• The US dollar is firm. It is at new highs for the year against the yen and rose to new two-month highs against the euro and sterling. The greenback is also higher against most EM FX.
• Japan’s Tankan survey improved but not as much as expected. However, capex plans were stronger than anticipated and the economy is still poised to have a better second half.
• The eurozone manufacturing PMI was revised higher, while the UK’s came in weaker.
• Sweden’s Riksbank left policy and its rate path unchanged. The market had expected a clearer indication that it would bring in its first hike from Q3 24, but it did not and the krona weakened.
• The US sees the final manufacturing PMI. The manufacturing ISM is new news and the prices paid sub-index may have fallen for the second month. June auto sales may have also fallen for the second month in a row.
• Mexico reports worker remittances which are a more important source of dollars than trade.
• OPEC+ is expected to boost output by around 500k barrels a day in August and WTI is at new three-year highs.
Soft Asian manufacturing PMIs weighed on local shares after the S&P 500 set new record highs yesterday. European shares are recouping yesterday’s month-end losses, while US futures indices are bid.
The US 10-year yield is around 1.47%, and European yields are 1-2 bp higher.
The dollar is beginning the quarter on firm footing, making new highs for the year against the Japanese yen (~JPY111.60). The euro has been unable to resurface above $1.1860 and is at its lowest level in nearly three months. No change by the Riksbank left the krona vulnerable, and the krona’s 0.3% loss leads the majors. Russia, Turkey, and South Africa are firmer, while many emerging market currencies are softer. The JP Morgan Emerging Market Currency Index has a four-day slide in tow.
Gold extended its recovery from $1750 but ran into resistance in front of $1780. Oil prices are firm in the wake of the latest drawdown of US inventories. The August contract set new highs above $74.50 as the outcome of the OPEC meeting is awaited. Speculation has centered around an increase of 500k barrels next month. The CRB Index settled yesterday at its best level in nearly six years. With June’s gain of 3.75%, the index rose for the seventh month in the past eight.
Bannockburn Global Forex