Euro boosted by German business confidence

Today's Highlights

• Dollar boosted by tapering pledge

• Euro boosted by German business confidence

• Sterling slips due to lack of data

• Chinese upturn boosts AUD and NZD

FX Market Overview

I think it is fair to say that Julian Assange will be even more entrenched in the Ecuadorian Embassy after his source for secret US Government documents was jailed for 35 years yesterday. It is probably fair to say he would spend a tad more than 9 hours in detention if he left the safety of diplomatic immunity. Those sitting in queues crossing the border from Gibraltar to Spain will have had plenty of news to read yesterday. It helps to while away the hours when so much is going on in the world. They'll have realised that the UN is practically pointless when a chemical weapon attack on innocent civilians and children cannot even be investigated because Russia and China are protecting their customers and perhaps themselves, they'll have heard about a dolphin in the River Dee near Chester, they'll know all about David Cameron's bad back and it'll be clear now that, even if you wear a dodgy mask, rapping about vile acts and offensive views online will get you sacked from your acting job.

If they got beyond The Sun's headlines, they may have heard about the light data diary but the fact that the Pound weakened a little against the Euro and US Dollar based on US and Eurozone data.

The Eurozone news came in the form of sentiment and rumour. The sentiment was that of German businesses. The German Purchasing Managers Index rose to its highest level in two years at 52 in August, up from 50.7 in July. That was at odds with poor French data but as Germany is, seemingly, the sole growth area of Europe, the data was enough to lift the euro. The rumour and speculation surrounded suggestions that Greek debt will have to be written off but the comments themselves are being written off as politically motivated as they came from a German politician with a vested interest ahead of the 22nd September German elections. Nevertheless, the euro is a tad stronger this morning and Sterling has stepped back from its resistance levels.

The US data came late in the day as the Federal Reserve released the minutes from its last meeting. We didn't really learn anything new from them. It confirmed the fact that they will start to tail off their bod buying program later this year but there was no indication as to when that process might begin. It was clear though that there is no consensus on the strength of the US recovery and that is a worry. Nevertheless, the US Dollar has strengthened a little, bringing the Euro-Dollar exchange rate half a cent lower and bringing the Sterling - US Dollar rate down below $1.56 again.

The Federal Reserve's commitment to 'tapering' their requirements, as it has been dubbed, has s knock on effect as well into the Canadian Dollar which weakened to a fresh high against the Pound overnight. There is a good chance Sterling's weakness today will bring the GBP-CAD exchange rate back down to 1.62 and perhaps lower in the short term but we will have to see if the infant gains the Pound has experienced recently can follow through into a proper grown up rally.

Overnight news showed China's manufacturing Purchasing managers Index rose to 50.1and that was not only a rise compared to the last two months but also well above expectations. This new was largely lost amongst the reports of ex politician Bo Xilai but it had a direct effect on the strength of the Australian and New Zealand Dollars, which both strengthened overnight. That took the Sterling - NZ and Sterling Aussie Dollar exchange rates down from yesterday's highs.

Today's data diary is a bit limp really so there is likely to be further consolidation in exchange rates. Nevertheless, after such a lively month and with so much politicking going on in Germany, anything is possible.

I will leave you with news that all train announcements are not lies. A few nights ago my journey back to East Sussex was slowed due to 'Livestock on the line' as the Driver put it. The train crawled for 15 minutes until we did actually see cows and a very agitated bull shaking his head at the train as we inched past. The Driver's second announcement is the one that made everyone stop moaning. "This is the driver speaking. Sorry for the delay ladies and gentlemen. We have now passed the livestock on the line but the reason it took so long is that they can't be removed until the farmer gets here because, apparently the bull only takes notice of the farmer". So that's either a very lovely relationship between a farmer and his prize bull or a very scary farmer. I didn't find out which.