By ActionForex -
Sterling tumbles sharply in an otherwise quite market on talk that UK would slump into a Japan-style “lost decade”. There are speculation that BoE will use the Quarterly Inflation Report to be released this Wednesday to signal the risk of falling into a trap debt deflation and that was the main reason that the bank extended its asset purchase program last week. Former MPC member Wadhwani also said that US is tracking the path trodden by Japan in the 90s. He said that the bounces in three to four quarters of decent bounce would be seen by the bounces are driven by temporary factors only. He expects second half of 2010 would be even more difficult in UK.
Elsewhere, dollar remains generally steady against most major currencies as consolidation continues. The Japanese yen recovers mildly in general but key short term support levels are still holding. Note that as mentioned before, commodity currencies remain relatively firmer in general. However, some additional pressure might be seen in near term, considering that Gold’s dive below 950 level is suggesting a short term top is in place there.
Data released earlier today saw Eurozone Sentix Investor Confidence improved more than expected to -17 in Aug. Japanese current account rose more than expected to 1.8T JPY in June. Machine orders rose more than expected by 2.7% mom in June. Economic watcher sentiment rose slightly to 42.4 in July but fell short of expectation of 43.4
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We were watching the open last night for signs of continued USD strength from Friday, but the last 15 hours have been very quiet. EUR/USD (current bid 1.4176) is in a tight range. Without any follow through of lower EUR/USD we will put back on our full position of long EUR/USD. We originally bought at ... ...
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