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    Dollar rises after release of strong Manufacturing and Jobs data

    USD

    The dollar gained on Wednesday after better-than-expected data boosted the outlook for the U.S economy and increased the chances of an early interest rate hike from the Fed.

    The greenback rose after ADP Employment Change, which is sometimes seen as a proxy for Non-Farm Payrolls – increased by a higher-than-anticipated 237k from 201k in the previous month of May, when it had been expected to increase by 218k. May’s figure was also revised up from 201k to 203k. Non-Farm Payrolls is out tomorrow (Thursday) and although the higher ADP result would appear to indicate the same is possible for NFP’s, there is little real correlation between the two.

    The dollar was also supported by continuing positive Manufacturing data from the Institute of Supply Management (ISM). This came out at a higher-than-expected 53.5 in June, beating analyst’s estimates of 53.2. The New Orders component, which is often seen as a forward indicator for the economy rose by 0.2 to 56.0 from 55.8 in May. Another noteworthy detail from the report was the Employment component, which rose 3.8 points to 55.5 from 51.7 previously, with the reporting saying this reflected: “growing employment levels from May, at a faster rate.”

    EUR

    The euro weakened on Wednesday after another last-minute proposal from Greeks to creditor institutions was rejected, with Germany still taking a hard-line and saying that further negotiations would now have to wait till after the referendum on July 5.

    Alexis Tsipras wrote a letter to EC’s Junckers, ECB’s Draghi and IMF’s Lagarde overnight proposing a last minute deal, saying he would be willing to make deeper reforms than those originally proposed before negotiations broke down last week and he called a referendum at the weekend. The reforms he proposed covered six main areas, including Pensions, VAT, fiscal structures, labour markets and product markets. Nevertheless Angela Merkel stood by her decision not to enter into any new negotiations until after the Greek people have had their voice heard at a referendum.

    On the data front, Manufacturing PMI in June (final estimate) came out at 52.5 in line with expectations and identical to the previous result.

    GBP

    The pound fell against most pairs on Wednesday after the governor of the Bank of England, Mark Carney said that low interest rates could continue for “quite some time.”

    The comments came during a speech after the BOE released its twice yearly Financial Stability report. The central bank would have given the economy a stable outlook, as it did in December, however the worsening situation in Greece and fears that this could lead to contagion – perhaps not directly since U.K exposure is minimal to Greece but perhaps via a third-party country which the U.K has more exposure to such as France – and therefore another financial crisis. The governor warned not to underestimate the implications of a possible ripple effect infecting global markets if Greece were to slip into the abyss.

    In addition to sobering comments from Governor Carney prompted by events in Greece, the pound also suffered after data released showed a deeper-than-expected slow-down in Manufacturing, with the Purchasing Manager’s Index, falling to 51.4 in June from 51.9 in May, when a rise to 52.5 had been forecast. This was the lowest level for the index for two years. The main reason given for the slowdown was the strength of the pound which reached a 5-year high against the euro.

    JPY

    The yen weakened over 70 points on Wednesday against Tuesday’s close, despite a better than expected Tankan index reading.

    Overnight data indicated that Japan’s Tankan Large Manufacturing Index, considered accurate given its near 100% response rate, rose unexpectedly advancing to 15.0 in Q2 2015, compared to a reading of 12 recorded in the previous quarter. Additionally the Tankan Large Manufacturing Outlook Index climbed to 16.0 in Q2 2015, following a level of 10.0, in the previous quarter. Meanwhile the Tankan Non – Manufacturing Outlook Index climbed to 21.00 in Japan, against market expectations of an advance to a level of 22.00.

    Earlier today data revealed that Japan’s Manufacturing PMI edged down to 50.1 in June, but remained in expansion territory and compared to the prior month’s reading of 50.9%.

    These figures, despite the weak industrial production figures and the slowdown in China, suggest the Japanese economy continuing to gain pace.

    BOJ board member Yukitoshi Funo speaking in Tokyo today said that companies needed to to be able to achieve sustainable growth regardless of Forex risk and that the economy needed strength to withstand Forex moves which is determined by the market. The tenor of his remarks was that companies had to “get on with it” in regard to currency shifts.

