The US dollar gave back most of its recent wins at the end of the week on profit-taking and the lack of follow-through on tax reform. The ISM manufacturing PMI, which should serve as a leading indicator for Friday’s NFP, is due today and analysts are expecting a drop from 58.8 to 57.9. The Markit final manufacturing PMI reading is also due, along with data on construction spending.
The euro finished the previous week on a strong note, despite mixed reports from its top economies. German retail sales fell 0.4% instead of rising by 0.5% while French consumer spending dropped 0.3% instead of posting the estimated 0.2% uptick. German unemployment change was stronger than expected at a 23K drop in joblessness versus the projected 5K reduction while French preliminary CPI showed a smaller than expected 0.1% dip instead of the estimated 0.2% drop in price levels. However, CPI flash estimates were both weaker than expected. Final manufacturing PMIs and the region’s jobless rate are lined up today.
The pound was in a weak spot on Friday as the current account balance showed a larger deficit of 23.2 billion GBP versus the estimated 15.3 billion GBP shortfall while the earlier reading suffered a downgrade. PM May’s speech over the weekend failed to rally positive sentiment for the UK leading up to Brexit. The manufacturing PMI is due today and a dip from 56.9 to 56.3 is eyed.
The franc had a mixed run as it mostly reacted to currency-specific events on the lack of top-tier reports from Switzerland. The KOF economic barometer improved from an upgraded 104.2 reading to 105.8, outpacing the consensus at 105.5. The Swiss manufacturing PMI is due today and a fall from 61.2 to 60.6 is expected.
The Japanese yen also had a mixed performance as it was driven by market sentiment and its counter currencies. Earlier today, the Tankan survey printed a gain from 17 to 22 for its manufacturing component and no change for its non-manufacturing component at 23. The final manufacturing PMI was upgraded from 52.6 to 52.9. There are no other reports lined up from Japan so sentiment could continue to push yen pairs around.
Commodity Currencies (AUD, NZD, CAD)
The comdolls were mostly weaker towards the end of the week as there were still signs of risk aversion in the financial markets. Australian and Chinese banks are closed for the holiday today so liquidity could be thin. Over the weekend, China’s manufacturing PMI rose from 51.7 to 52.4 instead of falling to 51.5 while the non-manufacturing PMI improved from 53.4 to 55.4. The Caixin version of the manufacturing PMI was down from 51.6 to 51.0.