UK PMI Dropped; Onto ADP, ISM and FOMC

German and Eurozone manufacturing PMI revised lower; UK manufacturing PMI dropped. Market turns to ADP report, ISM manufacturing and later in the session to FOMC. Info on Premium Insights is below.

The common currency dipped briefly below the 1.23 handle after headlines appeared quoting Bundesbank president Jens Weidmann that "the ECB should not exceed its mandate". Once it became known that the comment was made during an interview on June 29th EURUSD pushed back above 1.2300 where it continues to trade.

Even though the final readings of German and Eurozone manufacturing PMI indices for July were both revised lower, EURUSD along with commodity dollars hold ground. In case of Germany the PMI was revised to 43.0 from 43.3 and for Eurozone the revision was to 44.0 from 44.1 which is the lowest since 6/2009.

GBPUSD dropped sharply lower to 1.5619 from 1.5690 session high after UK manufacturing PMI plunged in July to 45.4 from June's 48.4. Even though analysts expected an improvement to 48.6, manufacturing production fell at the fastest pace since 3/2009. Output and new orders dropped but manufacturing employment rose slightly. GBPUSD trades off session lows around 1.5630 while EURGBP trades near session highs around 0.7870.

The US session will start at 8:15 am ET with July ADP that is expected at 120K from previous 176K followed by ISM manufacturing at 10:00 am that is seen higher in July at 50.2 from June's 49.7.

The key event will be the FOMC decision that is due at 2:15 pm. In light of yesterday's positive data, it seems that the most likely outcome is the continuation of the "wait and see" mode at least until the next meeting on September 13th. By that time the FOMC will have more data available and they will present a new set of economic projections. Regardless of today's outcome, traders will begin positioning ahead of the tomorrow's much anticipated ECB decision that could result in additional unconventional policies.

EURUSD and USDJPY hit all targets, USDCAD, AUDUSD, Gold and Silver remain on track. 3 charts on EURUSD, AUDUSD are also among the Premium Insights Click here for direct access: http://ashraflaidi.com/products/sub01/access/?a=671 Non Subscribers can click here: http://ashraflaidi.com/products/sub01/

-AB