Forex news for North American trading on June 3, 2019:
- US May ISM manufacturing index 52.1 vs 53.0 expected
- Fed's Bullard: Rate cut may be warranted soon on trade and inflation risks
- US construction spending for April 0.0% versus 0.4% estimate
- Markit May final US manufacturing PMI 50.5 vs 50.6 prelim
- Canada May Markit manufacturing PMI 49.1 vs 49.7 prior
- Mexico eyes retaliation if US proceeds with tariffs - report
- Trump tweets that Mexico should immediately halt flow of drugs and people
- Fed's Bullard Q&A: 2% inflation target has become international standard
- Fed's Barkin (non voting): Running economy hot may boost labor force
Markets:
- Gold up $20 to $1325
- WTI crude down 72-cents to $52.78
- US 10-year yields down 5 bps to 2.07%
- S&P 500 down 8 points to 2744
- NZD leads, USD lags
The US dollar is starting to feel the pain of the trade war as Treasury yields fell another 4-8 bps led by the front end.
The theme was USD weakness across the board and it accelerated after Bullard shifted towards a more dovish stance on rates. Powell speaks tomorrow and that will be a big one with the market now pricing in a 50% chance of a rate cut in July.
The European currencies were lively as the yield differential narrows. The Swiss franc was the early beneficiary as USD/CHF fell below parity and down to 0.9911 before a small bounce late. The euro found a bid into the London close that extended 1.1262 at the highs. On the day the pair gained 75 pips.
USD/JPY fell to the lowest since early January as risk sentiment deteriorated. It was the second day of losses after Friday's slump. The flash crash lows are beginning to look like a target.
The best clue that it was a USD-centric selloff was in the commodity currencies, in particularly the Aussie as it gained despite the high likelihood of a rate cut within hours. The kiwi scored what looked to be its best day of the year in a 67 pip climb to 0.6598.
