The US dollar was slightly off its highs from Wednesday’s near 4-month highs against a basket of currencies. Comments from Fed policymakers Jerome Powell and Dennis Lockhart gave conflicting signals on the possibility of a September rate increase. Lockhart sounded more hawkish, saying the economy was ‘in good shape’ and that September would be an appropriate time for a move. But Powell reiterated the Fed’s data dependency stance saying no decision has been made.
The dollar fluctuated during the course of the day but stronger-than-expected services PMI and ISM non-manufacturing data pushed the dollar to day’s highs in US trading. The greenback briefly topped 125 yen on Wednesday but eased to around 124.76 yen in Thursday’s Asian session. The euro managed to recover back above the 1.09 level against the dollar after the strong US data sent it down to 1.0849. It was trading at 1.0912 in late Asian session.
The dollar’s rebound pulled Brent crude futures back below $50 a barrel. It was down at $49.53 in late Asian trading.
The pound is set to come in focus later in the day as the Bank of England unleashes its new approach of releasing its MPC meeting minutes soon after the meeting decision instead of two weeks later. It has also moved the publication of its quarterly inflation report to coincide with the MPC decision. Investors have dubbed this as ‘Super Thursday’ due to the overload of data. Most economists expect the Bank will keep interest rates unchanged but all eyes will be on how many MPC members will have voted to raise interest rates in August. If more than the expected two members vote for an increase, this will raise expectations that a rate hike could come later this year rather than in early 2016.
Sterling was comfortably above 1.56 dollars on Thursday, rising to 1.5635 in late Asian trading. It was also higher against the single currency as the euro fell to 0.6978.
A bigger-than-expected rise in Australia’s unemployment rate dragged the aussie lower against the dollar. The unemployment rate in July rose to 6.3% instead of the expected 6.1% as a rise in the number of people entering the workforce outnumbered a healthy rise in the number of new job creations. The aussie dropped to 0.7332 against the dollar in late Asian trading, having earlier hit a high of 0.7391. The kiwi meanwhile bounced back from fresh 6-year lows of 0.6490 to climb to 0.6539.
German factory orders jumped by 2% month-on-month in June, pushing the annual rate to 7.2%. Consensus estimated were for only a 0.1% rise from the previous month. UK industrial and manufacturing production data are also due to be released later today, which is expected to show a +0.1% monthly change for both figures.
The Bank of England’s inflation report and meeting minutes are scheduled to be released at 11:00 GMT followed by a press conference 45 minutes later. Markets will be paying close attention to the Governor Mark Carney’s statement as his recent hawkish comments surprised some analysts, sending the pound higher against major currencies.
Apart from the UK central bank data, the initial weekly jobless claims for the US will be closely followed ahead of tomorrow’s July jobs report.