Sterling slides to 1.41 on the Dollar
The final UK PMI services-sector index was revised to 62.9 from the flash reading of 61.8 and the highest figure on record. The data helped maintain a positive Sterling tone early in the European session amid expectations of a strong near-term recovery.
There was some disappointment over the latest announcement on UK travel with restrictions tightened rather than being eased as had been expected. Markets will also monitor developments surrounding the Indian variant closely in the short term.
As Dollar gains dominated, the UK currency slid to below the 1.4100 whilst against the Euro, settled close to 1.1630. With US Dollar developments likely to dominate again on Friday, Sterling currently sees little change and holds below the 1.4100 mark.
ADP reported an increase in private-sector US payrolls of 978,000 for May following a revised 654,000 increase the previous month and well above consensus forecasts of around 650,000. The data has had only limited correlation with the monthly employment data releases, but the data helped underpin confidence in Friday’s release.
The data maintained underlying concerns surrounding inflation pressures. The Dollar gained ground following the ADP employment data and the advance gained further traction following the business confidence data with a covering of short positions. Sharp moves are expected with Friday’s NFP report with the dollar holding steady as we begin Friday’s trading session.
The Euro-zone PMI services index was revised marginally higher to 55.2 from the flash reading of 55.1 and final April figure of 50.5. The Spanish and Italian figures both registered significant gains on the month, although the Euro was unable to gain any further traction following the release.
The Euro continued to drift lower into the European close with a sharp overall retreat to around 1.2120. Expected volatility will be heightened today with the US employment report out at lunchtime. The Euro is currently holding the Dollar around the 1.2115 mark.
Data to watch
12:00 – EUR – ECB President Lagarde Speaks
12:00 – USD – Fed Chair Powell Speaks
13:30 – USD – Average Hourly Earnings
13:30 – USD – Non-Farm Employment Change
13:30 – USD – Unemployment Rate