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Weekly FX Outlook September 6th



GB Pound


Sterling had a quiet week.


Movements

GBPUSD opened at 1.3800 and traded sideways most of the week. It edged slightly higher on Friday, briefly touching 1.3890 before closing with a weekly gain of 0.31% at 1.3843.


GBPEUR opened at 1.1665 and traded in a tight range all week, to close unchanged.


Movement rationale

With little UK economy or policymaker newsflow, Sterling had quiet trading sessions this week, with all GBP exchange rates largely tracking broader market sentiment. The UK currency seems to have found some support from the view that the Federal Reserve looks in no rush to taper stimulus as rising cases linked to the Delta variant might deteriorate the economic outlook. On the data front, the manufacturing PMI came out broadly as expected, with muted GBP reaction.


Week ahead

The UK economic data calendar includes the following:


Calendar

Friday 7am | Industrial Production (Jul), Gross Domestic Product (Jul)


US Dollar


The Dollar fell on disappointing labour data.


Movements

EURUSD began the week at 1.1829 and moved with a positive bias, briefly trading above 1.19 on Friday. It then closed at 1.1863 (+0.29%).


GBPUSD opened at 1.3800 and traded sideways most of the week. It edged slightly higher on Friday, briefly touching 1.3890 before closing with a weekly gain of 0.31% at 1.3843.


Movement rationale

With investors’ eyes on US job data released in the second part of the week, the Dollar moved nervously ahead of the economic event. Some initial negative readings came out already on Wednesday, with the US Manufacturing Business Activity marginally below expectations, and the ADP employment data showing that US private firms hired far fewer employees than expected. The Dollar reaction was negative. USD continue edging lower on Thursday after data showed weekly jobless claims dropped to a 24-year low. The Greenback weakened further on Friday after a much softer than expected US payrolls report, with new jobs of only 235k last month, well short of the 728k expected by economists in a Reuters poll. The Dollar Index dropped to a 1-month low after that data release, before a timid rebound and recouping a small portion of the weekly losses.


Week ahead

A light US economic calendar includes the following:


Calendar

Thursday 1:30pm | Initial Jobless Claims (Sep 3)


Euro


The Euro was mixed.


Movements

EURUSD began the week at 1.1829 and moved with a positive bias, briefly trading above 1.19 on Friday. It then closed at 1.1863 (+0.29%).


GBPEUR opened at 1.1665 and traded in a tight range all week, to close unchanged.


Movement rationale

The single currency was supported during the first half of the week by better-than-expected Eurozone inflation, which rose to decade high of 3%, This will likely put some pressure on ECB to slow its bond-buying programme as the Block experiences an economic rebound. However, disappointing Retail Sales figures on Friday, falling 2.3% in July against June, prevented the Euro having a further boost against major rival currencies. The single currency eventually closed the week broadly unchanged.


Week ahead

The Eurozone economic data calendar includes the key ECB meeting. The main events are the following:


Calendar

Tuesday 10am | Gross Domestic Product (Q2), ZEW Survey – Economic Sentiment (Sep)

Thursday 12:45am | ECB Interest Rate Decision


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