Fed speakers dominate FX news flow today, with GBP focus moving to the BoE’s `Super Thursday`
FX markets have once again been guided by the USD today, as a Fed rate lift off comes into focus ahead of their September meeting. Yesterday’s comments from Fed’s Lockhart, who has been known to have a dovish leaning, suggested that the economy is ready for a September rate hike and there would have to be a deterioration in the data to put him off raising rates; the resulting reaction saw USD strengthen throughout the session. However, today’s gains were capped by comments from Fed’s Powell, who suggested that he had not made a decision yet regarding whether he will vote for a rate hike and he remains data dependent.
Today’s notable US data came in the form of US ADP employment change (185K vs. Exp. 215K) ahead of Nonfarm payroll report on Friday, with the data resulting in a mild bout of weakness in the USD; however, this was pared prior to the European close to see the USD remain firmly in positive territory alongside the highest US ISM Non-Manf. Composite (60.3 vs. Exp. 56.2) since August 2005.
Elsewhere, today saw relatively light macro news, with the European morning seeing a host of European and UK services and composite PMI, with the European numbers generally beating expectation, while UK PMIs came out lower than expected; however, these data points failed to have a sustained reaction on FX markets. GBP focus looks ahead to tomorrow and the BoE’s `Super Thursday` where particular notice will be placed on the vote split in the minutes and notable comments in the QIR. Also tomorrow, notable data includes German factory orders, UK industrial and manufacturing production and US weekly job numbers.