August is generally a low liquidity month, however, we saw some pretty sharp moves on Sterling across the board with a rise on GBPEUR to 1.19, a drop to 1.15 and then a rise back to 1.19 again at the end of the month. We also got some concrete information from Central banks in regards to moves in September- which is set to be a volatile month- so before we get into it- let’s look at the main dates to look out for in September.
On Thursday 19th September we have the Bank of England rate decision- where the markets are currently NOT pricing in any changes- which is positive for Sterling exchange rates, it seems the BoE are going to be less aggressive with rate cuts in this cycle, which will bode well for Sterling exchange rates, however if this outlook changes then we would see the Pound weaken, but this looks unlikely as the BoE is probably waiting for the Autumn budget before making any new monetary policy changes.
On Thursday 18th September we have the Fed rate decision where a 25 bps cut is already priced in- markets were toying with the idea of a 50bps cut, however this would seem like panic territory and looks unlikely to happen, however the main data release to watch is NFP’s this Friday, if we see that the jobs market has slowed even more than expected, then the Fed may change their stance to a more aggressive cut- this cut will probably continue the trajectory of a weakening Dollar- and we could see GBPUSD rise more after this announcement.
On 12th September we have the ECB rate cut announcement, where the expectation is 25-50bps cut, the Euro has been strong against the Dollar over the last month, however the ECB meeting may put a halt to current strength and we may see EURUSD return to the 1.09 level this month, maybe as early as this week.
This week we have a few noteworthy data releases which could have an effect on the market, we are also expecting a return of liquidity into markets now the Summer is over, so we should have an exciting month from a volatility perspective;
Monday-
- Europe Manufacturing PMI
- UK Manufacturing PMI
Tuesday-
- UK BRC Retail sales monitor
- US Manufacturing PMI
Wednesday-
- EUR Services PMI
- UK Services PMI
- U.S Balance of trade
- Bank of Canada Interest Rate Decision (25bps cut expected)
Thursday-
- EUR Retail sales
- U.S ADP Employment change
- U.S Jobless claims
- US ISM Services PMI
Friday-
- Germany Balance of Trade
- EUR GDP Data
- Canada Employment
- U.S Non farm payrolls
- U.S Unemployment