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FUNDAMENTALS OF CURRENCY:

The British pound hit a three-week high of $1.385 on Friday, as investors dumped the dollar following the release of a weaker-than-expected US jobs report. US Federal Reserve Chairman Jerome Powell indicated last week that interest rate hikes aren’t imminent as there is still “much ground to cover” before the economy hits full employment. At the same time, the Bank of England signaled earlier this month "some modest tightening" of monetary policy over the next two years was likely to be necessary if the economy continues to improve.

The Yuan appreciated to 6.43 against the US dollar in early September, its strongest level since mid-June, as investors turned to riskier currencies following weaker-than-expected US employment data. Still, the Yuan will likely weaken over the long term as a batch of economic data added to signs of slower growth in the world's second-largest economy and spurred hopes of more stimulus from the country's central bank. Data showed China's factory activity shrank in August for the first time in nearly 1-1/2 years due to the resurgence of the COVID-19 virus, supply bottlenecks, and rising costs.

The euro rose above $1.19 for the first time since June 30th on Friday, after a disappointing US jobs report hit the dollar. Also, signs are emerging that the European Central Bank might start debating limiting the emergency bond-buying. Eurozone inflation rate surged to a 10-year high in August and a few ECB policymakers made hawkish comments this week.

Technical indicators (Daily):

RSI- 24.4378

MACD- -0.3355

MOVING AVERAGES (20,50,100)- (73.9213/74.235/73.9186)

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