On this Wednesday, May 31st, please be aware of the following:
Traders have been wary since midweek as fears rise that the US debt-limit plan would be met with opposition in both houses of Congress despite passing the House Rules Committee by a narrow 7-6 majority on Tuesday. Midweek, as investors become less willing to take risks in anticipation of April’s JOLTS Job Openings data and Fedspeak, the US Dollar (USD) strengthens. The German statistics agency Destatis will release May inflation figures during the European trading day.
US stock index futures are currently trading 0.35% to 0.45% lower, reflecting the gloomy market sentiment. The benchmark 10-year US Treasury bond yield is down 1% on the day below 3.7%, while the US Dollar Index is inching higher around 104.50 after falling on Tuesday.
China’s manufacturing activity shrank in May at a somewhat higher rate than in April, according to statistics released during Asian trade hours. The NBS Manufacturing PMI dropped to 48.8 from 49.2. The Non-Manufacturing PMI dropped to 54.5 from 56.4 over the same time period, however this result was still much above the market forecast of 50.7.
During the Asian trading session, the AUD/USD currency pair came under selling pressure, dropping to levels below 0.6500 not seen since early November. On Wednesday, the Australian Bureau of Statistics released statistics showing that annual inflation in the Consumer Price Index (CPI) was 6.8% in April, up from the 6.3% increase seen in March. Reserve Bank of Australia (RBA) Governor Philip Lowe spoke before the Senate Economics Legislation Committee, but his warnings that persistent inflation will increase interest rates and joblessness had little effect on the Australian dollar.
The Euro appreciated against the Dollar and eventually concluded Tuesday with a gain. However, early on Wednesday, the pair was pushed down by the increased USD strength and fell back below 1.0700. The yearly increase in Germany’s Harmonized Index of Consumer Prices is expected to slow to 6.8% in May from April’s 7.6%.
On Wednesday morning, USD/CAD gained positive momentum and climbed to about the 1.3650 region. Market investors will be keeping a close eye on Canada’s first quarter GDP growth later today.
Pressured by declining US T-bond rates, the USD/JPY extended downward on Tuesday and remained doing so early Wednesday. Just above 139.50 was where we last saw this pair trade.
On Tuesday, the pound remained over 1.2400 against the dollar, but by midweek, it had fallen. In the European morning, the pair maintains its negative tone and heads toward 1.2350.
On Tuesday, gold’s price benefitted from falling US rates and climbed toward $1,960. XAU/USD consolidates recent gains and trades over $1,950 on Wednesday.
On Wednesday morning, Bitcoin’s value took a sharp turn for the worst, falling around $27,000, a loss of over 2% for the day. On Tuesday, Ethereum posted slight increases, but on Wednesday, it reversed course. As of this writing, the ether to dollar exchange rate had fallen by almost 1% on the day, to $1,870.
