US GDP data fell on the right side of market forecasts but failed to really motivate risk-taking before the weekend, with investors immediately turning their attention towards upcoming event risks. Debt troubles in both Spain and Greece should continue to give traders and the euro a headache. In addition, European statisticians are likely to publish another record high eurozone unemployment figure which should keep the single currency susceptible to volatile swings. Sterling could also struggle to hold onto much support before UK manufacturing PMI survey. The yen has had its safe haven appeal inflated by uncertainty heading towards US elections but remains near recent lows as traders prepare themselves for more Bank of Japan stimulus following a policy meeting.
Sterling
Britain’s third quarter GDP data launched sterling from a four-month low to three-week highs against the euro but cautious comments from some Bank of England members since the release have already undone some of those gains. Although the UK’s latest growth figures won over many investors, analysts will be keen to reassess business activity in order to gauge whether or not the UK economy can sustain some of that momentum.
US dollar
An early look at US third quarter GDP beat market forecasts slightly to keep investors somewhat optimistic about the US economy gradually finding its feet heading into the year end. As a result, demand for the haven US dollar would usually drop off, however, the greenback has put together a noticeable advance, as forthcoming events weigh on market sentiment.
Euro
The euro could be out in the open and struggling for support. Data checkpoints over the coming days are anticipated to show Spain’s recession evolving into economic depression and austerity pushing unemployment levels in Europe to new record highs. Germany will also publish retail sales and unemployment figures and consensus amongst analysts is to see more proof that eurozone debt woes are stifling growth in the area’s leading economy.
Japanese yen
The yen starts much stronger against the US dollar, as uncertainty heading into US elections and lack of progress in Europe regarding Spain pull Asian investors towards safer bets. Nevertheless, the yen is still hovering close to five-and-a-half-month lows against the British pound and will have its upside limited before Bank of Japan monetary policy decision.