Previous Day's Market Highlights
Exchanges rates remained in familiar ranges ahead of the Fed meeting on Wednesday. Sterling-euro continued to trade in the 1.12-1.13 range, briefly testing the 1.12 level, while sterling-dollar headed lower towards 1.31 and euro-dollar gave up 1.17 overnight.
Eurozone GDP slowed to 0.3% quarter-on-quarter and 2.1% year-on-year, while inflation surprised to the upside: headline CPI hit 2.1% and core CPI hit 1.1%. The Unemployment Rate was in line with expectations at 8.3%. This saw some two-way trading for the euro, but the single currency was overall relatively unchanged. In the US, Personal Consumption Expenditure data came in under forecast, with PCE steady at 2.2% and core PCE at 1.9%, but this is unlikely to shift expectations for two more Fed hikes later in the year.
Rate movements in July were overall relatively contained, with sterling-euro seeing a 1.8% range and sterling-dollar a 3.0% range that notably included a dip below 1.30 to 1.2958, cable’s lowest levels since September 2017.
|Currency Pairing||08:00 Today||Vs 08:00 Yesterday||Four-Week High||Four-Week Low||% Change|
Today's Market Highlights
This morning, a dip in UK Manufacturing PMI (09:30 BST) could weigh slightly on the pound but may do little to push rates out of recent ranges. Afternoon data may be mixed for the dollar, with a pick-up in ADP Employment Change (13:15) and a dip in Manufacturing PMI (15:00) forecast.
Overall, rates may continue to remain around recent levels ahead of tonight’s Fed rate decision (19:00). No change in interest rates or major shift in guidance is expected, which may mean that the dollar impact from tonight’s announcement is limited. Greater volatility would be seen if there is any adjustment to the statement.
Key for the pound is tomorrow’s Bank of England rate decision (12:00), when the BoE is widely expected to announce a rate hike of 25 basis points to 0.75%. While the pound could see some additional strength as an initial reaction, a cautious outlook going forward could limit gains. A decision to hold steady, as projected by some banks, could come as a downside surprise to the pound.
Today's Economic Calendar
|9:30am||GBP||Markit Manufacturing PMI (Jul)||54.2||54.4|
|1:15pm||USD||ADP Employment Change (Jul)||185K||177K|
|2:30pm||CAD||Markit Manufacturing PMI (Jul)||57.5||57.1|
|3:00pm||USD||ISM Manufacturing PMI (Jul)||59.5||60.2|
|3:30pm||USD||EIA Crude Oil Inventories (27 Jul)||-2.794M||-6.147M|
|7:00pm||USD||Fed's Interest Rate Decision||2.00%||2.00%|
|7:00pm||USD||Fed's Monetary Policy Statement|
|2:30am||AUD||Trade Balance (Jun)||900M||827M|