Aside from the British Retail Consortium’s retail sales monitor over the night before, which slowed as a result of falling food prices, there was nothing on the economic calendar to get excited about throughout yesterday. Today at least brings us a smattering of UK data in the form of the unemployment rate, average earnings and change to the number of people signing on. Following on from the Bank of England’s surprisingly dovish tone to last week’s big event, the market will be happy to sell the UK currency further on a justification from just this type of data release.
The dollar gained strongly against the yen, commodity currencies and obviously the yuan following the surprise move from China to weaken their currency for the second time in two days. However, in the same period the U.S. currency has made only minimal gains against the pound and has lost ground to the euro. The reverberations of the Chinese action have been suggested to fuel dollar buying further over the day ahead but any benefit over the euro and sterling may be limited due to the market’s focus on the respective monetary policy positions and traders may be unwilling to commit to further positions prior to the FED’s September meeting and expected interest rate hike.
German ZEW economic sentiment, essentially a measure of optimism on the economy from a survey of institutional investors and analysts, plunged to the lowest level since October last year during yesterday’s morning session. Aside from that there was a distinct lack of other major data releases throughout Europe, yet the single currency strengthened throughout the day. Clearly, the optimism around the Greek “agreement” was distinctly lacking when those German counterparts were submitting their answers. Today sees a similar lack of tier 1 data and while the currency has enjoyed a strong 24 hours we are still within the recently traded, albeit choppy and wide, ranges.
Telegraph – Global stock markets jolted by China’s historic renminbi devaluation.
The Times – Chine hits oil price as the yuan is devalued.
FT – Greece strikes outline of debt deal.
Pound Sterling (GBP), Euro Currency (EUR), US Dollar (USD) exchange rates commentary is provided by Argentex (Ag-Fx.com)