Thanks to the ECB and BOE maintaining 1.0% and 0.5% interest rates respectively, coupled with poor numbers from the US regarding jobless claims and retail sales, the euro experienced a 120 pip rally yesterday against the dollar. Will this continue through today? It appears that EUR/USD is consolidating around 1.283 awaiting the next bit of financial news.
At 8:30 this morning, both Canada and the US will announce Trade Balance which potentially could increase volatility in the forex market. I anticipate a slightly worse position for the US and a much improved trade balance for Canada which should strengthen the Canadian dollar and slightly weaken the US counterpart which should help to maintain the rally of the euro regardless of the situation in Greece.
The yen continues to strengthen placing a stranglehold on Japanese exporters. I was surprised that the BOJ did not intervene on Tuesday as many had anticipated and still look for them to do so prior to the end of January.
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