Consensus for PMI numbers sees a continued growth recovery in the eurozone supporting a drift higher in euro rates. A disappointment in French PMIs, however, could be a trigger for wider French government bond spreads, which we think are still on the tight side. A further recovery of German PMIs would help maintain the current positive market sentiment
The New Zealand dollar has steadied on Monday. In the European session, NZD/USD is trading at 0.562, down 0.07% on the day. On Friday, the New Zealand dollar shot up 0.82%, its best one-day performance since June.
I strongly invite you to check these two pieces to spot how strong the reactions are after the dovish speech from Powell:
The release of the July FOMC minutes failed to move the needle on the dollar story. What is interesting is the continued strong performance of Chinese assets, with the benchmark CSI 300 equity index up 5.9% this month in dollar terms and the PBoC's USD/CNY fixing at its lowest since last November. Investor appetite for EM is typically a dollar negative
The FOMC minutes seem to be from a different time, pre the payrolls revisions; but can still embolden Powell on Friday. Gilt yields came down on the day of hotter CPI numbers suggesting a possible peak. Having said that, with Autumn Budget discussions kicking off, volatility is likely to remain. Meanwhile, the path for the 10y euro swap rate is still up
• USD firmer as markets trade cautiously into Fed decision.
• CAD slips back from probe through upper 1.42s.
• EUR drifts lower after another failure around 1.0950 yesterday.
• GBP tracks peers, short-term price patterns may be tilting negative.
• JPY drops after BoJ holds policy rate at 0.50%, as expected.
• AUD, NZD lower in line with peers; Aus jobs, NZ GDP data due tonight.
• MXN softer on the day but holds gains back through 20.
