According to the latest data, business activity continued to weaken in August. Just like in the last few months, the more export sensitive manufacturing sector underperformed services. As such the latest development may continue to indicate a weakening trade-related capital flow situation.
This combined with capped ECB rate expectations should keep the single currency under pressure.
From that angle investors’ focus shifts to central bank President Draghi’s speech at the Jackson Hole Symposium. Given still weak growth and price developments he is unlikely to surprise with a less dovish monetary policy stance.
As a result to the above outlined conditions we remain of the view that EUR rallies should be sold, against both the AUD and the USD.
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