USD 

The US dollar was unable to benefit from the safe-haven rallies as dovish Fed rhetoric was front and center.

FOMC member Brainard reiterated that the central bank should pay closer attention to underlying inflation trends before deciding to tighten while policymaker Kashkari said that the recent hikes are doing the economy harm. Data was weaker than expected as factory orders posted its steepest fall in three years at a 3.3% drop. US non-manufacturing PMI, trade balance, and Fed Beige Book are due next. 

EUR 

The euro was also in a weak spot as final services PMI readings from the region’s top economies came in the red. Euro zone retail sales also sank 0.3% versus the projected 0.2% dip. German factory orders, Italian retail sales, and the region’s retail PMI are up for release today and another batch of downbeat reports could spell more euro weakness. 

GBP 

The pound was able to stay resilient despite seeing a decline in the UK services PMI. The reading fell from 53.8 to 53.2, lower than the projected fall to 53.5. There are no reports due from the UK economy today so Brexit-related headlines might influence pound movement. 

CHF 

The franc gave up some of its recent risk-off gains when the Swiss GDP fell short of estimates. The economy grew 0.3% in Q2 versus the projected 0.5% expansion while the earlier figure was downgraded to 0.1% growth from the previously reported 0.3% reading. Swiss CPI was flat as expected. There are no reports due from the Swiss economy today. 

JPY 

The yen was the big winner for the day as it took advantage of most of the safe-haven flows. There were no major reports out of Japan recently but there has been talk of further tapering, lending more support for the Japanese currency. Average cash earnings data is due next and a 0.5% rebound is eyed after the previous 0.4% drop. 

Commodity Currencies (AUD, NZD, CAD) 

The Kiwi managed to score some gains in a risk-off environment thanks to the 0.3% rebound in dairy prices reported during this week’s GDT auction. The Loonie was in a weak spot as crude oil failed to sustain its upside momentum while the Aussie was weighed down by the RBA statement which contained remarks against currency appreciation. Australia’s Q2 GDP is lined up next and a 0.8% growth figure is eyed. The BOC will be announcing its policy decision as well but no hikes are expected for now. 

By Kate Curtis from Trader’s Way