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.