The ECB president is getting into the habit of surprising the markets. Only two weeks ago he made unexpectedly dovish comments at the ECB press conference, describing the current interest rates at 2.0% as “appropriate”. Then on Friday he said almost the exact opposite, indicating that the ECB is ready to raise rates at the December or January meeting. Trichet said the ECB is ready ‘to moderately augment the present level of interest rates in order to take into account the level of risks to price stability’.
The market will be watching his testimony to the European Parliament today in which he’s expected to reaffirm his intention to raise rates.
With a Euro rate rise in the pipeline the market is likely to test the Euro’s strength against the dollar early this week, with cable likely to be dragged along also.
The Yen continues to fall agaisnt the dollar as the interest rate differential persists (4.25% USD and 0.0% JPY), with Japanese politicians leaning heavily on Bank of Japan to maintain zero rates.
GBP USD – Support 1.7150 then 1.7100
Resistance 1.7225 then 1.7300
GBP EUR – Support 1.4555 then 1.4500
Resistance 1.4600 then 1.4675
DATA: US Leading Indicators 15:00
Related posts:
