The US dollar barely got a boost from upbeat ISM non-manufacturing PMI and ADP non-farm employment change data as the focus was on the next Fed Chair. There have been rumors that dovish member Powell is being eyed to replace Yellen when her term expires in February, weakening rate hike expectations for next year. The ISM non-manufacturing PMI rose to 59.8 versus the 55.5 consensus and featured a gain in the jobs component while the ADP reading came in at 135K versus 131K. The initial jobless claims and trade balance are due next, along with speeches by FOMC members Powell and Harker.
The euro was able to chalk up some gains against its counterparts when the King of Spain addressed the unrest related to the latest Catalan elections. His speech provided a bit more reassurance for the markets and the shared currency, which was on shaky footing in anticipation of similar independence votes in other European nations. Euro zone services PMI readings were mixed but mostly in line with expectations, except that of Italy. The ECB minutes are due next and traders are on the lookout for tapering remarks.
The pound was able to regain ground on stronger than expected UK services PMI. The reading ticked up from 53.2 to 53.6 instead of holding steady as many expected or posting a bleak figure like the manufacturing and construction PMIs. Since the services sector accounts for majority of UK economic activity, pound bulls were more confident that the BOE can stick to its hawkish bias. There are no major reports due from the UK today.
The franc gave up some ground as sentiment improved in the European area and safe-haven demand dipped. There were also no reports to give the Swiss currency an extra boost then. Swiss CPI is due next and analysts are expecting to see a 0.2% uptick in price levels after the previous flat reading.
The yen edged slightly higher against its peers even though it was still stuck in its short-term range. There were no reports out of Japan then and none are due today, which suggests that yen pairs could be vulnerable to market sentiment and currency-specific factors.
Commodity Currencies (AUD, NZD, CAD)
Australian economic data turned out mixed today, with retail sales coming up short of the 0.3% gain and posting a surprise 0.6% decline. The trade balance, on the other hand, showed a larger than expected surplus of 0.99 billion AUD versus the estimated 0.88 billion AUD and the earlier 0.81 billion AUD figure. Crude oil inventories dropped by 6 million barrels versus the estimated 0.5 million draw but failed to shore up crude oil or the Loonie. Canada’s trade balance is due next and a smaller deficit of 2.6 billion CAD is eyed.