The loss of impetus in the US manufacturing sector sparked a deeper pullback in the Greenback and supported further the recovery of the risk-associated assets at the beginning of a week ruled by the ECB event and US Nonfarm Payrolls.
Here is what you need to know on Tuesday, June 4:
The USD Index (DXY) dropped markedly and flirted with three-week lows near the 104.00 neighbourhood. On June 4, Factory Orders take centre stage seconded by the JOLTs Job Openings and the RCM/TIPP Economic Optimism Index.
EUR/USD advanced for the third session in a row and challenged the key 1.0900 barrier amidst generalized Dollar weakness. The release of Germany’s labour market report and EMU’s Consumer Inflation Expectations will be at the centre of the debate on the domestic docket on June 4.
GBP/USD advanced to just pips away from the key 1.2800 hurdle, or multi-week highs, on Monday. The BRC Retail Sales Monitor is expected across the Channel on June 4.
The weaker Dollar and diminishing US yields prompted USD/JPY to recede to multi-session lows in the sub-156.00 region at the beginning of the week. In Japan, a JGB 10-year Auction is only due on June 4.
The increasing selling pressure in the Greenback motivated AUD/USD to advance to the proximity of the 0.6700 mark. On June 4, Business Inventories, Current Account and final Retail Sales are all due in Oz.
WTI prices receded for the third consecutive week and broke below the $77.00 mark per barrel on Monday, as traders digested the bearish tone from the OPEC+ meeting on Sunday.
Gold prices charted a strong advance to the $2,350 region on the back of the intense sell-off in the Dollar and declining US yields across the curve. By the same token, Silver followed suit and reversed three consecutive sessions of losses.
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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