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Calm FX markets, but for how long?
Publication date: 22 May 2012
Author: Alistair Cotton, Currencies Direct
We are experiencing a slight lull across the FX land after the whipsaw markets over the past few weeks. Although the situation in Greece is still very worrying, it seems the markets are paying heed to the ‘no news is good news’ saying, with most of the major currency pairs trading in tight ranges. Lower volatility should persist this week in the absence of any major developments on the macro front (Euro-zone!) with little of the big ticket data due over the coming days.
We do have UK CPI data this morning; the figure was marginally lower than the consensus estimates at 3%, still at an uncomfortable level for the BOE. The Bank of England minutes are also due tomorrow morning. Completing UK data releases this week is the preliminary GDP number on Thursday. It is worth noting that the arch dove on the MPC, Adam Posen, has confirmed he will not be serving another term. Instead he will return to the US to Chair the Peterson Institute, an influential economic think tank based in Washington DC.
Around the rest of the markets German GDP is the standout number, and could lend support to the singles currency’s recent bounce against the US Dollar and Sterling. US Durable goods orders are also out later in the week and expected to show a slight increase from last month.
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