Daily Currency Update

USD - US Dollar

The USD is firmer against major currencies, though below its overnight peak. A swift rise in the DXY occurred in Asian trading, driven by significant EUR sales. This momentum has since mellowed in European trading. The spotlight today is on Fed Chairman Powell's speech at Jackson Hole. Post the recent hawkish FOMC minutes, he might strike a balanced tone. While some think the Fed has acted sufficiently, Powell might still hint at more tightening possibilities. Currently, the market sees only a 20% chance of a 25bps hike on September 20th. Depending on Powell's message, the USD could strengthen significantly or continue to remain in its current trading range. Other key figures like Harker, Mester, Goolsbee, and ECB's Lagarde will also speak today. Interestingly, recent data indicates the USD's global transaction share rose to 46.5% in July, emphasizing its dominant role in global payments.

CAD - Canadian Dollar 

The CAD remains slightly weak but has seen very little change in the overnight session. Other commodity currencies have somewhat countered the USD's general rise overnight, gaining traction due to stronger stock and crude oil prices. With no local data available and all eyes on Fed Chairman Powell's remarks, the CAD's movement is primarily influenced by external factors such as the overall mood around the USD and short-term market sentiment. Observe the USD/CAD trends.

EUR - Euro 

In early Asian trading, EUR/USD dipped below 1.08, marking its lowest point since mid-June. This decline occurred despite a subsequent modest recovery in the EUR. A Reuters report cited ECB "sources" suggesting a growing momentum for a rate halt, and Germany's August Ifo survey indicated a drop in business confidence (85.7 this month compared to the expected 86.8). However, the EUR found some support due to a slight narrowing in short-term EZ-US spreads during the session. This support came despite the mentioned ECB news and the unfavorable German data, pulling the spot close to 1.08 as our session commences.

GBP - British Pound

GBP/USD saw a decline during overnight trading, slipping below 1.26 following the close of the North American session on Thursday. However, UK data released late yesterday indicated a surprising boost in consumer confidence, albeit still weak, which might have alleviated some of the downward pressure on Sterling. The Gfk index rose to -25 this month, up from -30 in July, bolstered by increasing wages. While GBP remains somewhat vulnerable, it has rebounded from its overnight low, approaching 1.26 again as we await Powell's comments. It's worth noting that BoE's Broadbent is scheduled to speak at Jackson Hole tomorrow at 12.25ET.