USD 

The US dollar regained ground to its counterparts, thanks to stronger than expected data from the US. 

The ISM non-manufacturing PMI climbed from 57.1 to 59.3, outpacing the consensus at 57.5. However, the ADP non-farm employment change reading showed a mere 208K increase versus the projected 223K gain and the previous 233K rise, hinting that the NFP might disappoint. Only the initial jobless claims and a speech from FOMC member Brainard are due today and these might have minimal effect on the dollar prior to NFP Friday.

EUR

The euro dropped to new lows against the dollar, as euro zone data came in mixed. Spain reported a drop in its services PMI from 55.9 to 52.7 instead of improving to the projected 56.2 figure. Italy showed a climb from 50.8 to 51.8 in its services PMI, higher than the projected 50.9 reading. The euro zone services PMI dipped from 51.3 to 51.1 instead of holding steady while retail sales marked a 0.4% increase instead of the estimated 0.6% gain. The ECB statement is scheduled today and more dovish remarks from Governor Draghi and his men might drive the shared currency lower.

GBP

The pound managed to put up a good fight in recent trading, as the UK services PMI came in stronger than expected. The report showed a climb from 56.2 to 58.6, higher than the projected improvement to 56.6. The BOE interest rate decision is scheduled today and no major announcements are expected, although any change in tone is likely to have a strong impact on pound movement.

CHF

The franc weakened to the dollar but continued to consolidate to the euro, as Swiss GDP came in stronger than expected at 0.6% versus 0.3%. No other reports are lined up from Switzerland today, leaving the franc sensitive to euro movements. Do watch out for any changes in risk sentiment which might impact the Swiss currency as well.

JPY

The yen weakened to the dollar once more, as USDJPY is closing in on the 120.00 mark. There have been no reports released from Japan yesterday and none are due today, suggesting that the move was mostly a result of dollar strength. Nevertheless, the yen remains in a weak spot compared to its forex counterparts, as traders continue to entertain the possibility of further BOJ easing.

Commodity Currencies (AUD, NZD, CAD)

The comdolls continued to show weakeness to their counterparts, although the Loonie was able to show a bit of recovery. BOC Governor Poloz hinted that they might hike rates earlier than expected, as strong inflationary pressures might warrant tightening. Earlier today, Australia saw stronger than expected retail sales gains of 0.4% versus the projected 0.1% uptick while the trade balance indicated a smaller shortfall. Canadian Ivey PMI is up for release later and a climb from 51.2 to 52.7 is eyed, which might lead to more Loonie gains.

By Kate Curtis from Trader’s Way