By Dhilshan Sandanarajah

The European session began with PMI data with the Eurozone having more disappointing results for both services and composite PMI, with figures of 53.7 and 53.3 both lower than expected. This saw the Euro experience some weakness in the morning, along with the GBP also experiencing weakness after service PMI of 56.7. EUR/USD was able to break below the 1.115 mark and GBP/USD broke below the 1.535 mark, as the USD index breaks out of its range over the past few days to print fresh 11 year highs. This is likely to be due to expectation of better employment figures from the U.S over the next couple of days, with ADP employment change being released later today.

The late morning saw the release of European retail sales with figures being much more positive than expected, with the year on year retail sales being as high as 3.7%. Though with QE around the corner and inflation being at the lowest levels for Europe, retail sales was bound to make a positive turn. Subsequently EUR/USD was unable to make a strong retrace and now continues its descent.

Though the dollar index has made a climb, USD/JPY does not seem to have reacted as of yet which is unusual with WTI now climbing towards the 51 mark. It is likely to be awaiting the U.S open, if equities react positively to the rise in oil prices, we can expect USD/JPY to begin a climb. It is also important to note that the timing of an OPEC meeting is now uncertain, as the Saudi Arabian oil minister seems oblivious to one till June and an emergency meeting was expected sooner.

As we near the U.S session open ADP employment change will be an important release as NFP is on Friday, and will likely give an estimation of what to expect. Later will see the release of Markit Services and composite PMI, however the focus will be ISM non-manufacturing PMI with an expected figure of 56.5 and therefore a slight fall from its previous figure. Also to look out for will be Fisher’s speech in the very late evening, whom is likely to make comments on Yellen’s testimony last week.
Looking towards tomorrow, the main focus will be the ECB monetary policy statement as it will confirm the technicalities of the QE programme due to start this month.

That’s the wrap for today, Good Luck with your trading endeavours.