Consolidation Prevails in Most Currencies Trading, Sterling Drops Ahead of UK Data - 18.6.2013

Currency pairs are still fluctuating in recently established sideways zones with the US dollar slightly higher against its major peers and approaching the upper barrier of its index at 80.96 while yesterday was limited by lower boundary at 80.48. Only against the Japanese Yen the US dollar trading range narrowed to extremely tight between 94.94/94.65 as we approach FOMC statement. Bernanke’s tone on Wednesday is highly expected by market participants, who for the time being can only speculate, and during previous week volatility was very high due to speculation of reducing FED QE.

At the same time the sterling is falling against the USD, breaching support at 1.5682 and creating a reversal pattern in the hourly chart ahead of fundamental data for UK today. The British CPI for May is expected to rise, Producers Price Index also forecasted to rise and later on BOE Inflation letter. Uncertainty on news might increase currency risk and that makes heavier the sterling, reducing its recent gains. In addition, the Net Short positioning on the British pound reduced from $7.4 bln to $5.2 bln as indicated by Friday CFTC report for the week ended on June 11 in accordance with previously rising GBPUSD rate.

The RBA released meeting minutes of the June 4th were current monetary stance viewed as appropriate so no change was made but the members said also that “inflation outlook might provide some scope for further easing”. The latter put bears in control in the AUDUSD pair that dropped from 0.9571 to current level at 0.9468 and may continue toward recent low at 0.9325. Perhaps in the medium term a new low would be possible as long as technicals are on the same side with fundamentals.