The US dollar returned some of its recent gains as traders booked profits at the end of the month. Economic data from the US came in line with estimates, except for the Chicago PMI which showed a sharper decline and a slower pace of expansion. The core PCE price index was up 0.1% as expected, personal spending rose 0.5%, and personal income increased by 0.3%. The ISM manufacturing PMI is due today and a rise from 51.5 to 51.8 is expected.
The euro held on to its recent wins when euro zone data came in mostly in line with estimates. The headline CPI flash reading stood at 0.5% while the core figure held steady at 0.8% as expected. The region’s flash GDP estimate came in at 0.3% but Italy’s preliminary CPI reading came in short. French and Italian banks are closed for the holiday today so lower liquidity is expected during the European session.
The pound was able to advance after BOE Governor Carney confirmed that he would be staying in office for three more years, easing fears that he might step down in the middle of Brexit negotiations. UK net lending to individuals and mortgage approvals came in line with expectations. The manufacturing PMI is due today and a fall from 55.4 to 54.6 is eyed.
The franc was barely able to establish any clear direction in recent trading since there were no economic reports out of the Swiss economy. Swiss retail sales and manufacturing PMI data are due today, with the former expected to show a 2.3% year-over-year drop and the latter projected to rise from 53.2 to 53.9.
The yen was stuck in consolidation as traders are holding out for the BOJ decision. No actual changes are expected for the time being, although officials are expected to provide more details on the shift in their monetary policy framework. Dovish remarks could keep a lid on yen gains while upbeat comments could allow the Japanese currency to recover.
Commodity Currencies (AUD, NZD, CAD)
The Loonie gave up ground when crude oil prices fell on reports of record high OPEC output and a buildup in inventories. Earlier today, Chinese PMI readings came in mostly better than expected. Canada is set to print its monthly GDP reading and might show a bleak 0.2% expansion while New Zealand has its quarterly jobs report due.