After a day of consolidation the euro finally broke out through the 1.2500 level that had been protected with a 1.2000-1.2500 double no touch option. The minutes from the August FOMC meeting revealed that many committee members thought that additional monetary accommodation would likely be warranted fairly soon unless upcoming data showed a substantial and sustainable strengthening in the pace of recovery. The Fed minutes don’t necessary mean outright QE3.
Range: 1.5866 – 1.5914
Broad based USD weakness post the FED minutes has taken cable through the 1.5900 level but just shy of the 1.5933 May high. All eyes now on US data going into the Jackson Hole speech at the end of the month as US data will take centre stage after the dovish Fed Minutes. I guess the trend is your friend despite poor UK fundamentals.
The lifestyle currency was a little mixed in the general USD demise after the FOMC minutes moved closer to some sort of stimulus and although I think a change in language is more likely in September than outright purchases you can’t argue with the price action. The optimism for AUD was dented in the Asian session as the August China HSBC manufacturing PMI data disappointed the market. It fell to a 9-month low of 47.8 from 49.3 fuelling the export slowdown in the region. The PBoC Governor did respond to the data saying that all tools must be made available when managing monetary policy with local media reporting that the Central Bank will inject further system liquidity.