The ECB Chief, Mario Draghi, reiterated his support for additional stimulus measures to support the Euro zone economy and fend off deflationary pressures. The ECB President seems caught on the wrong foot as measures adopted by him are not having the desired impact on the region’s economy, evident by a string of recent weak macro data.
Meanwhile, following broadly mixed economic data at home lately, market participants will keep an eye on a speech from the BoE Governor, Mark Carney, scheduled later today for hints on the central bank’s policy stance in the near future. Across the Atlantic, investors will continue to monitor domestic economic data to gauge the pace of growth in the nation’s economy during the third quarter.
Pound Sterling – UK Markets
Since the wrapping up of Scottish independence referendum late last week, market attention has turned towards fundamentals where the focus has once again shifted back on the timing of interest rate hikes in the nation. Against this backdrop, today’s speech from the BoE Governor, Mark Carney, will be keenly monitored for cues over the central bank’s future monetary policy outlook. In the absence of major economic releases in the UK, investors will keep a close watch on US durable goods orders and weekly jobless claims data, considering its potential to alter risk sentiment in the upcoming trading session. Meanwhile, the Pound is trading on a weaker footing and has slipped below the 1.63 mark against the greenback in today’s trading session. However, Sterling has shown some resilience against the Euro, primarily due to the vulnerability of the common currency.
Sterling lost ground against the US Dollar yesterday after data released in the US indicated that new home sales advanced more than expected for August to reach near its highest level in more than six years.
US Dollar – US Markets
The greenback gained ground against the majors in yesterday’s trading session. Data released yesterday showed that the sale of newly built homes climbed to its highest level since 2008 for August. This was in contrast to the existing homes sales report released earlier this week which showed an unexpected drop last month. With mortgage rates nudging higher, it remains to be seen how the housing market reacts to the changing economic dynamics in the US.
The US Dollar is trading on a firmer footing against its key peers this morning. The durable goods orders data scheduled for release later today is expected to show a sharp drop for August, after the one time jump last month which was skewed due to a spurt in aircraft orders. However, any upside surprise in today’s figures will prompt market participants to upgrade their growth forecasts for the current quarter. Additionally, US initial jobless claims numbers is expected to rise back to the 300K mark, but remain close to its pre-recession lows.
Euro – European Markets
The Euro has slipped to fresh 2014 lows against the US Dollar in today’s trading session. The single currency witnessed fresh selling pressure after the ECB Chief reiterated his commitment to take additional unconventional stimulus measures to boost growth in the region. However, he did not provide details about his views on the region’s macroeconomic troubles and prospects of a broader asset purchase programme by the central bank.
The common currency lost ground against its major counterparts in yesterday’s trading session following the release of downbeat German Ifo sentiment report. Data showed that business climate in Europe’s largest economy remained weak, as persistent geopolitical tensions in Ukraine continued to weigh on sentiment in the nation. In the light of weak PMI readings in the Euro zone and yesterday’s soft economic data, this week’s economic releases might have probably pushed policymakers to consider fresh steps to counter the region’s economic weakness.
Other Currencies – Highlights
The Aussie Dollar lost ground against the greenback in today’s trading session and dropped close to the 0.88 mark. The Reserve Bank of Australia Governor, Glenn Stevens, indicated earlier today that the central bank is expected to introduce tools to control the nation’s housing market from overheating. This might have been in response to yesterday’s Australian financial stability report which showed that the overheating housing market was posing a major challenge to the economy. Additionally, the greenback remained supported against the Australian Dollar after data released in the US revealed that demand for newly built homes reached a multi-year high.
With little on the domestic macroeconomic front, the Australian Dollar is likely to take direction from US durable goods orders and initial jobless claims data scheduled later today. Going ahead, next week’s domestic retail sales and trade numbers for August would provide further direction to the Australian Dollar against the majors.
British Pound Extends Rally on Brexit Optimism
British Pound Steadies as PM May Survives No Confidence Motion