The ECB president Mr. Draghi has lost his credibility to some extent, where he was recognized as personnel who could shake the market with his words easily. Last week, no reaction was seen in the euro when he spoke, plus the Italian trade balance gave a good sign of recovery in their contribution to the Eurozone’s economy. The inflation numbers for the EU were just up-to the expectations, whereas the current account and consumer confidence level plummeted in the past month.
On the other hand, the German ZEW economic sentiment improved significantly but failed to lift the pair, because the key event of last week was FOMC statement where decision was taken not to taper the easing plan due to which major currencies soared nearly 200 points.
The unemployment claims are constantly falling every week for the United States and so they did last week as well, after which the existing home sales along with manufacturing index data showed a massive recovery in the economy. Therefore, it led the major pairs to give bearish correction to some extent but US dollar remains under pressure for now as bond buying would continue at least until December 2013.
The key event that is happening this weekend is the German Federal Elections, where market may open a gap on Monday due to any positive or negative sign that investors may perceive depending on what the elections results are.
Upcoming Economic Indicators
Apart from that the key economic indicators due this upcoming week include the services and manufacturing index for Germany, France and the US, German business climate, US consumer confidence, core durable goods orders, and pending home sales. Talking about the British pound, it is well intact with the bullish channel where the key fundamentals due this week are the current account and the realized sales data. In short, the bulls would remain in command over the major currency pairs until and unless any strong fundamental disturbs their bullish momentum.
To contact the reporter of this story: Jonathan Millet