26/07/2024
Written by: Ian Morley
Summary:
Currency movements were mixed on Friday due to conflicting statements from Fed speakers and varied manufacturing PMI data. While S&P PMI numbers and a hawkish Fed Barkin initially bolstered the USD to its strongest levels of the week, gains were later erased by a combination of dovish comments from Fed Goolsbee and a further contraction in manufacturing activity shown by ISM data. Despite this, the USD ended the week unchanged, while equity markets continued to reach new highs. Notably, GBPEUR descended to a previous support level without breaking lower.
Speeches:
Market Insight:
As it is the first week of the month, much attention will be on US job data releases, including JOLTS, ADP payrolls, and Friday’s nonfarm payroll and wage figures. Strong labour market data would likely reinforce expectations of the Fed’s first rate cut in June, supporting the USD and sustaining gains in the equity market. Fed Powell’s testimony to Congress on the economy and monetary policy will also be closely watched.
In the UK, focus will be on the Spring budget and its potential impact on the timing of the Bank of England’s rate cuts this year, with pricing currently anticipating the first cut in August.
The ECB is expected to maintain its interest rates during its meeting on Thursday, with guidance likely revolving around awaiting inflation and wage data for the first quarter before deciding on rate cuts. Goldman Sachs recently revised its rate cut expectation from April to June this year, based on their analysis.