The US dollar tumbled on Friday as USD investors were dismayed by a stalling of domestic retail sales last month.
Meanwhile, the pound is struggling a little this morning, with GBP/EUR muted at €1.1232 and GBP/USD sliding back to $1.3352. GBP/CAD is subdued at C$1.7454, while GBP/AUD and GBP/NZD hold steady at AU$1.8160 and NZ$1.9747, respectively.
Coming up, the publication of the latest ADP employment report in the US will be in focus today as USD investors look for some insights into the US jobs market ahead of Friday’s more influential payroll release.
What’s been happening?The US dollar continued to tumble during yesterday’s trading session, propelling the EUR/USD exchange rate past the key $1.20 barrier of resistance and pushing GBP/USD just shy of $1.35.
A clear USD selling bias has prevailed following the announcement of changes to the Fed’s framework for targeting inflation as it implies interest rates will remain close to zero for longer than previously thought.
However, the US dollar was later able to recover some of these losses after the ISM manufacturing PMI printed above expectations in August.
This slump in the US dollar helped to propel the euro higher on Tuesday thanks to the negative correlation between the pairing, although the upside in EUR was capped after the Eurozone CPI figures revealed the bloc unexpectedly slipped into deflation last month.
The pound, meanwhile, enjoyed some broad gains after the UK’s latest PMI release confirmed UK factory activity spiked to a two-year high in August.
What’s coming up?Turning to today’s session, the US dollar may look to mount a recovery should the latest US data releases print positively.
First up will be the ADP employment report, which while not as influential as the non-farm payroll release could offer some support to the ‘Greenback’ if it shows that employment growth surged as expected in August.
This will be followed by July’s factory order figures, where another robust reading may also reflect well on USD exchange rates.
In Europe, the publication of Germany’s latest retail sales figures looks to weigh on the euro this morning after they revealed a surprise slump in sales growth in July.
In the UK, GBP investors will look to a speech by the Bank of England’s (BoE) Ben Broadbent for fresh impetus, where a cautious tone could weaken the pound.
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)