Currency markets were generally calm today ahead of the weekend and ahead of an important week ahead. The highly anticipated Federal Reserve policy meeting is being held on September 16-17 so many investors are expected to sit on the sidelines until the FOMC announces its interest rate decision.
The euro reached an early session high of 1.1309, the highest in over a week but then faded its gains to ease to 1.1253 before bouncing back up again to 1.1293. The euro had a good week overall and made a good retracement from the September 3 low of 1.1086.
Sterling also had a good week, rising nearly 2% against the greenback and reached a 2-week high of 1.5475 yesterday on the back of a less-dovish-than-expected Bank of England. The pound gave up some gains today to slide to a low of 1.5404 after some disappointing UK construction output data which came in at -1.0% m/m in July, much weaker than the expected 0.5% gain.
The Swiss Franc was in focus today as it weakened to more than 1.10 francs per euro for the first time since the Swiss National Bank lifted the EURCHF exchange rate peg in January. The euro broke the key psychological resistance level at 1.1000 in mid-European session trading and this accelerated a move to as high as 1.1036 francs by 1400 GMT.
The Australian dollar was one of the best performers of the major currencies this week, gaining about 2% against the US dollar as concerns over China eased somewhat lately. The aussie started the week at a fresh 6-year low of 0.6906 and rose to 0.7098 on Thursday. It eased slightly today but remained above 0.7034.
The dollar was mostly in a range in the past three days but remained above the key 120 yen level. US data today included August PPI and September University of Michigan confidence report. Inflation in the US still appears soft as US producer prices were flat last month after a 0.2% gain in July. Meanwhile, US consumers are feeling less optimistic for September according to the University of Michigan consumer sentiment index which came in at 85.7, down from 91.9 in August, and missed expectations for a reading of 91.2.