Euro still down on Jackson Hole uncertainty

As investors become less confident that Federal Reserve chair Ben Bernanke will announced to new scheme of quantitative easing in the US at the Jackson Hole meeting today, the euro slipped down 0.1 per cent to $1.2509. Modestly upbeat reports from the US have led some experts to suggest that QE3 will not be announced today.

A report on consumer spending for August shows a five-month high, while jobs data suggests that the amount of Americans making new claims for jobless allowances has stayed the same for two weeks. Many investors will be holding out for August’s job report, but it is clear that the US economy isn’t looking quite as bad as last week when the euro rallied on very strong indications that QE3 was not far off.

Traders are also holding on as they wait for the upcoming ECB and Fed policy meetings. Dennis Lockhart, head of the Federal Reserve Bank in Atlanta, also told the press yesterday that he feels the outcome of the Jackson Hole meeting is too close to call.

The euro was buoyed slightly yesterday by China’s announcement that it is willing to buy more EU bonds. Italy also sold its goal of 10-year bonds at auction, meaning the ECB is now more likely to reduce borrowing costs for debt-ridden Eurozone countries.

Meanwhile, the Aussie dollar was down again by 0.4 per cent to $1.0305 as fears refuse to dissipate about the Chinese economy. Australia traditionally exports steel, iron and copper to the Asian country.