Today's Key Points

Daily Forex Fundamentals | Written by Danske Bank | Jul 02 08 07:44 GMT |

Today's Key Points

* The ISM index once again proved more resilient than expected
* This lifted equities and bond yields a little in an otherwise nervous market
* EUR/USD climbs above 1.58 ahead of ECB meeting Thursday

Markets Overnight

In June the ISM index rose to 50.2 from 49.2, once again proving more resilient than expected and continuing to indicate that the US manufacturing sector is holding up quite well compared to other sectors of the economy. The price index rose further to 91.5 in June (the highest reading since 1979) from 87.0 in May, reflecting intensifying price pressures in raw material markets.

This supported most US equities and drove US bond yields a few basis points higher in an otherwise nervous market.

In FX markets EUR/USD has moved above the 1.58 mark ahead of the ECB meeting tomorrow. In Emerging Markets the Turkish lira looks very fragile in the current environment further enhanced by increasing political tensions in Turkey. We are looking for further upside in EUR/TRY in the coming days.
Global Daily

Today global markets will have a very thin calendar for its guidance. In Euroland the markets will be awaiting the ECB decision tomorrow. Although Trichet is scheduled for a speech in Paris at 09:15, which bears watching, he is not expected to provide any change of tone this close the ECB meeting. In the US the ADP employment report, released at 14:15, could provide the markets with some hint about tomorrow's payroll figure. That said the ADP report has lately been a poor guide to the monthly payroll figures over-predicting job growth by an average of 91K in the previous seven months. Hence, the outcome should be taken with a grain of salt and is not likely to move the markets substantially. Later today, at 18:00, the speech from Federal Reserve Board Member Mishkin (dove, voter) could prove interesting.

With markets awaiting the ECB meeting and the US labour market report for June bond yields are left with the general sentiment in equity and credit markets in what looks to become a relatively uneventful day.

Danske Bank
http://www.danskebank.com/danskeresearch

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