Aussie dollar continues to trade below 66 US cents

Key Movers

In the US, S&P Global released flash readings of PMI reports for January. Manufacturing PMI improved from 47.9 in December to 50.3 in January, compared to analyst consensus of 47.9. Numbers above 50 show expansion. At the same time, the report indicated that the improvement in operating conditions came amid a further drop in production. Services PMI increased from 51.4 in December to 52.9 in January, despite analysts expecting that it would decline to 51. Composite PMI grew from 50.9 to 52.3, easily beating analyst estimates. Treasury yields moved higher after the release of the reports. The US economy remains in good shape, so the Fed has the opportunity to keep rates at high levels to put additional pressure on inflation. The US Dollar Index moved back above the 103.00 level as traders reacted to PMI data. Rising Treasury yields provided material support to the American currency.

Overnight in the UK, the GBPUSD climbed during the mid-North American Wednesday session after economic data suggested the UK’s economy remains solid after a release of strong PMI figures. UK Flash PMIs for January revealed by S&P Global showed that economic activity gathered steam, with Manufacturing PMI rising from 46.2 to 47.3 while the Services index jumped from 53.4 to 53.8. Consequently, the S&P Global Composite PMI rose from 52.1 to 52.5 hitting a 7-month high. Ahead of the week, the UK economic calendar is light, though the US docket would feature GDP and the Fed’s preferred gauge for inflation, the Personal Consumption Expenditures (PCE).