The US dollar had a mixed performance as it weakened to the yen but consolidated against most of its counterparts. Economic data was stronger than expected as the trade deficit narrowed on higher imports while factory orders ticked up by 1.0%. FOMC minutes, ISM non-manufacturing PMI, and ADP non-farm employment change are all lined up today and these could carry a lot of weight in terms of influencing Fed rate hike expectations.
The shared currency was off to a weak start but was able to recoup some of its losses. Data from the euro zone, namely the Spanish unemployment change and euro zone retail sales, turned out stronger than expected. Final services PMI readings are up for release today.
The pound was still one of the weaker performers of the day as the UK construction PMI dipped from 52.5 to 52.2 instead of holding steady as expected. The services PMI is due today and an improvement from 53.3 to 53.5 is eyed, although another unexpected fall could mean more losses for the UK currency.
The franc had a mixed performance as it consolidated to the dollar, lost ground to the euro, but held on to its gains versus the pound. There were no reports out of the Swiss economy yesterday and none are due today, which suggests that country-specific events could continue to stay in play.
The yen retreated against some of its peers as US bond yields recovered. There were no major reports out of the Japanese economy yesterday and none are due today so risk sentiment and bond yields could continue to push yen pairs around, particularly in reaction to top-tier US releases.
Commodity Currencies (AUD, NZD, CAD)
The comdolls recovered slightly against the yen but were still generally weaker to the dollar. Australia printed a larger than expected trade surplus but the RBA decision was less upbeat as it highlighted the weakness in hiring. Canada’s trade balance was also weaker than expected as it printed a 1 billion CAD deficit. New Zealand reported a 1.6% rebound in dairy prices during the latest GDT auction. Crude oil inventories data is lined up next.