Risk found itself well supported through much of yesterday session and without any other major drivers it was broader sentiment that gave markets their lead. European stocks were lifted by energy stocks and leading indexes broke a three day losing streak, closing higher on the day. That sentiment carried through into the US session where stocks enjoyed their biggest one day rally in over a week and retraced much of the decline from August highs. The USD also took its chance to recover as the weighted USD index traded firmer on the day with EURUSD down over .5% however it was EURGBP that was the notable riser on the day, the slow grind to near record highs continuing for the cross as GBP weakness continued to press on sterling crosses.
EURGBP has continued its press higher this morning as better than expected PMI data helped boost demand for the single currency. EURGBP now trading back above .9200. while EURUSD has also rallied almost .45% from the mornings lows. Manufacturing in the region led the charge with French and German PMI’s beating expectations helping the Eurozone benchmark beat expectations and while services data was slightly weaker, the broader PMI composite reading for the Eurozone was firmer helping maintain Euro demand. Mario Draghi was also across the wires this morning and again traders were looking towards his speech for any guidance on future policy but we were left disappointed and Draghi’s speech gave us nothing new and no indication of what may be to come in Jackson Hole on Friday, for those thinking he’ll be looking to talk back down the Euro there was certainly no indication.
US services and manufacturing figures from Markit headline the afternoon session although markets are likely more focused on Jackson Hole tomorrow. GBPUSD broke below key support at 1.2810 and further downside is now expected, 1.2770 area next level down. EURUSD remains in broader range 1.1730 up to 1.1828. while EURGBP grinds higher a next real level of resistance not until the sterling flash crash spike above .9400.