The U.S. dollar is a touch weaker to start today as slightly improved global risk sentiment and positive data abroad boosted some of the greenback’s rivals.
Overview
The dollar was under pressure yesterday as Fed President Jerome Powell tried to knock down inflation fears and reiterated that the central bank will be patient in raising borrowing costs. Powell was not alone as New York Fed President John Williams said that interest rate hikes are “way off in the future.”
Attention will shift from monetary policy to fundamental data this morning with the U.S. releasing PMI data at 9:45 a.m. The print will follow strong European and extraordinary British PMI data that was released earlier this morning and will provide somewhat of an apples-to-apples comparison on the economic recovery.
New Home sales are due out in May and there is another slew of Fed speakers slated for this afternoon.
What to Watch Today…
- US PMI Data at 9:45 a.m.
EUR ⇑
The Euro was able to tack on modest gains to yesterday’s positive momentum early this morning following the release of strong Purchasing Managers Index data. According to HIS Markit, euro-area activity is growing at the fastest pace in 15 years as companies struggle to keep up with demand. Confidence in the economic outlook reached the highest level since sentiment data were first recorded in 2012.
Some analysts took a less rosy look at the impressive data and warned that increasing threats from the so-called Delta variant of the coronavirus in parts of the bloc threaten the positive momentum. Regardless, the Euro is up 0.3% to start the day.
GBP ⇑
The British pound popped higher this morning following strong PMI data. IHS Markit reported that British PMI came in at 61.7, outpacing that of mainland Europe and only slightly below the record reached in May. A breakdown shows that firms are hiring staff quicker than at any time since it began collecting data in 1998.
Bloomberg points out that there is also evidence that labor shortages are pushing up wage costs which could lead to an uptick in inflation. The Bank of England will meet tomorrow facing concerns that the higher inflation pressures would be “stickier” than initially hoped. If the Bank of England begins to pivot away from a stimulus, the sterling could see more gains.
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