Market Drivers for August 1, 2013
Draghi reaffirms that rates will stay low
US ISM Manufacturing beats big
Chinese PMI surprises to upside but data in AU sinks
EZ Manufacturing PMI remains above 50, UK PMI blows past forecasts
Nikkei 2.47% Europe 0.35%
Oil $105/bbl
Gold $1317/oz.

Europe and Asia:
AUD AiG Performance of Manufacturing Index 42 vs. 49.6
AUD HIA New Home Sales 3.4% vs. 1.6%
EUR ECB Rate Decision
EUR ECB Deposit Facility Rate
EUR Euro-Zone PMI Manufacturing 50.3 vs. 50.1
GBP PMI 54.6 vs. 52.8
GBP BOE Rate Decision
GBP BOE Asset Purchase Target

North America:
USD Initial Jobless Claims 326K vs. 346K
USD Markit US PMI Fina 53.7 vs. 53.1
USD Construction Spending -0.6% vs. 0.4%
USD ISM Manufacturing 55.4 vs. 52.1

The dollar was stronger in afternoon New York trade today after better than expected US economic data and a relatively dovish press conference by Mario Draghi pushed it higher against both the euro and the yen. In US the ISM Manufacturing data printed at 55.4 versus 52.1 markedly beating expectations as hit its best mark in more than 2 years.

The subcomponents of the report looked very strong as well with employment increasing to 54.4 versus 48.7 while new orders rose to 58.3 versus 51.9. The data showed a huge improvement from the month prior and suggested that US economic activity may be starting to pick up after Q1 stall.

Meanwhile in Europe Mr. Draghi stuck to his well worn script and played down the nascent recovery in the region emphasizing that rates in the EZ are likely to remain low for a considerable period of time. The EUR/USD saw little reaction from his remarks dropping to 1.3200 on an initial knee jerk sell off only to climb higher and then drift back towards 1.3200 once again.

Although the euro has remained remarkably resilient as investors continue to remain enthusiastic about the turnaround in the region, the single currency is likely to have a harder time making further progress against the greenback if US data continues to surprise to the upside putting enormous pressure on the Fed to taper sooner rather than later.

The market is now primed for a strong NFP there is a risk of disappointment tomorrow for dollar bulls if the number prints at 175K or less. In the meantime currencies are likely to remain quiet for the rest of the day as the markets prepare for final and most important economic event of the week,

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