The dollar gave back some ground on Friday following the worse than expected nonfarm payrolls and rise in unemployment across the pond. It was the euro that benefited most, finding support around the 1.3370 level as it recovered to back over 1.3400 and is trading at 1.3420 at the time of writing.
It was also the disappointing wage data that compounded the sell off in the dollar as this is a key measure that is a main contributor to inflation and economic activity and is watched carefully by the Fed.
This week however is different with a great deal of PMI services data due for release across Europe and the UK which of late have just been softening somewhat and so if we continue to see PMIs drift lower then the dollar sell off from Friday might be short lived. Today commences with UK construction PMI, not a major piece of data but can nonetheless cause a little excitement for GBPUSD.
Later in the week the focus will be on the Bank of England and European Central Bank as they announce their latest monetary policy decisions.
The BOE will be keenly watched although due to the Inflation Report coming out the following Wednesday we are unlikely to see any fireworks and of course do not see the minutes from the meeting, which will not reveal whether anyone’s voted for a hike this month, until 20th August.