The US dollar was able to hold on to its gains at the start of the week, as risk aversion seemed to return to the financial markets. Data from the US came in slightly weaker than expected, as the Chicago PMI dipped from 54.7 to 54.4 instead of holding steady. For today, the US ISM manufacturing PMI is due and it might show a dip from 52.7 to 52.6, reflecting a weaker pace of expansion. Traders will be more interested to see how the employment index fares to gauge if the August NFP might miss or surpass expectations.
The euro managed to hold on to its recent wins when data from the region came in mostly in line with expectations. The headline CPI estimate showed a 0.2% gain as expected while the core version of the report indicated a 1.0% increase. Final manufacturing PMI readings are lined up for today and upward revisions could allow the shared currency to gain further ground.
The pound was still in a weak spot, as UK traders were off on a bank holiday yesterday. Today has the UK manufacturing PMI on tap and no change is expected from the previous 51.9 reading. A drop could mean more pound weakness while a climb could spur gains.
The franc enjoyed a few gains in recent trading sessions, thanks to the stronger than expected KOF economic barometer reading. The figure climbed from an upgraded 100.4 reading to 100.7, reflecting stronger improvements in the economy. The Swiss manufacturing PMI is due today and a climb from 48.7 to 49.9 is expected.
The yen managed to hold on to its recent gains as risk aversion returned to the financial markets. Data from Japan was weaker than expected, with the preliminary industrial production report showing a 0.6% drop instead of the projected 0.1% uptick. Earlier today, Japan reported a 5.6% gain in quarterly capital spending versus the projected 9.0% increase.
Commodity Currencies (AUD, NZD, CAD)
The comdolls lost a bit of ground due to China’s weak PMI readings, both from the government and Markit. The RBA decided to keep rates on hold at 2.00% as expected and confirmed that the Aussie is already adjusting to lower commodity prices. The Canadian monthly GDP reading is due today and a 0.2% expansion is eyed for June. Also lined up is the global dairy trade auction in New Zealand.
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