Market Drivers for April 27, 2015
- Range trading dominates as week starts
- Greek talk continue with focus on Tsipras
- Nikkei -0.18% Europe -0.67%
- Oil $57/bbl
- Gold $1181/oz.
Europe and Asia
EUR: GE Import Prices 1.0% vs. 0.5%
North America
USD: Flash Services PMI 9:45
It's been a quiet listless night of trade in the currency market with the majors essentially range-bound for most of the Asian and early European trade with little fresh news flow to move the market.
With Gallipoli day remembrance holiday in New Zealand and Australia, the markets were off to a subdued start for the week, with minimal liquidity until later in the Asian session. The European open brought a fresh round of US dollar buying, but that rally also stalled by mid-morning London dealing.
Overall, the FX markets were merely marking time today, waiting to see what progress has been made on the Eurogroup and Greece negotiations and what the Fed will say at this week's FOMC meeting on Wednesday.
In the Eurozone there appeared to be a glimmer of hope with respect to Greece, as news over the weekend suggested that Chancellor Merkel and Prime Minister Tsipras held constructive talks over the phone. Negotiations appear to be moving away from the Finance Minister Yanis Varoufakis whose confrontational style has angered some in the Euro group and hope now is that the more collegial tone between Ms. Merkel and Mr. Tsipras could lead to some sort of deal this week. Time is running short for Greece as the country continues to face a shortfall of cash and has only a few weeks left before it will run out of funds to pay its creditors.
As for the Fed, this FOMC meeting is not expected to produce any fresh news, with policy makers unlikely to signal any tightening into the June meeting. The policymakers are likely to remain highly focused on incoming data with the latest batch of reports offering a mixed picture. Many analysts have noted that the US economy appears to have suffered a dichotomy at the start of this year with business and industrial demand slowing while consumer demand has strengthened. Although the Fed is no doubt buoyed by improving trends in consumer spending. it's doubtful that US policymakers would make any changes until business demand firmed up as well.
For now, this lack of focus is likely to keep the market range-bound for the time being with EUR/USD traveling from 1.0800 to 1.1000 while USD/JPY remains contained between 118.00-120.00 barriers.