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USD jumps following impressive US PMI figures

currency-newsUSD jumps following impressive US PMI figures
The US dollar surged on Friday on the back of a record increase in activity in the US manufacturing and service sectors this month.
 
Meanwhile, the pound is trading in a narrow range so far this morning, with GBP/EUR flat at €1.1613 and GBP/USD stable at $1.4162. GBP/CAD is rangebound at C$1.7073, while GBP/AUD and GBP/NZD hold steady at AU$1.8297 and NZ$1.9716, respectively.
 
Looking ahead, will we see UK coronavirus statistics infuse some volatility into GBP exchange rates this week?
 

What’s been happening?

The US dollar closed last week’s session on a high in the wake of the latest US Markit PMI release.
 
While not as influential as the ISM release, USD investors were nonetheless impressed after the Markit PMI reported a record expansion in the US manufacturing and service sectors this month.
 
The pound, meanwhile, initially rallied on Friday as GBP investors cheered data showing a stronger-than-expected expansion of domestic retail sales in April and a record jump in the UK’s manufacturing PMI.
 
However, worries over the lack of progress in talks between the UK and EU over the controversial Northern Ireland Protocol saw Sterling relinquish the vast majority of these gains by the end of the European trading session.
 
At the same time, the euro suffered aggressive selling at the end of last week following comments from European Central Bank (ECB) President Christine Lagarde, as she dismissed speculation the bank could start to discuss the tapering of its bond purchases in the coming months.
 
This overshadowed the Eurozone’s own PMIs, which revealed the bloc’s private sector experienced its strongest growth in over three years in May.
 

What’s coming up?

Looking ahead, we are likely to see the pound vulnerable to coronavirus headlines this week, as any significant rise in new cases of the Indian variant could threaten to derail the government’s reopening plans.
 
For EUR investors the focus in the first half of this week will be Germany’s finalised GDP figures for the first quarter. These could provide some relief to the euro if the Eurozone’s largest economy is reported to have contracted at a slower pace than initially thought.
 
Across the pond, the spotlight this week will be on the latest US durable goods release, with a solid expansion in order growth last month potentially propelling the US dollar higher.
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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