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Euro and pound advance ahead of European rate decisions

Published 10/07/2010, 06:47 AM
Updated 10/07/2010, 06:56 AM

The European common currency and British pound strengthened against the dollar ahead of the announcement of October's rate decision.

Expectations show that neither BoE not ECB is going to introduce or change its monetary policy stance this month where both will keep borrowing cost unchanged.

Probably, the BoE will leave interest rate at 0.50% and APF at 200 billion pounds which may not affect the pound movements after the decision except if King added any comment after the decision.

The ECB, on the other hand, will hold interest rate at 1.00% and may hint to an increase in the ECB's market security program.  

Conversely, the dollar extended its fall beyond eight-month low versus a basket of major currencies as depicted by the dollar index which slipped to a low of 77.05, after the breach of 77.60, compared with the day's opening at 77.43.

The dollar fell to 15-year low against the yen and all-time low against franc on expected intervention by the Fed as the latest data is suggesting that the Fed will add to stimulus where ADP employment fell yesterday ahead of the release of the infamous job's report tomorrow.

Concerning the euro-dollar pair, it inclined on the daily charts till touching a high of 1.3994 as the breach of 1.3883 opened the way for the pair to continue its rally, heading to the fourth consecutive weekly rise,

Today, data showed that German industrial production rose in August to 1.7% from 0.1%, but the news did not have a noticeable effect on the euro.

Meanwhile, the pair is trading at 1.3972 after hitting a low of 1.3896, whereas the trading range for today is among the major support at 1.3800 and the major resistance at 1.4100.

Moving to the sterling-dollar pair, it pared its earlier drop when it visited a low of 1.5844 following the report showing that UK house prices plunged in August to the lowest level since at least 1983 to touch a high of 1.5961.

Currently the royal pair is trading at 1.5935, where the trading range for today is among the major support at 1.5775 and the major resistance at 1.6070.

With regard to the dollar-yen pair, it slipped sharply to 82.43 after the breakout of 82.86 level which is the low recorded on September 15 when the BoJ intervened in markets causing the pair to rise to 85.76.

Before the G7 meeting, some analysts expect the BoJ to refrain from intervening in markets again.

The trading range for today is among the major support at 81.60 and the major resistance at 84.40.

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