OPENING COMMENT
While it is unclear how volatile the markets will be on Monday, overall trade is expected to be quite thin in light of the US closure for the Labor Day holiday. More familiar rhetoric out from Fed Hoenig over the weekend, after the central banker warned that rates would need to be raised quickly once clear evidence of the bottom of the recession emerged. Sterling has been one of the more offered currencies on the day thus far, perhaps weighed down by recent comments from UK Darling who said that quantitative easing would keep mounting pressures on the single currency. Eur/Gbp has been well bid as a result and could be in the process of putting in a bullish reversal day following three consecutive down days. The Yen has also been well offered on the day as risk appetite once again appears to be firming up. Meanwhile, on the other side, the Canadian Dollar outperforms, with gains accelerating early Monday back towards Friday’s post NFP highs (ie Usd/Cad lows). Canadian employment data on Friday was better than expected and could be helping to fuel the relative strength. Asian equities are showing bid, while commodities are mixed to flat. Looking ahead to the European session, Eurozone Sentix (-13.7 expected) is due at 8:30GMT, followed by German factory orders (2.0% expected) at 10:00GMT.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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