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.

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.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.