Fed interest rate bets kept volatility interesting for the major financial assets on Monday.
Spot gold is gaining ground on overall U.S. dollar weakness and ahead of this week’s U.S. employment data, while the Canadian dollar is attracting bearish demand ahead of BOC’s decision.
Headlines:
- Australia’s MI inflation gauge up from 0.1% m/m to 0.3% in May
- Chinese Caixin manufacturing PMI up from 51.4 to 51.7 in May vs. 51.6 forecast
- Judo Bank Australia Manufacturing PMI for May: 49.7 vs. 49.6 previous; “Employment levels rise for the first time in seven months”; “Acceleration of inflation rates signaled by May survey”
- Procure Switzerland Manufacturing PMI up from 41.4 to 46.4 in May vs. 45.4 forecast; Services PMI fell from 49.5 to 48.8
- France’s final manufacturing PMI revised lower from 46.7 to 46.4 in May vs. 46.7 expected
- Germany’s final manufacturing PMI confirmed at 45.4 as expected in May
- HCOB Eurozone Manufacturing PMI for May: 47.3 vs. 45.7; “Peripheral eurozone countries see expansions in factory output; downturns in Germany and France cool”
- S&P Global U.K. final manufacturing PMI revised lower from 51.3 to 51.2 in May vs. 51.3 forecast
- S&P Global Canada manufacturing PMI for May: 49.3 vs. 50.3 forecast and 49.4 previous
- S&P Global U.S. final manufacturing PMI revised higher from 50.9 to 51.3 as New Orders returned to growth
- ISM U.S. manufacturing PMI surprisingly contracts faster at 48.7 vs. 50.0 forecast and 49.2 previous
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
OPEC+’s decision over the weekend to extend its output cuts into 2025 provided a short-term boost to U.S. crude oil prices during the Asian session, but the move was quickly reversed as traders continued to worry about global demand. U.S. crude oil prices dropped to the $74 area after trading near $77 at the start of the day!
During the European session, focus turned to the markets bringing back their dovish Fed bets following a weak core PCE price index. European equities traded higher while spot gold, U.S. 10-year yields, and the U.S. dollar index reflected USD weakness.
The dollar’s intraday downtrend extended to the U.S. session after ISM’s manufacturing PMI contracted faster instead of expanding as the markets had expected. U.S. equities turned lower but eventually finished in the green while spot gold retained its gains above the $2,345 zone.
FX Market Behavior: U.S. Dollar vs. Majors
Overlay of USD vs. Major Currencies Chart by TradingView
A lowkey risk-friendly trading environment didn’t stop the U.S. dollar from gaining pips during the Asian session.
The tides turned for the Greenback during the European session, however, as some traders took the decelerating U.S. core PCE price index on Friday as a sign to revive Fed rate cut bets by September. The U.S. dollar turned lower and saw a fresh downswing during the U.S. session after ISM’s manufacturing PMI surpsisingly contracted faster instead of expanding in May.
USD capped the day lower across the board except agaisnt CAD which attracted sellers after OPEC+’s oil-bearish decision and ahead of Bank of Canada’s (BOC) policy decision on Wednesday.
Upcoming Potential Catalysts on the Economic Calendar:
- Switzerland’s CPI at 6:30 am GMT
- France’s government budget balance at 6:45 pm GMT
- Spain’s unemployment change at 7:00 am GMT
- Germany’s unemployment change at 7:55 am GMT
- U.S. JOLTS job openings at 2:00 pm GMT
- U.S. factory orders at 2:00 pm GMT
- New Zealand’s quarterly overseas trade index at 10:45 pm GMT
- Japan’s average cash earnings at 11:30 pm GMT
- AU quarterly GDP at 1:30 am GMT (June 5)
- China’s Caixin services PMI at 1:45 am GMT (June 5)
Ready to trade the news? SNB Chairman Jordan’s worries over the upside risks to Switzerland’s inflation should attract attention for today’s Swiss CPI release.
We’re also getting the first look at May’s labor market data with the JOLTS job openings report while quarterly releases from New Zealand and Australia might just get AUD and NZD moving in the next trading sessions.
Looking for your own spot to record your market observations & trading statistics? If so, then check out TRADEZELLA! It’s an easy-to-use
journaling tool that can lead to valuable performance & strategy insights! You can easily add your thoughts, charts & track your psychology with each and every trade. Click here to see if it’s right for you!Disclaimer: Babypips.com earns a commission from any signups through our affiliate link. When you subscribe to a service using our affiliate links, this helps us to maintain and improve our content, a lot of which is free and accessible to everyone–including the School of Pipsology! We appreciate your support and hope that you find our content and services helpful. Thank you!