Weekly claims nothing to worry over, Philly Fed dips

Published date: 19/09/2019

This afternoon's data out of the US was never going to influence the market in any meaningful way, and certainly not the day after the FOMC announcement.  Market participants have had little in the way of fresh insight with the Fed cutting rates as expected and pointing to a wait and see approach from here.  Top tier data is what we will be watching out for, with employment, consumption and the ISM PMIs the primary focal points. 

Even so, the weekly claims at 208k show the labour market remains tight, so on this basis, there is little of concern - this highlighted in the statement last night as well as the press conference.  The Philly Fed manufacturing survey sees the index dipping from 16.8 in August to 12 in September, though this was marginally above expectations.  Economic data has been softer when we look at the PMIs, but as yet, both the US government and Federal Reserve are comfortable with the moderate pace of growth even if the President is screaming for more accommodation from the Fed to make it even better.  

For the USD, there is nothing at this stage which suggests the market is ready to turn around the strength seen in the last 18 months or so.  True, that rates in the US have peaked, but with the rest of the major economies around the world embarking on further or ongoing easing measures, the Fed's stance has been put into perspective and the greenback is holding its ground as a result.  

EUR/USD remains hemmed into a narrow range in the mid 1.1000's, while USD/JPY is still getting a bump up on the downside despite repeated rejections above 108.00.  It seems we are set for some tight ranges ahead as traders show little conviction in pursuing aggressive direction from here, with GBP also unmoved from a tight range pivoting in the upper 1.2400's.  AUD, NZD, and CAD have tested lower vs the USD in the last 12-24 hours, but losses here have also been arrested to add to the congestion seen in the FX markets at present.


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