The U.S. Dollar is moving within familiar ranges, with the exceptions of Mexican Peso and Japanese being big movers.
Overview
The Yen slid further into weakness leaving many wondering about future monetary policy and the Bank of Japan’s willingness to intervene again in FX. On the other hand, the Mexican Peso has finally jumped into recovery mode against the dollar after the very negative reaction to election results that saw MXN slide 5.0%.
As far as domestic data, the earlier release of ADP Employment Change came in lower than expected, with 152K payrolls added instead of 175K expected. The prior figure was also downwardly revised. The S&P Composite Purchasing Managers Index is due at 9:45 AM, right before the Institute for Supply Management survey on the Services sector in May. At the time of writing, equities started jumping higher with favorable interpretations of the labor figure. A slower pace in demand for workers can be seen as an accelerator of “dovish” policy from the Fed. Perhaps the Buck will have room to fall.
What to Watch Today…
- ECB Meeting Thursday
- U.S. Employment Situation Friday
- Monex USA Online is always open.
EUR ⇑
The Euro climbed 1.5% since the start of May, currently holding steady ahead of the European Central Bank decision tomorrow. Eurozone Composite PMI for May came in just below expectations with a reading of 521.2 vs 52.3 forecast while inflation for suppliers dropped more than anticipated at (-1.0%) instead of (-0.7%) for the month, increasing the deflationary average from (-5.3%) to (-5.7%). “Hawkish Cuts” could be the case after BOC and ECB make their announcements which could put some pressure on the Buck.
CAD ⇑
The Canadian Dollar is quiet ahead of the Bank of Canada meeting coming up at 9:45 AM, in which officials are expected to make a 25-basis-points interest rate slash. Ever since the start of May, the “Loonie” has stayed up over the Buck by just half a percent, with the decision by BOC growing in speculation. Data points have made for a mix of enough disinflation that makes BOC comfortable making a move to stimulate while not putting any more price pressures.
Gross Domestic Product remains is the envy of other regions at a quarterly pace of 1.7%, but with Q1 expectation being of 2.2%, the time feels right to address the slowdown which has also been evidenced across Purchasing Managers Indices that have failed to show an expansionary reading since April of last year. Watch for volatility and the first reaction may not always be the correct one that lasts long.
