Dollar weakness continues in the early part of the day as the market focus shifts to today's service sector PMI numbers...
The economic calendar was on the busy side through the Asian session.
Australia 1st quarter GDP numbers and China’s Caixin Services May PMI provided direction in the early part of the day.
The Australia economy grew by 1.8%, year-on-year, in the 1st Quarter GDP, which was in line with market forecasts. The economy had grown by 2.3% in the 4th quarter. Quarter-on-quarter, the economy grew by 0.4%, coming up short of a forecasted 0.5%. The economy had seen a quarterly growth of just 0.2% in the 4th quarter.
According to the ABS,
The Aussie Dollar moved from $0.69937 to $0.70000 upon release of the figures that preceded China service PMI numbers.
The Caixin Services PMI slipped from 54.5 to a 3-month low 52.7 in May. According to the May Markit Survey,
The Aussie Dollar moved from $0.70000 to $0.69985 upon release of the figures. At the time of writing, the Aussie Dollar was up 0.14% to $0.7001.
At the time of writing, the Kiwi Dollar was up by 0.39% to $0.6634, while the Japanese Yen was up by 0.05% to ¥108.10 against the U.S Dollar.
It’s a particularly busy day ahead on the economic calendar. Spain and Italy’s May service PMI numbers are due out in the early part of the session.
France, Germany and the Eurozone’s Finalized service PMIs are also due out along with the Eurozone’s April retail sales figures.
Barring material deviation from prelim numbers out of France and Germany, Italy service PMI and the Eurozone’s composite PMI will be the key drivers on the PMI front.
The Eurozone’s retail sales figures will also influence and will likely be EUR negative.
From elsewhere, private sector PMI numbers out of the U.S will have an impact on the pair as will any Beijing and U.S administration chatter on trade.
At the time of writing, the EUR was up 0.09% to $1.1262.
The UK’s May service PMI is due out later this morning. While forecasts for the PMI to hold steady at 50.9, an unexpected contraction would certainly impact the Pound.
Outside of the numbers, chatter from the UK Parliament and sentiment towards Brexit will continue to influence.
Macron continues to attempt to show strength in Europe, stating that the 31st October deadline should be Britain’s final deadline. Fortunately, for the British government and the rests of the EU, France is not the only member state with a say on this.
A no-deal Brexit remains the worst-case scenario for the Pound, leaving the race to become Theresa May’s successor the key driver near-term.
At the time of writing, the Pound was up 0.06% to $1.2705.
It’s a relatively busy day ahead on the economic calendar. ADP nonfarm employment change figures are due out ahead of service sector PMI numbers.
Alongside May’s employment numbers, the market’s preferred ISM non-manufacturing service PMI will be the key drivers.
Outside of the stats, trade war chatter will also provide direction on the day.
At the time of writing, the Dollar Spot Index was down 0.02% to 97.054.
1st quarter labor productivity figures will provide direction later this afternoon.
We can expect crude oil inventory numbers and any trade war chatter to also have an impact on the day.
The Loonie was up by 0.12% to C$1.3378, against the U.S Dollar, at the time of writing.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.