Euro steady ahead of ECB rate decision

The euro strengthened for the latter part of last week but has levelled off this morning amidst a lack of Eurozone data. Traders are generally preparing for the European Central Bank’s interest rate decision, which they will deliver on Thursday. Whilst nobody is expecting the ECB to deliver a change to their 3.75% base rate, Everybody is trying to second guess whether the ECB considers they have done enough to control inflation or whether further monetary policy tightening is on the cards. That is the only significant news event from the eurozone this week. So we ought to see the euro trade in recent ranges until that unless shifted by external influences. Right now, the GBP/EUR rate has bounced a little to just above €1.1650 and the EUR/USD rate has found marginal euro buying, bringing it up to $1.0730.

Aussie and Kiwi dollars gain off Chinese loan data

China’s inflation data, released on Saturday, was entirely in line with expectations. The consumer price index was up 0.1% in the year to August and the producer price index contracted by 3.0% in the same. That would normally be a cautionary result for the Asian and Australasian markets but data released this morning showed a sharp jump in the number of new loans issued in China in the month of August. It is interesting that it’s generally perceived to be positive for the Chinese economy. I guess the standard thinking is that people don’t borrow unless they are confident they can pay the debt back. I’m not sure that’s entirely true in all countries but it appears to be the case in China. Either way, that gave the Australasian dollars a boost. The GBP/AUD rate is down to AUD 1.9430 for the first time in a month and the GBP/NZD rate is also pushing down to the lowest levels since early August. That pair is at NZD 2.1115 this morning. We don’t have a lot of data from New Zealand this week but we do have Australian employment numbers on Thursday. The market consensus opinion is that we should see a slight improvement in the unemployment rate to perhaps 3.6%. If so, we ought to see further Aussie dollar strength.

USD twitchy with a busy data diary ahead

The US dollar strengthened in the latter part of last week but has lost some ground this morning. The GBP/USD rate dropped as low as $1.2450 on Thursday and Friday but is back up to $1.2520 this morning. This week’s US data diary kicks in from Wednesday onwards. It includes the Consumer Price Indices and Retail Sales Data will be seen on Thursday. At a time when the US Federal Reserve is trying to assess whether to continue to raise its base rate, this consumer-based data is extremely important.