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The French June PMI manufacturing index edged higher to 57.1 from 57.0 previously, but below consensus forecasts while the services index was also below expectations at 57.4 from 56.6 previously. In contrast, the German PMI manufacturing index strengthened to 64.9 from 64.4 previously and above consensus forecasts while the services-sector index posted a strong advance to 58.1 from 52.8 in May, the strongest reading for over 10 years.

The Euro-zone PMI manufacturing index was unchanged at 63.1 with the services index strengthening to 58.0 from 55.2.

The data maintained underlying confidence in the Euro-zone recovery outlook and the Euro maintained a firm tone into the New York open.

The US current account deficit widened to $196bn for the first quarter of 2021 from $175bn previously, but below consensus forecasts of $206bn.

Atlanta Fed President Bostic stated that the phase of higher inflation is set to be longer than expected initially. He added that a decision on tapering could be seen in 3-4 months while a rate increase was possible late in 2022. Fed Governor Bowman commented that inflation has risen and is likely to rise further while supply-line bottlenecks could take some time to ease. Nevertheless, she expected that upward pressures on inflation should ease as bottlenecks are resolved.

Dallas Fed President Kaplan reiterated that he expected a first rate increase in 2022. Boston head Rosengren was more confident over transitory inflation although the rate is likely to be slightly higher than 2.0% in 2022. The Euro peaked at 1.1970 on Wednesday before a retreat to 1.1930 as the US dollar secured some wider respite on short covering. There was little change on Thursday with the Euro around 1.1925 as markets continue to monitor Federal Reserve comments closely.


The dollar posted 15-week highs at 111.10 ahead of Wednesday’s New York open before stalling as the US currency came under wider selling pressure.

US new home sales declined to an annual rate of 769,000 for May from a revised 817,000 previously and well below consensus forecasts with a lack of supply hampering transactions. Although there was choppy trading in US Treasuries, overall yields were little changed with the 10-year yield below 1.50%. The dollar overall dipped to lows around 110.70 against the yen before consolidating around 111.00 as underlying dollar demand held firm.

Treasury Secretary Yellen commented that inflation will go back to normal after this year. There were also reports that Congressional negotiators were getting close to an infrastructure framework deal, although markets remained cautious with little reaction. Market conditions were subdued in Asia on Friday with underlying yen sentiment still weak with the dollar settling around 110.80 in early Europe and the Euro around 132.30.


According to the flash data for June, the UK PMI manufacturing index retreated to 64.2 from 65.6 previously, although slightly above consensus forecasts while the services index retreated to 61.7 from 62.9 and below market expectations. There was a further strong rate of growth in new orders with the strongest rate of job creation in the series history. Within manufacturing, there were further and severe supply-side difficulties with costs and prices both increasing at the fastest pace on record. There was a dip in overall business optimism while prices in the services sector also increased at a record rate for the month.

According to sources, the EU member states have conditionally approved a three-month extension to the grace period for the Northern Ireland protocol.

Sterling overall maintained a firm tone with net gains into the New York open. The UK currency strengthened to highs just below 1.4000 against the US dollar while the Euro retreated to 10-week lows around 0.8530. There was speculation that the Bank of England would adopt a more hawkish stance at Thursday’s policy meeting amid the potential for increased concerns over inflation, although there was a limited correction late in Europe.

Sterling consolidated just above 1.3950 against the dollar on Thursday and the Euro just below 0.8550 ahead of the Bank of England statement.


The Euro edged higher against the franc in early Europe on Monday, but stalled around 1.0970 and the franc regained some territory while the dollar dipped to lows near 0.9150. The franc gained some support from a notable relaxation of domestic coronavirus restrictions, although the impact was offset by expectations of a Euro-zone recovery. Global risk conditions and rhetoric on interest rates will continue to be monitored closely in the short term.

The franc traded marginally lower on Thursday with the dollar held just below 0.9200 with central bank rhetoric watched closely.

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