TD Securities’ Global Strategy Team highlights that stronger ISM services data and higher US rates are shaping the backdrop for the US Dollar. The report notes that ISM services rose above expectations, driven by new orders and business activity, while employment stayed in contraction. The authors stress that the Federal Reserve remains data-dependent and sees no immediate case to change interest rates.

ISM services and Fed guidance

"Rates sold off on Wednesday, continuing to move higher after additional proposed tariffs on 60 countries were announced overnight."

"ADP rose in line with consensus, showing signs of labor market stabilization. ISM services came in above consensus at 54.5, stemming from increases in new orders and business activity."

"Note that even though the ISM index registered a notable m/m increase it remains well-below the pre-Covid norm."

"Fed's Williams spoke, saying that he does not see an argument to change interest rates right now and remains data-dependent."

"News from Iran negotiations showed that their response to the US has not been sent yet. Markets will remain largely focused on geopolitical news, while jobless claims and productivity & ULC data will be released on Thursday. Barkin, Bowman and Daly are all on the docket ahead of the blackout period which starts on Friday night."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)