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Euro Gains After Encouraging PMIs

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  • The EUR increased unexpectedly over the GBP, after the release of the Eurozone’s PMI for August.
  • The manufacturing print shot up and the service index dropped.
  • The slowdown in services signals that the economy is still in recovery at a healthy pace which reflects our view that soon the ECB is set to QE changes.
  • Draghi did not reflect anything new yesterday. The main focus is till on his Jackson Hole speech.
  • The EUR could consolidate until the speech tomorrow.

 

Today’s Highlights:

UK:

  • The GDP data for Q2 in the UK is expected to confirm the preliminary reading.
  • The recent positive reaction in the GBP cold become short-lived.
  • The GDP print is unchanged hence the market attention may move to business investment.
  • Based on the UK Overnight Swaps, presently the probability for a hike by year-end is at 25%.
  • EUR/GBP traded higher after it hit the support near the 0.9150 (S1), this could lead to a more bullish extensions.
  • The overall path of the pair is positive, hence in the long-run, it increases the likelihood for EUR/GBP to continue trading higher.

Norway:

  • GDP data for Q2 shows rise in the growth rate from the previous quarter.
  • The Norges Bank will push more towards a hawkish stance in the next meetings.
  • USD/NOK briefly below the support line of 7.8500, after the surprise in Norway’s GDP for Q2. We think that the near-term bias may have just turned from neutral to negative.

US:

  • The Jackson Hole economic symposium will commence, Draghi and Yellen will be speaking tomorrow.
  • Regarding the US data, the Initial jobless claims for the week ended last week and the home sales for July are next.

EUR/GBP

EURGBP Chart

  • Support: 0.9150 (S1), 0.9070 (S2), 0.9000 (S3)
  • Resistance: 0.9235 (R1), 0.9300 (R2), 0.9415 (R3)

USD/NOK

USDNOK Chart

  • Support: 7.7800 (S1), 7.6800 (S2), 7.6000 (S3)
  • Resistance: 7.8500 (R1), 7.9215 (R2), 8.0000 (R3)

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