Forex snapshot

We look set for a calm morning for currency markets with almost no economic data releases today. Federal Reserve chair Janet Yellen and European Central Bank president Mario Draghi, are speaking at 3pm and 7:30pm respectively (London time).

Euro/dollar currency
Source: Bloomberg

EUR/USD below $1.33

EUR/USD continues to trade below the $1.33 level, as currency traders look likely to sit the morning session out awaiting the possibility of market-moving comments from either, or both of the European and US heads of economic decision making.

Yesterday’s manufacturing and services PMI figures for France, Germany and the eurozone show that this continued weakness in the euro is needed by many of the export driven economies. Although Germany has managed to maintain growth in this area, France has once again seen contraction and the eurozone as a whole has now dropped to 50.8 lower than the expected 51.4. This week's equity markets have increasingly factored in some sort of proactive measure being taken by the ECB president. Should the Jackson Hole event pass off without fresh news, then an aggressive selloff could ensue.

EUR/USD chart

GBP/USD awaits Jackson Hole meeting

It has become an increasingly difficult task to gauge the timeline for interest rate change as the Bank of England governor, Mark Carney, made comments contrasting with both the economic data that is being released, and his previous comments on interest rate expectations. Earlier in the week the release of inflation figures strongly pointed to a 2015 interest rate rise start date, while only a day later the Monetary Policy Committee saw two members vote for change. The importance of this vote was highlighted by the fact that this was the first time any of its members had voted for anything other than maintaining these low rates since July 2011.

This afternoon currency traders will have an opportunity to hear what Fed chair Janet Yellen has to say about the US economy, when she speaks at the latest Jackson Hole meeting at 3pm (London time). Considering the minutes released earlier in the week from the US Federal Open Market Committee, a confirmation of US earnings strength might well be mentioned. GBP/USD looks weak and oversold, but if this comes to pass lower levels look on the cards.

GBP/USD chart

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