Here are the latest developments in global markets:
FOREX: The British pound was the best performer during the early European afternoon, trading 0.55% higher against the dollar on the day at 1.3387 after the UK’s services PMI reading rose more than expected. This was also perceived as a sign of economic strength that could persuade BoE policymakers to raise interest rates in August. Versus the Japanese yen, sterling picked up by 0.44% to 146.80. On the other hand, an upward revision to previous Eurozone retail sales figures didn’t help euro/dollar, with the pair edging down to 1.1690 (-0.07%). May’s retail sales came in line with expectations on a yearly basis, whereas on monthly terms they missed forecasts. In Italy, the new Prime Minister, Giuseppe Conte, expressed in Parliament that Italy’s interests coincide with European ones, saying at the same time that the country’s public debt is sustainable. Euro/pound declined by 0.56% to 0.874, erasing yesterday’s gains. Dollar/yen was flat at 109.75 in the absence of major economic announcements and ahead of data releases later today. The dollar index was also moving sideways, changing hands at 94.02. The loonie was on the back foot, retreating by 0.30% versus the greenback. Yesterday, the IMF said that policymakers need to enhance their policy buffers and plan structural reforms as the risk is high due to trade uncertainties and the impact of US tax cuts. In antipodean currencies, auddie/dollar remained on the downside, last seen at 0.7617 (-0.34%), after the RBA’s rate statement reiterated worries on wage growth and inflation earlier today. Kiwi/dollar eased to 0.7021 (-0.11%) before the release of global dairy prices later today.
STOCKS: European stocks were all in the green at 0900 GMT except Britain’s FTSE 100 which dipped into losses, losing 0.38%, after an upbeat services PMI survey pushed the pound higher. Loses in the financial sector were also weighing on Britain’s FTSE following the UK government’s sale of its stake in the Royal Bank of Scotland. The pan-European STOXX 600 and the blue-chip Euro STOXX 50 were up by 0.26% and 0.14% respectively. The German DAX 30 surged by almost 1.0% with tech stocks leading the gains, the French CAC 40 rose by 0.58%, while the Italian FTSE MIB 100 continued to pare losses linked to last week’s political risks, climbing by 0.77%. Spain’s IBEX 35 was also on the recovery, increasing by 0.58%. Futures tracking US stock indices were flashing green, pointing to a positive open.
COMMODITIES: Oil prices were on the backfoot as supply concerns continued to weigh, with investors speculating that OPEC could raise its output this month at its policy meeting at a time when US production is rising to near record levels. WTI crude was last seen slightly down on the day at $64.77/barrel, while the London-based Brent posted sharper losses, falling by 0.94% to $74.58/barrel. Meanwhile the Saudi Arabian energy minister stated today the supply release will be gradual, while Bloomberg headlines reported that the US is planning to ask OPEC for an output hike of 1 million bpd. In precious metals, gold was moving sideways at $1,292.04/ounce.
Day Ahead: US ISM non-manufacturing PMI & JOLTS job openings in spotlight; Global dairy auction coming up
In terms of economic data, one of the major releases left on the agenda today is the US ISM non-manufacturing PMI, which is due at 1400 GMT. Expectations are for the print to reach 57.5 in May, from 56.8 previously. A stronger than expected reading could provide a further boost to the US dollar, which was trying to regain its positive footing against the Japanese yen in the previous couple of days. Additionally, a bit earlier, the US will see the release of May’s final Markit services and composite PMI’s at 1345 GMT. The services PMI is expected to remain the same at 55.7 as the preliminary reading.
At 1400 GMT, the US JOLTS job openings will be the figures likely to attract some interest as well. Specifically, the report published by the Burau of Labor Statistics is likely to show that 6,400 million positions opened in December compared to 6,550 million seen in the preceding month.
In energy markets, investors will look forward to the API weekly report due at 2030 GMT which tracks the level of the US crude, gasoline and distillates stocks, as concerns over rising US output linger in the market.
In other commodities, global milk auctions will be also eyed, probably, bringing some volatility to the kiwi as New Zealand is a major dairy exporter. However, the release time is tentative.
Overnight, aussie traders are likely to turn their attention on the Australian GDP figure for the first quarter of 2018 (0130 GMT). According to the forecasts, the Australian economy will likely have expanded by 0.9% q/q in the March quarter from 0.4% in the previous quarter. On a yearly basis, the GDP growth is projected to tick higher to 2.8% from 2.4% before. On Monday, the Australian dollar hovered near a 6-week high following a flurry of upbeat data releases.
The time of the meeting between the US President, Donald Trump, and the North Korean leader, Kim Jong Un in Singapore on June 12 has been set at 1700 GMT.
