Daily currency report

The Swiss franc was once again the main benefactor as economic data released in the EU and UK showed that manufacturing sectors were contracting. A similar survey in the US remained in expansion territory, but its jobs component slipped and fuelled concern over the release of non-farm payrolls. Equity markets across Asia are trading in negative territory which is helping to support the safe haven currencies such as the yen, Swiss franc and US dollar. The pound has traded lower alongside euro/dollar developments, but the slide has not been as great allowing for sterling to take some gains against the euro despite weak economic data.

Sterling

The CIPS PMI manufacturing survey remained in contraction territory dipping to a 26-month low. The data was not strong enough to allow sterling the chance to fight off a rising dollar. Indeed, the BCC downgrade to its growth outlook for the UK and a housing survey that showed prices falling did not help either. However, sterling’s decline against the dollar was less than the euro’s decline against the dollar. The euro fell to three week lows against the dollar which helped the pound take some gains against the single currency.

US Dollar

The ISM manufacturing survey came in above market forecasts. Indeed the survey even showed that the sector remained in expansion territory. However, a subcomponent of employment declined and sparked fears over the non-farm payrolls release. Weekly jobless claims further stoked concern after continuing to come in above 400,000. Nerves have already been set on tenterhooks after this week’s ADP employment report failed to live up to expectations and showed a mere 91,000 new jobs were added to the private sector. The jobs data could hold the key as to whether the US government or Fed decides to take more action.

Euro

Flash estimates of PMI manufacturing surveys were revised lower. The downward revisions increased concerns over an economic slowdown in the eurozone and helped to weigh on the euro. There is a current feeling that Greece will overshoot the deficit target and not be able to fund the €1.7 billion needed by the end of September or the €5 billion it will need by the end of the year.

Japanese yen

The Japanese yen has strengthened against the US dollar, euro and sterling as equity markets falter leaving heightened demand for safe haven currencies such as the yen.

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