It shot up above 1.3560, a huge increase. This increase comes as the Greenback weakened following disappointing economic reports, including the ADP employment report and the ISM Services Purchasing Managers’ Index (PMI) for May, which fell short of expectations.
Given that more than 80% of US economic activity occurs in the rapidly-growing services sector, this pullback served as a major US dollar bearish catalyst. As GBP/USD closed in on the daily highs around 1.3560, traders jumped at the weakening of the US dollar. Analysts pointed to the disappointing ISM Services PMI as perhaps the biggest factor in the downward revised change.
“EUR/USD flirts with daily highs past 1.1400 on weak ISM data” – FXStreet
The Euro (EUR) shot up too, in addition to the GBP’s bullish move. It helped lift the EUR/USD currency pair to test daily highs beyond the 1.1400 mark. Indeed the market sentiment turned Euro positive thanks to those same weak economic reports that were hammering the Dollar.
The Australian Dollar (AUD) struggled lost its footing against its US counterpart. But despite some of that positive movement earlier in the day, the AUD continued to be weighed down as the USD stuck around. But as analysts pointed out, such a rate cut would be historic. Should the cut go through as expected, it would mark the seventh straight cut and the eighth since the central bank started its current easing cycle.
“Australian Dollar remains subdued as US Dollar holds ground ahead of ISM Services PMI” – FXStreet
The mixed Australian economic data at first lifted the AUD/USD pair sharply. That was enough to keep it in positive territory. Yet with continued attack on the currency, dollar strength gave way, leading to sharp declines against all other major currencies.
Apart from currency exchange shifts, gold price fluctuated in a consolidating approach close to $3,360 per ounce troy. National Bank Financial Market watchers took note as gold traded range-bound just below this level in the wake of the ISM PMI release.
“Gold remains range-bound near $3,360 post ISM PMI” – FXStreet
Investors are warily tinged this summer’s wild expansion with much caution as we enter the consolidation stage. They are pessimistically judging the implications for the economy based on new data releases.