The US dollar rallied then reversed to start the week as equities ended the day in the red on weaker tech and industrials performance. There were no reports out of the US economy on Monday as traders kept their focus on Trump’s next Fed Chairperson appointment. Medium-tier reports such as flash manufacturing and services PMIs, as well as the Richmond manufacturing index, are lined up next.
The euro was off to a slow start as it retreated to some of its peers while moving sideways against the rest. Euro zone consumer confidence was unchanged as the index held steady at -1 as expected. Flash manufacturing and services PMIs from Germany and France are lined up today and strong figures could set the tone for an upbeat ECB decision later this week.
The pound managed to hold its ground despite dovish remarks from BOE MPC member Cunliffe. While he acknowledged that the economy has seen improvements, he also warned that a hike is still an “open question” on timing since real incomes are being squeezed by subdued wage growth and imported inflation on sterling weakness. The CBI industrial order expectations index fell from 7 to -2 instead of improving to 9, hinting at weaker business conditions down the line.
The franc was able to regain its bearings later in the day when risk aversion peeked back in the markets. There were no reports out of the Swiss economy yesterday and none are due today, so the franc could take its cue from euro zone data or overall market sentiment once more.
The yen gapped down over the weekend then filled this gap later in the day as risk-off flows returned. There were no reports out of Japan yesterday but the aftermath of Abe’s victory weighed on the currency in anticipation of another tax hike in 2019 and a continuation of the BOJ’s easy monetary policy. Today has the flash manufacturing PMI lined up and a gain from 52.9 to 53.1 is expected.
Commodity Currencies (AUD, NZD, CAD)
The comdolls returned some of their recent gains to their lower-yielding counterparts when risk-taking took a step back in the latter sessions. Canadian wholesale sales rose 0.5% versus the projected 1.1% gain while Australia’s leading index chalked up a 0.1% uptick, lower than the previous 0.2% increase. There are no major reports due from the comdoll economies today.