Despite mixed economic reports from the US, the dollar managed to advance against most of its forex counterparts in recent trading. The ISM non-manufacturing PMI posted a huge upside surprise, as the reading climbed from 56.0 to 60.3 in July. However, the ADP non-farm employment change report turned out to be a disappointed as it printed a mere 185K increase in hiring, short of the projected 216K gain. Aside from that, the previous month’s figure was downgraded. This could set the tone for a weak NFP release on Friday, which might mean lower odds of a Fed rate hike in September.
Economic data from the euro zone came in mostly weaker than expected, except for the Spanish services PMI which climbed from 56.1 to 59.7. Euro zone retail sales showed a sharper than expected 0.6% drop instead of the projected 0.1% decline while Italian industrial production showed a large 1.1% tumble. Only the German factory orders report is up for release today and a 0.4% rebound is eyed.
Pound pairs were mostly in consolidation yesterday, despite weaker than expected UK services PMI which fell from 58.5 to 57.4. Traders are waiting for upbeat remarks in today’s set of top-tier central bank catalysts, namely the BOE decision, MPC minutes, and Inflation Report hearings. In the previous hearing, Carney said that the point at which they could hike rates is moving closer. If he reiterates this view, the pound could be in for more gains, but a cautious statement could force the currency to retreat.
The franc continued to sell off against its counterparts when Swiss CPI came in weaker than expected. The report showed a 0.6% monthly decline in price levels, worse than the projected 0.4% drop. Swiss SECO consumer climate data is due today and a drop from -6 to -7 is expected, with a lower than expected reading likely to spur more losses for the franc.
The yen was able to rack up more gains against most of its rivals, even though there were no reports released from Japan. Later today, the leading indicators is due and a climb from 106.2% to 106.9% is expected, which might allow the yen to go for more wins. Other than that, risk sentiment might continue to push yen pairs around.
Commodity Currencies (AUD, NZD, CAD)
The Aussie got another boost from stronger than expected employment data, with a 38.5K increase in hiring versus the projected 10.2K gain. Stronger than expected trade balance from Canada also allowed the Loonie to regain a bit of ground, along with declining crude oil inventories in the US. There are no other reports due from the comdoll economies today.
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