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Euro, Yen and GBP

James Boston
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Despite the last 5 days producing consistently week data on European economies and the Eurozone as a whole, European stock markets look set to close out the week higher for the 3rd week in a row. There is however one challenge left to overcome before the closing bell at the end of today. European growth forecasts are due at 10am (GMT), given recent soft data releases there is nothing exceptional expected in these growth forecasts however any revision downward will cause concern in the markets.

The Euro is consolidating just above the 1.37 with little momentum to push it higher, in fact with the exception of the Japanese Yen there is little excitement in the currency markets this morning.

The Yen, which is 20% lower over the past 12 months, is continuing to suffer from yet another failure of the Japanese economy to break out of its long term rut. USDJPY has found support at the 3 month moving average level of 101.45 but is showing no signs of moving through this level, the most recent bounce has in fact pushed USDJPY through the key resistance level at 102 and a run higher is highly anticipated. The next couple of weeks will be crucial for this currency pair as the Yen is showing signs of once again challenging the long term low of 105.31 against the US Dollar.

Elsewhere in the currency market Sterling is setting itself up for a disappointment this morning, British retail sales figures for January are expected at 9:30 (GMT) and the consensus is for 5% growth, this is an ambitious figure and hitting it would show strong signs for a UK recovery. However missing this ambitious number in the current environment is not likely to be overly detrimental for UK growth forecast so long as it is a near miss. Sterling however is looking for a cue to move, so more so than usual today’s retail sales number will have an effect on the currency market.

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