- EUR/USD continues to hold around 1.2180-90 levels for now but the range is similar to what we saw yesterday. GBP/USD was nudged lower to 1.4145 earlier but has since recovered to be near flat levels around 1.4175-80 after the UK PMI beat.
- The preliminary report can be found here. Stronger revisions only add to the gloss on this report as UK services sector output growth is seen at its quickest in 24 years.
- The large expiries sit at 110.00 so that is likely to cap gains, similar to yesterday. There's also a chunk towards the downside so that should keep price action anchored in the current range before they roll off later in the day in any case.
- The preliminary report can be found here. The composite index is the highest since February 2018 and this reaffirms a strong May month for the euro area as looser virus restrictions bolstered demand conditions and new businesses.
- The preliminary report can be found here. No change to the initial estimates as the German services sector returns to growth in May after having stagnated in April. Of note, new business is seen rising at its quickest pace in nearly two years.
- "Latest PMI data indicated a strong improvement in business activity across the French service sector after virus-related restrictions eased in May, allowing schools and many businesses to reopen after a period of closure. Stronger demand, particularly from the domestic market, underpinned the uplift."That said, output was somewhat hindered by capacity constraints after a softer increase in headcounts contributed to a marked rise in backlogs. Meanwhile, sector data continued to reveal a struggling hospitality sector with many businesses having to operate with restrictions on capacity."Nevertheless, the upturn across France's private sector, and a rising vaccination rate will place the country in good stead for strong growth as we head into the summer."
- "Italy's service sector saw its first signs of a recovery during May. Business activity rose for the first time since last July and at the strongest rate since March 2019, amid the fastest upturn in new business for over three years as companies reopened and demand began to recover as COVID-19 restrictions eased. Subsequently, services employment stabilised following a 14-month sequence of job shedding."The rebound in services activity during May was joined with a near record upturn in factory production and as a result, data highlighted the fastest rate of private sector output growth since February 2018. This bodes well for the Italian economy, which has been, so far, held back by the weak performance of services. With COVID-19 lockdown measures much looser, we should expect to see further growth over the coming months as the economy continues on its recovery path."
- "Spain's services economy benefited from an easing of COVID-19 restrictions during May, expanding at its fastest rate since the summer of 2015 on the back of improving demand and sales."The data highlight how the sector is primed for rapid growth in the coming months, with clients and consumers clearly keen to get back to some form of normality following the considerable challenges related to the pandemic over the past year or so."Of course, growth will remain dependent on the successful rollout of vaccination programmes and for Spain in particular a return to normality in foreign travel and tourism ahead of the crucial summer trading period is important."Less positive is that pipeline price pressures seen in the industrial sectors are being felt by service providers but for now, with demand and sales still in recovery mode and ground to be made up, pricing power and pass through to end clients remains muted."
- EUR/USD is back under 1.2200 and keeping below its key hourly moving averages but swing region support around 1.2170-75 is still one to watch that could limit near-term downside for the pair before the 28 May low @ 1.2133.
- Iran remains the big wildcard for OPEC+ but you can bet that Russia will be looking at any which ways to increase their market share as soon as possible, especially with prices continuing to keep higher as they are now.
- That is the highest level since 28 May as buyers look to be forming a base close to the 50.0 retracement level of the big picture upswing in Bitcoin, around $34,378.
The Reserve Bank of Australia has taken a decisive step to try and drive unemployment very low. The current rate is 5.5% and the RBA would like to see this drift down towards the 4% level. This emphasis on a return to full employment was once again seen in the latest RBA minutes. Here are the headlines:
- In Asia, the Nikkei closes up 0.4% while the Topix ends the day up 0.8%. Meanwhile, the Hang Seng trails as it is down 0.5% while the Shanghai Composite is up 0.2%.
- Meanwhile, Bitcoin is showing some signs of life as it climbs to $38,700 now - its highest level in nearly a week. But still, the $40,000 level and 200-day moving average (now @ $41,475) are still key levels keeping sellers in control for the time being.
- Well, the Fed's portfolio is rather small so the amounts shouldn't really move credit markets whatsoever. As of last month, the Fed held roughly $5 billion in bonds and $8.6 billion worth of ETFs in this space, which isn't a whole lot at all if you think about the $1.4 trillion in corporate bonds sold this year so far.
- Overnight, the Fed did move to wind down its corporate bond holdings but the volumes are a drop in the ocean so it is more symbolic than it is significant in terms of impact.
- Meanwhile, total active cases is seen falling further to ~85,000 - the lowest since October last year. So, that continues to reaffirm that the virus situation is getting better and will allow for looser restrictions going into the summer surely.
Major FX has moved very little during the session here so far in Asia. News flow has been light and, obviously, of negligible impact. Data flow, on the other hand, has been plentiful (see bullets above) but also, and again obviously, non impactful. "Awaiting the nonfarm payroll data from the US" has been today's excuse and with Friday still to come in the timezone will likely be tomorrow's as well.
In summary the US dollar has inched a little higher during the session, with gains against AUD, NZD, yen, EUR. All tiny though.
Oil stretched its gains even higher, an increase in expected demand is cited as economies improve (a key benefit, alongside health, of vaccination rate increases) while supply discipline from OPEC+ remains in place, for now. The private survey of oil stocks shopwed a much larger than expected draw in headline inventory.
Gold and Bitcoin have given back a little.
The People's Bank of China weakened the onshore...
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