Dollar surged overnight as Atlanta Fed Dennis Lockhart expressed his support for rate hike in September. Lockhart is seen by some analysts as neutral to slightly dovish, and hence his comments were taken quite seriously. He said in an interview with Wall Street Journal that it's a "high bar" not to act for him and "it will take a significant deterioration in the economic picture for me to be disinclined to move ahead." Meanwhile, the economy was ready and it was an "appropriate time to make a change" to monetary policies. The main focus will now be turned to ADP employment report later today. The ADP report is expected to show 210k growth in private sectors jobs in July. And non-farm payroll to be released on Friday will determine the greenback's fate in near term.
Technically, development in dollar index is mildly bullish. The breach of near term resistance at 98.15 suggests that rise from 93.56 is resuming. Also, the support from 55 days EMA is a mild bullish sign. Further rise would be seen to retest 100.39 high. Nonetheless, we'd maintain that the structure of the rise fro 93.13 is not clearly impulsive and could turn out to be a corrective move. Hence, we'll stay cautious on reversal at the current level. Break of 96.28 support will target 93.13/56 support zone.
New Zealand dollar is under some pressure today after employment data. Employment grew only 0.3% qoq in Q2 versus expectation of 0.5% qoq. Also that's a notable slowdown from prior quarter's 0.7% qoq. Unemployment rate rose to 5.9%, inline with expectation. Private sector labor cost rose 0.5% qoq as expected. NZD/USD is heading back to near term support at 0.6496.
Elsewhere, China Caixin PMI services rose to 53.8 in July. UK BRC shop price index dropped to -1.4% yoy in July. Services PMI will be a main focus in European session. UK services PMI is expected to drop slightly to 58.0 in July. Eurozone will release services PMI final and retail sales. Swiss will release CPI. In US session, ADP employment and ISM services will be main focus today while trade balance will also be featured. Canada will also release trade balance.