Forex Forecast

Norges Holds EUR traded generally heavy overnight, except against Sweden’s krona. An article in Die Zeit by ECB President Draghi attracted market attention.

Norges Faces Cross-winds EURSEK pushed higher after some slightly soft manufacturing and consumer confidence numbers (which came in at 5.4 and -9 respectively).

Norges Up Next The Australian dollar saw some slippage overnight after weaker than expected construction data. A succession of bearish press reports also sounded warnings about risks to economic growth − both in China and domestically in Australia itself.

Norges Bank Meets Today EUR gained across the board, with EURUSD rallying 0.5% during New York hours. EU President Van Rompuy “fully” endorsed the ECB’s proposal for bond-buying and expressed confidence that the plan, if an when used, will be “very effective”.

Eurozone Lending Data Due Falling commodity prices were a key talking point during the Asia session. The New Zealand dollar fell on news that dairy-farmer incomes next season would likely be lower than had been previously indicated. What’s more, a strong currency was blamed as the main reason for this.

In Waiting Mode EUR managed to stay above 1.25 level overnight amid thin markets, despite a soft August German IFO report which showed the Current Assessment index fall marginally to 111.2 while Expectations index dropped to 94.2.

Rhetoric Supportive, Data Not Trading was generally subdued overnight due to a market holiday in London, but the euro still managed to make some headway despite a weak IFO release.

German IFOs Due FX markets mostly consolidated overnight given the general lack of news flow and economic data releases. The Australian dollar was the exception however, dropping over 40 pips at one point (on low volumes) amid continuing market concern over whether mining investment plans might be scaled back in response to weaker commodity prices.

EUR Stays Firm EUR came under pressure on Friday morning in New York after sources from the ECB announced that the central bank will await the German constitutional court ruling on the ESM before finalising its bond-buying programme.

UK GDP Revised Higher As expected, UK GDP was revised slightly higher but still posted a q/q contraction of -0.5% (previously stated as -0.7% ). UBS economics expect a recovery in Q3 (+0.5%) because of the Olympics, but, taking the two quarters together, it is clear that the economy is flat.

Samaras Due In Berlin RBA Governor Stevens delivered his semi-annual testimony before a parliamentary committee but offered no change in his views.