A hawkish sounding U.S. Federal Reserve helped to lift the U.S. Dollar Index, however unexpectedly strong German data boosted the Euro from a recent 11-month trough. Yesterday, the U.S. central bank released its minutes from the July policy meeting and though the FOMC members continued to debate the timing of an interest rate hike, the debate is focused on whether or not the recovery in the U.S. jobs market should be tied to an increase in benchmark rates. Nonetheless, most dovish members still wanted to see additional evidence of the recovery before they’d consider switching positions. In Germany, Germany’s private sector reading showed growth for the 16th consecutive month, offsetting sentiment in the wake of last week’s surprise GDP outcome and lifting hopes that the 3rd quarter GDP results could rebound.
As reported at 11:02 a.m. (BST) in London, the EUR/USD was trading at $1.3278, edging away from a session low at $1.3242; in the past week, the common currency has lost nearly 1.2% of its value which has been primarily attributed to improved U.S. economic data. Analysts don’t expect to see too much improvement in the Euro, however, which they believe to be on a gradually declining path given the ECB’s inclination to provide further stimulus to jumpstart the region’s economy.
FX Focus on Central Bankers’ Meeting
Key U.S. data due out later today includes preliminary PMI numbers, Philadelphia Fed survey results, existing home sales and continuing jobless claims. However, FX traders will focus their attention on Wyoming where the Federal Reserve will host other major central bankers to discuss policy and events which impact them all. Janet Yellen, the Fed chief, is scheduled to speak tomorrow.