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USD Hovers near 7-Week High

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USD

The U.S. dollar hovered yesterday near a seven-week high against a basket of currencies after a private index of June domestic manufacturing activity rose more than expected. The ISM Manufacturing PMI jumped to 57.8, beating the estimate of 55.0, buoyed by stronger hiring, new orders, and production.

  • On Tuesday, the U.S. dollar index (DXY), which measures the Greenback against a basket of currencies, failed to manage its gains and fell as much as -0.02% to 96.18 at 1:40 a.m. EDT.

The U.S. stock markets will close early at 1 p.m.ET with Independence Day holiday.

GBP

The Sterling pound declined yesterday for the first time in nine days after the U.K. manufacturing expanded at a slower pace in June than forecast, increasing worries about the outlook of UK’s economy. The UK Manufacturing Purchasing Managers' Index (PMI) declined to 54.3 from a downwardly revised 56.3 in May, marking a 3-months low. Today, the market is awaiting the UK Construction PMI, which is expected to fall to 55. Cable fell as much as 0.5% to settle at 1.2966. Technically, GBP/USD could find support at 1.2946.

EUR
The euro returned some of its recent wins as final manufacturing PMI readings from its top economies saw some downgrades. In addition, the Spanish manufacturing PMI dipped from 55.4 to 54.7 instead of improving to 55.6. Only the Spanish unemployment change report is due from the euro zone today and analysts are expecting to see a 120.3K drop in joblessness.

JPY
The yen resumed its slide against its counterparts as rising US bond yields drew traders away from the lower-yielding Japanese currency. The Tankan manufacturing index is up from 17 to 12 versus the consensus at 15 while the non-manufacturing index rose from 20 to 23, just a notch short of the estimate at 24. Japanese consumer confidence took a hit as the index dipped from 43.6 to 43.3. The BOJ core CPI is due today and a rise from 0.2% to 0.3% is eyed.

Gold

Also on Monday, Gold prices fell to $1,232.28, the lowest level since mid-May as the Greenback pared losses after its worst quarterly performance in seven years. The Precious metal was also declined as Asian stocks remaining near two-year highs. Still, the yellow metal is working lower as political tensions and geopolitical worries have eased in recent weeks, so there seems less need for safe-havens.

Oil

Oil prices declined as the U.S. rig count continued to increase and its oil production is now near the highest since August 2015. U.S. West Texas Intermediate (WTI) crude futures fell as much as 0.5%, or 22 cents, to settle at $46.85. Despite the OPEC’s efforts to curb its oil supply, there are still no visible signs of tightness in the market, as the unexpected production in Libya and Nigeria, who are exempt from the cuts, has added to the downward pressure on prices.

The most important economic events:

  • CAD Markit Canada Manufacturing PMI (JUN): (GMT 13:30) – Important – Forecast (N/A) – Previous (55.1).

Disclaimer
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