Bob Mason
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Earlier in the Day:

It was a busier start to the day on the economic calendar this morning. The Aussie Dollar and the Japanese Yen were in action this morning, with economic data from China also in focus.

For the Japanese Yen

Finalized service sector PMI figures drew attention.

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In May, the services PMI fell from 49.5 to 46.5, which was up from a prelim 45.7.

According to the finalized Markit survey,

  • A renewed pickup in new COVID-19 cases weighed on the services sector in May.
  • Both activity and new business inflows saw sharp declines in the month. The declines were the most marked since February.
  • In spite of this, employment rose for a 4th consecutive month, while the pace of hiring eased to a 3-month low.
  • Optimism slipped to the lowest level since the start of the year.

The Japanese Yen moved from ¥109.632 to ¥109.601 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.09% to ¥109.66 against the U.S Dollar.

For the Aussie Dollar

It was a busy morning, with retail sales and trade data in focus.

In April, retail sales increased by 1.1%, which was in line with prelim figures. Sales had risen by 1.3% in March.

According to the ABS,

  • Food retailing increased by 1.4% in April, supported by 1.2% increase in supermarket and grocery store sales.
  • Household goods retailing rose 1.5%, with electrical and electronic goods retailing rising by 3.0%.
  • Clothing, footwear, and other personal accessory retailing rose 1.2%. While clothing sales rose by 3.1%, footwear and other personal accessory retailing fell 2.8%.
  • While other retailing increased 1.7%, department store sales slid by 6.7% in the month.
  • Compared with April 2020, retail sales were up 25.0%.

On the trade front, the trade surplus widened from A$5.574bn to A$8.028bn in April. Economists had forecast a widening to A$7.900bn.

According to the ABS,

  • Exports of goods and services increased A$1,170m (+3%) to A$39,772m.
    • General merchandise exports increased by 5%. While non-monetary gold exports fell by 16%.
    • Net exports of goods under merchanting increased by 13%.
  • Goods and services debits fell A$1,064m (-3%) to A$31,743m.
    • General merchandise imports fell by 2%, with the imports of consumption goods and capital goods both falling by 5%.
    • Non-monetary gold imports slid by 46%.

The Aussie Dollar moved from $0.77515 to $0.77492 upon release of the figures. At the time of writing, the was Aussie Dollar was down by 0.17% to $0.7741.

From China

The Markit services PMI fell from 56.3 to 55.1 in May.

According to the Markit survey,

  • While rising sharply, the rates of expansion in business activity and new orders softened since April.
  • In spite of this, firms continued to increase staffing levels.
  • Input price rises accelerated in the month, leading to steeper increases in prices charged.
  • Business optimism fell to a 4-month low in May.

The Aussie Dollar moved from $0.77492 to $0.77407 upon release of the figures.


At the time of writing, the Kiwi Dollar was down by 0.17% to $0.7227.


The Day Ahead

For the EUR

It’s a busy day ahead on the economic data front. Service sector PMIs for Italy and Spain are due out along with finalized PMI numbers for France, Germany, and the Eurozone.

Barring marked revisions to prelim figures expect Italy, Spain, and the Eurozone’s PMIs to have the greatest impact on the EUR.

With economies reopening, the markets will be looking for the services sector to begin catching up with the manufacturing sector in terms of activity.

At the time of writing, the EUR was down by 0.04% to $1.2206.

For the Pound

It’s a quiet day ahead on the economic calendar. Finalized services and composite PMI figures are due out.

Expect any revisions to the services PMI to provide the Pound with direction.

Late in the day, BoE Governor Bailey is also scheduled to speak. Any chatter on monetary policy or the economic outlook will also influence.

Away from the economic calendar, expect any chatter from the government on new COVID-19 strains to also influence.

At the time of writing, the Pound was up by 0.01% to $1.4172.

Across the Pond

It’s a particularly busy day ahead on the economic calendar. Early in the U.S session, jobless claims and ADP nonfarm employment change figures will draw plenty of interest.

A further decline in jobless claims to sub-400k levels would support riskier assets and put further pressure on the FED.

Later in the session, the market’s preferred ISM non-manufacturing PMI for May will also be a key stat on the day.

Other stats include nonfarm productivity and unit labor cost figures for the 1st quarter and finalized Markit PMI numbers for May. We don’t expect these figures to have too much influence on the Dollar and market risk appetite, however.

At the time of writing, the Dollar Spot Index was up by 0.02% to 89.928.

For the Loonie

It’s a particularly quiet day ahead on the economic data front. There are no material stats due out of Canada to provide the Loonie with direction. The lack of stats will leave the Loonie in the hands of market risk appetite and crude oil inventories later in the day.

With new strains of the coronavirus being identified, any hint of resilience against vaccines would weigh on riskier assets and the Loonie…

At the time of writing, the Loonie was down by 0.04% to C$1.2040 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

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