European trades have seen the euro/dollar return to Friday’s maximum. I don’t have a clue what event has sparked demand for the euro as the ECB meeting approaches. The news is weak and we’re all still expecting the ECB to take those additional economic slackening measures.
Germany’s manufacturing index came out worse than expected, with the Eurozone trade balance surplus down.
The current balance of payments surplus in the Eurozone fell in August to 17.7 billion euros against July’s 25.6 billion.
Germany’s manufacturing index was down by 0.4% MoM against an expected -0.1% and a previous -0.5%. The price index is down for the year by 2.1% against a forecasted -1.8% and -1.7% last month.
The head of the Spanish central bank, Luis Linde, announced that the ECB could extend and correct its asset purchasing program where necessary. There’s nothing positive for the strengthening of the euro against the dollar to 1.1386.
There is one factor which could change the mood for euro pairs. But this is just a guess. If the ECB extends its QE program on Thursday, the Swiss National Bank could make a currency intervention so that the franc doesn’t strengthen.
The euro/pound is up 34 points to 0.7353 in spite of the BoE’s McCafferty speaking of the necessity to raise interest rates.
Market participants are waiting patiently for the US Fed’s Yellen, Dudley and Powell to speak. I believe that a fair level for the euro/dollar this evening is 1.1325, with 1.5425 for the pound/dollar. I do have to say though: my expectations don’t always meet those of the market.