USD

The Dollar Index is up nearly 0.5% on the day as markets react to another strong ADP report while shrugging off yesterday's surprise move from Fitch to downgrade the US credit rating.

This morning's ADP employment report showed the US private sector added 324K jobs, well above the 189K expected. 

The service sector added 303K jobs, while manufacturing shed 36K jobs – the fifth straight month of job losses in the industry.

Yesterday, Fitch stunned financial markets after the close by announcing a downgrade in the US credit rating from AAA to AA+, becoming the second major rating agency to take such action after S&P did so in 2011. Fitch cited "the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance" as reasons for its decision.

EUR

The Euro is down over 0.2% this morning following the latest US jobs data, losing momentum after its initial surge following Fitch's US credit rating downgrade. With today's move, EUR/USD now sits 0.5% lower for the week.

On the data front, Spain's unemployment count fell 0.4% in July, marking the country's lowest level of unemployed individuals since September 2008. It was the fifth consecutive month of declining unemployment in Spain.

Looking ahead, tomorrow's European docket is headlined by services PMIs from across the Eurozone, as well as German trade data and Eurozone producer inflation data.

GBP

The British Pound is in the red again today after the latest US private payrolls data as Cable traders brace for tomorrow's highly anticipated BoE interest rate decision.

The latest market pricing still points to a 0.25% rate increase when the BoE announces its latest interest rate decision tomorrow at 7:00 AM EST, with traders assigning over a 60% chance to this scenario. However, the odds of a 0.5% hike have slightly increased this week and are now approaching 40%.  

Before the decision, GBP traders will also get a look at the latest services PMI out of the UK, where it is expected that the service sector will have expanded for the sixth consecutive month in July.

JPY

The Japanese Yen is clinging to modest gains this morning following a rough three-day stretch that saw JPY shed over 2.75% against the Greenback. The recent moves in USD/JPY have been fueled by the reaction to the latest US ADP report and the surprise move from Fitch to downgrade the US credit rating.

With no economic data out of Japan to mull over this morning, Yen traders look ahead to July's services PMI read out of Japan scheduled for release this evening at 8:30 PM EST. Market consensus points to the index coming in at 53.9, in line with the preliminary read and just shy of the 54.0 seen in June. 

CAD

The Loonie is on the back foot this morning, down over 0.6% as weak manufacturing data from across the globe boosts demand for the safe-haven After yesterday's tough outing that resulted in a nearly 0.7% decline against the Dollar, the Loonie is down again this morning as CAD traders assess the latest economic data from Canada and the US over the past 24 hours.

Yesterday's Canadian manufacturing PMI release for July was better than market expectations but still pointed to a third consecutive monthly contraction in the sector. New orders fell slightly, but output increased, and survey participants remained optimistic about the future. However, operating costs saw a significant spike due to rising transportation and borrowing costs.

The July unemployment rate and Ivey PMI are next on the Canadian calendar, both slated for release Friday morning.

MXN

The Mexican Peso is back in the red today after shedding over 1% to begin the week despite a string of impressive economic indicators pointing to a robust Mexican economy.

According to the latest manufacturing PMI, Mexico's manufacturing sector expanded again in July, the sixth-straight month of growth, sending the index to its highest level in seven years. 

New orders, output, and optimism all improved, while international orders increased for the first time in five months.

The next batch of key data comes this Friday, with auto industry and fixed investment figures both on the docket.

BRL

The Brazilian Real is slightly lower this morning as traders catch their breath following yesterday's selloff that saw the Real drop nearly 1.5% versus the Dollar. The moves come ahead of today's BCB interest rate decision at 5:00 PM EST, where markets widely expect the Bank to deliver its first rate cut since its tightening cycle began in 2021. Market consensus points to a 0.25% rate cut, with an outside chance of a more aggressive 0.5% cut.

Meanwhile, consumer prices in Sao Paulo declined by 0.14% in July, surprising markets. This was the second-consecutive month of deflation, driven by decreased food prices and slower increases in housing, personal care, and clothing.  

CNY

The Yuan is down for the second day in a row following yesterday's 0.5% decline against the Dollar in the offshore market, despite the efforts of the PBoC and China's FX regulators to ease the pressure. The Yuan's latest stumble has been fueled by another batch of soft economic data out of China and renewed strength in the Greenback since mid-July.

All eyes will be on China's services PMI release for July, slated for this evening at 9:45 PM EST, which is expected to show another seventh-consecutive month of expansion in the sector – although at a slower pace than seen in June.