Forex - Weekly outlook: 08.28 - 09.01
The dollar fell against a basket of the other major currencies on Friday and plumbed its lowest level against the euro in more than two years as investors digested speeches by global central bank officials.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.82% at 93.47 late Friday after falling as low as 92.34 earlier.
The dollar weakened after a speech by Federal Reserve Chair Janet Yellen at the Jackson Hole economic symposium made no reference to monetary policy, disappointing some investors who had hoped she would sound a hawkish tone.
The dollar index has fallen around 10% so far this year amid ongoing uncertainty over the economic agenda of U.S. President Donald Trump and doubts that the Fed will deliver a third rate hike this year
Lower rates typically weigh on the dollar by making U.S. assets less attractive to yield-seeking investors.
EUR/USD hit a high of 1.1941, the most since January 2015. It was up 1.06% at 1.1924 late Friday, its largest one day percentage gain in two months.
The single currency was boosted after a speech by European Central Bank President Mario Draghi avoided giving any new indication as to when the bank might wind down its stimulus program, but acknowledged that the recovery in the euro area is gaining momentum.
The euro hit an eight year high against the pound, with EUR/GBP rising as high as 0.9270, the most since October 2009. It was last at 0.9257, up 0.42% for the day.
The euro has risen more than 8% against sterling so far this year, reflecting the diverging economic outlook for the euro zone and the UK and its implications for monetary policy.
Sterling was higher against the softer dollar, with GBP/USD rising 0.61% to 1.2878, rebounding from Thursday’s two-month lows of 1.2773.
The dollar slid lower against the yen, with USD/JPY sliding 0.17% to 109.36.
In the week ahead, investors will be focusing on Friday’s U.S. jobs report for August to gauge how it will impact on the path of Fed policy. Traders will also be closely watching a revised reading of U.S. second quarter growth.
Thursday’s euro zone preliminary inflation estimate will also be in focus.
Monday, August 28
Financial markets in the UK are to remain closed for a holiday.
Tuesday, August 29
Canada is to release data on raw materials price inflation.
The U.S. is to report on consumer confidence.
Wednesday, August 30
Australia is to release data on building approvals and completed construction work.
Germany is to release preliminary inflation data.
The UK is to produce data on net private lending.
The U.S. is to release the ADP nonfarm payrolls report as well as revised data on second quarter growth.
Thursday, August 31
China is to release survey data on activity in the manufacturing and services sectors.
New Zealand is to publish a report on business confidence.
Australia is to produce data on private capital spending.
The euro zone is to release its preliminary inflation estimate while Germany is to report on retail sales.
Canada is to release monthly data on GDP growth.
The U.S. is to put out a string of data, including reports on jobless claims, personal income and spending and pending home sales.
Friday, September 1
China is to publish its Caixin manufacturing PMI.
The UK is to release data on manufacturing activity.
The U.S. is to round up the week with the non-farm payrolls report for August and the Institute for Supply Management is to publish its manufacturing index.