Spotlight On ECB and BOE Rate Decisions

Many currency pairs have been trading in tight ranges on Wednesday in the absence of major news and ahead of the ECB and BOE rate decision Thursday. EUR/USD traded a narrow 70 pips, finding support somewhere around 1.4590. If the pair breaks successfully below 1.4570, possible downside targets are 1.4720-1.4730, 1.4700. USD/CHF is still capped by 1.1060.

UK Nationwide consumer confidence in January fell to the lowest level since the survey began in May 2004 as Britons showed concern with slowing economic growth, higher living costs and falling stock prices.

There is now growing sentiment that the Bank of England may cut interest rates by a quarter point to 5.25% Thursday.

A Wall Street Journal article today has the following title: "Will Dollar overshadow Yuan at G7?" The article states the Yuan's value will receive greater public attention and a possible place in the communique. However, it is the USD's decline which could possibly be of most concern to Europeans and Canadians, as it makes it harder for the companies in these countries to compete against US companies. If USD is indeed singled out, it could spark a further rally in the currency.