Since the latter half of May, the trend has been towards a stronger dollar. While the broader trend of dollar weakness from April remains, the dollar index has reached short-term resistance at the 10-day moving average, indicating a slowdown in the pace of dollar depreciation.
Yesterday's FOMC minutes came across as more hawkish than expected, causing a slight retreat in early rate cut expectations. There is some anticipation that tightening might still be necessary, adding to the market's uncertainty. The next decisive move is awaited under this data-dependent scenario.
In the upcoming overseas market sessions, preliminary PMI data for France, Germany, the Eurozone, the UK, and the US will be released. If clear differences in economic trends among these three regions emerge, it could drive market movements. Pre-release expectations suggest improvements in both manufacturing and non-manufacturing sectors for the Eurozone, although manufacturing is still expected to be below the 50 mark, indicating weak recovery. In the UK, manufacturing is expected to improve, while non-manufacturing is forecasted to worsen. However, the composite index is expected to remain well above 50, similar to the previous reading. For the US, both manufacturing and non-manufacturing are expected to be almost unchanged, with the composite index remaining above 50.
In terms of speaking events, attention will be on the results of the Eurozone wage survey published by the ECB, as well as speeches and event participation by key figures like BoE Chief Economist Pill, Banque de France Governor Villeroy de Galhau, and Atlanta Fed President Bostic. Additionally, there will be a US 10-year TIPS auction for $16 billion.
Following the release of the FOMC minutes and NVIDIA's earnings report, if the PMI data and ECB wage survey fail to provide clear direction, a broader adjustment mood might spread today.
The FOMC minutes suggested that maintaining high policy rates for a longer period is desirable, keeping the dollar firm. Today, focus will be on the USD's movement following the release of the US Manufacturing PMI, Services PMI, and Composite PMI. Depending on these numbers, the USD could see significant moves in either direction.
