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Tight ranges and sideways trading the main theme. But some volatility from German IFO data. Markets awaiting restart of major data flows after northern summer break

Currencies
Tight ranges and sideways trading the main theme. But some volatility from German IFO data. Markets awaiting restart of major data flows after northern summer break

By Kymberly Martin

Most currencies continue to trade tight ranges ahead of Fed Chair, Yellen’s scheduled speech tonight at the Jackson Hole symposium. However, the GBP/USD underperformance was notable.

Across risk assets, currencies bonds and commodities, ranges were fairly contained overnight. This reflects that a common factor in the performance of each is the outlook for US monetary policy. Markets are unwilling to express strong views on this ahead of tonight’s appearance by Yellen.

While the USD traded a sideways path overnight the EUR/USD experienced a bit of volatility around the release of German IFO data. Current assessment and expectations were marginally below expectations, resulting in a brief dip in the EUR. But it quickly rebounded. The EUR/USD now trades at 1.1280.

The GBP/USD traded down from afternoon highs above 1.3260 to sit below 1.3180 at present. Stepping back, the GBP/USD continues to consolidate within its broad 1.28-1.35 range established since plunging following the ‘Brexit’ vote. As an aside, the UKIP’s outgoing leader Farage (remember him?) made a cameo appearance alongside US Republican candidate, Trump, at gatherings overnight. Drawing on the experience of the ‘Brexit’ vote he was quoted as saying “anything is possible if enough decent people are prepared to stand up against the establishment ...”

In a recurring pattern, the NZD/USD found resistance approaching 0.7340 yesterday afternoon. It now trades at 0.7300. In early afternoon trading the NZD/AUD traded as high as 0.9620 before drifting down to 0.9590 currently. There are no data scheduled for release on either side of the Tasman today. The fate of the NZD/USD and AUD/USD will likely lie with the USD’s response (if any) to Yellen’s comments in the early hours of tomorrow morning

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