Daily FX Wrap: US non-manufacturing ISM turns the tide in the USD after Friday’s post payrolls bounce. Cable through 1.3400, NZD tips .7400. Spot JPY eyeing sub 102.00 again
It was a relatively quiet day until the afternoon release of the US ISM non-manufacturing data, which further detracted the probability of a FOMC move in September. The headline read came in at a much lower than expected 51.4 vs 55.5 previously, already moderated to 55.0.
EUR/USD had been running into strong sell order at 1.1170 through the day, holding off the Monday highs, but tore through both levels and 1.1200 to put in a fresh retest on the 1.1250 highs seen in the wake of the US payrolls report on Friday. In tandem, USD/JPY dropped back under 103.00, later taking out stops through the equivalent Friday base at 102.81 to post session lows at 102.25, but these are likely to be extended through the 102.00 level as little notable support seen until the mid-101.00’s.
Through the day, GBP and NZD were notable outperformers, with GBP buying testing 1.3400 ahead of the US numbers, but helped through the figure to hit 1.3418. EUR/GBP sales added to the pressure on the EUR spot rate as the cross hit a low of .8333, but we saw the cross up around 40 ticks off the lows later in the day.
NZD/USD hit .7400, with the added benefit of another healthy GDT auction, even though the rise in WMP was a more modest +3.7% (than expected). AUD/NZD was back in the mid 1.0300’s as a result, but AUD/USD also gained on the day as the spot rate is back eyeing a move on .7700 again.
USD/CAD extends the downside into the mid 1.2800’s, and looks set to test 1.2800 despite limited follow through in WTI on a weaker USD. The figure level is a strong support point but price action suggests a test at some point.