The euro managed to claw back some of its losses against the US dollar during European trading, as an announcement by the Ukrainian government it had reached a truce agreement, helped the single currency. The euro rose to 1.3150 as market participants were also wary not to get carried away since more than once in the recent past, hopes that the Ukraine conflict would be resolved were quickly dashed.
The euro was not helped by data that showed that Services PMI numbers were revised lower for a number of European countries and the Eurozone as a whole. Services Final PMI for August came in at 53.1 versus 53.5 initially estimated.
Tomorrow’s ECB meeting and Mario Draghi’s press conference are very important for the euro as investors are looking for clues on how the ECB will react to falling inflation and a recovery that is slowing down. This was another factor that constrained the euro from moving too far ahead of this key risk event.
Factory orders for July, the revision to the initial estimate of durable goods orders, came in at 10.5% versus 11% expected, as large orders for aircraft distorted the month’s order books. Excluding transportation equipment, orders fell 0.7% against a drop of 0.8% initially reported.
The Australian dollar was the best performer of the European session as the news about Australian GDP slightly beating estimates by coming in at 0.5% (0.4% was expected), helped the currency rise to 0.9337 against the US dollar. The year-on-year growth rate for Australia was 3.1%; a slowdown from the first quarter’s 3.5% rate but still relatively high for a developed economy in the aftermath of the financial crisis. The aussie might also have benefited from positive risk appetite following the Ukraine truce news as well as US dollar weakness.
Dollar / yen was trading around the 105 level, off its highs, ahead of the Bank of Japan policy announcement and Kuroda’s press conference during the Asian session on Thursday. The Bank of England policy announcement is also expected tomorrow although no change is expected. Other economic reports include the Fed’s Beige Book later in the US session.