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Private Sector PMIs and Jobless Claims Put the EUR, GBP, and USD in Focus

Private sector PMIs and U.S jobless claims put the EUR, the Pound, and the Greenback in the spotlight. Numbers out of Japan were not inspiring…
Bob Mason
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Earlier in the Day:

It was a relatively busy day on the economic calendar this morning. The Japanese Yen was in focus, with April trade and May prelim private sector PMIs giving the Yen direction.

Away from the economic calendar, the markets responded to the FOMC meeting minutes released overnight and the latest chatter from the U.S government.

Looking at the latest coronavirus numbers,

On Wednesday, the number of new coronavirus cases rose by 99,724 to 5,082,661. On Tuesday, the number of new cases had risen by 94,819. The daily increase was higher than both Tuesday’s rise and 89,941 new cases from the previous Wednesday.

France, Germany, Italy, and Spain reported 2,856 new cases on Wednesday, which was up from 2,848 new cases on Tuesday. On the previous Wednesday, 3,225 new cases had been reported.

From the U.S, the total number of cases rose by 21,408 to 1,591,991 on Wednesday. On Tuesday, the total number of cases had risen by 20,688. On Wednesday, 13th May, a total of 21,774 new cases had been reported.

For the Japanese Yen

It was a busy morning for the Japanese Yen, with April trade figures and prelim May private sector PMIs in focus.

In April, Japan’s trade balance slumped from a ¥5.4bn surplus to a ¥930.4bn deficit. Economists had forecast a deficit of ¥560.0bn.

According to figures released by the Ministry of Finance,

  • Exports tumbled by 21.9%, following on from an 11.7% slide in March.
  • Imports fell by 7.2%, following a 5% decline in March.

The Japanese Yen moved from ¥107.607 to ¥107.636 upon release of the figures that preceded private sector PMIs.

May’s private sector PMIs provided some idea of what the 2nd quarter is going to look like.

  • The manufacturing PMI fell from 44.1 to 38.4, while the services PMI increased from 19.5 to 25.3.

According to the prelim PMI Survey:

  • Output across the manufacturing sector saw a stronger decline, while service sector activity saw a weaker decline.
  • New orders were also mixed, with the manufacturing sector seeing new orders fall at a sharper pace.
  • The Manufacturing PMI fell to its lowest since March 2009, with sector output at its lowest in over 11-years.
  • While service sector activity improved marginally, the decline in output was still the 2nd sharpest on record.
  • New orders fell at a weaker pace, while employment fell at a more marked pace across the services sector in May.

The Japanese Yen moved from ¥107.673 to ¥107.684 upon release of the PMIs. At the time of writing, the Japanese Yen was down by 0.12% to ¥107.66 against the U.S Dollar

Elsewhere

At the time of writing, the Aussie Dollar was down by 0.62% to $0.6556, with the Kiwi Dollar down by 0.42% to $0.6119.

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The Day Ahead:

For the EUR

It’s a particularly busy day ahead on the economic calendar. Putting geopolitical risk and COVID-19 aside, May’s prelim private sector PMIs are in focus.

While we would normally be eyeing the manufacturing numbers, service sector PMIs should garner more interest.

A marginally slower pace of contraction across the private sector and support from EU member states would be EUR positive.

The devil will be in the details, however. Headline numbers may be better, but if demand trails then don’t expect long-lasting support from the numbers.

At the time of writing, the EUR was down by 0.18% to $1.0960.

For the Pound

It’s a relatively busy day ahead on the economic calendar. Key stats include May’s prelim private sector PMIs.

With the UK still in lockdown, the numbers are unlikely to be too supportive for the Pound.

Expect the Services PMI to have a greater influence, with the PMI likely to linger at sub-20 levels.

Outside of the numbers, geopolitics will continue to be a factor, with Brexit in the limelight once more.

At the time of writing, the Pound was down by 0.39% to $1.2197.

Across the Pond

It’s a busy day ahead on the U.S economic calendar. Key stats include May’s prelim private sector PMIs for May, the weekly jobless claims, and the Philly FED Manufacturing Index figures for May.

Expect the service sector PMI and the initial jobless claims to have the greatest impact. The government has been easing lockdown measures in May. This will need to translate to a pickup in service sector activity and hiring…

Existing home sales figures for April will likely have a muted impact later in the session.

The Dollar Spot Index was up by 0.26% to 99.377 at the time of writing.

For the Loonie

It’s a quiet day on the economic calendar. There are no material stats due out to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of market risk sentiment on the day. Expect the PMIs to influence.

At the time of writing, the Loonie was down by 0.25% to C$1.3936 against the U.S Dollar.

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