The USD is weak as we approach the NA session, with early EUR gains driven by improved French confidence data, fol-lowed by a broader G10 rally that coincided with the release of euro area PMI’s (top chart) – suggesting that market participants are finding reassurance in the softened pace of moderation with indicators still in expansionary territory above 50. Overall, the market tone is mixed, with equity futures soft, U.S. 10Y yields lower and gold rallying on a mix of concerns ranging from geopolitics to tax inversions. Meanwhile, com-modities appear to be stabilizing following the release of unexpected strength in China’s HSBC flash manufacturing PMI—with solid new or-ders and new export order sub-indices. Events and releases through the NA session should help market participants assess the near term growth outlook—recently clouded by Monday’s Chicago PMI and housing re-leases—as we look to FHFA house prices, the Markit U.S. manufacturing PMI, and the Richmond Fed manufacturing index (see p3 for calendar). Four Fed policymakers are scheduled to speak publicly today, however both Bullard and Powell are providing introductory remarks, leaving the focus on non-voting hawk George. Kocherlakota is scheduled to speak through the latter half of the NA session, with a dovish tone likely to mirror his comments from Monday evening.
Read the full report: FX Daily