Markets Calm as Traders Look to FOMC Minutes

United States Dollar:

Yesterday was a quiet day on the FX markets in the absence of any top-tier data releases. Cable dropped through the day on profit taking, as investors speculated that sterling was over-bought. GBP/USD started the London session at 1.7145, but dropped to a low of 1.7110 around lunchtime. It currently trades at 1.7133, enjoying a slight uptick at the start of the London session. This morning, we have the only top-tier data release from the UK this week (barring a very unexpected rate rise on Thursday), with the monthly Manufacturing Production release out at 9:30am. Markets are expecting 0.4% growth from a sector which has been performing strongly recently. Expect some volatility if the release prints much either side of this. This morning sees the monthly NIESR GDP Estimate for April – June, with the markets hoping that the recent good UK data pushes up the last reading of 0.9% to 1% or higher. The main risk event of the week is tomorrow night’s FOMC minutes, taken from the meeting held on 17-18th June. This meeting was held before last Thursday’s Non-Farms and the encouraging housing data that preceded it, so it is unlikely that the minutes will show any great change in stance from the one before.

Euro:

GBP/EUR dropped off during the London session yesterday, mirroring cable’s fall. After touching another recent high of 1.2640 in Asian trading, it drifted down below 1.26 to trade as low as 1.2584. It starts today at 1.26, with pound-bulls hoping for good UK manufacturing data to push it higher. However, gains may be capped to 1.2658 (EUR/GBP – 0.79). There is no top-tier EUR data all week, so tomorrow evening’s FOMC minutes are this week’s main focus. EUR/USD has remained within a tight range throughout the past 24 hours, trading between 1.3575 – 1.3610. It currently trades at 1.3595.

Aussie and Kiwi Dollars:

The Aussie benefitted overnight from an unexpected improvement in the NAB Business Confidence survey, which showed an increase to 8 from last month’s reading of 7. It stated that “firms were apparently shrugging off the sharp deterioration in consumer confidence that followed May’s Federal budget.” After the positive news, AUD/USD moved up from .9372 to .9389. AUD/USD currently sits at .9386. New Zealand saw the release of the quarterly NZIER Business Confidence survey overnight, which printed 32 – down from last quarter’s reading of 52. NZD/USD, which had been trading at .8753, dropped to .8740 on the release – however, the losses were quickly pared as the NAB result from Australia came out. NZD/USD currently trades at .8771. GBP/AUD is at 1.8253 with GBP/NZD at 1.9540.

Data releases for the next 24 hours:

AUD: Westpac Consumer Sentiment

EUR: No data

GBP: Manufacturing Production m/m

NZD: No data

USD: JOLTS Job Openings