The Euro and British Pound Could Sell Off Today

Some points to consider in this article:

• The euro and the British Pound could see weakness on tepid CPI and easing from the ECB.
• The USD/JPY rose, the Australian and Canadian Dollars are higher thanks to risk aversion.

Today will see the release of the Eurozone CPI. This news will headline European trade and be at the front of decision making for traders. The core CPI (annual) is expected to rise one percent. Yesterday’s poor German CPI number could mean this number comes in lower than expected. Yesterday, the German CPI for December came in flat. The annual umber rose a tepid 0.2 percent. Both numbers missed the mark and what was expected. This poor outcome in German inflation should lead to further stimulus measures from the European Central Bank (ECB). This ill put downward pressure on the Eurozone currency. These added stimulus measures could also put pressure on the British Pound. Why? More ECB easing will make problems for imported disinflation in the United Kingdom. This would, in turn delay the Bank of England (BoE) from raising interest rates.

Both the AUD/USD and USD/CAD Forex pairs were in play overnight. The Australian Dollar outperformed as did the Canadian Dollar. This move was probably corrective and in line with the overall equities selloff we saw yesterday. The Japanese Yen proved to be the weakest currency during the Asian trading session.

Looking at the United States (US) markets, right now futures in the S&P 500 are pointing to a solid open suggesting we could see a corrective recovery in the United States trading session. Also, futures for the Dow Jones Industrial Average (DJIA) are also higher.

Going forward today as well as for the week, traders should look at trading the path of least resistance. So far in 2016, for now, risk aversion is in play.