Global Stock markets have retraced today as speculators take profit on their bets on based on the Fed’s announcement of $600 billion of stimulus last week. the feeling in the market today is that perhaps the USD was oversold on a release that was in line with expectations.

The fundamental outlook for the USD is still for further weakness with expectations for mid 1.60’s on cable and mid 1.40’s on EUR/USD in the coming months. As of the last two weeks it seems that traders still refuse to take significant bets against the trend and we will have to continue to watch risk barometers such as the S&P500 to see where direction lies in this weeks relatively quiet economic data front. Previously we had been calling a potential reversal on the USD yet it seems that this was a little premature. The USD will probably continue to weaken before we see any significant retracement.

Today was an eventful day for the Euro. The Euro has suffered from selling pressure today on the focus of fundamental news from Greece and their debt problems. The Euro has been immune from significant selling pressure for sometime now and it appears focus has shifted from selling Sterling to selling Euro’s.

Tomorrow sees key data from the UK we have house price data and and Industrial and Manufacturing production. This will set the tone for appetite towards the pound tomorrow and could easily be the cause the pounds decline.

Regards
Luke Zorab
Torfx Currency Dealer
(01736) 335285