The currency has been trading similar to that a speculative carry trades like the Australian dollar and New Zealand dollar. Gains were seen as GDP/USD rallied towards the 1.500 mark as well as GDP/EUR reaching highs of 1.1074.
Heavy GDP/JPY and EUR/GDP once again supported the pair. In addition, home prices fell for the 14th straight month in December down to -15.9% the lowest it has been in 17 years, leaving the odds in favor for a rate cut by the Bank of England on Thursday.
The Euro fell sharply on Tuesday as the Euro-zone CPI estimates fell more than had been predicted to a 2 year low of 1.6% in December from 2.1%, falling against the sterling as well at the U.S dollar. The general sentiment from the Vice president is that the ECB will in fact cut rates on the January 15th. The Euro continued to remain under heavy selling pressure accelerated by the CPI estimates slowing to 1.6% from 2.1% on the back of falling energy price and falling demand.
The Euro dropped nearly 300 bps falling below 1.3400 for the first time since the 15th December. Looking ahead German unemployment is forecast to be around 3.07 million with an unemployment rate unchanged at 7.5%.
The US dollar has consistently been trading stronger than the euro, EUR/USD traded with lows of 1.3314 and a high of 1.3637 all suggesting a stronger dollar in relation to the EURO. Also gains were seen against the Swiss Franc, and Japanese Yen but remained weak versus the Pound Sterling as GBP/USD pushed towards the 1.500 level. U.S economic data was relatively weak, Durable Goods Orders falling -1.5% in November and pending home sales dropping by -4%.
The Japanese Yen was sold aggressively against a majority of the worlds currencies as the uptrend continued to be tested on the USD.JPY. Overall the USD/JPY traded with a low of 92.86 and a high of 94.63.