Daily FX Update – 26th April 2016
After a short break, it seems the general themes remain but with differing outlooks moving forward. The Pound still rises and falls with Brexit news, the difference being the odds of an exit appear to be slimming, with President Obama sticking his 10 pence worth in to support the remain campaign, whilst giving Boris Johnson a much deserved slap down after his frankly stupid comments regarding Obama’s ethnicity over the weekend. As a result, Cable climbed above the 1.4500 handle yesterday for the first time in nearly 6 weeks but hasn’t managed any conviction over and above the level.
Risk aversion has tapered off and this has reversed the fortunes of the Yen and the Euro which were flying high the previous week. The single currency has also slipped post the interest rate announcement last week which coupled with Sterling’s strength has seen GBPEUR climb to more familiar levels above 1.2700, although from a technical standpoint as illustrated above, it is looking a little stretched and sits at the the edge of the Ichimoku cloud which is also resistance on the ascending trendline we’ve seen over the last couple of weeks, so a pullback would not be a total surprise.
The key focus of the week returns to central bank announcements, the forefront of which will be the FOMC announcement from the US on Wednesday evening. It is widely expected that there will be no change, but as always, the wording will likely set the tone for the Dollar for the foreseeable.
The Bank of Japan will also announce its monetary policy on Thursday and the market will be keen to see whether they apply negative interest rates to banks. The JPY has been on a bit of a see-saw of late with risk aversion and talk of BoJ intervention so it could be a volatile end to the week, particularly as we also head in to month end.
Focus today turns to the US with the release of durable goods, home prices, PMI and consumer confidence figures.
Have a good day.