Coming Up Today (all times GMT)
- GBP CBI Realized Sales (10:00)
- USD Preliminary GDP (12:30)
- USD Unemployment Claims (12:30)
Carry trades and risk taking are returning to the Forex market. The EURAUD, a widely used currency pair for carry trades, was down over 250 pips yesterday from above 1.5000 to around 1.4750. Also, Gold continues to rally, while Oil prices broke out of their slump and surged 4.0% higher yesterday. Moving the markets are statements from the OECD that they don't see a double dip recession occurring. However, they still pointed out that bank finances around the world remain vulnerable.
Looking ahead, economic news is light today, therefore, conditions are ripe for a continuation of weakness in safe haven currencies like the Dollar and Yen, with momentum turning to riskier currencies.
The EURUSD on the defensive again yesterday as it traded near its 2010 lows of 1.2145 after it broke down below its 1.2250 support. However, it has since bounced higher to 1.2275 this morning as bargain hunters stepped in to buy the beleaguered currency when its 2010 lows weren't broken. Nonetheless, EURUSD sentiment remains very negative which may limit any additional advance in the pair to its 1.2350 resistance.
The GBPUSD has been looking stronger, as it has successfully bounced off of it 1.4250 support several times over the last seven trading days. This suggests that demand for the pair is rising. Therefore, if it can trade out of its current 1.4250/1.4500 trading range we may see a continued breakout to the upside occur.