The Euro continued to drive higher in Friday’s trading session as news out of Germany that Angela Merkel looks likely to form a grand coalition which cements her leadership and gives a bit of clarity to the market on the political situation in Germany. The single currency powered to the topside to finish the session up around 1.2200, this move led to a strong break to the downside in the Dxy which broke through the short term support around 91.80 with the basket now traded down sub 91.00. Against the other majors the dollar remained under pressure with UsdJpy now trading under 111.00 and Cable punching above 1.3700.
The US CPI data came out close to expectation with the Core numbers beating expectation by 0.1% and Retail Sales also came in slightly better than expected, however this did little to stem the markets enthusiasm for selling the greenback.
Looking ahead to today’s trading sessions and even though the US is off for Martin Luther King day we should continue to see volatility in the currencies with the dollar remaining a sell on any rallies. There’s very little in the way of fundamental economic data being released today with no tier 1 data on the horizon until Tuesday nights CPI numbers out of the UK. Traders will be keeping a close eye on the news wires for any change on the main themes affecting the market, especially any further news out of China and Japan in the Asian session and further news on the political situation in Germany once the London session opens.
Subscribe to RSA's FX Insight and get access to our daily market commentary.
If you have any questions or queries, please contact the team at info@sec.rakuten.com.au or visit our website.