The currency market has been rather quiet on Monday due to the lack of major economic releases from the US or Eurozone. The US dollar mainly erased some of last Friday’s gains post-payrolls report which wasn’t as bad as many had predicted. Traders will be looking forward to Thursday when the Bank of England and the European Central Bank are scheduled to meet and announce their rate decision.
Trichet Sounds Alarm On Global Inflation
European Central Bank president Jean-Claude Trichet said at a G10 meeting in Switzerland on Monday that central banks must be alert to inflation risks worldwide. Trichet said that “inflation risks are significant” due to rising commodity prices, which he described as “a very important phenomenon on a global level”. As for the topic of the forex markets, Trichet said that G10 members did not discuss that at the meet as G7 countries have made their position clear. Trichet sounded optimistic about global economic growth, and said, “Thanks to remarkable, confirmed resilience of a great number of emerging economies we see ongoing growth.”
Forex Trading
EUR/USD has been trading a relatively narrow range of 80 pips early today, reaching a session high of 1.5500, more than a 100 pips above Friday’s precarious low of 1.5360. 1.5510-30 will be its nearest resistance. USD/CHF’s move has been even more subdued, moving between 1.0520-70. The US dollar rallied with greater energy versus the British pound, causing GBP/USD to move lower to 1.9660. However, the buck lost footing against the Australian dollar: AUD/USD rose from 0.9340 to 0.9440, ahead of a rate announcement by the Reserve Bank of Australia on Tuesday morning at 0430 GMT. Although most people are expecting the central bank to hold the rate steady at 7.25%, which is a 12-year high, they are hoping for a hawkish post-rate statement highlighting inflation concerns in Australia.
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