Major Currency Pairs Analysis: August 26, 2013

The European Central Bank Governing Council members split over whether scope remains for further interest-rate cuts as evidence mounts that the euro-area economy is on the mend. Policy makers still can’t rule out lowering the benchmark rate from the record low of 0.5%, Bank of Cyprus Governor Panicos Demetriades said in an Aug. 24 interview. By contrast, Bank of Austria Governor Ewald Nowotny said that he doesn’t see, “many arguments now for a rate cut” after the recent “stream of good news'. The divisions within the 23-member council are emerging as the ECB prepares forecasts for release next month. The euro-area economy emerged from its longest recession with 0.3% growth in the second quarter from the previous three months. Economists predict that a European Commission report due this week will show that confidence in the bloc is the highest since March 2012. Regarding the euro a little changed.


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GBP/USD

The pound weakened for a second day as investors bet. Bank of England governor Mark Carney will use a speech next week to affirm his intention to hold borrowing costs at an all-time low. Sterling headed for its first weekly drop in three weeks against the dollar. It was set for the biggest weekly slump against the euro since May after data showed euro-area consumer confidence increased more than analysts estimated in August. Benchmark 10-year gilt yields were little changed after approaching the highest level in two years as a report showed the U.K. economy expanded more than initially estimated in second quarter. Carney is set to speak in Nottingham, England, on Aug. 28.

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USD/JPY

The yen weakened touched 99.15 per dollar, which put it on course for the lowest close since Aug. 1, before Bank of Japan Governor Haruhiko Kuroda speaks at the Federal Reserve’s annual monetary conference in Jackson Hole, Wyoming.


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USD/CAD

Canada’s dollar has lost the most in more than two months as wholesale and retail sales fell, additionally consumer-price gains have stayed below the central bank’s inflation target for a 15th month, fueling concern the economy is slowing. The Canadian dollar touched a six-week low versus the U.S. dollar before data next week forecast to show Canadian gross domestic product shrank in June.

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