The euro slumped on Thursday following the European Central Bank’s (ECB) latest interest rate decision.
Meanwhile, trade in the pound is mixed so far this morning, with GBP/EUR muted at €1.1822 and GBP/USD climbing to $1.1854. GBP/CAD is rangebound at C$1.5308, while GBP/AUD and GBP/NZD tumble to AU$1.6990 and NZ$1.9013, respectively.
Looking ahead, will hawkish expectations ahead of the Federal Reserve’s Jackson Hole symposium help to bolster the US dollar today?
What’s been happening?Following Tuesday’s sizable USD selloff, the US dollar initially jumped yesterday, with investors favouring the safe-haven currency amid a cautious market mood.
The ‘greenback’ also firmed on the back of a mixed US durable goods orders release. July’s figures reported goods orders stalled, missing forecasts for a 0.6% expansion down but saw growth in June revised up from 1.9% to 2.2%.
However the US dollar erased a good portion of its gains later in the session as market risk appetite started to improve.
The upside in the US dollar kept a lid on the euro yesterday as a result of the strong negative correlation between the world’s most traded currency pairing.
Meanwhile, the pound initially held its ground on Wednesday amid growing expectations for another 50 basis point rate hike from the Bank of England (BoE) next month.
But Sterling was unable to hold on to its best levels, succumbing later in the session to concerns over the UK’s economic outlook.
What’s coming up?Turning to today’s session, the focus this morning will be on the release of the latest IFO business climate index from Germany.
Economists forecast August’s business indicator will report another deterioration in sentiment, likely undermining the euro.
Also on today’s data calendar is the publication of the latest US GDP figures. The latest estimate of growth is likely to confirm the US fell into a technical recession in the second quarter and could limit the appeal of the US dollar this afternoon.
However USD investors may be more focused on the start of the Federal Reserve’s Jackson Hole symposium. Hopes for a hawkish message from Fed Chair Jerome Powell at his speech on Friday could help to underpin the US dollar.
Meanwhile the pound may stumble this morning if the Confederation of British industry’s (CBI) distributive trades index reports another drop in retail sector activity this month.
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)