The single currency finished up vs the dollar last night and is up 0.6% in this morning’s trading trading. Traders have noted a potential Euro sell opportunity on the basis that the Euro is overbought and retracement is becoming a distinct possibility against the US Dollar and the Pound. Continued concerns over the debt problems in Ireland and Spain have done little to stir concern in the currency markets. Riskier asset classes such as the S&P 500 have helped to make the risk sensitive Euro the best performer as of late.

This week’s economic releases represents a busier than normal schedule and could easily set the tone for the rest of October. We have had UK services PMI out this morning at slightly better than expected (52.8) vs (51.3). Retail sales data from the EU was -0.4% vs an expected 0.2%. Despite this, the Euro continues to make gains against Sterling down 0.45% this morning.

This afternoon we have US ISM non-Manufacturing PMI. Any disparity in what is expected and we could see the markets respond rapidly.

Markets will be looking to Thursdays BoE and ECB rate announcements for an indication on potential interest rate movements. Although changes are unlikely anytime soon there is often dissent in the ranks and last month the vote was 8-1 to keep rates on hold. Andrew Sentence was the sole BoE member to advocate a rate hike.

Support and Resistance
GBP/USD – Support 1.5670 / Resistance1.5924
GBP/EUR – Support 1.1296 / Resistance 1.2015

UK Economic Releases

JPN – BOJ Rate Announcement
AUS – 0430 – RBA Interest Rate Announcement
EU 16 – 0858 – Market Services PMI
UK – CIPS Services PMI (September)
EU 16 – Retail Sales (August)
US 1500 – ISM Non-Manufacturing PMI (September)

Best Regards
Luke Zorab

Torfx Currency Dealer
(01736) 335285