Forex snapshot

The euro remains range-bound while the pound eyes $1.64. 

Euro and US dollar notes
Source: Bloomberg

Euro remains within range

The euro is broadly unchanged versus the US dollar as there was little economic news from either region to force the currency pair out of its range.

The euro is trading at $1.2848, after seeing little movement overnight. In fact, as far as the eurozone is concerned, it is a quiet week in terms of economic data, so the focus will remain on the US dollar. Tomorrow, the eurozone will release the private loans and money supply data; this should be interesting given the European Central Bank cut interest rates at the beginning of the month and announced the buying of asset-backed securities (ABS). The ECB is now hoping banks will ramp up their lending which will be key to the region’s recovery.

As I stated yesterday the risk remains on the downside; if the US has strong home sales figures at 3pm (London time) the euro could target $1.28.

Pound eyes $1.64

The pound is edging higher as political and financial stability returns to the UK in the wake of the Scottish referendum.

The pound is trading at $1.6385, dropping below the $1.64 mark but appearing to make another attempt at it. Sterling traders have little to get excited about this week as we are not expecting any major economic announcements from the UK in the next few days. Traders are slowly gaining confidence in the pound but the strong US dollar still dominates the headlines.

Loretta Mester of the Federal Reserve is due to speak at 5.05pm (London time). The pound will find it difficult to target $1.65 unless Ms Mester’s comments are very dovish, which I doubt they will be. Pressure on pound could push to back to $1.6310.

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