De ja vu appears to have struck us again as it was announced this morning that Greece expect to agree a deal with Eurozone finance minister’s over the weekend, we’ve been here before. At the risk of repeating ourselves again I think we will leave the Greek situation there and move onto to other news, the Greek deal will happen when it happens. It was confirmed earlier in the week via there policy statement that the Bank of Japan had intervened in regards to their currency to weaken the Yen. We suspected this was the case at the start of the month when we saw the Yen start to weaken and the Japanese cabinet have followed this up with an approval to raise taxes in order to tackle the growing public debt the country is amassing. JPY crosses are now trading at a 3 month high and look like they will push up further so if you buy Yen you should think about putting in an order to catch any high we see in the near future.
Yesterday’s trading was very volatile especially US Dollar crosses with cable moving from the mid 1.56’s to over 1.58 and EUR / USD moving from under 1.30 to over 1.31. Sterling has been the main benefactor over the last few days and we have seen it push back over the 1.20 mark against the Euro which is encouraging, we would like to see this level consolidated before pushing higher to 1.21. There was further good news for Sterling this morning with retail sales figures coming in much better then expected at 2% year on year, with expectation at 0.5%. The more important number was the month on month figure which was 0.9% compared to a consensus figure of -0.4%. December’s numbers are usually good due to the pre-Christmas trade but with sales continuing well into January it looks as if there is still a decent appetite to spend money even with the high V.A.T. rate and this will be a welcome shot in the arm to the struggling retail sector. Later today we have CPI data being released from the US at 13.30 with a mixed set of numbers expected. Look out for volatility just before the figure and after the figure and if you are a buyer of USD it may be worth securing your deal before the figures come out.
Today could be fairly flat as the excitement of the last few days settles down and traders look to take profit from their positions. The levels at the moment are good for buying USD especially considering where it was not 2 days ago and with positive data continuing to come out of the US these levels may not last for too long. EUR / USD’s move back over 1.3135 on the expectation of a Greek deal looks fragile and we still expect to see it under 1.30 in the next few weeks so if you sell Euros against Dollars think about looking to lock in a rate at these levels.
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