On this coming Thursday, June 1st, please take note of the following:
The US dollar (USD) maintains its bullish trend in the second half of the week despite the optimistic market sentiment. May inflation data from Eurostat and minutes from the European Central Bank’s Monetary Policy Meeting will be made public during the European session. The ISM Manufacturing PMI survey, the US Department of Labor’s weekly Initial Jobless Claims report, and the ADP Employment Change for May will all be released in the afternoon.
Preview of US ADP Employment and ISM Manufacturing PMI: Downward Trend for the US Dollar to End?
The US Dollar Index (DXY) rose above 104.50 on Wednesday, its highest level since mid-March, after the US Bureau of Labour Statistics (BLS) reported that the number of job openings on April 30 was 10.1 million, up from 9.74 million in March and the market estimate of 9.37 million. In the meantime, the Federal Reserve reported in its Beige Book that economic activity was relatively stable in April and early May. “Prices rose moderately over the reporting period, though the rate of increase slowed in many Districts,” the journal noted.
Late Wednesday, the House of Representatives passed a bill to suspend the debt limit until January 1, 2025, easing investor concerns. The DXY fell from its daily highs in response to this news, but it still managed to end the day in the green. While the benchmark 10-year US Treasury bond rate recovered towards 3.7%, key US equity indexes that closed before the vote posted losses. U.S. stock index futures are trading flat on Thursday morning, while the yield on the 10-year Treasury note is hovering around 3.7%. On Wednesday, both Fed Governor Philip Jefferson and Philadelphia Fed Bank President Patrick Harker said they favoured not raising rates at the next meeting. The value of the USD has not fallen as a result of these comments, at least not yet.
Due to Thursday’s continued USD strength, the EUR/USD pair has been trading at a disadvantage below 1.0700. After increasing by 7% in April, the annual increase in the Harmonised Index of Consumer Prices in the Eurozone is expected to slow to 6.3% in May.
GBP/USD has lost momentum and is stretching lower towards 1.2400 in the early European session, after having completed the first three trading days of the week in positive territory.
On Thursday, the USD/JPY gained momentum and headed back around 140.00. Capital spending in Japan increased by 11% in the first quarter, according to data released earlier in the day, which was far more than the market consensus of a 5.5% growth.
On Wednesday, gold’s price surged beyond $1,970, only to lose most of the day’s gains and end the trading day just above $1,960. In the early hours of the European morning, XAU/USD trades at the mid-$1,950s, where it remains under mild bearish pressure.
Bitcoin has lost another 1.5% today, dropping to roughly $26,800. The cryptocurrency’s daily loss now stands at 2%. On Wednesday, Ethereum dropped by over 1%, and it continued to fall towards $1,850 by early Thursday.
