All eyes on FOMC this evening
Daily Currency Update
It was a quiet day for data Wednesday with the US celebrating the 4th of July. Currency movement has been a little more subdued on this basis, with Sterling picking up against both the US dollar and Euro in the past 24 hours. GBP/USD touched highs of 1.2735 yesterday evening but has since fallen and is trading just above 1.2700 at the time of writing. GBP/EUR touched 1.1690 but opens a little lower this morning.Early this morning we anticipate final services PMI across the UK and Europe, with European PPI month-on-month data also expected. This is all a prelim to this evening’s US FOMC meeting minutes, which is the key release for this week. The market and the FED are at odds about future rate hikes with a question mark hanging over what will happen at the September meeting. Clarification will be sought from today’s meeting minutes with 2 rate hikes expected before the end of the year, with traders factoring an 80% probability that 1 of the 2 will be this month. Any guidance on future rate hikes will likely be to drag the USD higher or lower.
Key Movers
European services PMI showed the majority of European locations remain above the expansion 50.0 figures. France was the only location to post below 50.00 but at the forecast 48.00 figure. It will likely be the May producer price index that will sway the Euro as the Eurozone is expected to show a weakening of inflationary pressures at the factory gate. A previous -3.2% is expected to fall to -1.7% on the forecast. GBP/EUR has seen little movement on the data so far this morning, but EUR/USD has bounced above and below 1.0900 in the past couple of hours.Expected Ranges
- GBP/USD: 1.2610 - 1.2820 ▲
- GBP/EUR: 1.1580 - 1.1730 ▲
- GBP/AUD: 1.8860 - 1.9160 ▲
- EUR/USD: 1.0780 - 1.0990 ▲