USD: Lots of news, but little that's new – Commerzbank

There was plenty of news yesterday, but nothing really new, which is why EUR/USD ended the day virtually unchanged. The focus yesterday was certainly on the ECB meeting, at which the key interest rate was left unchanged, even though Ms Lagarde was maybe a little more hawkish than expected in her press conference, Commerzbank's FX analyst Volkmar Baur notes.

Market is going to wait for next week's Fed meeting

"As a result, our economists no longer anticipate any further cuts in the key interest rate in this cycle. However, the market had already been only half-heartedly expecting another cut, so although this probability decreased again yesterday, it was not enough to really move the euro. The euro is not too dependent on 25 basis points more or less. And it was already clear beforehand that the cycle would come to an end in September at the latest."

"Looking at the data, fresh purchasing managers' indices (PMIs) were also released yesterday from the eurozone and the US, but here too there were no major surprises overall. In the eurozone, the PMIs were slightly better than expected and also improved on the previous month. In the US, on the other hand, the overall PMI was significantly better. However, the manufacturing PMI surprisingly fell below the expansion threshold of 50. Support for the US dollar came from initial jobless claims, which fell to their lowest level in three months, clearly indicating that the situation on the labour market does not appear to be deteriorating significantly."

"Last but not least, Donald Trump's visit to the Fed was on the agenda yesterday evening, including an attempt to throw the Fed chairman off balance in front of the cameras. However, he was able to counter this quite well and seemed prepared for the attack, so that this episode did not bring any new insights. Everyone knows by now that Donald Trump would like to fire Jay Powell, but Trump also knows that the market would not like to see this happen. What remains is the long-term damage to this important institution, although this is not something that can be seen in daily market movements. For truly new impetus, the market will now wait for next week's Fed meeting and watch closely to see to what extent the pressure on the Fed is reflected in its voting behaviour and official communications."