Euro Losses Ground Against the Dollar
As expected, the Fed meeting was the main event last week. While the FOMC kept policy on hold as expected, the tone from the meeting was more cautious than anticipated. This saw the dollar come under pressure. Although, sterling proved to be the main mover last week, benefitting from some positive UK labour market data and BoE comments.
As trading gets underway this morning, the aforementioned weakness to the euro at the end of last week means the EUR/USD pair is trading around $1.13, while EUR/GBP is back below 73p. Meantime, cable (GBP/USD) is around the mid $1.55 mark.
Euro
This week, market focus will switch to the Eurozone where we get a raft of survey data for September. They will give us an early insight into the performance of the economy at the end of Q3. The Eurozone composite PMI is expected to suggest that the economy maintained its modest pace of growth.
Elsewhere, the Ifo index should point to solid growth in Germany, while the French INSEE is forecast to suggest an improved performance in Q3. The positive survey data could help to support the euro.
There is some potential event risk to the currency, though, in the form of testimony from ECB President Draghi to the EU Parliament on Wednesday.
According to an article on the Businessweek website, Ireland’s property market is growing at the second fastest rate across the globe. Hong Kong grew at the fastest rate of 20% while Ireland reached 10% last year. Read more
Euro trades at £0.72777 which is slightly higher than close on Friday.
US Dollar
Meanwhile, the US calendar is relatively light in nature. Indeed, durable goods orders and new & existing home sales data (both August) are the only releases of note.
Dollar recovered ground after witnessing the EUR/USD moving to $1.13995. This correction is due to investors weighing up that the European central bank and Bank of Japan will embark on further extensions to their quantitative easing programmes. This would mean further advances for the Dollar. Read more
US Dollar trades at £0.6448 and €0.8857.
Great British Pound
Currently this week Economic Minister George Osbourne is in China for talks regarding developing further business ties between the two nations. This is also an attempt by the English government to help the Chinese government control the slowing of China’s economy.
This morning the Financial Times reported part of George Osbounes plans for further incorporation with China. China is going to begin issuing short term debt within London which is the first location for this to occur outside its own country.
The chancellor said he wanted the UK “to be the natural western hub for renminbi trading” and “China’s bridge into western financial markets”. Read more
The Great British Pound trades at $1.55089.
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