The US private sector hit a 27 month high in August, adding to optimism that the US economy could still on course to raise interest rates, according to a preliminary report published by Markit this afternoon. The figure in their services sector report was a considerable jumped up from the previous month and out performed initial expectations. The services sector makes up 80% of the US economy so this figure was a welcomed sign that the US economy is on the right track.
In what was a tale of two halves, the Purchasing Managers Index data that was released at the same time dropped below analysts’ expectations. Many analysts are claiming that the stronger Dollar of recent times has weighed on Manufacturing sector, hitting exports and increasing costs for imported goods.
Overall, the data released today was taken as a positive on the whole by investors. A well performing services sector means that Gross Domestic Product (GDP) is expected to pick up in the 3rd quarter for the US and could help add to the case for the FED to raise the US interest rate before the end of the year.
What next for the US Dollar?
Looking ahead to the rest of this week there are a few economic releases of note to keep an eye out for, namely Initial Jobless Claims and Continuing Jobless Claims data tomorrow afternoon and Durable Goods Orders for July on Friday.
Jackson Hole Symposium starts tomorrow
Tomorrow is the start of the Jackson Hole Symposium, where key figures from central banks will meet. There is usually exchange rate movement around announcements and speeches that give hints to any future monetary policy. Look out for the Federal Reserve’s Chairlady, Janet Yellen who will be speaking on Friday at 17:00pm (BST). If you have an interest in USD/EUR rates, Mario Draghi (President of the European Central Bank) will be speaking at 20:00 (BST), which could cause some volatility.