Currency markets review, August 01

Data released (actual, consensus, previous):  

07:53 GMT Germany Markit Manufacturing PMI (Jul)   50.7    50.3    48.6        

07:58 GMT EMU Markit Manufacturing PMI (Jul)    50.3    50.1    48.8        

08:28 GMT UK Markit Manufacturing PMI (Jul) 54.6    52.8    52.5

11:00 GMT UK BoE Asset Purchase Facility £375    £375K    £375B        

11:00 GMT UK BoE Interest Rate Decision (Aug 1) 0.5%    0.5%    0.5%                

11:45 GMT EMU ECB Interest Rate Decision 0.5%    0.5%    0.5%

12:30 GMT USA Initial Jobless Claims (Jul 26)  326K    345K    343K        

12:30 GMT USA Continuing Jobless Claims (Jul 20)  2.951M    2.994M    3.003M    

12:58 GMT USA Markit Manufacturing PMI (Jul)  53.7    53.1    53.2        

14:00 GMT USA Construction Spending (MoM) (Jun)   -0.6%    0.4%    1.3%    

14:00 GMT USA ISM Manufacturing PMI (Jul)  55.4    52.0    50.9        

14:00 GMT USA ISM Prices Paid (Jul)  49.0    53.8    52.5

 

The dollar rose against the euro and the British pound Thursday after the European Central Bank and the Bank of England kept their respective monetary policies on hold.

 

In the United States, the ISM Manufacturing PMI (July) came in at 55.4, beating estimates of 52.0. Moreover, Construction Spending (MoM) fell -0.6% in June, relative to expectations of +0.4%.

 

After a recent jump above resistance at Chf0.9340, the USD/CHF faces additional resistive measures at Chf0.9390 (Jul 25 high).

 

Separate report showed the U.S. jobless claims fell 19,000 to 326,000, which is the lowest level since January 2008. That data comes ahead of Friday’s highly anticipated U.S. jobs report for July.

 

EURO:

Euro ignored ECB decision to leave rate unchanged at 0.5%.

ECB’s Draghisaid rates to stay low for ‘extended period’:

-Underlying inflation are expected to remain subdued;

-recent survey indicators have show improvement from a low level;

-monetary policy is geared to maintaining degree of accommodation;

-repeats 'extended period';

-risks remain on the downside.

 

Analysts say Drahgi’s comments on improvements in the banking sector and that credit will improve with the economy are important because they suggest less of a likelihood of rate cuts. The comment on capital inflows is good news for the euro as well.

 

EUR/USD consolidates near $1.3215. Below $1.3200 support comes at $1.3160 (Jul 25 lows). Initial resistance remains at $1.3340. Above gains will extend to and $1.3400/15 (Jun 18 highs).

 

POUND:

In the U.K., the Bank of England also left monetary policy unchanged, with the key lending rate remaining at a record low of 0.5%, where it has stood since March 2009.

 

The U.K.’s manufacturing PMI surged to a 28-month high

 

GBP/USD remain under pressure, a bit higher session lows on $1.5130. Below support comes at $1.5080 (Jul 17 lows) and $1.5025 (Jul 15 lows). Initial resistance is around $1.5260 (Jul 25 lows), then - at $1.5416 (Jul 26 highs) and $1.5480 (Jun 25 highs).

 

YEN:

The yen fell amid general dollar’s weakness.

 

USD/JPY rocketed to Y99.40, breaking above the resistance at Y99.00. Further resistance comes at Y100.00 (channel line from Jul 7) and Y100.80 (Jul 19 highs). Initial support is around Y98.50 (50% of the recent rally) and Y97.60 (yesterday’s lows).

 

DATA AHEAD:

At 07:30 GMT Swiss Jul SVME - Purchasing Managers' Index is due to come.

At 08:30 GMT UK presents Jul PMI Construction data with 51.6 expected after 51.0.

EU Jun PPI figures are schedule to release at 09:00 GMT.

The main event of the day is due to comes at 12:30 GMT with Jul Nonfarm Payrolls data. Analysts predict 184K gain after 195K in June. The Unemployment Rate is estimated down to 7.5% after 7.6%.   

The same time Jun Personal Spending/Income come.

At 14:00 GMT  Jun Factory Orders may show 0.8% rise after 2.1%.

 

 

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