Calmer Night Permits Forex Rest

Improvements in risk appetite allowed the EURUSD to rise overnight from its oversold levels to highs of 1.4400 before retreating back down to 1.4340(See Chart). The dollar gave ground to most of the other majors although it did climb against the Yen to its present value of 90.40.

Earlier this morning, the Euro-zone posted a growth in producer prices of 0.1% for November whilst the region’s trade surplus widened to EUR 6.3B. The EURUSD is currently on track to achieve its third weekly fall in succession.

The GBPUSD climbed back to 1.6250 during the night although it has now retracted to 1.6180. The pair initially benefited from the rise in risk appetite. A report from the Bank of England released earlier this morning claimed that the UK fiscal system had become significantly more stable as a result of government intervention. However, the document also stated that the probability of default by UK real estate companies had also risen sharply as households continue to face threats from a weakening labor market and tightening credit.

Market sentiment should drive Forex today as there are no major event risks. As such, currency movements are expected to be erratic.