Dollar Slips Post-Powell Speech; Sterling Rallies Pre-UK Elections
GBP
GBP/USD is currently trading at 1.2700 (interbank), while GBP/EUR stands at 1.1800 (interbank).
Today, the S&P Global UK Services Purchasing Managers Index dropped to 52.1 in June from 52.9 in May, marking its lowest level since November. However, it was revised up from an initial estimate of 51.2. The composite PMI, which combines services with Monday's manufacturing survey, also fell to 52.3 from 53.0 in May, its lowest reading since December, but was revised up from a flash estimate of 51.7.
In June, the Bank of England adopted a cautious stance, increasing expectations for an August rate cut amidst uncertainty over the upcoming UK general elections. The Labour Party is anticipated to return to power.
Moreover, the UK's constrained finances mean any new government will have little room for increased spending, potentially mitigating sterling weakness and keeping volatility contained.
Today’s Events (GMT):
09:30 - Composite PMI (Jun) - Actual:? 52.3 vs Forecast: 51.7
09:30 - Services PMI (Jun) - Actual: 52.1 vs Forecast: 51.2
EUR
EUR/USD is currently trading at 1.0760 (interbank).
June's Eurozone PMI Services index finalized at 52.8, slightly down from May’s 53.2. The PMI Composite also decreased, finalizing at 50.9 compared to the previous month’s 52.2.
Yesterday, the Eurozone Harmonized Index of Consumer Prices (HICP) inflation eased to 2.5% YoY in June from 2.6% in May. Despite this, the data are unlikely to prompt the ECB to cut interest rates at its next policy meeting on 18 July.
ECB officials Christine Lagarde and Philip Lane are scheduled to speak at the central bank’s forum in Portugal later today. Additionally, services PMI data for June in the Eurozone are expected to indicate continued expansion.
The euro has been supported by efforts to block France's National Rally from gaining power in Sunday's run-off election.
Today’s Events (GMT):
08:55 - German Services PMI (Jun) - Actual: 53.1 vs Forecast: 53.5
09:00 - S&P Global Composite PMI (Jun) - Actual: 50.9 vs Forecast: 50.8
09:00 - Services PMI (Jun) - Actual: 52.8 vs Forecast: 52.6
15:15 - ECB President Lagarde Speaks
11:30 - ECB's Lane Speaks
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USD
The Dollar index, which gauges the U.S. dollar against a basket of six major currencies, held steady at 105.66 following a slight 0.14% decline in yesterday's trading.
Federal Reserve Chair Jerome Powell adopted a somewhat dovish tone on Tuesday, contributing to a decline in the Greenback. Powell indicated that the Fed is steering towards a disinflationary stance. Despite this shift, he emphasized the necessity for further evidence before considering interest rate cuts, citing the robust conditions of the US economy and labour market.
Later today, the Federal Reserve is scheduled to release minutes from its June monetary policy meeting. During this meeting, the central bank opted to maintain interest rates at a range that has been at a two-decade high, signalling an expectation of only one reduction in borrowing costs this year.
Additionally, today's economic calendar includes the release of the latest ADP report on private-sector employment and the ISM Services PMI. These indicators will provide further insights into the health of the U.S. labour market and service sector activity.
Today’s Events (GMT):
12:00 - FOMC Member Williams Speaks
13:15 - ADP Nonfarm Employment Change (Jun) - Forecast: 163K
13:30 - Initial Jobless Claims - Forecast: 234K
14:45 - S&P Global Composite PMI (Jun) - Forecast: 54.6?????????
14:45 - Services PMI (Jun) - Forecast: 55.1
15:00 - ISM Non-Manufacturing PMI (Jun) – Forecast: 52.6
19:00 - FOMC Meeting Minutes
CAD
USD/CAD is currently trading at 1.3678 (interbank).
Yesterday, Canadian manufacturing activity showed continued weakness in June, with new orders declining and job cuts reported for the first time in five months. The Canadian S&P Global Manufacturing PMI remained stagnant at 49.3, falling short of the market's expectation of 50.2. This marks the 14th consecutive month of contraction, the longest such streak since records began in October 2010.
Investors are eagerly awaiting Friday's release of Canadian employment data. Analysts anticipate that the Unemployment Rate will rise to 6.3% in June, alongside an expected addition of 22.5K jobs to the Canadian economy during the same period.
Brent crude increased by 0.2% to $86.40 per barrel, while West Texas Intermediate crude (WTI) climbed to $82.92 per barrel.
No significant events are scheduled for today
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