Yesterday was rather quiet across major FX pairs but that’s certainly not to say there’s nothing going on. Markets have been light on economic and fundamental data thus far this week but we’ve had plenty of headlines carrying weight to impact market sentiment and I’d be very confident that will continue into the weekend.
US President Trump continues to be in the spotlight following the guilty plea from his former attorney Cohen, the concern for markets is that this is only the beginning and with Cohen threatening to divulge details of Russian interference in the elections (amongst other things I’m sure) Trump could very quickly find himself backed into a corner. Markets are not yet showing too many signs of concern however. The USD halted its slide yesterday and while the USD index did trade moderately lower on the day, thus far this morning we’ve seen USD demand.
Last night’s FOMC minutes came and went without much fanfare, the status quo was maintained and the language of the FOMC minutes didn’t suggest any shift or concern around the Feds projected rate hike path. Two further rate hikes are still the goal for this year, and more next year and the USD finds itself supported as a result. The annual economic symposium in Jackson Hole kicks off today, where US movers and shakers all meet and discuss the economy and their views, it’s always worth some headlines and we’ll be keeping a close eye on the USD to see what happens, we’ll also be watching progress on US/China trade talks which commence today. PMI data also crosses the wires this afternoon, the preliminary August figures are expected to show a slight slowdown in the pace of growth but unlikely to knock the greenback too much.
Closer to home and focus in back on Brexit. The EU’s Barnier stated that they would now be in continuous dialogue between the UK and EU. No great surprise given the rapidly approaching deadlines. The UK’s Brexit secretary Dominic Raab is set to produce 80 “technical notices” for various business sectors explaining how they should prepare for a no deal scenario. Not exactly inspiring confidence but at the same time almost essential. A KPMG repost yesterday suggested that 63% of respondents to a survey felt a no deal scenario would create additional delays in UK channel ports, what’s more alarming is that 37% didn’t think it would! As always the pounds outlook is dependent on sentiment surrounding Brexit.
EURGBP still locked in a tight range just below .9000. High mark remains .9030 for now and downside finding support at around the .8950 area, although nothing very solid until we get back towards .8900 area. GBPUSD stalled below 1.3000 once again, highs around 1.2930 marked the top yesterday and thus far this morning the pound is facing some selling pressure, 1.2808 offers the first level of support should the pair begin to drop.
The bulk of this morning’s heavy hitting data comes from the Eurozone and PMI data is just crossing the wires as I type. Manufacturing appears to be weak across the board, the Eurozone figure slipping to 54.6 from 55.1 (55.2 expected), and the Eurozone composite figure also missed to the low side posting 54.4 vs 54.5 expected. Thus far the single currency is pretty much unchanged and I’d imagine it will be a quiet mooring as we await the ECB minutes due out at 12.30.
The ECB have been very careful in keeping rate hike expectations pinned, Eurozone data has remained mixed but holding positive bias overall. The minutes are unlikely to offer too much in terms of fresh data but should we see any concerns creeping in or a change in language to the dovish side then the euro can certainly face additional selling. EURUSD will likely be the most exposed. The rally from the lows stalled ahead of 3%, just peaking above 1.1600 before dropping back this morning where we trade just above 1.1550. 1.1491 offers next support should