USD/NOK weakened ahead of the release

The dollar traded unchanged against most of its other G10 counterparts during the European morning Tuesday. It was higher against NOK and SEK, in that order, while it was lower against AUD and GBP.

The final manufacturing PMIs for June from France, Germany and Eurozone as a whole were announced. The French data started the day, coming out higher than forecast, but still remaining below the 50 barrier for a second successive month. Germany’s PMIs fell marginally below expectations. Data from the single currency area was also slightly lower than the forecast.

The UK also released its manufacturing PMI for June. The strong figure of 57.5 was even higher than the previous month’s robust figure and better than the forecast of a decline to 56.8, strengthening cable at the release.

Besides the PMIs, the German unemployment rate for June and Eurozone’s unemployment rate for May both remained unchanged at 6.7% and 11.6% respectively. These indicators had no impact on EUR as the market was already anticipating these broadly stable readings.

The Norwegian Krone was the main loser during the European morning after the nation’s manufacturing PMI in June missed the estimate and remained below 50.0. USD/NOK weakened ahead of the release but jumped nearly 200 pips at the time of the release, recovering the losses and more.

The main gainer was the Australian dollar after the Reserve Bank of Australia kept its cash rate steady at 2.5% as widely expected and issued a statement essentially identical to the previous month. Apparently some market participants had expected the RBA to adopt a more dovish stance or to be more vocal about the strength of the currency. I still expect Chinese demand for Australia’s commodities to wane and for the country’s terms of trade to deteriorate further, which should weaken the AUD over time.