Currency news

Powell optimistic on disinflation

Head of FX Analysis at Equals Money
-
3
min read
Publish date
03/07/24
    • USD loses grounds on Powell's comments
    • US data and Fed minutes in focus today


    Yesterday's currency recap

    USD was net lower on the day following comments made by Fed Chair Powell in Sintra, despite JOLTS job opening numbers coming in better than expected. Powell commented, that “Last Inflation Reading Suggests Disinflation Path” and “Unexpected Labor Weakening Could Also Prompt Reaction”. CPI dropped to 2.5% as expected, but the core number remained at 2.9% when a fall to 2.8% was expected, but market reaction was muted ahead of the second round of election votes this weekend.

    Today's GBP rates

    Currency pair Daily move* Indicative rate**
    GBPAUD 0.28% 1.9047
    GBPCAD -0.10% 1.7359
    GBPCHF 0.40% 1.1464
    GBPDKK 0.26% 8.8079
    GBPEUR 0.26% 1.1809
    GBPJPY 0.25% 204.7580
    GBPNOK 0.61% 13.5632
    GBPNZD 0.34% 2.0892
    GBPSEK 0.30% 13.4690
    GBPUSD 0.21% 1.2677


    *Daily move - against
    G10 rates at 7:30am, 03.07.24

    ** Indicative rates - interbank rates at 7:30am, 03.07.24

    Key data points

    Currency Event Period Consensus Previous
    EUR Services PMI Jun Final 52.60 52.60
    EUR Composite PMI Jun Final 50.80 50.80
    GBP Services PMI Jun Final 51.20 51.20
    GBP Composite PMI Jun Final 51.70 51.70
    USD Services PMI Jun Final 55.10 55.10
    USD Composite PMI Jun Final 54.60
    USD ADP Employment Chnage Jun 165,000 152,000
    USD ISM Services Jun 52.60 53.80

    Upcoming speeches

    • None today.

    What we think

    Busy day ahead with the release of services PMI numbers from the UK, EU, and the US, as well as the ADP payroll numbers and the release of the minutes from the latest Fed meeting. We had a upside surprise on the JOLTS numbers yesterday so could see an uptick on the ADP number as well today. Service PMIs should remain in expansion territory, and the Fed minutes may have limited impact given Fed Powell’s comments yesterday. Unless we see a nice upshoot on US data, we expect USD to be under pressure following Powell’s disinflation comments. Over in France, over 200 candidates withdrew from a three-way runoff, which is seen to be a blow to Marine Le Pen’s National Rally party.

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    About the author
    Thanim Islam
    Profile
    Head of FX Analysis at Equals Money

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