This week: EURUSD bulls are trying to recover

The world’s most popular major currency pair has held up relatively well recently. Serious worries about China’s recovery prospects mean both the region’s economic exposure and wider risk sentiment are threats to euro performance.

Markets currently price in a 50/50 chance of another ECB rate hike in September. A full rate increase is not priced before the end of the year.

The major has dipped below both its 50- and 100-day simple moving averages. The latter currently sits at 1.0930 and may act a near-term resistance. A base could develop above the late June and July lows around 1.0833/35 if they act as solid support.

Events Watchlist

• Wednesday, August 23^rd: Eurozone PMIs

These manufacturing and services surveys are leading indicators and should serve as a useful guide to how the region’s economies are faring in the third quarter. Muted demand is expected to continue to drag on the manufacturing outlook. The services sector remains above the boom/bust 50 level (only just in July at 50.9) but emerging growth issues could see a move into contractionary territory.

• Friday, August 25^th: IFO German Business Survey

This widely watched German data is forecast to decline to 86.8 from 87.3 in July. That would mark the fourth straight month that business morale has deteriorated. Europe’s economic engine has been struggling to recover after slipping into recession earlier this year.

• Friday, August 25^th: Jackson Hole Symposium

The Fed’s Powell is scheduled to speak at the FOMC’s annual summer retreat on Friday morning eastern time. Although mostly an academic event, the conference has been used by Fed Chair’s over the years to signal major policy changes. Can Powell declare victory against rampant inflation and proclaim a soft landing is nigh?

 

Here’s comprehensive list of other key economic data and events due this week

Monday, August 21

• NZD: New Zealand July external trade
• CNH: China loan prime rates
• EUR: Germany July PPI

Tuesday, August 22

• USD: US July existing home sales; August manufacturing index

Wednesday, August 23

• EUR: Eurozone August PMIs, consumer confidence
• GBP: UK August PMIs
• USD: US August PMIs; mortgage applications and new home sales
• CAD: Canada June retail sales
• Nvidia earnings

Thursday, August 24

• USD: US weekly initial jobless claims

Friday, August 25

• EUR: Germany August IFO business climate; 2Q GDP (final)
• GBP: UK August consumer confidence
• USD: US August consumer sentiment and inflation expectations (final)
• Fed Chair Jerome Powell speaks at Jackson Hole