Forex snapshot

US dollar weakness has seen a sharp bounce in both EUR/USD and GBP/USD.

US dollar notes
Source: Bloomberg

EUR/USD bounces following poor German data

The regular pattern of disappointing economic data coming out of the eurozone has continued, even before equity markets are open. The latest German monthly industrial production figures, falling 4%, are the worst seen from the country since March 2009. It is becoming increasingly obvious that the weight of France is taking its toll on Germany.

The bounce seen over the last 24 hours has as much to do with EUR/USD being aggressively oversold as anything else. We could also have seen a pre-emptive move as two Federal Open Market Committee members are due to speak this afternoon. Currently the currency markets are factoring in a US rate rise before July 2015, and tonight’s comments could sway that perception. 

Cable returns to $1.61

Much like the euro, GBP/USD was heavily oversold and a correction was overdue. This morning will see the release of the latest monthly manufacturing and industrial production figures, both of which have struggled to impress over the last couple of years.

Currency traders will be conscious that this afternoon/evening will see Narayana Kocherlakota holding a Q& A session discussing the objectives of the monetary policy, while William Dudley will be speaking on the state of the economy in New York.

As welcome as the bounce back up to $1.61 is, this does just feel like a blip in an otherwise downward trajectory.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.

Find articles by analysts

Find out more about