Market Drivers for September 21, 2015
Europe and Asia
GBP: UK PSNB 11.3B vs. 8.7B
North America
No Data
With Tokyo closed for the second day in a row, currency markets remained in a rambling directionless state with the euro probing further downside levels while the other majors were contained to narrow ranges.
The euro weakness persisted through early European trade with the pair testing support ahead of the 1.1150 level, but buyers materialized ahead of that level and the unit was lifted back towards 1.1200. After several days of sharp selling the pair may find a modicum of support today, but it remains in a strong downtrend and we wouldn't be surprised if the shorts tried to press the 1.1100 figure over the next few days.
Cable was also weaker as the European trade wore on, with sterling falling to a low of 1.5460 in the aftermath of larger than expected Public Sector Net Borrowing results. PSNB expanded at 11.3B rate versus 8.7B eyed - a much bigger gap than forecast. This was the highest August borrowing since 2012 and could give some concerns to the market about the expansion of fiscal spending in UK. Still overall PSNB is actually 4B lower this year than last as the economy continues to improve.
With no major US economic releases on the docket today, the price action in the currency market may remain directionless for the rest of the day. Generally, volatility appears to be much more muted this week as markets digest the FOMC data from last week and appear to have settled into comfortable ranges as they look for a new theme to trade.
With Chinese and European PMIs on the docket tomorrow, price action may heat up as the week progresses but the underlying dollar strength—especially against the euro—appears to be intact as currency traders continue to bet on monetary policy divergence between the Fed and the ECB.