- • After yesterday’s PBOC reserve requirement increase for foreign exchange, the yuan weakened for a second day.
- • The RBA stood pat as expected with a review of the asset purchases and three-year interest rate target still planned for next month
- • EMU final manufacturing PMI was revised higher, while the preliminary estimate for May’s CPI rose to 2.0%, slightly more than expected.
- • Sterling rose to new 3-year highs near $1.4250 but has been sold in Europe.
- • OPEC+ highlighted the tightening of supplies and helped send oil higher. Brent is near $71 and WTI is above $68 a barrel.
- • US reports manufacturing PMI and ISM, and construction spending. Canada is expected to report strong Q1 GDP. Mexico reports worker remittances, manufacturing PMI, and IMEF indices.
The US dollar fell against most major currencies following the PBOC’s modest move to reduce the upward pressure on the yuan. Follow-through selling was seen earlier today, and sterling reached a new three-year high. However, the dollar found a bid in the European morning, while the Scandi currencies held on to most of their earlier gains. Emerging market currencies were mixed, and the yuan eased. The JP Morgan Emerging Market Currency Index’s four-day advancing streak is at risk.
Equity markets have begun the new month on firm-footing. The MSCI Asia Pacific Index rose, led by Hong Kong, Thailand, and New Zealand, to post the third consecutive gain. It has risen 11 of the past 13 sessions. It has rallied from the year’s low in mid-May to the upper end of its three-month trading range. Europe’s Dow Jones Stoxx 600 snapped a seven-day rally yesterday but has come back strongly today to set new record highs. US futures are trading higher.
The US 10-year yield is firm near 1.62%, after finishing last week slightly below 1.60%. Most European benchmark yields are slightly firmer.
Gold’s gains were extended above $1916, and it saw the best level since January 8 before easing back to little changed levels below $1908. OPEC+ underscored the tightness of markets, and oil prices were lifted to new highs, with oil rallying more than 2% to lift Brent to almost $71 a barrel and the July WTI above $68 a barrel. Other industrial commodities are mixed. Iron ore gained for a third session and is up more than 10% over the run. Steel rebar fell after rising around 6% over the past two sessions. After rising in four of five sessions last week, copper is slightly softer today.
Bannockburn Global Forex