The euro and sterling broke the resistance at 1.3520 and 1.9940 yesterday but was unable to gain much follow through as data releases from the respective economies were softer than expected. The initial leap in these currencies was prompted by Ben Bernanke, Trichet and Fukuki giving comments on their economies for a South African Audience via satellite. Also Syria following Kuwait to unwind the dollar peg of its currencies to a basket of currencies which would certainly include the Europeans buoyed the latter. The euro and sterling closed 1.3522 and 1.9921 respectively. There were some unwinding of carry trades and this easily reflected in the USD/YEN, other yen crosses and fall in some asset markets across the globe. The yen closed at 121.33.
ECB: hike rates by 25 basis points and then give dovish comments without reference to “inflation vigilance”
BoE: We expect BoE to remain on hold tomorrow despite talk of a 50 basis point hike in the last meeting. (No statement is expected to be released)
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