North American Summary and Highlights 1 August
Overview - There was only a limited reaction to a BoE easing. Weak US data weighed on the USD versus the JPY and CHF but as equities slipped the USD advanced against the riskier currencies.
North American session
There was only a minor reaction to the BoE decision to cut rates, markets noting the close 5:4 vote. EUR/GBP rose by around 10 pips to touch above .8450 on the news but this was soon reversed.
US data was soft, firstly a rise in initial claims to 249k from 235k and a weaker than expected 0.9% annualized rise in unit labor costs, which saw minor USD losses. Later July’s ISM manufacturing index slipped to 46.8 from 48.5 with employment particularly weak at 43.4 from 49.3. The USD again saw modest knee-jerk losses, but these were erased and more versus the riskier currencies, as a positive start for equities gave way to a sharp sell-off.
USD/JPY, which had peaked near 150.90, slipped to near 149.50 while USD/CHF slipped to .8730 from .8770. However, EUR/USD ended little changed slightly below 1.08 and GBP/USD saw fresh lows for the day below 1.2750 as EUR/GBP moved above its initial high seen after the BoE decision. AUD/USD fell to .65 from a high of .6560 and USD/CAD rose to 1.3870 from a low near 1.38.
European morning session
The USD, JPY and CHF were strong through the European morning session ahead of the BoE MPC meeting. EUR/USD fell 45 pips to 1.0780, and GBP/USD fell 90 pips to 1.2760. AUD and CAD were also slightly lower, but the CHF and JPY slightly outperformed the USD, with EUR/CHF losing 50 pips to 0.9450 and EUR/JPY a figure to 161.50.
News was quite thin on the ground, with just final manufacturing PMIs from Europe which saw a small upward revision in both the Eurozone and the UK. Swedish manufacturing PMI (first release) was lower on the month, and the SEK and NOK both held their own against the USD.