Forex snapshot

The euro is broadly unchanged since the US revealed stronger-than-expected jobs data on Friday. The pound is subdued this morning as little ground has been recovered in the wake of the US jobs report.

Euro and dollar currency
Source: Bloomberg

Euro flatlines overnight

The euro is trading at $1.2537. The single currency has managed to pull back some of Friday’s losses even though Germany announced that factory orders dropped 5.7% in August — the consensus was for a decline of 2.4%.

The fact that the euro is trading higher, despite dreadful figures from Germany, suggests that traders are no longer shocked by poor figures from the eurozone and their attention will be on the Federal Reserve and when it will look to increase interest rates. We are not expecting any economic announcements for the US today but Fed members Narayana Kocherlakota and William Dudley are speaking tomorrow, Mr Kocherlakota at 6.20pm and Mr Dudley at 8pm (London time). Hawkish tones will keep the pressure on the euro.

The euro is close to a two-year low versus the greenback. As Alastair McCaig stated, Mario Draghi outlined the details of the asset-backed security scheme. Any rally in the euro will be short-lived and the $1.25 mark could be breached tomorrow evening pending the comments from Mr Kocherlakota and Mr Dudley.

Sterling attempts $1.60

Sterling is trading at $1.5975. The US dollar continues to dominate the headlines and, as I stated above, the statements from Fed members tomorrow could ensure the pound stays under the $1.60 level.

Sterling dealers will also be keeping an eye on tomorrow’s manufacturing production figures from the UK and the National Institute of Economic and Social Research GDP estimate at 9.30am and 3pm respectively (London time).The race continues between the UK and the US over who will raise rates first, and robust numbers from the UK could swing the sentiment back in its favour.

A pullback in the pound could see it back to $1.6161. If the downward trend continues, sterling could be below $1.59 within the next few days. 

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