The US Dollar retraced downward having launched a broad-based recovery against its major counterparts in the first half of the week. Taken together, price action probably reflects corrective pre-positioning ahead of Friday’s much-anticipated release of April’s US labor-market data after commodity-bloc FX underperformed in the prior 48 hours.
The deliberative tone is likely to carry forward absent an uncharacteristically brazen comment from Fed officials due to speak in the hours ahead. Remarks from James Bullard, Dennis Lockhart and John Williams – Presidents of the Fed’s St. Louis, Dallas and San Francisco branches respectively – are due to cross the wires.
UK PMI data headlines the economic calendar in European hours. The composite gauge is expected to show that the pace of manufacturing- and service-sector activity growth narrowly slowed in April. UK economic news-flow has increasingly disappointed relative to median forecasts over the past month, opening the door for a downside surprise that may hurt BOE policy bets and weigh on the British Pound.