United States Dollar:
As it was a public holiday in the UK yesterday, trading in GBP/USD was fairly muted. The dollar did weaken on Friday afternoon, however, following Fed Chair Yellen’s speech at the Jackson Hole Symposium. There was also something of a follow-through on Monday morning in early Europe. There was still “remaining slack in the labour market”, according to Yellen, although she did point out that it had picked up in the last year. There was no signal as to when the next interest rate hike might come and, if anything, she sounded quite accommodative on interest rate policy. The speech left investors and traders feeling underwhelmed, particularly following the hawkish tones in the FOMC statement earlier that week. GBP/USD traded up to a high of 1.6596 on the news, although it then slipped back later in the day on Monday to a low of 1.6556. This came despite the weaker-than-expected economic data out of the US yesterday – Flash Services PMI and New Home Sales came in on the soft side. It’s continued to trade this range since, and opens this morning at 1.6570. The focus this week will be on US Prelim GDP, whilst there may also be some further reaction to events at Jackson Hole.
Euro:
EUR/USD has continued to trade close to and around 1.32. ECB President Mario Draghi also spoke at the event in Jackson Hole; he strongly indicated that the central bank would do more to prevent falling inflation, such as asset purchases to pump more money in to the system, although there was no indication as to when this might happen. He also made the point that fiscal reform in some parts of the eurozone was needed to help ease these pressures. EUR/USD has so far fallen to a low of 1.3179 and it opens this morning at 1.3195. There’s little by way of European economic data out of the EZ today. Later on in the week, German Prelim CPI is due, which is particularly pertinent following Draghi’s comments on Friday.
Aussie and Kiwi Dollars:
AUD/USD and NZD/USD have also drifted lower over the last few trading sessions, a response to a generally firmer USD. All in all it was a fairly flat overnight session, as local traders await the Australian CAPEX data on Thursday. The rest of the week looks pretty drab, too, amid a lack of any major economic news. AUD/USD and NZD/USD open this morning at .9305 and .8535 respectively.
Date Releases for the next 24 hours:
AUD: Construction Work Done q/q
EUR: No data
GBP: BBA Mortgage Approvals
NZD: FPI m/m
USD: Core Durable Goods Orders m/m, HPI m/m, CB Consumer Confidence, Richmond Manufacturing Index
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