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The German IFO business confidence index retreated to 99.4 for August from a revised 100.7 the previous month and below consensus forecasts of 100.4. The current conditions index strengthened to 101.4 from 100.4 previously, but the expectations component dipped significantly to 97.5 from 101.0 in July. According to the IFO, 70% of companies in the industrial sector have expressed concerns surrounding supply issues and bottlenecks while export expectations have dipped, but remain reasonable. Expectations in the travel and leisure sector were undermined by increased coronavirus restrictions.

ECB vice president de Guindos stated that macroeconomic projections could be upgraded within the next few days. He added that monetary and fiscal policies must follow if the economy normalises. Chief Economist Lane stated that is too early to discuss ending the PEPP bond purchases at the September policy meeting. He was, however, optimistic over the outlook due to the high vaccination rates and stated that Europe was now the exception in the pandemic

The Euro maintained a firm tone in Europe with some optimism over economic developments, but there was selling interest above the 1.1750 level against the dollar.
US durable goods orders declined 0.1% for July after a 0.8% decline the previous month and slightly above consensus forecasts. Underlying orders increased 0.7% on the month after a 0.6% gain the previous month. The data provided some reassusrance over underlying capital spending trends.

The dollar recovered ground into the New York open and secured marginal gains after the data, but was unable to generate any momentum. Commodity currencies edged higher and the Euro secured a fresh advance to 1-week highs around 1.1770 at the New York close.

Trading conditions remained subdued amid low trading volumes and caution ahead of Fed Chair Powell’s comments on Friday. The dollar advanced against commodity currencies on Thursday, although the Euro was able to hold just below 1.1770 as tight ranges prevailed.


After trading slightly lower in Europe, US Treasuries dipped lower after the New York open with the 10-year yield increasing quickly to around 1.33%. Higher yields underpinned the dollar and firm equity markets limited the potential for defensive yen demand and the dollar edged back above the 110.00 level.

Japan announced that the state of emergency had been expanded to a further eight prefectures with markets still uneasy over domestic coronavirus developments with the dollar holding just above 110.00 as underlying yen demand remained limited.
The Chinese yuan was fixed weaker than expected on Thursday which reinforced speculation that there would be a resistance to significant Chinese currency gains. Asian equity markets also posted significant losses on Friday which dampened risk appetite with further concerns over global supply issues.

Narrow ranges prevailed in currencies with the dollar trading fractionally below the 110.00 level in early Europe and the Euro around 129.40.


There were no significant UK data releases on Wednesday which limited potential Sterling activity as global trends tended to dominate. The UK currency was unable to attack the 1.3750 against the dollar ahead of the New York open and it dipped lower as the dollar attempted to recover with a test of the 1.3700 level.

There were some reservations over domestic coronavirus developments with the UK reporting an increase in daily coronavirus cases of over 35,000 on Wednesday, the highest reading since July 20th, although hospitalisation rates remained low.

The Euro held limited net gains while Sterling recovered to near 1.3735 against the dollar at the European close. Sterling secured further gains late in the day with the Euro retreating to near 0.8550 The UK currency was hampered by slightly less confident risk conditions on Thursday with the Euro just above 0.8550 while Sterling held just above 1.3750 against the dollar as expectations of merger-related inflows provided an element of support.


The Swiss franc edged lower on Wednesday as global bond yields ticked higher. The Swiss ZEW economic expectations index also declined sharply to -7.8 for August from 42.8 previously which maintained unease over potential trends within the Swiss economy.

The Euro secured a net advance to just above 1.0740 while the dollar was held below 0.9150. Narrow ranges prevailed on Thursday with the franc edging lower with higher global bond yields limiting scope for Swiss currency demand and the US currency trading just below 0.9150.

Technical Levels



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