USD weaker after Durable Goods Orders slump

Today's Highlights

• USD weaker after Durable Goods Orders slump

• Short week but plenty of data to ponder

FX Market Overview

If you are reading this in the UK, I hope you had a terrific bank holiday weekend and if you are reading this elsewhere, did you miss us?

We start the last week of the month after a Monday which saw US durable goods orders slump by 7.3% in July. That was worse even than the most pessimistic forecasts. Most of the markets expected a 4 percent decline so the drop in the value of the US Dollar on the announcement was no surprise bat all. Such a dramatic drop is enough to make the Federal Reserve think twice about starting to reduce the volume of money in the financial markets. That weakened the US Dollar over the last 24 hours and it is likely to stay weak at least until Thursday when we get the US GDP growth data and a speech from Federal Reserve Bank of St. Louis President Jim Bullard which may shine some light on their 'tapering' timetable.

Sterling bounced around in familiar ranges over the bank holiday. With no data to focus on and few traders in action in London, the volumes were not there to create any directional trading. The rest of the week will be more interesting; the highlight being BOE Governor Mark Carney's speech to Parliament tomorrow. The markets are still trying to get the measure of Mr Carney so every opportunity to size him us is welcome. Any nuance on the BOE's plans to remove themselves from monetary stimulus will be seized upon.

This is a massive week for EU data. I would bore you to tears if I listed every item but the feature events are unemployment, Business sentiment indices, consumer inflation and retail sales. If that isn't enough to keep us all busy then I don't know what is. While we await those releases, the euro is being flattered by the weakened USD but is relatively static against the Pound.

OF course, lurking in the background of all market activity is the threat of further Middle East hostility as weapons inspectors were finally allowed in to assess last week's suspected chemical weapons attack but late enough to have allowed enough time for a clean-up. The US, France and the UK are all threatening military response if it is proven that the government used weapons against its people but it is less clear what they will do if the chemical attack is proven to have been launched by the rebels. Equally, Britain must be running out of troops amidst redundancies and other commitments. This week will be a very interesting one for Syria.

Away from the markets, The Notting Hill Carnival reports always include a picture of a Policeman Hugging or Kissing someone but three Bobbies went a step further this year and have made a splash in a choreographed dance routine akin to The Gap Band's 'Oops upside your head' sitting dance well known to people of a certain age. Good on 'em.