The Pound made small gains against the Euro while reversing some of Tuesday’s losses against the Dollar as it found technical support near the 50-day moving average. With risk aversion currently driving the market and little economic releases from the region, investors may see the cable weaken further until Friday’s GDP release.

The Dollar declined against the Euro and the Pound as US durable goods orders rose only 0.3% compared to the forecasted 3.0% and previous -1.0%. The data highlighted the slowing manufacturing sector and deteriorating consumer demands. Combined with disappointing home sales releases, the outlook for economic growth remains poor. However with its safe-haven status, the dollar is supported in the short run by increased risk aversion flows.

The Euro declined slight against the Pound while making gains against the Dollar as it was lifted by better than expected German IFO data, suggesting that the German economy is on its way to recovery. The data posted a 106.7 gain vs. the forecasted 105.7 and previous 106.2. However as risk aversion flowed back into the market on disappointing US durable goods data the Euro gave up the majority of its gains.

Data released 26.08.10

EU      09.00 M3 (July)

3 Month Moving Average

UK      11.00 CBI Distributive Trades Survey (August)

US      13.30 Initial Jobless Claims (w/e 21st August)