Volatility Causes Currency Surges

Overnight, the EURUSD has fallen from its heavily overbought position, generated a bearish Stochastic crossover and presently sits at 1.4890 - see chart.

Recent US Data releases showed that CPI rose to -1.3% from -1.5% YOY; Continuing Claims fall to 5992K and the US Empire Manufacturing Index rose to 34.6.

The US CPI reading may be the cause of the USDYEN 100 pip climb in the last hour as it has flagged a possible rise in interest rate hike expectations. The USDYEN is now posting 90.60.

Perhaps the big story of the night is the massive 330 pip climb by the GBPUSD that is presently registering 1.6260. As there were no UK data releases overnight, BoE member Paul Fisher is credited for this reaction after he stated that the UK central bank was not planning to weaken the British pound.

Concerns exist that the New York and Philadelphia manufacturing figures may post poor figures later this morning which could dampen the current market euphoria. Although nothing seems to be capable of doing that at present as this runaway monster seems to be able to consume its own flesh.