Fed rate bets kept volatility interesting for major financial assets on Monday.
Spot gold is gaining ground on general US dollar weakness and ahead of this week's US employment data, while the Canadian dollar is attracting bearish demand ahead of the Bank of Canada's decision.
Titles:
- Australia's MI inflation index rose from 0.1% monthly to 0.3% in May
- China's Caixin Manufacturing PMI rose from 51.4 to 51.7 in May versus 51.6 expected
- Judo Bank Australia Manufacturing PMI for May: 49.7 vs. 49.6 previously; “Employment levels rise for the first time in seven months”; “Inflation rates are accelerating as indicated by the May poll.”
- Switzerland's manufacturing PMI rose from 41.4 to 46.4 in May versus 45.4 expected; The Services PMI fell from 49.5 to 48.8
- France's final manufacturing PMI was revised down from 46.7 to 46.4 in May versus 46.7 expected
- Germany's final manufacturing PMI was confirmed at 45.4 as expected in May
- Eurozone HCOB manufacturing PMI for May: 47.3 vs. 45.7; “The eurozone periphery is witnessing expansions in factory production; Deflation in Germany and France is cold
- S&P Global's final UK manufacturing PMI was revised down from 51.3 to 51.2 in May versus 51.3 expected
- S&P Global Canada Manufacturing PMI for May: 49.3 vs. 50.3 expected and 49.4 previous
- S&P Global's final US manufacturing PMI was revised higher from 50.9 to 51.3 as new orders return to growth
- Surprisingly, US ISM Manufacturing PMI contracted faster at 48.7 vs. 50.0 expected and 49.2 previous.
Broad market price movement:
Dollar Index, Gold, S&P 500, Oil, 10-Year US Yields, Bitcoin Overlay Chart by TradingView
OPEC+'s decision over the weekend to extend production cuts through 2025 provided a short-term boost to US crude oil prices during the Asian session, but the move was quickly reversed as traders remained concerned about global demand. US crude oil prices fell to the $74 area after trading near $77 at the beginning of the day!
During the European session, focus shifted to markets which returned their dovish bets on the Fed after the core PCE price index weakened. European stocks traded higher, while spot gold, US 10-year bond yields and the US dollar index reflected US dollar weakness.
The dollar's intraday bearish trend extended into the US session after the ISM Manufacturing PMI contracted faster instead of expanding as markets had expected. US stocks turned lower but eventually finished in the green while spot gold held its gains above the $2,345 area.
Forex market behavior: US dollar against major currencies
Overlay of the US dollar against major currencies Chart by TradingView
The low-risk and risk-friendly trading environment did not prevent the US dollar from gaining points during the Asian session.
However, things turned in the dollar's favor during the European session, with some traders taking a slowdown in the core US PCE price index on Friday as a signal of a revival in bets of a Fed rate cut by September. The US dollar turned lower and saw a new decline during the US session after the ISM Manufacturing PMI surprisingly contracted faster instead of expanding in May.
The US dollar closed the day lower across the board except for the Canadian dollar which attracted sellers following a bearish OPEC+ oil decision and ahead of the Bank of Canada (BOC) policy decision on Wednesday.
Potential catalysts coming on the economic calendar:
- Swiss CPI at 6:30 AM GMT
- French government budget at 6:45pm GMT
- Spain's unemployment rate changed at 7:00 AM GMT
- Germany's unemployment rate changed at 7:55 AM GMT
- US JOLTS JOBS OPEN AT 2:00 PM GMT
- US Factory Orders at 2:00 PM GMT
- New Zealand's quarterly foreign trade index at 10:45pm GMT
- Average cash dividends in Japan at 11:30 PM GMT
- AU quarterly GDP at 1:30am GMT (June 5)
- China Caixin Services PMI at 1:45 AM GMT (June 5)
Are you ready to trade the news? SNB President Jordan Jordan's concerns about upside risks to inflation in Switzerland should draw attention to today's Swiss CPI release.
We also get our first look at labor market data for May with the JOLTS jobs report, while quarterly releases from New Zealand and Australia could move the Australian and New Zealand dollars in the following trading sessions.
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