The US dollar had a mixed performance after data from the economy came in mixed. The ADP non-farm employment change beat expectations with a 200K gain versus the projected 192K increase and the previous 186K rise, spelling positive prospects for Friday’s NFP report. However, the Chicago PMI came in below consensus at 48.7 down from the previous 54.4 reading, indicating a slump to industry expansion. Initial jobless claims and the ISM manufacturing PMI are due today, with the former expected to show a 273K figure and the latter likely to print a drop from 51.1 to 50.8.
The euro suffered a nasty selloff against its forex rivals when the euro zone CPI estimates showed that deflation is taking place. The headline CPI came in at -0.1% versus the projected 0.0% figure, dragged down by an 8.9% drop in energy prices. The core CPI held steady at 0.9% as expected, but this didn’t seem to be enough to quash easing speculations. Final manufacturing PMI readings are due from the region today with downbeat results likely to push the shared currency lower.
The pound slowed down from its recent selloff against the dollar and recovered against the euro, but it was still mostly weaker to the comdolls. UK current account balance came in better than expected while the final GDP was unchanged at 0.7% for Q2. The UK manufacturing PMI is due today and a drop from 51.5 to 51.3 is expected.
The franc also suffered a selloff yesterday, despite mixed reports from Switzerland. The UBS consumption indicator improved from 1.59 to 1.63 but the KOF economic barometer fell from 101.2 to 100.4. To top it off, the franc was also dragged down by deflation in the euro zone, as the prospect of ECB easing could spur SNB intervention. Swiss retail sales data is due today and a 0.3% rebound is eyed.
The yen gave up some of its recent wins when risk appetite appeared to improve in the latter trading sessions. Data from Japan was also weaker than expected, with retail sales showing a smaller than expected 0.8% gain and the preliminary industrial production report showing a surprise 0.5% decline. Earlier today, the Tankan survey indicated a fall in the manufacturing component from 15 to 12 and a climb in the non-manufacturing component from 23 to 25.
Commodity Currencies (AUD, NZD, CAD)
The comdolls made a decent rally against the European currencies and the safe-havens, as commodity prices picked up slightly. This was partly spurred by the stronger than expected Canadian monthly GDP reading of 0.3% and the Chinese PMI readings coming in line with expectations. The official government manufacturing PMI ticked up from 49.7 to 49.8 while the Caixin version was upgraded from 47.0 to 47.2. There are no other reports due from the comdoll economies for the rest of the day.