Recap

USD:
The big story from last week has once again been the strength of the US Dollar,
touching it’s highest value in almost a year on a trade weighted basis. The
catalyst for the week’s activity was the minutes of the July US Federal Reserve
(Fed) monetary policy meeting, which were published.

Contained inside the minutes was a note that “recent improvement in labour

Recap

USD:
The big story from last week has once again been the strength of the US Dollar,
touching it’s highest value in almost a year on a trade weighted basis. The
catalyst for the week’s activity was the minutes of the July US Federal Reserve
(Fed) monetary policy meeting, which were published.

Contained inside the minutes was a note that “recent improvement in labour
market conditions and the cumulative progress over the past year had been
greater than anticipated,” suggesting that interest hikes may occur sooner than
expected. This triggered a fresh round of USD buying.

EUR:
The President of the European Central Bank, Mario Draghi, said that if
inflation continues to fall, risks for price stability would increase and the
governing council would need to use all available tools. Analysts believe this
is Draghi brushing off the inflation risks once again. The ECB proved to be
behind the curve when they blamed temporary factors before and now market-based
measures of inflation are flashing warning signs.
 
Yesterday

EUR:
In the headlines yesterday was news German business confidence declined for a
fourth month, reflecting a faltering euro-area economy that European Central
Bank President Mario Draghi says might need more stimulus.

Germany has been the engine of the euro area’s revival since last year and its
resilience could be critical now as growth stalls and political tension with
Russia threatens trade flows. Draghi signalled last week that he could step in
with broad-based asset purchases as the region’s inflation outlook worsens.

USD:
The pace of new-home sales fell to the slowest in four months in July,
signalling US real estate lacks the vigour to propel faster growth in the
economy. Housing has advanced in fits and starts this year as tight credit and
slow wage growth kept some prospective buyers from taking advantage of
historically low borrowing costs. 

Key Announcements:

13:30 BST – USD – Core Durable Goods Orders m/m

15:00 BST – USD – CB Consumer Confidence

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