The British Pound is likely to look past PMI data as the BOE rate decision looms ahead. The US Dollar may rise ADP and ISM reports boost Fed rate hike bets.
Talking Points:
British Pound to Overlook Services PMI as BOE Rate Decision Looms Ahead
US Dollar May Rise as ISM, ADP Reports Boost Bets on September Fed Hike
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July’s UK Services PMI data headlines the economic calendar in European hours. Expectations call for the index to edge narrowly lower to 58.0 from 58.5 recorded in the prior month, reflecting a slight deceleration in the pace of sector activity growth. The outcome may not inspire follow-through from the British Pound however as traders withhold directional conviction until after this week’s much-anticipated Bank of England policy announcement passes.
Later in the day, the spotlight shifts to US economic data. The ISM Non-Manufacturing Composite gauge is expected to print at 56.2 in July, a hair higher than June’s 56.0 result. Meanwhile, the ADP Employment gauge of private-sector hiring is forecast to reveal a slowdown in job creation, with payrolls rising by 215,000 in July compared with a 237,000 increase in the prior month. US economic data has increasingly outperformed relative to analysts’ bets since mid-May, opening the door for upside surprises. Such outcomes may help boost the perceived probability of a September Fed rate hike in, pushing the US Dollar higher.
The Australian Dollar underperformed in otherwise quiet Asian trade as prices corrected following yesterday’s outsized rally in the wake of the RBA monetary policy announcement. Falling equity prices may have compounded downside pressure. Australia’s benchmark S&P/ASX 200 stock index declined as much as 1 percent, pointing to souring risk appetite that could have further hurt the sentiment-linked currency.
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