EUROPEAN session review: ECB should keep interest rates held down for a longer period

Data released: 

08:30 GMT UK Public Sector Net Borrowing (Aug) £11.452B £12.000B £-1.119B 

The market trades clam on Friday. Earlier the dollar headed for its biggest weekly loss in two months versus the euro before reports that economists said will to show consumer confidence improved in the 17-nation currency bloc and manufacturing expanded. 

EURO 

Finland central bank governor, and European Central Bank (ECB) Governing Council member Erkki Liikanen said today that the ECB should not take responsibility to wind down non-viable banks as part increasing centralisation of the European financial system. Liikanen also said that the ECB should keep interest rates held down for a longer period. 

EUR/USD consolidates near $1.3530, below post FOMC highs on $1.3570. Strong resistance comes at $1.3600 (Feb 5 and 6 highs) with the stronger resistance is near yearly high on $1.3712. Initial support comes at $1.3400 (channel line from Sep 6). Below support is around Sep 13 lows on $1.3250. 

POUND 

UK Public Sector Net Borrowing was at £11.452 billion in August, official figures released by National Statistics show, following £-1.119 billion registered in July. Analysts expected £12.000 billion. 

GBP/USD retreated to $1.6030, a bit higher $1.6000 (channel line from Sep 6). Below support comes at $1.5780 (Friday’s lows). Initial resistance is around recent highs on $1.6145. Above the resistance comes at $1.6200 (channel line). 

YEN 

The yen consolidated in the narrow range. 

USD/JPY recovered to Y99.50 (61.8% Fibo of the Y100.60 - Y97.90 decline). Above resistance comes around Y100.00 (Friday’s highs) and Y100.60 (Sep 11 highs). Below Y97.80 support comes at Y97.50 (trend line from Jun 13) and Y96.80 (Aug 27 lows). 

DATA PREVIEW: 

At 12:30 GMT Canada report CPI for August. 

From 16:30 GMT till 17:45 GMT Fed’s officials speak, including George, Bullard and Kocherlakota.

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