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Dollar drivers shift as ADP, PMIs and Fed speakers set the tone

In the euro area, final services and composite PMIs beat flash estimates, while the Bank of Japan minutes highlighted growing focus on inflation risks.

Reported · Written up by our desk · Central Banks

Markets focused on a run of US and euro zone data, beginning with ADP’s July private employment report, which is expected to offer an early read on what the upcoming Jobs Report on Friday may show. Additional US releases include the July ISM Services index, with the earlier flash PMI pointing to an uptick in business activity, while Fed speakers included Fed voter Jeff Cook and non-voter Mary Daly on the wires and into overnight Thursday, respectively.

In the euro area, the final services and composite PMIs for July were also in focus after both beat the flash release, with the services PMI at 51.6 versus 49.4 in the flash and the composite PMI at 51.9 versus 50.0. June PPI data was scheduled as well, following May’s 0.2% month over month rise and an annual rate increase to 5.9%, the strongest reading since March 2023, according to the update.

Outside the US and Europe, the Bank of Japan’s June meeting minutes indicated the BoJ was increasingly focused on broadening inflation risks. The minutes noted that firms were planning price hikes across a wide range of goods, and board members cited higher fuel costs, a weak yen, and a tight labour market as potential drivers of further consumer price pressure.

Oil markets and rate expectations were also cited as supporting drivers, with Brent crude falling below USD80 per barrel from USD86 per barrel after news that the US and Iran may be nearing an agreement to reopen the Strait of Hormuz without tolls. In the US labor market update, June JOLTS job openings declined to 7.36 million from 7.54 million in May, while hiring and voluntary quits rose and involuntary layoffs were unchanged, leaving the job openings to unemployed job seekers ratio little changed at 1.04 from 1.03.

Latest closeWTI crude $75.32 ▼6.2%|Brent $78.86 ▼5.9%

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