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Market reports
Thanim Islam
  • USD garnering support?
  • Inflation in the EU continues to drop
  • PMI numbers in focus


USD declined on Friday after the core PCE numbers showed that inflation eased in May, but overall finished the week a tad higher.

Eurozone inflation numbers came in lower than expected, with headline numbers in at 5.5% versus 5.6% expected, and the core number at 5.4% versus 5.5% expected.


Market rates

* Daily move - against G10 rates at 7:30am, 03.07.23

** Indicative rates - interbank rates at 7:30am, 03.07.23

Data points


  • None today.

Our thoughts

Final PMI manufacturing numbers for June are due for release from Europe, UK, and the US with focus now falling on the performance of each respective economy. The numbers above suggest that the manufacturing sector in each economy will continue to contract (below 50). But, worth noting these are final revision of previous numbers so market impact could well be limited.

Also worth noting, US markets will be closed tomorrow for the Independence Day holiday, so markets in general could be quite quiet.

Chart of the day

The market seems to be catching onto the Fed’s hawkish narrative, and does recent price action suggest that the USD is about to get started on a move higher? The uptrend on GBPUSD was broken last week as interest rate expectations narrowed between the UK and US, and we can see below that we are in a downtrending price channel. There is very little input from UK data and BoE speak this week, so we expect GBPUSD to take cues from data points from the US - of which there are plenty. Strong numbers to back the US economy and markets seem likely to support and buy USD which ultimately will continue the GBPUSD move lower.

Source: Bloomberg Finance L.P.

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