News

Dollar Inches Higher on Upbeat Data

USD

The dollar index which measures the greenback against a basket of major currencies inched higher to 90.06, to turn green again on the week after solid data. The ISM Manufacturing PMI came in at 61.2, beating estimates, to continue to show that the economic recovery is underway. The pricing component came in at 88.0, which is slightly lower than the previous reading but well above average. Market participants are looking forward to services sector reading, and the US jobs report later this week. Upbeat economic data would support the US dollar as they raise the chances of monetary policy normalization soon. The USDJPY rose to 109.80, the EURUSD declined to $1.2193, and the GBPUSD tumbled to $1.4128.

Equities

Futures tied to major US stock indices had a mixed performance with tech stocks being the weakest across the board. The Dow Jones and SPX500 rallied at the beginning of the session to a three-week high but failed to sustain gains. Investors are looking for fresh drivers which could sustain the current general trend. The economic data will be monitored closely, especially as the upside momentum weakened during May. The Dow Jones Industrial Average futures hovered near 34550, the S&P500 futures traded near 4195, and tech-heavy Nasdaq dipped to 13614.

Metals

Metals prices retreated as the dollar recovered along with Treasury yields. The US 10-year yields rose to 1.64% after dipping to 1.579% a day earlier. The price of a gold ounce fell to $1892 after facing heavy resistance near $1916, the highest since early January. The price of a silver ounce dropped to $27.69, and palladium eased to $2846.

Oil

Oil prices extended upside rally as OPEC+ continued with their pre-set plan. OPEC and its allies chose to move forward with the plan that they decided on in April, and add supply by 700,000 barrels in June and 840,000 in July, including the Saudi Arabia voluntary cuts. The group expects the oil-demand recovery to continue as governments ease restrictions. They are still focusing on driving down inventories. On the other hand, the nuclear deal negotiations are still underway, and capping the upside momentum of prices. The West Texas Intermediate crude July contract traded above $68, and the Brent blend August contract hovered above $70.

Major Economic Events

GMT Country Event Expectation Previous

12:30

CA

 Building Permits (MoM) (Apr)

-4.8%

5.7%

15:00

UK

 BoE Gov Bailey Speaks 

-

-

17:10

EZ

ECB President Lagarde Speaks 

-

-

20:30

US

 API Weekly Crude Oil Stock

-

-0.439

 

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