Pound Should Brace For Further Volatility

EUR/USD fell 14 points to reach 1.3387 as traders worry about the eurozone recovery and future steps from the ECB. Traders will closely monitor Mario Draghi’s presentation at Jackson Hole later this week. The Eurozone has seen a stuttering this week in its recovery following surprisingly downbeat Eurozone data releases and back and forth disagreements with Russia. Friday signaled a meeting between the Russian and Finnish Presidents which was hoped would enable less dispute between the 18 nation Eurozone and Russia. The meeting is expected to be the next step toward a ‘peaceful settlement of the internal political crisis in Ukraine and measures to prevent human catastrophe’ as stated by the Kremlin.

GBP/USD recovered 38 points to trade at 1.6729 with a lack of economic data and news the overall UK recovery continues to shine. The GBP may see further volatility in the week ahead with a wealth of data publications. Tuesday’s highly influential Consumer Price Index, Retail Price Index and Producer Price Index could have a big effect on the currency price.

AUD/USD added 16 points to trade at 0.9341 after the release of minutes from the August 5 RBA meeting. The Australian dollar is trading in a tight band overnight with little in the way of economic data to force a significant move in either direction. However, the unit has further strengthened its position above 93c ahead of a couple of potential market-moving events. Australia’s central bank sees significant uncertainties around the economic outlook, which was why interest rates were likely to stay at record lows for some time yet.

USD/JPY added 6 points to trade at 102.63 as the US dollar gained momentum as yen traders are now expecting to see additional stimulus in the near term from the Bank of Japan after early data this month was dismal. A domestic survey of 106 major companies has found that 100 expect the economy to expand toward year-end, and that 76 do not oppose the government’s plan to complete the doubling of the sales tax to 10 percent in 2015, a poll says.

Gold eased to trade at 1301.90 down by $4.30 in today’s session as global tensions seem to ease off the brink. While geopolitical tensions prompted some safe-haven demand for gold, worries over more downside lingered after a 0.6% drop on Friday. ”There was some selling as Tokyo and China opened this morning sending gold to session lows,” said a trader in Sydney. “I wouldn’t be surprised if gold prices edge towards the support level at the 200-day moving average of $1 285,” the trader said.