….as gloomy market mood boosts US dollar
The US dollar appreciated on Tuesday amidst a souring market mood.
Meanwhile the pound is trading in a narrow range so far this morning, with GBP/EUR flat at €1.1733 and GBP/USD buoyed at $1.3942. GBP/CAD is rangebound at C$1.7461, while GBP/AUD and GBP/NZD hold steady at AU$1.8813 and NZ$1.9721 respectively.
Coming up, could the latest PMI figures from the US miss expectations, and undermine the US dollar?
What’s been happening?
The US dollar ticked higher during yesterday’s trading session as a prevailing risk-off mood saw investors favour the safe-haven currency.
Reinforcing this upside in USD exchange rates was the publication of the latest US factory orders figures, after they revealed stronger-than-expected order growth in June.
This upside in the US dollar dented the appeal of the euro due to the strong negative correlation between the worlds most traded currency pairing.
This offset optimism over the Eurozone’s improving economic outlook as coronavirus cases continue to fall in many parts of the bloc.
Meanwhile, the pound traded in a narrow range on Tuesday, as while a sustained fall in local coronavirus infections reflected well on Sterling, GBP investors appeared reluctant to make any aggressive bets ahead of the Bank of England’s (BoE) impending interest rate decision.
What’s coming up?
Looking ahead, the spotlight today is likely to be on the publication of the latest ISM non-manufacturing PMI.
While consensus estimates predict July’s figures will show a modest uptick in activity in the US service sector, in the wake of a disappointing manufacturing PMI, there is a risk that this afternoon’s release could also fall short of expectations, placing some pressure on the US dollar.
In the meantime, the publication of the Eurozone’s latest retail sales release could exert some pressure on the euro this morning as economists forecast sales growth will have slowed from 4.6% to 1.7% in June.
Also coming up this morning is July’s finalised services PMI from the UK. This looks set to confirm a notable slowing of activity in the UK’s vital service sector last month, in spite of this lifting of all remaining restrictions in England, and as such could limit the appeal of the pound in early trade.
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