Markets remain fairly subdued after the weekly jobless claims data from across the pond remained above the one million level for the thirteenth straight week. The resurgence in coronavirus cases continues to upend bets of a swift economic recovery with the US stock markets snapping a three-day winning streak and the dollar slightly firmer into last week’s highs.
Three European central banks have met today with the Bank of England disappointing many who wanted more than the £100bn injection to its QE programme. Although taking a more optimistic view on the economy compared to the May meeting, downside risks remain which has left sterling vulnerable.
The Norges Bank raised its projections for growth and inflation while also lifting its rate path, and this has seen the Krone rally to one-week highs versus the euro. Meanwhile the Swiss Franc has barely budged, after the SNB pushed back against currency appreciation caused by the pandemic.
Pound in danger
The initial spike in sterling with the hawkish Bank of England headlines evaporated fairly quickly and cable has broken through the 100 day MA support at 1.2520.
Today’s close will be significant if prices can hold below the 50% retracement of the December high and March low in the 1.2460 area. Resistance above now resides at 1.2550 followed by the 1.26 zone.
EUR following broad USD sentiment
Focus will be on tomorrow’s EU leaders talks about the relief package as the ‘Frugal Four’ and others make their feelings known. The fiscal hawks prefer grants to loans, which may upset the current Euro ‘bonhomie’.
The single currency is trading in a narrow range with trend signals not suggesting a strong move in either direction. The 1.12-1.14 range does have a slightly bearish bias so watch the 1.12 level as strong support.
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