Forex snapshot

Mario Draghi has driven the euro lower after suggesting a willingness to use ‘unconventional’ tools to get the eurozone back on track. Meanwhile, the pound continues to be dragged lower as the strength of the US dollar dominates.

Euro and dollar currency
Source: Bloomberg

Draghi talks down euro

The euro is trading at $1.2738, down 0.3% on the day as the European Central Bank president pledges to keep policy loose. This comes less than one month after cutting interest rates to a record low. Pressure is mounting on Mr Draghi as deflation fears in the eurozone persist. Adding to the euro’s woes is the buoyant economy, as yesterday US new home sales jumped to a six-year high.

The US will announce the initial jobless claims report at 1.30pm (London time). Analysts are expecting a reading of 294,000 and as long as the figure comes in below 300,000, it will add to the strength of the US dollar which could push to the euro to $1.2712.

 

EUR/USD chart

Sterling continues to slide

The pound is trading at $1.6313. Sterling has yet to recover from the knock it received by the US new home sales report which came in at the highest level since May 2008. As I stated yesterday, it is a quiet week in terms of UK economic events so the attention will be on the US.

The US will report the flash services PMI for September today at 2.45pm (London time). The previous month’s reading was 59.5 and expectations are for a dip to 59.4. If the figure exceeds estimates the pound may drop to $1.6205. 

GBP/USD chart

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