The dollar was able to hold onto its rally overnight, trading up against a number of currencies this morning after worse-than-expected data out of the U.K. and Europe. Market watchers are now looking ahead to U.S. PMI data this morning and FOMC meeting minutes later today.
U.K. jobs data weighs on sterling
GBP/USD dropped to its weakest levels in more than a week, hitting 1.392 after the U.K. jobs report.
The U.K. unemployment rate for the three months leading up to December increased to 4.4% from 4.3%. This is the first jump since the country’s Brexit vote. Wage growth including bonuses showed slight improvement, ticking up to 2.5% from 2.3%. Excluding bonuses, average earnings remained at 2.5%.
Despite the signs of wage growth, the mixed data prompted selling of the major. After U.K. inflation numbers came in higher than expected last week, the economy is looking to wage growth to close the gap between pay and costs.
The pound is also still weighed down by Brexit headlines. As Prime Minister Theresa May works to finalize the country’s Brexit transition plan, 62 members of her own conservative party are calling for a swift and clean break from the European Union.
Later today, we’ll see the Bank of England’s inflation report before the Treasury Committee in Parliament. Markit PMI data from the U.S. later this morning could also impact the pair.
Euro-area growth hits a snag with PMI data
The dollar was also able to hold onto its gains against the euro. Despite a general economic upswing in the euro area, Markit Purchasing Manager’s Index data for January came in lower than expected, holding EUR/USD pair lower toward the 1.23 mark.
The composite gauge for the area fell to 57.5 in February from 58.8 the previous month. The manufacturing and services PMIs, as well as the composite data, also fell for Germany and France – the area’s biggest economies.
Even though the data showed a slowdown in order growth, the report said that companies boosted staffing levels at one of the quickest rates in 17 years.
Coming up this morning, we’ll see how the U.S. Markit PMI data compares and if it will impact the pair.
Fed minutes will be watched closely
Investors are anticipating today’s release of the Federal Reserve’s FOMC minutes from last month, due at 2 p.m. EST.
The minutes may give more insight into the Federal Reserve’s plans to adjust interest rates. The interest rate decision last month held rates the same, however changes in the language saying the Fed would make “further gradual adjustments” instead of just “gradual adjustments” raised speculation.
We may get more clarification on that wording this afternoon, and we’ll see if it will help the dollar hold onto its upswing of the past four days.