Today we have had unemployment figures from the UK which confirmed the expected fall due to the build-up to the festive period. This was priced into the market before the release and as a result we saw little movement in price of exchange rates.
Tomorrow is the big day this week which could move markets by upwards of a cent. The data I am talking about is the European Monthly Report which is the first real opportunity the bank has had to comment on the speculation of an interest rate drop in the single currency early new year. This speculation was built on comments made in their Interest Rate decision last Thursday which at the time weakened the euro by almost a cent. They lowered their forecasts for growth across Europe last week which started this speculation.
I would however note a voice of warning as an interest rate cut has already been priced into the market. So if we were to see commentary saying it is not going to happen, or even pushing the Interest Rate change to the middle of 2013 expect the Euro to strengthen very quickly. This could really surprise and cost new currency traders a lot of money so make sure you are not caught out.
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