USD/GBP and USD/EUR Exchange Rates Hold Relatively Steady Ahead of Influential Economic Data
With an absence of economic data the US Dollar exchange rate has softened across the board after a bullish week preceding.
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The cooling demand for the US Dollar may also be as a result of trader profit locking ahead of Tuesday’s manufacturing data.
The US Dollar to Euro exchange rate is currently trending in the region of 0.7610.
Last week saw a bullish ‘Greenback’ (USD) top the charts; breaking records across the board. The combination of several positive economic data publications and heightened geopolitical tensions were enough to keep the ‘Buck’ (USD) on top, and it only softened during the week when investors locked in their profits.
With a distinct lack of economic data the Pound struggled against the majority of its major peers last week. Sterling’s downtrend was compounded by a series of poor Eurozone domestic data publications, and further issues surfaced in light of the absence of clear direction with the Scottish bid for independence.
The Euro had a difficult week with several dismal data publications. The single currency was also negatively affected by the rising tension between Russia and Ukraine as investors adopted risk-aversion strategies.
The US Dollar to Pound Sterling exchange rate has hit a low today of 0.6008.
The US Dollar to Euro exchange rate has hit a low today of 0.7607.
Monday’s US domestic data docket is non-existent, and the ‘Buck’ has softened as a result. It is also likely that US Dollar demand has waned as traders buy their profits ahead of Tuesday’s manufacturing data, which has been forecast to dip from 57.1 to 56.8.
British economic data has been relatively mixed on Monday. Whilst Mortgage Approvals, Net Consumer Credit and Net Lending Sec. on Dwellings all exceeded expectations, the seasonally adjusted Manufacturing PMI fell below the forecast figure of 55.1; printing at 52.5.
However, Sterling has had a boost from a recent statement made by Scottish Prime Minister Alex Salmond. Salmond admitted that if Scotland was to become independent it would have to inherit a portion of the British national debt even if it doesn’t keep the British currency.
Monday’s European data is relatively varied in terms of results. German Gross Domestic Product met with forecast figures but German Capital Investment, Domestic Demand, Government Spending, Imports and Private Consumption all failed to meet with expectations.
The German Manufacturing PMI was forecast to maintain the previous figure of 52, but the actual data showed a decline to 51.4. Oliver Kolodseike, economist at Markit, stated; ‘Warning lights in Germany’s goods- producing sector after the headline PMI fell to an 11-month low in August. The survey data suggest that manufacturing appears to be in the midst of a slowdown, with output and new order growth slowing to only marginal rates that were well below the levels seen at the beginning of the year.’
The French Manufacturing PMI showed an unexpected gain, hitting 46.9 having been forecast to hit 46.5. The Italian Manufacturing PMI, however, failed to meet with expectations posting at 49.8.
Eurozone Manufacturing was also unsuccessful having fallen from 50.8 to 50.7. Rob Dobson, a senior economist at Markit, stated; ‘The Eurozone manufacturing sector lost further growth momentum in August, with the recovery in production slowing for the fourth straight month to the weakest in the current 14-month sequence of expansion’.
After suffering losses as traders locked in their profits, the US Dollar is holding steady versus the Pound and the Euro.
This is likely to be in anticipation of the important US manufacturing data due for publication later on Tuesday. The ISM Manufacturing has been forecast to drop fractionally from 57.1 to 57.0.
Should the actual result meet with or exceed the forecast figure, it is likely that the US Dollar will claw back some of the losses from Monday’s lack of data.
With nothing in terms of influential European data on Tuesday, Euro changes will most likely be dictated by geopolitical issues and foreign currency movement.