Daily Market Update

US$ Mostly Flat Even As Private Payrolls Impress

August 31, 2016


The U.S. dollar was mostly flat overnight, gaining slightly against the Japanese yen and modestly weaker against the British pound.  Overall, the greenback is in stronger territory this week after Friday’s bullish speech by Fed Chair Janet Yellen.  The dollar may take a cautious tone as traders await Friday’s Non-farm payrolls number.  The central bank has reiterated that it is data dependent so jobs numbers may help predict future interest rate moves.

Today’s economic data may foreshadow a strong jobs number on Friday.  Private companies added 177K workers to U.S. payrolls in August, according to ADP.  The reading slightly beat expectations for a 175K rise.  However, last month’s reading was upwardly revised from 179K to 194K.  The U.S. dollar has reacted in a muted but positive direction.

Later this morning, Chicago Purchasing Managers Index is expected to register at 54.0 in August, down from 55.8 in the month prior.  Pending Home sales will also cross the wires at 10 a.m. and are expected to show a slight up-tick.


The British pound was the best performer overnight as more data showed that the fallout from the Brexit vote may not be as bad as most expected.  Mortgage lender Nationwide reported that house prices rose that the fastest pace in five months.  It was pointed out that the price spike maybe be attributed to a short supply on the market despite weak demand.
A separate report showed that consumer confidence is still weak but beat analysts dismal forecasts.  According to GfK, confidence registered at -7, better than July’s -12.  The British pound has enjoyed a two week onslaught of better or “less bad” data, allowing the embattled currency to push off a multi-decade low against the U.S. dollar.


The Euro has opened this morning slightly weaker against the U.S. dollar, showing its inability to rebound from three days of losses.  Eurozone CPI failed to miss estimates with inflation pressures rising only 0.2% year-over-year.  The overall unemployment rate also underwhelmed investors registering at 10.1% v. 10.0% expected.  Country-specific data was mixed with German retail sales coming in better than expected, but French consumer spending was disappointing.

The European Central Bank will make its next monetary policy decision on September 8th with policy makers saying their current financial stimulus is justified.  The Euro may come under increased pressure as policy divergence is likely to be a key market mover in the coming months. 

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