The US dollar is ending the day slightly weaker with modest trading ranges. The greenback was initially supported by a strong Nonfarm Payroll (NFP) and better Non-manufacturing ISM data out of China (and debt deal being signed by Biden), but later pulled back after the ISM Services and factory orders came out weaker than expectations. The headline ISM Services for May fell to 50.3, below the expected 52.2, with a slowdown in new orders and employment. Factory orders and core durable goods orders also missed consensus, adding to the decline in the dollar.
The strongest to weakest of the major currencies
The AUDUSD and NZDUSD moved higher due to the dollar’s decline and better China data. The RBA will meet on Tuesday, where the Cash Rate Target is expected to remain unchanged at 3.85%. If there is a surprise, it would be for a 25bps hike due to elevated inflation. The AUDUSD stalled near 0.66376 for the 2nd consecutive day. That level also corresponds with the 50% midpoint of the May trading range.
AUDUSD stalled against the 50% midpoint for the 2nd day
The NZD/USD based against its 100 hour moving average near 0.6044, and moved above it 200 hour moving average of 0.60543. Both those levels are now risk levels for buyers looking for more upside. The current price is trading at 0.60684. On the top side the high from Friday reached 0.61105. That becomes the next target followed by the 38.2% retracement of the move down from the May high which cuts across at 0.61367.
The EURUSD is closing marginally higher on the day after rebounding from declines in the Asian and London morning session. The move higher came after the weaker ISM data and had the pair banging against its 200 hour moving average at 1.07193 for much of the rest of the day. ECB members expressed concerns about ongoing inflation in the Eurozone. However, PPI inflation did come in weaker than expectations today (-3.2% versus -3.0% year on year) and so did ISM nonmanufacturing data out of EU countries.
The GBPUSD and the USDCAD were also relatively little changed., GBPUSD did move sharply lower in the Asian and early London session and extended below the 200 hour moving average at 1.2400. However, it recovered above the moving average, retracing declines and extending to just short of its 100 hour moving average currently at 1.2445. With the pricing between the 100 and 200 hour moving averages at 1.2433, traders are waiting for the next shove.
The Loonie showed some weakness as oil prices pulled back from their highs and erased earlier gains.
The USDJPY and USDCHF both moved lower with each influenced by the ISM Services miss. Newsflow was light for these currencies, but the Swiss CPI for May printed in line for both M/M and Y/Y.
Crude oil prices today moved sharply higher earlier after Saudi Arabia’s additional output cut announcement at the OPEC+ meeting. The high price reached $75.06. However by the settlement, the price was up only $0.41 at $72.15.
In addition to the Saudi announced cuts, all OPEC+ producers agreed to prolong cuts until the end of 2024, reducing the 2024 output target by 1.4 million BPD. Saudi Arabia clarified that its additional cut is precautionary, with an extension under consideration. The White House affirmed its commitment to maintaining stable energy markets for U.S. economic growth.
In other markets, US yields are lower on the day after opening higher. The US data helped to put shields back to the downside:
- 2 year yield 4.468%, -3.5 basis points
- 5 year yield 3.819% -2.3 basis points
- 10 year yield 3.686% -0.6 basis points
- 30 year yield 3.886+0.4 basis points
US stocks closed lower with the NASDAQ index erasing gains after Apple WWDC23 event.
In addition to announcing new Mac’s and enhancements to operating systems and such, Apple introduced the Vision Pro VR headset which will be sold early in 2024 at a high price of $3499. Apple shares traded to new all-time highs prior and during most of the event, but later gave up gains and closed down -$1.35 or -0.75% at $179.58. The move to the downside, dragged the NASDAQ index back into negative territory. The Dow industrial average was down for most the day after Friday’s 700 point surge.
A snapshot of the closing levels shows
- Dow industrial average fell -199.90 points or -0.59% at 33562.87
- S&P index fell -8.60 points or -0.20% at 4273.78
- NASDAQ index fell -11.35 points or -0.09% at 13229.42
The Russell 2000 index of small-cap stocks fared the worst with a decline of -24.19 points or 1.32% at 1806.71.
Bitcoin fell sharply after the SEC sued the largest crypto exchange Binance Holding and it’s Chairman Zhao. The price is trading at $25,626. On Friday, the price closed at $27,251.
Spot gold is trading up $13.70 up 0.70% at $1961.20. Silver is trading down -$0.04 at $23.56.
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