Euro Slipping With Fed Rates In Focus
The euro began the week just below $1.34 following last week’s spate of disappointing data.
The common currency traded at $1.3391 at 7:00 GMT as investors waited for eurozone PMI figures, due out this week.
Last week the eurozone released GDP data, which showed that the nation’s economy ground to a halt in the second quarter. The figures from individual eurozone countries were even more disappointing, with the bloc’s largest economy, Germany, posting a contraction.
This week, PMI figures will give investors a better picture of how the region fared in August and could take some pressure off of the European Central Bank if they are positive.
Investors will also keep their eyes on a conference in Jackson Hole, Wyoming, where central bankers and economists from around the world with gather to discuss the state of the global economy.
Fed Chair Janet Yellen is expected to speak on Friday, something markets are heavily anticipating as they hope for clues about the bank’s timeline for raising interest rates.
The Wall Street Journal reported that a survey of economists showed that the majority don’t see the Fed raising short-term interest rates and instead believe that the U.S. central bank will wait too long.
At this week’s Jackson Hole conference, the main focus will likely be the labor market, as the Fed has said that will be a key determinant in their interest rate decision.
Many believe that the bank is being too conservative and that the economy could withstand a rate hike given the marked improvement in the U.S. labor market. Data from July showed that the nation’s unemployment rate had fallen by more than 1 percent to just 6.2 percent in July.
Speculation around the Fed’s interest rate decision has largely driven currency markets lately, as the dollar strengthened with every strong U.S. economic indicator that suggested that a rate hike is imminent.
Despite that, Yellen has been firm on her concerns about a full economic recovery following the 2008 financial crisis.
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