Business optimism in the US remained high last month, with the ISM Services PMI unexpectedly leaping up to 53.9 in June. The dollar strengthened sharply yesterday in early trading and then gently deflated throughout the rest of the afternoon and evening.
The big story was in the jobs market. Yesterday’s JOLTs Job Openings showed a diminishing number of job vacancies and staying safely below the 10 million mark. However, what shocked the markets was the ADP Employment Change showing 497,000 new private sector jobs being created in June – double the number expected.
This afternoon we will see more labour market data, with non-farm payrolls at 1.30 this afternoon UK time. The tight labour market has been blamed time and again by central bankers as the cause of inflation, and the reason why interest rate rises will resume this month.
Hence, in expectation of more interest rate rises stock markets across the world fell sharply.
Several members of the Fed’s interest rate setting committee the FOMC will be speaking on Monday, ahead of the all-important inflation reading on Wednesday. Core inflation is the one to watch, as while general inflation fell to 4% last month, core inflation with the more volatile elements removed has actually been increasing.
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USD/GBP past year
