Forex snapshot

The euro and pound are broadly unchanged versus the US dollar as a light news day weighs on volatility.

Euro and US dollar notes
Source: Bloomberg

Euro is rangebound

The euro is trading at $1.3637, largely unchanged even though the eurozone sentix investor confidence dropped from 12.8 in May to 8.5 in June. It is worrying that the investor confidence has taken a sharp drop in the same month as the European Central Bank announcement. For the past few weeks all the focus has been on the ECB and now that there have been minimal steps towards tackling deflation, the excitement has dissipated.

We are not expecting any economic announcements from the eurozone or the US today. The euro is receiving support at the $1.36 mark, if it is breached it could target $1.3540.

Pound holds $1.68

Traders have little to get excited about with European markets on holiday and a lack of news from both the UK and US today. As the US jobs data came pretty much in line with expectations on Friday, the pound is getting off to a quiet start this week. Traders will be focused on the UK industrial production and unemployment figures on Tuesday and Wednesday respectively, the latter being the more important of the two. The jobless rate in the UK is already below  7%, a level once cited by Mark Carney as a target, the expectation is for a reading of 6.7%.

The pound could slip back to $1.6780 if the reports are weak however, on the up side we could target $1.6880 if the UK economic announcements are positive.

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