The US dollar took another trip higher late yesterday after some unscheduled and rather hawkish comments from FOMC voting member and Atlanta Fed President Dennis Lockhart, when he suggested that there was a fairly high bar to not acting on rates in September, and that there would need to be a “significant deterioration” in economic activity to cause the Fed not to act. While the comments were unexpected the markets shouldn’t really be unduly surprised by them given that this year the Atlanta Fed President hasn’t been shy in suggesting the need for a rate rise sometime this year, as far back as March. Of all the voting members he has been one of the most hawkish in terms of the potential timing, so while he could well vote for a rise in rates, the bar could be a little higher for some of the other more dovish members, of which there are more, and they may not be as prepared to act next month, particularly if the sell-off in commodity prices continues. US markets also continue to look top heavy with Apple shares continuing to look vulnerable to a steeper sell-off, as it continues to break below a number of key technical support levels, in the process pulling keeping a lid on the rest of the US equity, given its high weightings in the both the Nasdaq and the Dow. This weakness, ahead of the payrolls report on Friday is keeping investors cautious, reluctant to take on new positions in fairly low volume markets, as US economic data continues to flatter to deceive. In Europe the Greek stock market had another negative day, though not to the same extent as Monday, closing only slightly lower, though the banks index once again got absolutely battered, with yet more 30% declines, though this was offset by a stabilisation in more defensive sectors, like energy and utilities. Markets remained sceptical that a deal could be reached by 18th August despite claims to the contrary by Greek officials, with most investors focussing their attention on wider European data from Spain, Italy, Germany and France, where today we follow Monday’s manufacturing PMI’s for July with the latest service sector economic activity. Expectations are for activity to slip back slightly from earlier readings of 55.8 for Spain, 53.2 for Italy, while French and German readings are expected to come in unchanged at 52 and 53.7 respectively. In the UK this week’s July PMI numbers for manufacturing and construction were somewhat mixed with manufacturing improving slightly but there was a surprise dip in construction to 57.1, with a slowdown in the residential housing sector particularly surprising. Today’s services PMI therefore needs to come in above expectations to help keep expectations about Q3 growth on track, in light of tomorrow’s Bank of England data trifecta. Expectations are for a reading of 58, slightly down from June’s 58.5. In the US and the aftermath of FOMC member Dennis Lockhart’s comments yesterday, significantly more attention is likely to be focussed on today’s US economic data with the latest private ADP jobs report for July, the June trade balance numbers, and the latest ISM services number for July. Good numbers here will raise the stakes ahead of Friday’s payrolls numbers, with July ADP jobs expected to come in at 210k, down from 237k in June. The US trade deficit is expected to widen to -$42.9bn from -$41.9bn while the latest service sector ISM is expected to come in at 56.2, up from 56 in June, which may not be enough to assuage concerns about some of the weaker components seen earlier this week in the manufacturing numbers. Both employment components and prices paid fell back markedly, which if translated across sectors could well muddy the waters further. EURUSD – the euro continues to be range bound with an upper boundary just above 1.1100 and support down near 1.0800. A move through 1.1030 is needed to retarget last week’s high while a move below 1.0800 could well signal a move towards 1.0600. GBPUSD – the 1.5680 level remains a key resistance on the upside after another failed attempt last week. Support remains down at 1.5550 trend line support from the 1.4565 lows, as well as the 200 day MA at 1.5410. A move above 1.5700 has the potential to retarget the 1.5820 level. EURGBP – despite last week’s rally to the 0.7120 area the euro remains under pressure, but as long as we stay above the 0.6980 level we could get a rebound. A move below the 0.6980 level argues for further losses towards the 0.6930 lows. This remains the probable outcome unless we can get back above the 0.7040 level. USDJPY – another run at the 124.50 level saw the US dollar run out of steam last week before slipping back. This remains the key resistance level on the upside, with a through here retargeting the 125.85 highs. Support currently comes in at 123.00 for now, while below that we could see a move towards 122.50. CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.