North American Summary and Highlights 3 Apr

North American session

The USD fell through the US session, the trigger for the move being weaker ISM services data. The headline index slipped to 51.4 from 52.6, but more significant was a slide in prices paid to 53.4 from 58.6, reaching its lowest level since March 2020 at the height of the pandemic. The slide continued after comments from Fed’s Powell, who stated that recent strong data had not materially altered the picture, though the Fed needed more confidence that inflation was returning to target before easing, which most at the Fed continue to see starting this year.

EUR/USD spiked above 1.08 on the ISM services data and eventually rose to 1.0830 while GBP/USD reached 1.2650. AUD/USD rose from near .65 to .6560. USD/JPY saw some early gains, peaking at 151.95 after a stronger than expected 184k rise in ADP employment and hawkish remarks from Fed’s Bostic, both of which got little response elsewhere. After the ISM services data USD/JPY slipped back to 151.70.

European morning session

A very quiet session for FX saw the USD make some modest gains. USD/JPY gained around 15 pips to 151.75, and AUD/USD fell around 20 pips to 0.6505, but EUR/USD was only marginally weaker, oscillating close to 1.0770, and other European currencies were similarly static.

The Eurozone preliminary CPI data for March came in 0.1% below the published median estimates at 2.4% headline, 2.9% core, but likely in line with real market expectations after the softer German, French and Italian CPI numbers already released.