EUR, USD Softer After Friday Surprises

Sterling received a small boost on Friday as Manufacturing PMI surprised to the upside. The euro fell in the afternoon on reports that the ECB could delay announcing QE tapering until December. Some investors had anticipated greater clarity could come this autumn, perhaps as soon as the September meeting.

Previous Day's Market Highlights

Sterling received a small boost on Friday as Manufacturing PMI surprised to the upside. The euro fell in the afternoon on reports that the ECB could delay announcing QE tapering until December. Some investors had anticipated greater clarity could come this autumn, perhaps as soon as the September meeting.
 
The dollar also came under pressure as NonFarm Payrolls and Average Hourly Earnings surprised to the downside. The US added only 156K jobs to the economy in August, below expectations of around 180K, while Average Hourly Earnings growth slowed to 0.1% MoM and held steady at 2.5% YoY. The Unemployment Rate rose to 4.4% from 4.3%.  
 
As a result, sterling-euro briefly broke 1.0900 for the first time since 23 August. Sterling-dollar neared but did not break the psychological barrier at 1.3000. Euro-dollar initially jumped on the US data, before falling back on the ECB reports, largely holding below 1.1900 until Monday morning.  

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP / EUR 1.0893 1.1102 1.0745 3.22%
GBP / USD 1.2957 1.3060 1.2777 2.17%
EUR / USD 1.1894 1.2070 1.1662 2.99%
GBP/AUD 1.6289 1.6570 1.6165 2.44%
GBP / NZD 1.8084 1.8112 1.7522 3.26%
GBP / CAD 1.6069 1.6567 1.6006 3.39%

Today's Market Highlights

Investors expressed risk aversion following the latest North Korea nuclear test, turning to safe havens; however, the reaction seemed more muted than following previous tests last week. Heightened tensions continue to pose a threat to risk sentiment.
 
The main release this morning is the UK’s Construction PMI (09:30 BST). A gain may support the pound; however, the release typically has the most muted impact of the three PMIs.
 
Overnight, the Reserve Bank of Australia is expected to keep interest rates on hold at 1.5%. The Bank of Canada makes its latest interest rate decision on Wednesday, while the ECB meets Thursday.
 
The House of Commons returns from its summer recess this week. It will hold a second reading of the EU Withdrawal Bill on Thursday and hold a vote on the bill the following Monday.
 
Sir David Ramsden has been appointed to the MPC as the deputy governor for markets and banking. The BoE announces its latest policy decisions on 14 September. 

Today's Economic Calendar

Time Currency Release Consensus Previous
24hr USD Bank Holiday
24hr CAD Bank Holiday
09:30 GBP Construction PMI (Aug) 52.0 51.9
09:30 EUR Sentix Investor Confidence (Sep) 27.4 27.7
10:00 EUR Producer Price Index YoY (Jul) 2.2% 2.5%
10:00 EUR Producer Price Index MoM (Jul) 0.1% -0.1%
02:30 AUD Current Account Balance (Q2) -8.05B -3.10B
02:45 CNY Caixin China Services PMI (Aug) 51.8 51.5
05:30 AUD RBA Interest Rate Decision 1.5% 1.5%
05:30 AUD RBA Rate Statement