Forex daily analysis 20th September 2013 / Market and analysis overview

As far as the Euro-zone is concerned, the main focus was on politics rather than economics. There was a

further raft of opinion polls ahead of the German Federal election on Sunday. The CDU/CSU held a

comfortable lead in polls, but there was uncertainty surrounding both the FDP and anti-Euro AfP party

with both hovering around the 5% threshold needed to gain seats in parliament which could force a grand

coalition.

Forex daily analysis 9th September 2013

Markets were generally optimistic surrounding the US employment release following a run of strong data

over the previous few days. In the event, there was a weaker than expected report with a headline nonfarm

employment increase of 169,000 for August compared with an expected 180,000. The damage from

the headline could have been contained, but there was also a substantial downward revision to July’s

figure at 104,000 from 162,000 previously. There was a decline in the unemployment rate to 7.3% from

7.4% which provided only limited relief as workers had left the labour force.

Forex daily analysis 6th September 2013

As expected, the ECB left interest rates on hold at 0.50% following the latest policy meeting, ensuring

that the main focus would be on President Draghi’s press conference. He remained generally cautious

surrounding the economic outlook as he reinforced the message that recovery would come only very

slowly while inflation would remain low.

Forex daily analysis 4th September 2013

The US data was stronger than expected with the ISM manufacturing index rising to 55.7 for August from 55.4 previously and contrary to expectations of a modest retreat. 

This was the strongest reading since May 2011 and the second successive outcome above expectations. 

The components were also broadly favourable with a strong rise in new orders and a solid employment reading.

Forex daily analysis 2nd September 2013

The US personal income and spending releases were marginally weaker than expected on Friday which did not have a major impact while there was a subdued reading for the core PCE defoliator. 

There was a small gain in the Chicago PMI index to 53.0 from 53.3 previously and an upward revision to the final University of Michigan consumer confidence index which had some positive dollar impact. Expectations of at least a measured tapering were important in sustaining US currency yield support.

Short-term strategy highlights

Sterling can maintain a firm tone initially with higher bond yields, but overall valuations are unattractive at current levels

Medium-term strategy highlights

The dollar should be able to maintain a solid overall tone given expectations of a solid payroll release at the end of this week.