The US dollar tumbled against its counterparts when President Trump called out China and Japan for currency devaluation tactics. For some, this was also a form of jawboning for the dollar. To top it off, economic data came in mostly in the red, with the CB consumer confidence index sinking from a downgraded 113.3 figure to 111.8 and the Chicago PMI dropping from 54.6 to 50.3. The ISM manufacturing PMI is due today and a rise from 54.7 to 55.0 is eyed, but all eyes and ears are likely to be on the FOMC statement.
The euro was able to take advantage of dollar weakness while riding higher against the commodity currencies as well. Euro zone headline flash CPI was stronger than expected at 1.8% versus 1.5% from the earlier 1.1% figure while the core reading was unchanged at 0.9% as expected. The flash GDP reading printed a stronger than expected 0.5% expansion versus the projected 0.4% growth figure. Final manufacturing readings from top euro zone nations and EU economic forecasts are lined up today.
The pound also climbed higher to the dollar even though medium-tier reports from the UK missed expectations. Net lending to individuals came in at 4.3 billion GBP versus the 5.3 billion GBP consensus. UK manufacturing PMI is due today and a fall from 56.1 to 55.9 is expected.
The franc chalked up another day of gains versus the dollar but gave up ground to the euro. There were no reports out of the Swiss economy yesterday while today has the manufacturing PMI due. A small rise from 56.0 to 56.1 is eyed but a higher than expected read could reinforce franc strength.
The yen held on to its gains as the BOJ refrained from making policy changes. In the presser, Governor Kuroda mentioned that CPI is likely to hit the 2% target by next year and that growth could go above potential by then. There are no major reports due from the Japanese economy today.
Commodity Currencies (AUD, NZD, CAD)
The comdolls were in a weak spot after New Zealand printed downbeat headline jobs figures. Employment change was up 0.8% as expected but the earlier figure was downgraded from 1.4% to 1.3%. The unemployment rate rose from 4.9% to 5.2% due to a higher labor force participation rate, but this could mean that the slack is not being absorbed. China’s official manufacturing PMI dipped from 51.4 to 51.3, higher than the 51.2 consensus, while the non-manufacturing reading improved from 54.5 to 54.6.