Euro Hits 5-Day High In Asian Trading

Over the past week, virtually all currencies logged gains. The biggest increase was seen in the New Zealand dollar (+2.66%). Smaller gains were posted by the Australian dollar (+2.42%), the Canadian dollar (+1.69%), the British pound (+1.01%), the euro (+0.82%) and the Swiss franc (+0.65%). On the other side of the FX spectrum, the Japanese yen edged lower (-0.02%).

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The single currency surged 0.37%, to 1.1796 on Friday, August 27. Ahead of Fed Chair Powell’s speech, EURUSD slipped to 1.1735. A pullback followed the release of US macro data, but it was mainly triggered by remarks from Cleveland Fed President Loretta Mester, who said she sees the likelihood that monthly bond purchases could start to be tapered as early as next month.

The dollar started to weaken across the board during Powell’s speech. Market participants pegged Powell’s narrative as dovish even though he stated that QE could be reduced by year-end. He also cautioned that the Fed’s tapering of its bond purchases does not signal that it plans soon to start raising interest rates. 

The DXY index fell to 92.63 by the close, while the yield on 10-year US Treasury yield widened to 1.30%. The euro rose to an intraday high of 1.1803 against the dollar.

Todays macro agenda (GMT+3)

12:00 Eurozone: economic sentiment, consumer confidence, industrial and services sentiment (August)

15:00 Germany: harmonised inflation rate (August)

15:30 Canada: current account (Q2)

17:00 US: pending home sales (July)

Current outlook

Major currencies saw patchy performance in Asian trading. Trading opened with the dollar moving higher, but the bulls seized the initiative for a while. The aussie and the kiwi are currently trading in the red on the back of Covid-related negativity.

Australia has reported a record daily number of new Delta Covid cases – 1,375. In addition, the New Zealand Ministry of Health announced the first Pfizer vaccine-linked death.

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Disclaimer: Forecasts which are made in the review constitute the personal view of the author. Commentaries made do not constitute trade recommendations or guidance for working on financial ...

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