Fed minutes triggered fresh doubts over a willingness to sanction easing.
The dollar edged higher after Fed minutes triggered fresh doubts over a willingness to sanction a sustained easing cycle while Euro sentiment remained negative.
US long-term yields declined, however, with the yield curve close to inverting again. US equities did make net headway on hopes for solid US domestic demand, although caution prevailed in Asia on Thursday.
The yen was resilient amid an underlying lack of confidence in the global growth outlook. Sterling was unable to make any headway as tough French rhetoric on Brexit maintained underlying political concerns.
Oil prices lost ground after the EIA inventories data. Precious metals were little changed as a firm dollar limited potential support
The July UK government posted a budget surplus of £1.3bn compared with £3.5bn the previous year with the deficit for the first four months of fiscal 2019/20 increasing to £16.0bn from £10.0bn as spending increased and revenue growth slowed.
The Euro showed some resilience on Wednesday, but failed to make headway amid an underlying lack of confidence.
Sterling lost ground following comments by a French official that in view of Prime Minister Johnson’s comments on the Irish backstop, the baseline scenario now seemed to be a ‘no-deal’ Brexit and President Macron reiterated that the deal could not be re-opened. German Chancellor Merkel stated that as soon as there is a solution to the Irish border issue, there will be no need for the backstop. She also stated that a negotiated Brexit would be welcomed, but Germany is ready for all outcomes and challenged the UK government to find a solution to the Irish border within the next 30 days.
The comments failed to provide significant support with Sterling holding net losses on the day. GBP/EUR settled around 1.0950 with GBP/USD below 1.2150. A labour-market survey recorded the strongest increase in wage rises since 2008, but political tensions tended to dominate sentiment with GBP/USD around 1.2120 on Thursday.
Economic Calendar
| Expected | Previous | ||
|---|---|---|---|
| 08:15 | Markit Mfg PMI(AUG) | - | 49.7 |
| 08:15 | Markit Serv PMI(AUG) | 52.6 | 52.6 |
| 08:30 | EUR German PMI Composite(AUG) | 52.3 | 50.9 |
| 08:30 | EUR German PMI Services(AUG) | 55.3 | 54.5 |
| 08:30 | EUR German Manufacturing PMI (M/M)(AUG) | 45.2 | 43.2 |
| 09:00 | Euro-Zone PMI Manufacturing(AUG) | 47.6 | 46.5 |
| 09:00 | Euro-Zone PMI Services(AUG) | 53.3 | 53.2 |
| 09:00 | Euro-Zone PMI Composite(AUG) | 52.1 | 51.5 |
| 11:00 | CBI Distributive Trades Survey(AUG) | -10 | -16 |
| 13:30 | CAD Wholesale Sales (M/M)(JUN) | 0.50% | -1.80% |
| 13:30 | USD Initial Jobless Claims | 216K | 220K |
| 13:30 | USD Continuing Jobless Claims | 1.700K | 1.726K |
| 14:45 | USD Manufacturing PMI(AUG) | 51 | 50.4 |
| 14:45 | USD Markit Services PMI(AUG) | 51.7 | 53 |
| 15:00 | Euro-Zone Consumer Confidence(AUG) | - | -6.6 |
| 23:45 | NZD Retail Sales (Q/Q) | - | 0.70% |
| 23:45 | NZD Core Retail Sales (Q/Q) | 0.20% | 0.70% |