North American Summary and Highlights 23 Apr

North American session

The USD slipped in North America, largely on weaker S and P PMI data, manufacturing at 49.9 from 51.9 and services at 50.9 from 51.7. An 8.8% rise in new home sales shortly after was ignored. Equities were firmer, allowing commodity currencies to rise, while EUR/USD moved above 1.07. Before the data GBP saw support from comments from BoE’s Pill, who sated he was erring on the side of caution on cutting rates. GBP/USD reached 1.2450 while EUR/GBP fell below .86.

USDJPY saw a volatile day, falling below 154.60 from 154.85 on the PMI data before reversing most of the slide even as USD losses were sustained elsewhere. However a Nikkei report that the BoJ would discuss the impact of JPY weakness at its upcoming meeting delivered another sudden slide to a marginal fresh low for the day at 154.56 though this slide was also largely reversed, as USD/JPY returned to 154.80. 

European morning session

EUR/USD and GBP/USD both made some gains after the European PMI data, but these were nearly fully reversed and both were little changed by the end of the morning session. USD/JPY was slightly higher, breaking marginally above the new 34 year highs reached on Monday at 154.86 before edging a tad lower. Otherwise, the USD made modest gains against the commodity currencies.

The European PMI data was stronger than expected, with the Eurozone composite index rising to 51.4 in April from 50.3 in March, its highest since June last year. The UK composite index also matched last June’s high of 54.0. All the strength was in services, with the manufacturing indices for both the Eurozone and the UK coming in both below expectations and below the March level. The data triggered modest gains in yields but currency gains were largely reversed.