There was loads of information yesterday, however nothing actually new, which is why EUR/USD ended the day nearly unchanged. The main target yesterday was actually on the ECB assembly, at which the important thing rate of interest was left unchanged, though Ms Lagarde was perhaps somewhat extra hawkish than anticipated in her press convention, Commerzbank’s FX analyst Volkmar Baur notes.
Market goes to attend for subsequent week’s Fed assembly
“Consequently, our economists not anticipate any additional cuts in the important thing rate of interest on this cycle. Nonetheless, the market had already been solely half-heartedly anticipating one other reduce, so though this likelihood decreased once more yesterday, it was not sufficient to actually transfer the euro. The euro just isn’t too depending on 25 foundation factors roughly. And it was already clear beforehand that the cycle would come to an finish in September on the newest.”
“Trying on the information, recent buying managers’ indices (PMIs) had been additionally launched yesterday from the eurozone and the US, however right here too there have been no main surprises total. Within the eurozone, the PMIs had been barely higher than anticipated and likewise improved on the earlier month. Within the US, alternatively, the general PMI was considerably higher. Nonetheless, the manufacturing PMI surprisingly fell beneath the growth threshold of fifty. Assist for the US greenback got here from preliminary jobless claims, which fell to their lowest degree in three months, clearly indicating that the state of affairs on the labour market doesn’t look like deteriorating considerably.”
“Final however not least, Donald Trump’s go to to the Fed was on the agenda yesterday night, together with an try to throw the Fed chairman off steadiness in entrance of the cameras. Nonetheless, he was capable of counter this fairly effectively and appeared ready for the assault, in order that this episode didn’t convey any new insights. Everybody is aware of by now that Donald Trump wish to hearth Jay Powell, however Trump additionally is aware of that the market wouldn’t wish to see this occur. What stays is the long-term injury to this essential establishment, though this isn’t one thing that may be seen in day by day market actions. For actually new impetus, the market will now await subsequent week’s Fed assembly and watch carefully to see to what extent the strain on the Fed is mirrored in its voting behaviour and official communications.”
