Yesterday’s trading session produced a weaker US dollar as flash PMI data for August disappointed. There were softer numbers all around with the UK and eurozone printing some ugly figures, displaying marked slowdowns in August. However, the surprise of the day came out of the US where services plunged dramatically into contraction territory. Below 50 is an indicator of contraction and August US services fell down to 44.1. This is some of the weakest data since May 2020 and does not bode well for the US economic outlook.
Yesterday’s data reduces the chances of the Fed hiking by 75bps in September. As a result, the dollar took a dive. The pound rose above $1.18 and made good ground towards the $1.19 handle. EURUSD jumped back above parity, but this move could not be sustained, and it closed the session well below. Today is a quiet day on the economic calendar. All eyes will be on the Jackson Hole conference which begins tomorrow.
8:25am, August 24th 2022
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