US Dollar:
The directionless nature of speculative-based markets is both a boon and a burden when trying to establish the dollar’s fundamental bearings. On the one hand, without a clear trend in risk appetite to benchmark the currency against, it is difficult to determine whether the greenback is actually still playing the fundamental role of safe haven currency to FX traders. Whether this relationship is breaking down or still holds fast is essential to both analyzing and trading the US dollar. Having this definable driver to defer to means we can establish the current health of the currency and when developing forecasts, we can project the rather straightforward direction and tempo of risk appetite rather than attempting to categorize and verify the importance of the infinite variables factoring in a currencies strength. At the same time, an absence of clear speculative drive is beneficial in that it fits the tempered bearish momentum that swept over the greenback this past week. That being said, we would still see a divergent performance from the dollar across its major counterparts.
DATA : Core CPI and Prelim consumer sentiment.
Pound:
There were two notable economic reports that would cater directly to a couple of the Sterling’s more important fundamental drivers: interest rate speculation and the stability of an economic recovery. The growth forecast was lowered slightly by the first drop in retail sales (0.5 percent) since January. On the other hand, the BoE’s quarterly survey of consumer inflation expectations boosted the target to a two-year high 3.4 percent clip.
Retail sales were forecast to have risen by 0.3 per cent in August, but instead fell 0.5 per cent month on month.
Going into a period of fiscal tightening, we would expect to see consumer demand winding down and it is worth remembering that July's retail sales figures were a lot stronger than expected.
DATA : No major data to be released today.
Euro:
The euro put in for a robust performance yesterday but the strength was more relative than absolute. If we look to the drivers over the period, we see that the SNB’s dovish turn, the RBNZ’s moderate language and the dol¬lar’s floundering would provide indirect strength to the single currency. If we were to look at the actual European fundamental developments for the day, the backdrop is far less impressive. On the economic docket, the re¬gion’s trade deficit contracted to a 172 million euro shortfall but most investors are less concerned with external trade figures and more interested in internal imbalances. What was true was Greek Finance Minister Papacon¬stantinou’s commentary that the nation would not default or restructure. As he put it the region would be falling apart if that were the case. Is this a threat to investors and EU politicians?
DATA : No major data to be released today.
General:
• Without a clear boost for yield demand, the Australian dollar is struggling to gain traction. And, consider¬ing AUDUSD has stalled just after marking what many would consider a significant break, the risk of a reversal is growing rapidly. As for the fundamental backdrop, the outlook for business activity in the third quarter while inflation expectations grew to 3.1 percent.
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| GBP/USD | 1.5689 |
| GBP/EUR | 1.1941 |
| EUR/USD | 1.3136 |
| GBP/JPY | 134.48 |
| GBP/AUD | 1.6606 |
| GBP/NZD | 2.1483 |
| GBP/ZAR | 11.1895 |
| GBP/CHF | 1.5921 |
| GBP/CAD | 1.6041 |
| GBP/SGD | 2.0933 |
| GBP/THB | 48.02 |
| GBP/HKD | 12.1860 red-down; blue-up (snap shot) |
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