ForexLive European FX news wrap: Eurozone business activity gets a boost from the Olympics

Headlines:

• Cable eyes the 2023 high with dollar in the doldrums
• ECB accounts: Next meeting widely seen as good time to evaluate policy restrictiveness
• France August flash services PMI 55.0 vs 50.3 expected
• Germany August flash manufacturing PMI 42.1 vs 43.5 expected
• Eurozone August flash services PMI 53.3 vs 51.9 expected
• Eurozone wages slow down in Q2 after running hot in the previous quarter
• UK August flash services PMI 53.3 vs 52.8 expected
• UK August CBI trends total orders -22 vs -25 expected
• BOJ reportedly considering to add wage-related items to quarterly Tankan survey

Markets:

• GBP leads, JPY lags on the day
• European equities higher; S&P 500 futures up 0.2%
• US 10-year yields up 6 bps to 3.835%
• Gold down 0.4% to $2,500.54
• WTI crude up 0.4% to $72.25
• Bitcoin flat at $61,301

The focus finally turns back to the economic calendar today and we got a round of PMI data from the euro area and UK to work through.

The French numbers were a beat on the services side but it is likely a one-off, owing much to a demand boost from the Paris Olympics. The German numbers were bad and that tempered with the euro a little on the release. But as markets are already pricing in a rate cut by the ECB for next month, the reaction has been rather minimal overall.

EUR/USD caught a brief algo spike from 1.1150 to 1.1165 before turning lower to 1.1128, then now trading just 0.1% lower at around 1.1135.

The dollar had been weaker throughout the week but is finding a bit of a footing today. That comes as bond yields are also bouncing back, erasing the drop from yesterday. And that is underpinning USD/JPY, with the pair now up 0.5% to around 146.00. The less dovish comments from the Fed’s Schmid here is also helping somewhat.

Besides that, GBP/USD is still marching forward and helped by a stronger UK PMI data. The pair is up just above 1.3100 as it looks to the 2023 high next at 1.3142.

In other markets, equities remain steady after regaining some composure yesterday. S&P 500 futures are up 0.2% with European indices also sitting modestly higher so far on the day.

All eyes now turn towards more US data to come, before moving on to Jackson Hole and Fed chair Powell’s appearance ahead of the weekend tomorrow.

This article was written by Justin Low at www.forexlive.com.