The single currency dropped below 1.08 yesterday before recovering after softer US data, pushing EURUSD back to the top of its recent range, which is currently capped at 1.09. A lower-than-expected job openings report and dip in US consumer confidence weighed on both treasury yields and the greenback. It is a busy week for the euro, as markets await key inflation data in the coming days, kicking off with German and Spanish CPI later this morning. A mixed bag is expected today with the Spanish print expected to tick up whilst German inflation is looking set to step down a tad in August before dropping more notably next month on falling food and energy prices.
GBPUSD also endured a roller coaster session, dropping to within a whisker of key support at 1.2550 before rallying after the release of the US data to sit on a 1.26 handle once again. Sterling initially stuttered as data showed that first time buyers in the UK are avoiding the property market after a surge in mortgage costs. First time buyer loans slumped by 28% in Q2 compared with the same period last year – the lowest number for the second quarter in a decade, aside from the distortion felt by Covid in 2020.
The attention shifts back to the US this afternoon as we look forward to the release of Q2 GDP data and the ADP Private payrolls report. Markets expect a fall from last month’s stellar ADP release as analysts look for clues on the US labor market ahead of Friday’s Non-farm Payroll print.
