Data from the US economy came in mostly stronger than expected yesterday, although the dollar’s FX trading performance was mixed. The ISM manufacturing PMI showed a stronger than expected rise from 57.1 to 59.0, marking a faster pace of expansion in the industry instead of dipping to the estimated 57.0 reading. Construction spending also ticked higher by 1.8%, twice as much as the estimated 0.9% gain. Economic optimism and ISM manufacturing prices showed weaker than expected results though. For today, US factory orders, total vehicle sales, and the Fed Beige Book are up for release.
The euro made a small recovery to its FX trading counterparts as data came in slightly better than expected. The Spanish unemployment change report showed an 8.1K increase in joblessness, less than the estimated 25.5K rise. Euro zone PPI, however, marked a 0.1% decline and indicated that overall inflation might continue to weaken. Spanish and Italian services PMI are on tap for today and these might dictate euro direction prior to tomorrow’s ECB statement.
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The pound suffered a sharp FX trading selloff as news of possible Scottish independence became a cause of concern. Data from the UK was actually better than expected, with the construction PMI climbing from 62.4 to 64.0. Services PMI is up for release today and a decline from 59.1 to 58.6 is expected, which might lead to more pound weakness.
The franc recovered to the dollar in recent FX trading, despite weaker than expected Swiss GDP. The country registered a flat growth figure for the second quarter of the year, prompting some to speculate about stimulus from the SNB. There are no reports due from Switzerland today, as the franc might take its cue from euro behavior.
The yen continued to give up ground to its FX trading counterparts as more and more traders are anticipating easing from the BOJ today. Data from Japan has been mostly weaker than expected, debunking beliefs that the economy could stay resilient and easily recover from the negative impact of the sales tax hike. Any form of easing from the BOJ could drive the yen lower than its counterparts while the lack of dovishness could lead to profit-taking among yen pairs.
The comdolls weakened mostly to the dollar, spurred by a cautious RBA statement and a bleak dairy auction in New Zealand. Market participants are starting to price in another downgrade in Fonterra payouts, which might then weigh on the country’s overall economic performance down the line. Australia’s GDP came in stronger than expected at 0.5% versus the estimated 0.4% uptick though while Chinese services PMI reflected a pickup. The BOC is set to make its interest rate decision and no policy changes are expected.
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