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Departure of ECB hawk fuels euro decline

business-articlesDeparture of ECB hawk fuels euro decline
  • Surprise ECB resignation drags on euro
  • Risk appetite limits US dollar demand
  • Disappointing business barometer weighs on Canadian dollar
 
Euro on weaker footing ahead of Eurozone business confidence index
 
The surprise announcement of European Central Bank (ECB) policymaker Sabine Lautenschläger’s early resignation weighed heavily on the euro.
 
With the imminent departure of one of the ECB’s major hawks the risk of the central bank loosening monetary policy further before the end of the year increased.
 
EUR exchange rates could slip today if September’s Eurozone business confidence index shows any decline on the month.
 
However, if sentiment improves this could help boost the single currency amid hopes of greater economic resilience.
 
 
Weakening goods orders set to dent US dollar
 
As market risk appetite generally picked up yesterday, driven by hopes of potential US-China trade progress, the US dollar faltered.
 
Further weakness may be in store for USD exchange rates on the back of August’s durable goods orders reading.
 
With forecasts pointing towards a sharp -1% decline in orders on the month confidence in the underlying health of the world’s largest economy could fade.
 
Comments from Federal Reserve policymakers may also put pressure on the US dollar over the course of the day.
 
 
Canadian dollar braces for narrowed budget surplus
 
A second monthly decline in the CFIB business barometer limited the appeal of the Canadian dollar, undermining confidence in the domestic outlook.
 
Worries over the strength of the Canadian economy could pick up further ahead of the weekend if July’s budget balance disappoints.
 
Markets expect to see the budget surplus narrow from 0.9 billion to 0.3 billion.
 
Unless the budget demonstrates greater signs of resilience in the face of slowing global growth support for CAD exchange rates looks set to fade.
 
 
Upcoming Data:
 
Friday, 27th September 2019
10:00 EUR Eurozone Business Confidence Index
13:30 USD Durable Goods Orders
16:00 CAD Budget Balance
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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