EUR see losses three days on the trot

There wasn’t much to speak of from the UK yesterday with little data out; a slight dip was seen against the dollar while the pound was up somewhat against the euro. It did also, however, take a dip against South African’s rand following news yesterday that RSA had narrowly avoided entering recession; surprising, given the ineptitude of Zuma’s government in its handling of the on-going strikes that have caused such concern for the country’s vital mining sector. What we also saw from the UK was a CBI report that showed that UK service sector growth slowed in the three months leading up to August. Consumer services business volume growth was shown to currently be at its slowest since last year. On the flipside, there was growth shown in the amount of people employed in the business and professional sectors which is at a near seven year high. As it stands, there is uncertainty over what might become of GBP’s monetary policy and as such means that it remains slightly vulnerable, for the most part against the dollar.There is no data out for GBP today so direction will, as usual, be taken from elsewhere.

Yesterday wasn’t a good one for the single currency as EUR saw its third day of consecutive losses versus GBP and USD. This was as a result of poor German IFO data – negative readings for Current Assessment, business climate and expectation indicators – as well as the likelihood of ECB policy action in the near future. ECB chief, Marion Draghi, in his address at the Jackson Hole meeting, said that the inflation outlook for the EZ has deteriorated and that his organisation will have to respond accordingly with the appropriate tools to set things right. A policy review is then to be held in this regard on 4 September.

We saw USD hit a 13 month high yesterday against the single currency as it appears that the Fed are set to remain on course with their current bout of asset purchase programme tapering which is due for completion before the end of the year.