EUR / USD
The Euro was unable to make any headway after Tuesday’s European open and dipped below the 1.0800 level against the dollar, although narrow ranges prevailed.
The US JOLTS data recorded a sharp decline in job openings to 8.83mn for July from a revised 9.17mn the previous month. This was substantially below consensus forecasts of 9.46mn and the lowest reading since May 2021.
Given that the Federal Reserve has signalled the importance of a softer labour market in curbing inflation pressure, the data had a significant impact.
US consumer confidence declined to 106.1 for August from a revised 114.0 the previous month and well below consensus forecasts of 116.00. There was a decline in the current assessment and expectations components for the month with expectations only just above the recession benchmark.
The job-openings and consumer confidence data combined increased speculation over a weaker economy.
Markets were even more confident that rates would not be increased in September and the chances of a November hike dipped back below 50%.
The dollar dipped sharply after the data and, after a limited corrective recovery, there was fresh selling with the Euro moving above 1.0850 against the dollar.
A rebound in risk appetite was also a key element in providing net Euro support after the US data.
The Euro hit highs near 1.0890 late in US trading before a correction to 1.0860 as the dollar recovered some ground.
The US jobs data will remain an important focus with the ADP private-payrolls data due on Wednesday.
The dollar maintained a strong tone after Tuesday’s European open and posted strong gains with fresh 9-month peak near 147.40 against the yen ahead of the US data as US yields moved higher.
Treasuries rallied strongly following the job-openings data with the 10-year yield sliding to 2-week lows below 4.15%. The yen posted net gains despite a strong advance in US equities. With the market wrong-footed, the dollar posted sharp losses with a test of support below 146.00 just ahead of the European close.
US yields edged higher on Wednesday which underpinned the dollar and there was further dovish commentary from the Bank of Japan.
The dollar recovered to around 146.20 at the European open on Wednesday.
Developments in the Chinese economy will be watched closely with the latest PMI data due on Thursday.
Sterling there were no significant UK developments on Tuesday with markets waiting for the next batch of UK data releases to get a fresh sense of perspective on the UK outlook. Overall confidence in the outlook remained fragile with further speculation that the aggressive monetary tightening would undermine the economy.
There were also fresh doubts whether the Bank of England would decide to increase interest rates to above 5.50%.
Sterling dipped to lows just above 1.2560 against the dollar after the European open, but secured a significant reprieve as the dollar dipped sharply after the US data releases and US yields declined.
Stronger risk appetite underpinned the Pound, although the currency struggled to make significant headway amid domestic reservations.
Sterling was initially held just above 1.2600 against the dollar before an advance to 1.2630 as the dollar dipped further while the Euro strengthened to 2-week highs above the 0.8600 level. Sterling traded around 1.2625 on Wednesday with the Euro just above the 0.860 level.
The Swiss franc held a solid tone on Tuesday despite a further net recovery in risk appetite. The Euro advanced to 0.9570 before a retreat back below 0.9550 while the dollar dipped below the 0.8800 level as US yields moved lower on the day.
Narrow ranges prevailed on Wednesday with the dollar held just below the 0.8800 level as markets continued to monitor risk conditions.