The US Dollar could make gains against the Pound, Euro and other major peers on Tuesday if the afternoon’s data releases add to signs that the world’s largest economy is continuing to gain in strength.
After last week’s jobs data disappointed the markets, investors will hoping that the latest composite and service PMI data come in strongly.
Economists are widely forecasting that the Markit Services PMI report will show that production remained at the high figure of 61.0 in July.
A decline will likely put pressure on the US Dollar and ease speculation that the Federal Reserve will raise interest rates by next year.
The latest ISM Non-Manufacturing data is also forecast to show improvement by inching higher to a reading of 56.1 in July from the reading of 56.0 in June.
The Euro is forecast to stay near an eight-month low as investors continue to bet that the single currency will continue to weaken ahead of the European Central Banks latest policy meeting on Thursday.
Weaker than forecast inflation data released last week increased pressure on the Bank to take further action to stave off the threat of deflation taking root in the Eurozone.
Some economists are forecasting that the ECB could introduce a measure similar to the quantitative easing programmes in use in the UK, USA, and Japan.
‘There’s nothing the ECB will say that’ll support the Euro. The Dollar’s uptrend remains broadly intact. There’ll be a tendency to buy Dollars on dips,’ said a forex trader from BNP Paribas SA.
The Pound too is likely to make further losses if the US data comes in strongly. Losses could be restrained however if the latest house price and service PMI data lends support to the currency.
Comments are closed.