Watch Out For Higher Volatility Today
Dear Traders,
As expected, there wasn’t much volatility in the Forex market Wednesday with the euro and pound remaining within narrow price ranges. The GBP/USD was able to stabilize above 1.32 following an upbeat U.K. Services PMI report but the pair rejected the 1.3250-hurdle, at least for now. Generally speaking, the medium-term outlook for the pound is still bullish as market participants prepare for a potential rate hike in August. Odds for an August rate hike are currently at 53 percent.
BoE Governor Carney speaks in Newcastle today at 10:00 UTC and any comments on monetary policy could get the pound moving.
The euro appears to lose some of its downside momentum while we see a higher likelihood of an imminent break above 1.1690 and possibly even 1.1720 in the short-term. The euro’s slight upward bias was also backed by reports that some ECB members are seeing a rate hike in late 2019 as ‘too late’.
From the U.S. we have the ADP report, scheduled for release at 12:15 UTC, followed by the ISM Non-Manufacturing index at 14:00 UTC.
Last but not least, we will pay attention to the FOMC meeting minutes due at 18:00 UTC, which are expected to have a positive tone. If the minutes signal further steepening in the appropriate policy path, the dollar could receive some fresh boost.
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