USD was net lower on the day following comments made by Fed Chair Powell in Sintra, despite JOLTS job opening numbers coming in better than expected. Powell commented, that “Last Inflation Reading Suggests Disinflation Path” and “Unexpected Labor Weakening Could Also Prompt Reaction”. CPI dropped to 2.5% as expected, but the core number remained at 2.9% when a fall to 2.8% was expected, but market reaction was muted ahead of the second round of election votes this weekend.
*Daily move - against G10 rates at 7:30am, 03.07.24
** Indicative rates - interbank rates at 7:30am, 03.07.24
Busy day ahead with the release of services PMI numbers from the UK, EU, and the US, as well as the ADP payroll numbers and the release of the minutes from the latest Fed meeting. We had a upside surprise on the JOLTS numbers yesterday so could see an uptick on the ADP number as well today. Service PMIs should remain in expansion territory, and the Fed minutes may have limited impact given Fed Powell’s comments yesterday. Unless we see a nice upshoot on US data, we expect USD to be under pressure following Powell’s disinflation comments. Over in France, over 200 candidates withdrew from a three-way runoff, which is seen to be a blow to Marine Le Pen’s National Rally party.
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