North American Summary and Highlights 1 July
Overview - The USD saw a dip after comments from Fed’s Warsh, but remained firm, supported by soft Eurozone inflation.
North American session
The USD pushed higher in early trade despite a slightly softer than expected 98k increase in June’s ADP report on private sector employment, as markets awaited comments from Fed Chair Warsh. Warsh declined to provided forward guidance on rates but did say that inflation risks had reduced. The USD erased its earlier gains before stabilizing. June ISM manufacturing data at 53.3 from 54.0 was also on the low side of expectations, while prices paid slipped to 73.0 from 82.1, to their lowest since February.
EUR/USD was slightly softer near 1.1380, but GBP/USD picked up to 1.3280 from 1.3240 as EUR/GBP fell to .8570 from .86. EUR/CHF was also softer at .9210 from .9230. USD/JPY did not participate in the early USD bounce but recovered back above 162.50 after slipping to 162.40 from 162.70. AUD/USD failed to hold a move above .69 while a dip in USD/CAD found support at 1.42.
European session
EZ June HICP comes in at 2.8%y/y from 3.2%y/y, well below the original consensus of 3.0%, if less surprising after weak national figures yesterday. Ex energy was down to 2.2%, while services was down to 3.2% from 3.5%.
EUR/USD eases off from 1.14~ to 1.1385. Dollar generally remains well supported even as it unwinds the overbought conditions of the last few weeks. Next major focus remains payrolls, with ADP and ISM continuing the build up to that in the US session.
Final EZ manufacturing PMI revised marginally to 51.4 from 51.3. UK revised to 52.5 from 53.1 and is still being artificially boosted in the breakdown by supply issues.
Metals generally on the soft side, AUD/USD finding it hard to sustain any attempted lift back above 0.69.