    The yen was trading at 123.14 per dollar late in the New York session.

    USD

    The dollar gained on Wednesday after better-than-expected data boosted the outlook for the U.S economy and increased the chances of an early interest rate hike from the Fed.

    The greenback rose after ADP Employment Change, which is sometimes seen as a proxy for Non-Farm Payrolls – increased by a higher-than-anticipated 237k from 201k in the previous month of May, when it had been expected to increase by 218k. May’s figure was also revised up from 201k to 203k. Non-Farm Payrolls is out tomorrow (Thursday) and although the higher ADP result would appear to indicate the same is possible for NFP’s, there is little real correlation between the two.

    The dollar was also supported by continuing positive Manufacturing data from the Institute of Supply Management (ISM). This came out at a higher-than-expected 53.5 in June, beating analyst’s estimates of 53.2. The New Orders component, which is often seen as a forward indicator for the economy rose by 0.2 to 56.0 from 55.8 in May. Another noteworthy detail from the report was the Employment component, which rose 3.8 points to 55.5 from 51.7 previously, with the reporting saying this reflected: “growing employment levels from May, at a faster rate.”

    EUR

    The euro weakened on Wednesday after another last-minute proposal from Greeks to creditor institutions was rejected, with Germany still taking a hard-line and saying that further negotiations would now have to wait till after the referendum on July 5.

    Alexis Tsipras wrote a letter to EC’s Junckers, ECB’s Draghi and IMF’s Lagarde overnight proposing a last minute deal, saying he would be willing to make deeper reforms than those originally proposed before negotiations broke down last week and he called a referendum at the weekend. The reforms he proposed covered six main areas, including Pensions, VAT, fiscal structures, labour markets and product markets. Nevertheless Angela Merkel stood by her decision not to enter into any new negotiations until after the Greek people have had their voice heard at a referendum.

    On the data front, Manufacturing PMI in June (final estimate) came out at 52.5 in line with expectations and identical to the previous result.

    GBP

    The pound fell against most pairs on Wednesday after the governor of the Bank of England, Mark Carney said that low interest rates could continue for “quite some time.”

    The comments came during a speech after the BOE released its twice yearly Financial Stability report. The central bank would have given the economy a stable outlook, as it did in December, however the worsening situation in Greece and fears that this could lead to contagion – perhaps not directly since U.K exposure is minimal to Greece but perhaps via a third-party country which the U.K has more exposure to such as France – and therefore another financial crisis. The governor warned not to underestimate the implications of a possible ripple effect infecting global markets if Greece were to slip into the abyss.

    In addition to sobering comments from Governor Carney prompted by events in Greece, the pound also suffered after data released showed a deeper-than-expected slow-down in Manufacturing, with the Purchasing Manager’s Index, falling to 51.4 in June from 51.9 in May, when a rise to 52.5 had been forecast. This was the lowest level for the index for two years. The main reason given for the slowdown was the strength of the pound which reached a 5-year high against the euro.

    JPY

    The yen weakened over 70 points on Wednesday against Tuesday’s close, despite a better than expected Tankan index reading.

    Overnight data indicated that Japan’s Tankan Large Manufacturing Index, considered accurate given its near 100% response rate, rose unexpectedly advancing to 15.0 in Q2 2015, compared to a reading of 12 recorded in the previous quarter. Additionally the Tankan Large Manufacturing Outlook Index climbed to 16.0 in Q2 2015, following a level of 10.0, in the previous quarter. Meanwhile the Tankan Non – Manufacturing Outlook Index climbed to 21.00 in Japan, against market expectations of an advance to a level of 22.00.

    Earlier today data revealed that Japan’s Manufacturing PMI edged down to 50.1 in June, but remained in expansion territory and compared to the prior month’s reading of 50.9%.

    These figures, despite the weak industrial production figures and the slowdown in China, suggest the Japanese economy continuing to gain pace.

    BOJ board member Yukitoshi Funo speaking in Tokyo today said that companies needed to to be able to achieve sustainable growth regardless of Forex risk and that the economy needed strength to withstand Forex moves which is determined by the market. The tenor of his remarks was that companies had to “get on with it” in regard to currency shifts.

    The yen was trading at 123.14 per dollar late in the New York session.


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