BTMU waiting moderate growth of EUR/USD, but not more than 1.15

Until the meeting of the FOMC on September 21 is less than two weeks and the only thing that can improve the current low expectations for a rise in US interest rates, is the publication of strong data from the US, according to analysts.
Among the important statistics that will come out next week, the most significant is data on retail sales that will come out on Thursday and CPI on Friday.

Today are expected the speaches the heads of the Federal Reserve Bank of Boston - Rosengren and Dallas - Kaplan. As Rosengren is voting member of the FOMC, his speech seems to analysts more important.

The change of rhetoric of Rosengren to more decisive can significantly affect market expectations, say analysts. His last speech was on 31 August and then he made some interesting comments, that expressed concern, that the too long period of very low interest rates may affect the market.

Currently, analysts do not see any prerequisites for changing the current situation on the currency market and are waiting for the growth of EUR/USD, which however will be limited to the level of 1.15 dollars, they predict.

ECB sounded tougher than expected

The rhetoric of the ECB was much less "pigeon" than expected by the markets. The Central Bank left the policy rate unchanged. Draghi during a press conference said that the possibility of extending QE at today's meeting is not even discussed, and the situation itself does not require expansion of monetary stimulus. It is logical that the euro/dollar has reacted to these statements jump to week highs near 1.1327, from which then corrected.
Overall, however, the ECB is now much closer to the camp of the "doves" than "hawks". Despite the fact that the short-term effects of Brexit have not been as disastrous as expected, in the long term, uncertainty remains. In particular, it is unclear exactly how and when the official UK's out-of-EU procedure will be launched. Up until this process is complete, it will remain a risk to the European economy in general and in particular for the Eurozone. In such circumstances, the ECB must be ready at any time to expand the incentives to prevent systemic crisis. That's why remains the likelihood that sooner or later the European Central Bank may be forced to move to a policy of negative interest rates, as did the Bank of Japan.
In the medium term, taking into account the above, EUR/USD pair should continue to weaken. The goal for the next 2 months - a mark of 1.0950.

Small currencies rose against the Big Three

The lack of clarity in relation to the US dollar has left the currency market in domination of small currencies, which are strengthening against the "Big Three" against the background of extreme carelessness of investors in the asset markets, keen on hunting for higher incomes.
On Tuesday the States have returned to work after Labor Day, officially completing the summer holidays on the markets. Together with the autumn in the global asset markets, as a rule, return volatility, in fact, historically, the worst misfortune is happening in September and October. This is an important fact, since the last few weeks on foreign exchange markets reigns criminal carelessness and investors stubbornly refuse to notice the impending danger, considering that central banks will take care of everything, so they can easily search for the most profitable ways to invest.
Only this way could be explained, for example, the strengthening of AUD/USD after yesterday's meeting of the Reserve Bank of Australia, which is the last for Glenn Stevens, who this month leaves the post of chairman and delegates it to Philip Lowe. In the accompanying statement, the RBA noted low inflation and suggested that in the near future the price situation will not change, because the low salaries do not contribute to inflationary pressures.

Autumn melancholy...

In the beginning of autumn, the cold rain washed over investors summer bodies, who heard the words of hope of Janet Yellen about the growth of the US economy and expediency of raising interest rates in September on her last official speech on 26 August.
Economic Indicators, published by the 1st and 2nd of September of the last week: PMI index in the manufacturing sector, which declined from 52.6 to 49.4, and data on changes in the number of people employed in non-agricultural sector, with the creation of jobs 151 thousand, instead of forecasted 180 thousand, cooled the ardor of traders and forced them to doubt the reality of the intentions of the Committee on the open market operations of the Fed.
Against the background of a stable Eurozone economic data, the US dollar, together with its economy, currently looks like an outsider in the competition with the EUR. On Friday, before the long weekend in the United States, the EUR/USD failed to demonstrate its possible potential for growth, and, after a lull in world markets at the beginning of the week, yesterday the pair went to conquer the "northern" tops.
On Tuesday, European stock markets opened higher, the euro also demonstrated positive dynamics. Repulsing from 1,1120-1,1140 support area, the price of EUR/USD rose above 1.1250.

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Nomura note, that the impact of Brexit already fades

Analysts at Nomura suggest, that the instability that followed Brexit, already reduced to zero, and the difference in interest rates will soon be again a major factor in currency movements. At the same time the reaction of the GBP to British political risks and to risk appetite has reduced, they added.

Data for the UK will be a key factor in the near future as the further reduction of the GBP is likely to continue if the data in the UK show clear signs of weakness, analysts said.

However, they believe, that the Bank of England will quickly face with a decline in the effectiveness of their policy and this can reduce the impact of factors on the British GBP, as earlier analysts already saw the same reaction in the Eurozone.

After trading in the range of about 1.30-35, analysts continue to expect that GBP/USD will again test 1.30. Nevertheless, analysts believe, that the mid-term potential to reduce the GBP/USD is more dependent on data on US monetary policy unless there is a change in the monetary policy strategy of the Bank of England.

The British pound rose after the release of statistics

At auctions in Europe, in the focus was the British pound. Within twenty minutes, the pound soared on the news on 120 points to 1.3266. The currency's strength was caused by data on business activity in the manufacturing sector of the United Kingdom. Orders for sale, which were placed between 1.3155 and 1.3260, were executed and protective stop-losses were swept away.
The manufacturing PMI index in the UK amounted 53.3 points in August, and was significantly higher than the forecast of 49.0. The previous value was revised from 48.2 to 48.3 points.
High demand for the pound had a negative impact on the currencies in crosses with it. The euro/pound exchange rate fell by 70 points to 0.8403. Against the yen the pound rose by 135 points to 137.36; against the Australian dollar - by 145 points to 1.7597; against the Swiss franc - by 150 points to 1.3081.

Brazilian real - growth leader on the background of general uncertainty

For the short period from 29 to 31 August, the situation in most developing countries in the currency markets can be characterized briefly - "neutral". It seems, that the emerging markets in the background of controversial news, that come from the developing and the developed countries have no clear direction where to go. In addition, in some countries, the end of August and beginning of September - there is a traditional holiday season, which significantly reduces the activity in the financial markets.
A clear growth leader against the general uncertainty turned the Brazilian real (+ 1.09%). The Indian rupee has risen in price against the dollar, although a bit (by + 0.15%).
In other emerging markets dominated either neutral or moderately negative or negative sentiment. Thus, in the neutral zone of trading were multiple currencies: almost unchanged in price the Chinese yuan, the Kazakh tenge, the Azerbaijani manat and Turkish lira. A little less than a percent, the Russian ruble fell against the dollar (by 0.72%) and the Mexican peso (0.84%). The South African rand is still in free fall, it fell against the dollar by 2.25%.