Daily Market Pulse

The USD is trading a little lower on the session. Yesterday’s FOMC minutes perhaps read a little more hawkish than markets might have been expecting; the minutes indicated no imminent easing and, if there was any talk about the timing of rate cuts as Chairman Powell had suggested, policymakers continue to feel that rates will have to stay elevated for some time to come.

ADP jobs data are released at 8.15ET (consensus is for +121k) while the weekly claims data are released at 8.30ET. Continuing claims have been edging steadily higher since early September, suggesting some softening in the labor market.

EUR/USD - Eurozone data reports this morning saw solid upward revisions to German and French Services and Composite PMI readings for December, resulting in the Eurozone data being revised up to 48.8 (from 48.1) for Services and 47.6 (from 47) for the Composite index. Regional German inflation data suggest the preliminary national December CPI report at 8ET will see inflation pick up again from November’s 3.2% Y/Y reading. Broader technical signals are bearish, suggesting limited scope for EUR rallies at present.

GBP/USD - UK final December Services and Composite PMIs were revised higher (to 53.4 and 52.1, from 52.7 and 51.7 respectively). Data also showed stronger than expected demand for Consumer Credit (GBP2.0bn) in November. Sterling gains reflect firmer data reports as well as the broader softening in the USD on the session.

USD/CAD - Firmer stocks and firmer crude oil prices (up 1% on the day behind Libyan output stoppages and Middle East tensions) are providing a little bit of a lift for the CAD amid the broader slide in the USD on the day.

USD/JPY - JPY rallied and pushed past its 200-day simple moving average on Wednesday, though the advance lost some momentum in late afternoon trading. In any case, if the bullish breakout is sustained, bulls could regain commanding control of the market, setting the stage for a possible rally.