Kiwi upswing stalls as USD buoyed by stronger service data

Key Movers

Better than expected US PMI data and commentary out of the Jackson Hole Symposium helped the US dollar retrace some of the week's early losses and advance against the majority of majors. US Service sector PMI data printed well above expectations; further alleviating fears the US is running headlong toward recession. The stronger print helped fuel a rise in US treasuries, with gains extended following commentary from Fed speakers in Jackson Hole. Speakers doused calls for a 50-point rate cut in September and appeared at pains to stress any easing in monetary policy will be “slow”, “methodical” and “gradual”. Market pricing paired back rate cut expectations both for the September 17 meeting and through the end of the year. The DXY index advanced 0.5%, while the GBP was the only major to hold its ground against the USD, buoyed by a modest improvement in Manufacturing and Service PMI’s. Having tested a break above 1.3125, sterling opens this morning just below 1.31, while the euro has retreated back below 1.1150 and the yen again gave up 146.

Our attentions turn now to Japan CPI data and commentary from BoJ governor Ueda, while Fed President Powell addresses attendees at the Jackson Hole Symposium.