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Geopolitics Keeps the Pound and the Dollar in Focus, with Lagarde to Test the EUR Later

Bob Mason
·3 mins read

Earlier in the Day:

It’s was a relatively start to the day on the economic calendar this morning. There were no material stats to provide direction in the early part of the day.

While the PBoC was in action, there was little market reaction to Beijing’s threat of retaliatory measures from the weekend was the key driver.

Beijing’s threat came in response to the U.S administration’s targeting of TikTok and WeChat. It had started long before, however, with the targeting of Huawei and CFO Meng Wanzhou.

Out of China

The PBoC held the 1-year and 5-year loan prime rates steady at 3.85% and 4.65% respectively. This was in line with forecasts and recent forward guidance from the PBoC.

Economic data from China has continued to support an in-country driven economic recovery.

The Aussie Dollar moved from $0.73066 to $0.73058 upon release of the PBoC decision. At the time of writing, the Aussie Dollar was up by 0.25% to $0.7307.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.13% ¥104.43 against the U.S Dollar, with the Kiwi Dollar up by 0.21% to $0.6773.

The Day Ahead:

For the EUR

It’s a particularly quiet day ahead on the economic calendar. There are no material stats due out of the Eurozone to provide direction.

Through the early part of the day, the latest COVID-19 numbers and U.S – China tensions will be in focus.

Late in the European session, ECB President Lagarde is scheduled to speak. There are unlikely to be too many surprises, however.

At the time of writing, the EUR was up by 0.15% to $1.1858.

For the Pound

It’s also a particularly quiet day ahead on the economic calendar, with no material stats to provide the Pound with direction.

The lack of stats will leave the Pound firmly in the hands of Brexit and the passage of the Internal Market Bill.

At the time of writing, the Pound was up by 0.29% to $1.2954.

Across the Pond

It’s a quiet day ahead for the U.S Dollar. There are also no material stats from the U.S to provide the Greenback with direction.

The lack of stats will leave the Dollar in the hands of chatter from Beijing and Capitol Hill. Any news COVID-19 concerns will also influence ahead of FED Chair Powell’s testimony in the week.

The Dollar Spot Index was down by 0.09% to 92.838 at the time of writing.

For the Loonie

It’s a quiet day ahead, with August new house price figures due out later today.

Don’t expect too much influence from the numbers, however. Any renewed tensions between the U.S and China could question China’s willingness to crank up the import of U.S goods. Such an outcome would not bode well for global trade terms and crude oil prices.

At the time of writing, the Loonie was up by 0.18% to C$1.3180 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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