A high bar
A chap called Tyler Fischer visited several New York fortune tellers to discover what lay in store for him. They all made different prophesies. Had Mr Fischer asked a selection of Federal Reserve presidents about the future of US interest rates he might have been offered an equally varied range of predictions.

The impact of observations by senior Fed officials is directly proportional to their immediacy. What Dennis Lockhart said three or four months ago is of much less interest to investors than what he said yesterday. And whet the Atlanta Fed president said yesterday was "I think there is a high bar right now to not acting, speaking for myself". Mr Lockhart said only a "significant deterioration" in the economy could persuade him not to vote for higher interest rates next month,

Investors leapt on his comments, as did the US dollar. Having been almost on the defensive for most of the day the dollar jumped half a cent higher and went on to score net gains of half a cent against sterling and three quarters of a cent against the euro. Over the last seven days it is the only currency to have outperformed sterling, adding two thirds of a cent.

Reflected glory
The US dollar was not the top performer on the day though: that honour went to the Australian dollar. Although the Aussie did fall by a cent following Mr Lockhart's prediction it had enough earlier gains in the bin to come out half a dozen ticks ahead of the Greenback.

Having strengthened as a result of the Reserve Bank of Australia's mildly-worded statement on Tuesday morning the Aussie continued higher during the London session. The NZ dollar had no such reserves on which to fall back. It was also hurt by news of a further decline in the Global Dairy Trade index, which has shown milk prices falling since March, and by slightly disappointing NZ employment figures.

Sterling's third place among the major currencies was justified by investors adding two and two to make five: if the Fed raises rates in September the Bank of England won't be far behind.

PMIs round two
Investors might not have made much out of Monday's manufacturing sector purchasing managers' indices but that does not mean they will ignore today's measures of services sector activity. Good numbers would tend to support expectations for a US rate hike in September and, therefore, the US dollar. 

The PMIs from Australia and China, already out, are both stronger on the month at 54.1 and 53.8. The European readings should all be comfortably above the 50 breakeven point with Britain leading the way at 58.0. A 55.2 is expected from the States.

Other data cover Swiss inflation, Euroland retail sales and the trade figures from North America. ADP's Employment Change number will be seen as an important pointer to Friday's official US employment report and the Australian jobs numbers tonight will be crucial to the Aussie.