USD back under pressure
The US dollar was back under pressure – resuming a theme that dominated most of last week – after a weaker than expected reading from the US services PMI.
US services PMI fell from 51.9 in April to 50.3 in May – any number below 50 is a sign of contraction. Manufacturing PMI fell to 46.9 in last week’s report.
The PMI numbers weighed on the US dollar with the world’s most traded currency mostly down last week after Federal Reserve officials signaled they were likely to “skip” a rate hike at next week’s Fed decision.
The Japanese yen saw the biggest gains versus the US dollar with the USD/JPY down 0.3%.
The greenback was lower in most markets but remained broadly steady in USD/SGD and USD/CNH.
Oil rebound drives commodities
A sharp jump in oil prices helped commodity markets overnight after the Organization of Petroleum Exporting Countries (OPEC) announced a production cut with Saudi Arabia cutting production by one million barrels per day from July.
Crude oil initially jumped 4.5% on the open before ending only 0.6% higher.
Other key commodities also gained with gold up 0.7% and copper up 1.1%.
The AUD/USD and NZD/USD both gained 0.1%.
RBA due
All eyes are on the Reserve Bank of Australia decision, due at 2.30pm AEST, with markets pricing in a 36% chance of a 25-basis point increase to 4.10% (source Refinitiv).
According to Reuters, the dispersion of analysis is broadly similar, with 11 forecasters calling for an increase and 21 looking for rates to stay on hold.
The chances for a hike have increased in recent days with last week’s hotter-than-expected inflation reading (at 6.8% in annual terms versus the 6.4% expected) and Friday’s 5.75% increase in the minimum wage adding to inflation worries.
Aussie at highs ahead of RBA
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 5 – 9 June
All times AEST
Have a question? [email protected]
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
