The main currency pairs have continued to trade in narrow ranges throughout the week. The dollar has strengthened on Wednesday trading but has been unable to break out of its recent trading ranges. Despite US New Home Sales from July reaching an almost nine year high on Tuesday markets remained subdued as they await Janet Yellen’s speech in Wyoming at the end of the week. The next Federal Reserve meeting takes place on September 21st and market participants are eagerly awaiting any clues of a possible rate hike for this meeting. Looking ahead, today’s economic calendar remains quiet with the only key piece of data being existing home sales from the U.S. for the period of July. With a quiet economic calendar and Yellen’s speech fast approaching, limited action is expected in currency markets today.
The dollar has become fixated on Yellen’s upcoming speech and as a result has not managed to break out of its recent trading ranges. A number of analysts have suggested that markets will continue to drift with minimal volatility until Yellen has spoken at the Jackson Hole conference later in the week. The only data release of note today is existing home sales from the U.S. which is expected to show a moderate decline at 5.52m vs a previous 5.57m.
The British pound has managed to maintain the gains it has made over the week with it testing the $1.32 level on a number of occasions and finally sustaining a break through this level on Wednesday trading. Data has showed that British manufacturing exports were at their highest level in two years during August. This, coupled with the July inflation and retail sales numbers from last week, shows that the BREXIT vote is having little to no impact on consumer spending within the UK.
The loonie has remained in a fairly tight trading range this week with the weakest level of $1.2965 seen on Monday. The loonie has managed to remain beneath $1.30 as a result of doubts the Janet Yellen will be in a position to raise interest rates by the end of 2016. The persistent rise in oil prices has at times allowed the loonie to break through the $1.29 support level before retracing throughout the day to $1.2935.
The Eurozone dominated the economic calendar yesterday with the main theme of the market releases demonstrating that BREXIT is yet to have a detrimental impact on the Eurozone’s economic performance. Tomorrow will see the benchmark IFO German Business index which is a leading indicator of economic health, the forecast is for 108.5 vs a previous of 108.3, should this be the case we could see a move higher for EUR/USD.
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