The dust settles

It was another volatile day for the pound yesterday when we saw it lose 1.3% against the dollar in the afternoon, although level out against the single currency over the course of the day. There were also losses against the Aussie, Kiwi and Canadian dollars as the dust settle after Monday’s harrowing scenes across the . While the situation (and knock-on effect) in China stabilises, pundits still believe that the pound will strengthen as the year comes to a close. We won’t see any data to write home about today or tomorrow – direction will be taken from how the market continues to handle the fallout from China.

There wasn’t any data from the Eurozone to get worked up about either yesterday, but we did see the ECB’s top economist say that he would have to act if the Eurozone was seen to miss its inflation targets. This contributed to the euro falling 1% against the dollar. Today we’ll see more data out including French business sentiment and Spanish GDP.

USD fared better yesterday when July’s durable goods orders were released better than expected giving the dollar a lift against the pound. On the flipside, the MBA mortgage applications weren’t so good, with August coming in at 0.2%, far below July’s 3.6%. We also saw confirmation from the Fed’s William Dudley that, with the recent shenanigans in China, there won’t be any interest rate rise next month as many thought might happen. There is still the promise from the Fed that it will take place at some point this year – although, this is ultimately data dependant and provided there are no surprises again (ala China). We’ll see more data activity from the US today which will, as always, have a good or bad sway over the dollar’s fortunes.