In choppy week for the major currencies, we saw the Kiwi dollar slowly creep into the red, while the Aussie dollar took the top spot on late week RBA speculation.
Notable News & Economic Updates:
- China’s factory outlook holds firm as recovery passes peak
- China raises banks’ FX requirements to rein in yuan
- South Korea Manufacturing PMI signals softer improvement in May
- BOJ Governor Kuroda casts doubt on Bitcoin
- Chinese Caixin manufacturing PMI up from 51.9 to 52.0 vs. 52.1 consensus
- Eurozone manufacturing PMI reaches new heights in May
- Biden targetst crypto tax evaders in global data-sharing pitch
- Oil jumps to two-year high on Tuesday as OPEC and allies reconfirm gradual production increase
- Global economic growth hits 15-year high as rapid expansions in US and Europe offset subdued Asia region
- U.S. crude stocks fall, fuel stocks rise in latest week -EIA
- Chinese Caixin services PMI fell from 56.3 to 55.1 vs. 56.3 forecast
- U.S. job growth improves; desperate employers raise wages to attract workers
- Charts show Asia is far behind the U.S. and Europe in Covid vaccinations
Summer Doldrums Continue
Unless you were deep into trading the wild volatility in memes stocks this week, there was actually very little in the way of major financial market news/event catalysts and volatile price action in the broad markets.
Crypto assets were, as usual, the bigger movers as they continued to slowly recover from the May sell-off, at least until Elon Musk dropped another tweet that dropped the crypto markets early in the Friday session. Oil was also a steady gainer, likely due to continued optimism on the pandemic recovery as cases in the U.S. continue to decline, and as European vaccine distribution continued.
On top of the positive COVID developments, global economic data was likely a contributor to the positive lean in financial markets this week as business sentiment remained optimistic and economic updates were arguably net positive. Global equity markets marched higher this week seemingly without a hiccup, while gold pulled back from two month highs.
In the Forex space, a lot of choppy movement this week, and the usual correlations seemed pretty weak with broad risk sentiment. This indicates that each countries’ economic and pandemic developments were the main drivers for each individual currency….a very rare occurrence!
Overall, the New Zealand dollar was the biggest loser of the week despite not having any major negative catalysts from New Zealand, while the Aussie dollar beat out all currencies with the help of late week speculation from Australia’s top banks that the Reserve Bank of Australia may hint of tapering monetary policy stimulus in the near future, and likely on U.S. dollar weakness after a disappointing U.S. employment update.
USD Pairs
- U.S. Production growth accelerates amid stronger client demand, but supply chain disruption remains marked
- Fed’s Quarles: Still expects inflation jump will be transitory
- U.S. manufacturing sector picks up in May; work backlogs rising – ISM
- Harker says Fed needs to start discussing tapering timeline
- Fed’s Beige Book reports pickup in recovery, price pressures
- The Fed announces plans to sell off its corporate bond holdings.
- U.S. business activity growth rate accelerates to record high in May
- U.S. weekly jobless claims below 400,000; companies boost hiring in May
- ADP National Employment Report: Private Sector Employment Increased by 978,000 Jobs in May
- ISM Services PMI for May: 64.0 vs 62.7 in April
- Biden floats 15% minimum corporate tax in talks with GOP
- U.S. added 559,000 jobs in May, vs 671,000 estimate
- Fed should talk about taking foot off policy pedal: Kaplan
GBP Pairs
- UK Manufacturing PMI surges to record high in May
- UK house price growth hits 10% in hottest month in seven years
- UK retailers report more inflation pressure as economy reopens
- U.K. mortgage approvals rose unexpectedly in April, BOE says
- Fastest rate of UK service sector output growth for 24 years, but prices charged inflation hits record high
- UK construction surges at fastest rate since 2014 – PMI
- U.K. Covid infection rate rises as Johnson weighs more unlocking
EUR Pairs
- German inflation starts to pick up
- Germany looking to ease COVID-19 restrictions soon
- German PMI slips further from March’s record high as supply chain disruption continues to spread
- Euro zone inflation jumps past ECB target in May
- Industrial producer prices up by 1.0% in the euro area & by 0.9% in the EU
- Eurozone Services sector drives further acceleration in growth during May – IHS Markit
- ECB seen pushing ahead with faster bond buying until September
- Volume of retail trade down by 3.1% m/m in both euro area and in the EU
CHF Pairs
- SNB Chairman sees only modest inflation risk in Switzerland – Schweiz am Wochenende
- Swiss Economy Poised to Gain Pace After Slump at Start of Year
- Turnover adjusted for sales days and holidays rose in the Swiss retail sector by 34.8% in nominal terms in April 2021
CAD Pairs
- Canada’s current account balance: +$1.2B surplus in the first quarter after recording a $5.3B deficit in the fourth quarter of 2020.
- Prices for products manufactured in Canada, as measured by the Industrial Product Price Index (IPPI), rose 1.6% m/m; The RMPI increased 1.0% in April, after posting a 2.2% gain in March.
- Canadian output growth sustained but inflationary pressures intensify in May
- Canada Building Permits Slip 0.5% in April
- Canada suffers second jobs-market setback ahead of reopening
- Canada Ivey PMI rises to 64.7 in May from 60.6 in April.
NZD Pairs
- ANZ New Zealand’s final business outlook revised lower in May
- NZ central bank says keeping stimulus longer better than taking away too soon
- New Zealand ANX commodity prices rose 1.3% in May
- Australia Private Sector Credit: 0.2% m/m vs. 0.4% m/m in March
- Australia’s building approvals down by 8.6% vs. projected 9.9% drop
- RBA kept interest rates on hold at 0.10% as expected
- Australia Manufacturing PMI reaches new high amid marked rise in new orders
- GDP figures show Aussie economy back at pre-pandemic levels
- Australian retail sales rose 1.1% as expected in May
- Australian trade surplus widened from 5.57B AUD to 8.08B AUD
- ANZ, Westpac see Australia Central Bank adopting flexible bond-buying plan in July
JPY Pairs
- Japan’s April factory output extends gains, retail sales jump
- Japan Consumer Confidence Index came in at 34.1
- Japan Housing Starts: +7.1% vs. 1.5% previous
- BOJ Governor Kuroda casts doubt on Bitcoin
- Sustained improvement in Japanese manufacturing output in May
- Japan Economy Minister says he hopes Britain joins TPP trade pact after Brexit
- Japan household spending jumps by double digits in April
