Aggressive speculative Sterling buying.
The Euro held firm into Tuesday’s US inflation data. EUR/USD posted 3-week highs just above 1.0820 after the US data before fading.Weak Euro-Zone data
The latest Euro-Zone PMI business confidence data recorded a decline in the manufacturing index to a 37-month low of 43.6 for June from 44.8 the previous month and compared with an unchanged reading for the month.
The services-sector index also retreated to a 5-month low of 52.4 for the month from 55.1 previously and well below expectations of 54.5.
Input costs rose at the slowest rate since December 2020 and average selling prices for goods and services rose at the weakest rate since March 2021.
The latest UK PMI business confidence data recorded a decline in the manufacturing index to a 6-month low of 46.2 for June from 47.1 previously and below consensus forecasts of 46.8. The services-sector index also retreated to a 3-month low of 53.7 from 55.2 and below expectations of 54.8.
Total private sector input cost inflation was the weakest since February 2021, but the rate of increase in prices charged eased only slightly in June. Primarily this reflected further strong price increases in the services sector with upward pressure on wages again the principal culprit. The UK 2-year yield hit a fresh 15-year high on Friday.
The US PMI manufacturing index dipped to a 6-month low of 46.3 for June from 48.4 previously and below expectation of 48.5. The services-sector index edged lower to a 2-month low of 54.1 from 54.9 and in line with expectations. Within the data, overall selling prices increased at the slowest rate since October 2020. Manufacturing prices increased at the slowest rate for three years with services-sector increases at 5-month lows.
CFTC data recorded a very sharp increase in long non-commercial Sterling positions to just over 46,500 contracts in the latest week from 6,700 previously. This was the largest long position for over five years, lessening the potential for further buying.
The overall mood surrounding risk appetite was fragile on Friday with further reservations surrounding the global economy, especially with weak Euro-Zone data.
As equities moved lower, the dollar secured some defensive support with the currency index at 1-week highs before a net correction.
Following the aborted coup attempt by Prigozhin over the weekend, the situation in Russia will be watched closely.
Japan’s vice finance minister for international affairs Kanda stated that recent yen move had been rapid and one-sided, reinforcing the potential for intervention through the Bank of Japan.
The Euro posted significant losses after weaker than expected Euro-Zone PMI business confidence data. EUR/USD dipped to lows just below 1.0950 before a recovery to near 1.0900.
US yields secured a net retreat, but the dollar secured an element of defensive on demand. USD/JPY posted fresh 7-month highs above 143.85. Intervention speculation helped trigger a limited USD/JPY correction to 143.35 on Monday
The Swiss franc gained some support from weaker risk conditions. EUR/CHF retreated to 0.9775 with a slight net USD/CHF advance to 0.8970.
Sterling overall was resilient, but higher yields failed to provide further net support and weaker risk appetite sapped support. GBP/USD found support below 1.2700 and settled around 1.2730 on Monday.
Commodity currencies posted net losses amid US dollar gains and weaker equities. AUD/USD dipped sharply to lows below 0.6670 and was unable to regain ground on Monday. USD/CAD edged higher to 1.3225 before settling around 1.3180 and traded around 1.3165 on Monday.