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German labour-market data recorded an unemployment increase of 69,000 for June following a 238,000 increase the previous month and compared with consensus forecasts of an increase close to 120,000 for the month. The Euro-zone PMI manufacturing index was revised higher to 47.4 for the final reading from the flash reading of 46.9 and the previous month’s figure of 39.4. The German IFO institute expects a gradual recovery in the German economy with expectations of a 6.9% recovery for the third quarter after an 11.9% slump for the second quarter. The ECB maintained a slightly more optimistic tone over the outlook.

The Euro was, however, unable to make headway ahead of the New York open and briefly dipped below the 1.1200 level as the dollar held steady.

The US ADP report registered an increase in private-sector jobs of 2.37mn for June and below consensus forecasts of 3.00mn for the month. There was, however, a huge revision to May’s data with a monthly increase of 3.07mn compared with the original estimate of job losses totalling 2.76mn. The substantial revision brought the data much closer to the BLS monthly data but did little to boost the credibility of the ADP data.

The final PMI manufacturing index was revised slightly higher to 49.8 from the flash reading of 49.6. The ISM manufacturing index strengthened sharply to 51.3 for June from 43.1 the previous month. This was the strongest reading since May 2019 and the strongest monthly increase since 1980. There was a very strong recovery in new orders to 56.4 from 31.8 with production also securing a strong rebound. The prices index moved above 50.0 while there was a further contraction in employment and order backlogs, although at a slower rate. Strong data underpinned confidence and undermined the dollar as risk assets advanced. The dollar declined sharply following the releases and the Euro made solid gains to above 1.1250 as commodity currencies also moved higher. The labour-market report will be released on Thursday ahead of Friday’s Independence Day holiday with expectations of a strong gain in payrolls for the second successive month with volatile trading likely following the release. 


The dollar drifted lower into the New York open. Both currencies tended to lose ground following the US data releases with the dollar edging below the 107.50 level. Minutes from June’s Federal Reserve meeting reiterated the importance of forwarding guidance and the Fed remain committed to using the full range of its tools to support the economy. Officials agreed on the need for more analysis of yield control. There were also comments that a second coronavirus wave was no less plausible than the baseline economic scenario. Dollar reaction was muted as it traded just below 107.50 with the US currency unable to gain wider support.

Comments from Fed officials suggested that yield curve control was not a priority and US equities struggled to make further headway while Japanese developments were neutral. Coronavirus developments were mixed as the US posted a fresh record high in new infections of over 50,000 in the past 24 hours. There was, however, increased optimism that progress was being made in developing a vaccine by companies including Pfizer. Overall, the dollar settled just below the 107.50 level


The UK PMI manufacturing index was confirmed at 50.1 for June, unchanged from the flash reading. Bank of England external MPC member Haskel stated that the current monetary policy stance is appropriate. He stated that activity is recovering faster than the bank expected, but also that the balance of risks are to the downside. He was also concerned that there are already indicators of increased unemployment and that there is an important element of uncertainty how many furloughed workers will return to work. Sterling reaction was muted with expectations that there would be further Bank of England action later this year.

Prime Minister Johnson reiterated that a free-trade deal with the EU can be reached, although the UK is prepared for either eventuality and uncertainty remained a key feature. Sterling edged lower into the New York open with traders taking advantage of gains yesterday to sell the currency. There was, however, a firm tone later in the day and a net advance on Thursday with a move to near 1.2500 against the dollar while the Euro retreated to 0.9020 as firm risk conditions provided underlying support. 


The Swiss PMI manufacturing index declined slightly to 41.9 for June from 42.1 previously and well below consensus forecasts which will trigger fresh unease over the strength of the Swiss rebound and maintain pressure for a competitive franc.

The Euro was unable to make significant headway during the day and the dollar dipped to lows below 0.9450 as the US currency registered wider losses. Firm risk appetite had an impact with the franc edging lower on Thursday as the Euro edged above 1.0650, although the US currency was held close to the 0.9450 area.




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