USD Extends Losses on Weak ADP, Posing Downside Risks to NFP - US Market Open
USD: The USD is underperforming following yesterday’s dovish commentary from Fed Chair Powell, who like both Clarida and Bullard, opened the door to a more accommodative stance, which has been what the US bond market currently signals with two rate cuts by the year end. Further selling had been seen in greenback following a shockingly low ADP report (lowest since March 2010), which rose 27k, below expectations of 180k, consequently, this poses downside risks tomorrow’s Friday NFP report. USDJPY has broken below 108.00 as US yields edge lower.
GBP: Alongside the USD weakness, the Pound had received a slight boost from the better than expected services PMI report. However, based on all three PMI readings, IHS Markit note that Q2 growth in the UK had likely stagnated further reducing the likelihood that the BoE will be raising rates in 2019. The outlook for the Pound continues to remain a fragile one as eyes focus on the next Tory leader and with Boris Johnson the frontrunner gains could be somewhat limited for the Pound.
Source: DailyFX, Thomson Reuters
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--- Written by Justin McQueen, Market Analyst
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