The pound is mixed this morning, consolidating against the broadly stronger dollar, but gaining against the euro as debt crisis in Eurozone intensifies. Sterling, however consolidated versus the dollar as investors run for safety of US currency. There are no policy speeches or economic releases scheduled for today. Major event this week is the Bank of England monthly meeting scheduled for Thursday. Market participants expect from the MPC (monetary policy committee) to announce another round of quantitative easing of 50 billion pounds, bringing the total value of asset purchase program to 325 billion pounds. Also scheduled for this week are the manufacturing and industrial production data for December, with expectation for the figures to have dropped from previous reading. Finally, trade balance figures are also scheduled for Thursday, with projections for the trade deficit to have narrowed to 8.6 billion in December from 8.7 in previous month. Expect for the pound to experience excessive volatility this week before Bank of England announces its policy decision.
Euro dropped across the board this morning before Greek government respond to demands by international creditors on economic measures. The single currency also came under pressure before French Treasury auction 8.5 billion euro of debt today. Looking ahead to today, German Factory orders headline the economic calendar, with the expectations for the figures to have improved to –0.4% in December from –4.3% in previous month. Major event in the Eurozone this week is the ECB February meeting, with the investors being keen to learn more about the ECB’s measures last month to support the banking industry. Expect for the euro to remain under pressure before ECB announces its decision on Thursday.
The dollar gained against its major rivals during Asian session, as investors went for safety of the US currency on Eurozone debt crisis. The greenback was also supported against its major rivals on speculation the Fed will avoid easing its monetary policy on its next meeting. Looking to the week ahead, University of Michigan Consumer Confidence headline the economic calendar, with the expectation for the figures to have dropped to 74.0 in February from 75.0 in previous month.
That issue was conflict the market too much...!
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