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Kantox currency update: euro and pound dive on risk aversion

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The euro and the pound are losing ground on Tuesday, as investors rush for safe assets like the US dollar and the yen on the back of the escalating global trade tensions and with emerging markets under growing pressure.

The euro is suffering on a combination of investor’s concerns about the consequences of the US-China trade rift and fears about the impact of the Turkish crisis on the European banks.

The pound was hammered on Monday after the former foreign secretary, Boris Jonson boosted speculation that he aims to oust Theresa May with a news article attacking May’s Brexit plans.

EUR/USD: retreats below 1.1600: The euro has resumed its downtrend from last week’s highs at 1.1735, after a feeble recovery attempt on Monday, to extend losses below 1.1600. As at London market opening times, the EUR/USD is trading at 1.1575.

GBP/USD back below 1.2900The pound dropped sharply on Monday on growing political uncertainty after Boris Johnson’s comments, extending its retreat from last week’s highs near 1.3050 to session lows at 1.2840 area. As at London market opening times, the GBP/USD is trading at 1.2855.

USD/JPY picks up above 111.00. After having remained sideways on Monday, the dollar appreciates on Tuesday to trim last week’s losses and returns to the mid-range of 111.00. As at London market opening times, the USD/JPY is trading at 111.45.

 

In the Calendar Today

Today, in the UK we will be attentive to the BoE Inflation Report Hearings. The views of BoE Governor, Mark Carney, and his colleagues about the UK economy and the bank’s monetary policy might have some impact on the pound.

In the US the ISM Manufacturing PMI Index is expected to show that the sector’s activity slowed down for the second consecutive month. Although it remains at levels consistent with a solid performance, a sharper than expected decline might dent the confidence on the dollar.

12:30 GMT        BoE: Inflation Report Hearings

14:00 GMT        US: ISM Manufacturing PMI (Aug)
Previous: 58.1             Expected: 57.7