Are we ready to move past that US credit rating downgrade already? The US dollar definitely already has, focusing on the hot ADP employment data here yesterday instead. For what it's worth, the accuracy of the data in predicting the jobs numbers tomorrow is as good as throwing at a dart board but markets will find any good reason to react to it still.
In the equities space, we did see a notable selloff in stocks with tech shares leading the downside. But the overall mood is calmer now, with US futures marginally higher for the time being. We're coming off a strong rally in July, so the headlines yesterday is at least reason to make a pit stop.
Going back to FX, the dollar remains in a good position as it pushes back higher now but the mood today is one that is more tepid. We're seeing light changes and narrow ranges with dollar pairs less than 0.1% changed across the board:
The risk mood will remain in focus today, so that should keep some interest on commodity currencies - especially the aussie after the breakdown this week. The yen also remains one to watch amid higher yields and USD/JPY keeping up the move towards 145.00 again, where Japanese officials last offered plenty of verbal opposition at the end of June.
Meanwhile, the pound will definitely be one that could be liable to some swings later on as we do have the BOE policy decision coming up. I shared some thoughts on that and what the reaction may be yesterday here.
