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Dollar mixed as markets weigh UK VAT plan and Europe data
The USD was little changed versus EURUSD, USDJPY, and GBPUSD as UK political scrutiny over VAT funding and Germany ZEW optimism influenced broader risk and rate expectations.
The US dollar was mixed to little changed versus the major currency pairs EURUSD, USDJPY, and GBPUSD, with Forexlive pointing to technical levels as key drivers of near-term price action.
Attention also turned to the UK, where Prime Minister Andy Burnham proposed cutting VAT on household energy bills. Forexlive noted the plan faces scrutiny over financing, with the government previously citing an annual cost of roughly 850 million pounds covered by canceling the UK's Digital ID program, while former Treasury minister Darren Jones argued the project was never funded and left a potential gap in fiscal plans.
On the macro front, the UK labor market was mixed, with the unemployment rate holding at 4.9%, slightly better than the 5.0% expected. Forexlive said employment growth rose by 147,000 in May, June payrolls slipped by 4,000, and wage growth cooled, with total earnings slowing to 4.3% and regular pay at 3.4%.
Germany's July ZEW survey showed a sharp improvement in expectations, with the expectations index rising to 26.3 from 10.5, while the current conditions index remained deeply negative at -77.6. Forexlive added that the improvement was tempered by uncertainty tied to a renewed U.S.-Iran conflict and higher oil prices, reinforcing a view that European policy makers will stay focused on inflation risks.