A hugely busy day in terms of data allowed Wednesday to once again witness the US dollar as the major mover despite a plethora of disappointing Eurozone figures. The dollar ended the day over 1% down against the pound and perhaps more importantly from a global perspective, down below the Japanese Yen holding below 100 for the first time in recent weeks. This is a prevalent move as Japan’s recent monetary policy has been the catalyst for their currency weakening dramatically enticing investors to seek safe haven in the Yen as it represented such good value for money.

A hugely busy day in terms of data allowed Wednesday to once again witness the US dollar as the major mover despite a plethora of disappointing Eurozone figures. The dollar ended the day over 1% down against the pound and perhaps more importantly from a global perspective, down below the Japanese Yen holding below 100 for the first time in recent weeks. This is a prevalent move as Japan’s recent monetary policy has been the catalyst for their currency weakening dramatically enticing investors to seek safe haven in the Yen as it represented such good value for money. With the dollar losing strength for a week, pressing up towards 1.55 only one week after touching 1.50, questions have once again been raised about the health of the US economy.

Fewer jobs than expected were created in the US for the month of May and Factory orders also failed to meet expectations. All eyes will now be on Friday’s non-farm payroll figure that investors use as the most ‘accurate’ indicator of the US employment situation.  A disappointing figure here will only increase the dollar’s downward momentum.

The Eurozone suffered worse than expected service data, retails sales and GDP figures. Following a sustained period of poor data from the Eurozone, Thursday’s interest rate decision and Mario Draghi’s subsequent press conference will be eagerly anticipated. Last month’s rate drop in the Eurozone in itself had little impact but his hints of negative interest rates during the press conference saw the euro weaken significantly. Many analysts believe that additional cuts could be on the cards and although this is not expected on Thursday, Draghi will no doubt face a barrage of questions focusing on this issue.

The bank of England’s interest rate decision on Thursday, Mervyn King’s last, is not expected to change following a good month for the UK’s service, manufacturing and industrial production sectors.
Finally, overnight Australia’s trade balance narrowed significantly leading to the Australian dollar weaken massively. These levels now represent a 20 month high against the pound. With Australia’s general election due in September, could the value of the Australian dollar slide further? Major resistance levels will need to be breached if this is the case.

Key Announcements:

11.00am – EUR – German Factory Orders (MoM)(APR): Expected to fall -1.0%

12.00pm – GBP – Bank of England Rate Decision: No change expected.

12.45pm – EUR – ECB Rate Decision: No change expected

1.30pm – USD – Initial Jobless Claims (JUN) – Expected to fall by 11,000