Dollar slipped ahead of long weekend, solid German data threatens Eurozone inflation
February 20th - With many traders set to observe the President’s Day holiday, a run of profit taking against the dollar was seen ahead of the weekend break with gains being posted across the majority of major currencies. There’s relatively little on the economic calendar today as a result of the long weekend in the US, although monetary policy in Europe is receiving some attention just now. German PPI data came in well ahead of expectations – up 1.2% versus the forecast 0.4% - and as a result, expect further calls for the ECB to hike interest rates in the near term before inflation becomes a real issue within the Eurozone. Furthermore, in the UK the release of some solid housing data has shown the largest jump in prices in almost two years and obviously this could put the Bank of England under some pressure not to drop rates too quickly lest another boom in property prices should follow. However, there’s now little of note left on the economic calendar for today, although if volumes are reduced some added volatility may be seen. From a technical perspective, the market is going to be looking for cable to break 1.75 and EUR/USD to rally through 1.20 if furthet gains are to be forthcoming in the short term although tomorrow’s release of the latest FOMC meeting minutes could very quickly change trader’s overall sentiments surrounding the dollar too…
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