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A quiet Monday keeps markets range-bound - Euro currency news daily

22 August 2017, 11:18 CET
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A well supported Euro lost some steam against the US Dollar after hitting a 2-1/2 year high near $1.1910 in early August. It has, however, managed to pull up from a three-week low of $1.1662 set last Thursday. Positive factors relating to the Euro such as an improvement in the euro zone's economic outlook has been priced in of late and this now raises the question of where will the next wave of strength come from? European Central Bank President Mario Draghi is scheduled to speak at Jackson hole later in the week but with many not expecting any fresh impetus the Euro could struggle to hold on to the gains. Fundamental data today comes in the form of German ZEW economic sentiment where a drop is the forecast.

US Dollar

US Dollar advances were limited yesterday in what was a rather uneventful day of trading. On the data front, Chicago manufacturing undershot economists' forecasts falling 0.01% to 0.15 from the previous month missing expectations by a fraction. Cable broke 1.29 late in the afternoon touching a high of 1.2907 before snapping back below to 1.2870 where we currently sit. Geopolitical concerns still weigh on the greenback after the U.S. and South Korea began computer-simulated military exercises on Monday, risking a reaction from North Korean leader Kim Jong un, who may view such exercises as preparation for an invasion of the isolated nation. The focus is currently on the Fed's annual central banking conference in Jackson Hole, commencing later in the week. Yellens speech is of particular interest as it could prove instrumental in providing further guidance on a December rate hike. Another quiet day on the docket with just 2 low level releases so expect markets to be treading carefully.

Sterling lost ground throughout Monday in what has been a slow start to the working week. The Right Move house price index posted a drop early hours Monday which has cemented the view the housing market is still cooling with average house prices still continuing to drop off. Just the main release today, public-sector net borrowing, not usually a market mover but with little else on the docket it could be scrutinized. Brexit papers were released yesterday, the details of which were about the plans on goods and services post-brexit. The release didn't really highlight anything we didn't already know apart from the fact negotiations are behind schedule. 3rd round of Brexit negotiations with the UK begins next week and the bloc has said: "sufficient progress" was needed on the three areas before the bloc decides to launch talks on the future, including on trade rules. Barnier said last month that was less likely to happen in October, as previously expected, because of lack of progress on the divorce settlement. GBP/EUR has fallen on the back of the release, falling from 1.0970 to 1.0907.

Aussie and Kiwi Dollars

There were further gains for the Aussie overnight after Iron ore spot markets rallied higher. GBP/AUD ranges were tight, within 40 points, touching a low of 1.6224 and high of 1.6264. The Australian macroeconomic calendar remains empty this week so moves will be limited to external events.

The Kiwi Dollar traded sideways against Sterling for most of Monday. Starting the day 1.7609 and finishing up at 1.7602. It has today broken below 1.76 and currently moves at 1.7595. Very much the same as the Australian Dollar this week, an empty calendar will prompt moves from external factors.

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Eurozone Economic Calendar

Tuesday 22 August

09:00 ZEW Survey - Economic Sentiment (Aug)

Wednesday 23 August

08:00 Markit Manufacturing PMI (Aug) (Preliminary release)
08:00 Markit Services PMI (Aug) (Preliminary release)
08:00 Markit PMI Composite (Aug) (Preliminary release)
14:00 Consumer Confidence (Aug) (Preliminary release)

Friday 25 August

07:00 ECB President Draghi Speaks at Jackson Hole
19:30 CFTC NC net positions