US Dollar stronger ahead of GDP data and Fed decision

Today's Highlights

Sterling slips on growth concerns

US Dollar stronger ahead of GDP data and Fed decision

Huge data week for Euro almost guarantees volatility

FX Market Overview

Eid Mubarak to all our Muslim readers and to everyone, welcome to the last few days of July. I hope you all had a great weekend and got to see some of the lovely weather Britain has been enjoying. The weekend was awash with excellent sport. My favourites were the truly impressive drives by Daniel Ricciardo, Fernando Alonso and Lewis Hamilton to take the podium spots in the Hungarian Grand Prix. All very deserving of the champers.

In the slightly less frantic financial markets, the top slot is being occupied by the US Dollar which recovered lost ground in the latter part of last week. A growing consensus that the Federal Reserve is planning early monetary tightening is starting to strengthen the USD and we will get some clues on that this week. The first estimate of Q2 economic growth is published on Wednesday and Friday brings the July employment report. Both sets of data are forecast to be strong so don't be surprised if the USD strengthens a little more through the week. In addition, we get the Fed's latest interest rate decision on Wednesday. No change in the base rate is forecast but another reduction in their bond buying budget is on the cards.

Sterling, by way of contrast, has slipped off its perch over the last few days. The unbalanced nature of the UK recovery is causing some concern. A heavy reliance on retail and housing recovery is leaving the manufacturing and service sectors behind to some extent. This is a thin week for UK data so the little bit of housing market data and Friday's manufacturing PMI will take on extra significance. I suspect the Pound will stay fairly flat and maybe recover a little of its losses before the week is over.

Europe faces a week deluged with data; inflation, unemployment, consumer confidence, business sentiment; it will all assail Euro traders over this week and the euro is likely to be volatile as a result.

Canadian Dollar traders will be focussed on the employment and GDP data later in the week. It is expected that GDP growth picked up a little last quarter so the Canadian Dollar (the loonie to its friends) is likely to end the week on a high.

Cyclist Chris Pritchard and his now fiancée Amanda Ball ended their weekend on a high. Chris proposed to Amanda in front of millions of people in the Sir Chris Hoy Stadium after he had come 3rd in the Kirin. Thank goodness she said 'yes'. Could have been so awkward.

Quote

My wife says I never listen. Well is was something like that anyway.
Anon