The strongest to the weakest of the major currencies

The USD is the strongest of the major currencies , while the NZD is the weakest of the majors. The USD reversed some of the declines vs the EUR and the GBP from yesterday's trading. Inflation in Europe was weaker than expectations with Germany and France below expectations although Italy showed a stronger MoM release. It is higher vs AUD and NZD (and CAD) as they react to slower China.

There is a number of Fed speakers scheduled today along with the Beige Book release:

  • 8:50am: FOMC Member Bowman Speaks (USD)
  • 12:30pm: FOMC Member Harker Speaks (USD)
  • 1:30pm: FOMC Member Jefferson Speaks (USD)
  • 2:00pm: Beige Book (USD)

Canada GDP for the Q1 will be released at the bottom of the hour with expectations of 2.5% annualized and -0.1% MoM. JOLTs job openings will be released at 10 AM with expectations of 9.375M versus 9.590M last month. The US jobs report will be released on Friday with expectations of around 190K currently.

The U.S. House of Representatives faces a critical vote on the debt ceiling bill as the deadline for potential default approaches. US Republican negotiator Rep. McHenry says he has the votes to pass debt-limit Bill today, via CNBC. The vote in the House is expected at 3:30 PM ET today.

Chinese economic data disappoints as factory activity slows, raising concerns about the country's post-COVID recovery.

U.S. stock futures are lower after the mixed results yesterday (Nasdaq higher, Dow lower, S&P unchanged). Goldman Sachs reportedly plans further job cuts as the investment banking giant aims to tighten its budget amid challenging market conditions.

There were a number of economic releases overnight of importance:

  • Japan, preliminary Industrial Production m/m declined by 0.4%, falling short of the forecasted growth of 1.4% and a decrease from the previous figure of 1.1%. However, Retail Sales y/y in Japan exceeded expectations, recording a growth of 5.0% compared to the forecasted 7.1% and an improvement from the previous figure of 6.9%.
  • New Zealand, ANZ Business Confidence dropped from -31.1 to -43.8, indicating a more pessimistic outlook.
  • Australia Consumer Price Index (CPI) y/y was higher than expectations, rising by 6.8%, higher than the forecasted 6.4% and an increase from the previous figure of 6.3%. Construction Work Done q/q showed positive growth of 1.8%, outperforming the forecasted 0.6% and an improvement from the previous figure of 1.0%. Private Sector Credit m/m also exceeded expectations, showing a growth of 0.6% compared to the forecasted 0.3% and the previous figure of 0.2%. The AUD is still lower as it reacted to slower China growth.
  • China, the Manufacturing PMI came in at 48.8, indicating contraction and missing the forecasted value of 49.5. The Non-Manufacturing PMI, however, showed expansion with a value of 54.5, but was weaker than the forecast 55.1 and the previous figure of 56.4.
  • Germany: German Import Prices fell by -1.7% month-on-month (m/m), surpassing the previous month's decline of -1.1%. However, this figure was below expectations. The German Preliminary Consumer Price Index (CPI) just came in at vs. expectations of -0.2% m/m while YoY came in at 6.1% vs 6.5% and HICP YoY at 6.3% vs 6.8% Last month CPI came in at 0.4%. The Eurozone inflation will be released tomorrow. The German Unemployment Change showed a decrease of 9,000, outperforming both the forecasted 14,000 and the previous figure of 23,000.
  • Switzerland: Retail Sales in Switzerland came in weaker than expectations with a year-on-year (y/y) decline of -3.7%, worse than both the forecasted -1.4% and the previous figure of -1.9%.
  • France: French Consumer Spending experienced a month-on-month (m/m) contraction of -1.0%, larger than the previous figure of -0.8% and below expectations. Meanwhile, French preliminary Consumer Price Index (CPI) decreased by -0.1% m/m, falling short of the forecasted 0.3% and lower than the previous figure of 0.6%. The French Preliminary Gross Domestic Product (GDP) remained unchanged at 0.2% quarter-on-quarter (q/q).
  • Italy: Preliminary Consumer Price Index (CPI) month-on-month (m/m), recorded an increase of 0.3% vs. -0.1% expectations. It was lower vs last month at 0.4% but still elevated.

Oil prices continue to decline, with WTI July below $68 per barrel. The market losses are attributed to concerns over economic growth, highlighted by weaker-than-expected Chinese PMI data. The strengthening US dollar and lower-than-expected French and German State CPIs have also contributed to the downward pressure on oil prices. Additionally, overall market risk aversion is impacting prices. Looking ahead, the upcoming OPEC* meeting on June 4th will play a crucial role in shaping market expectations. The expectations are mixed with some analysts suggesting that production could be left unchanged, while others propose a lean cut.

A snapshot of the markets is showing:

  • Crude oil is trading down $1.90 or -2.74% at $67.56
  • Gold is trading up $3 or 0.15% at $1961
  • Silver is trading up $0.15 or 0.63% at $23.32
  • Bitcoin is trading at $27,086. That is down from $27,800 near 5 PM ET yesterday

In the premarket of US stocks the major indices are lower:

  • Dow Industrial Average is down -92 points after yesterday's -50.56 point decline
  • S&P index -18.5 points after yesterday's 0.09 point rise
  • NASDAQ index is down 60 points after yesterday's 41.74 point rise

in the European equity markets, the major indices are lower:

  • German DAX -0.44%
  • Frances CAC -0.71%
  • UK's FTSE 100 -0.23%
  • Spain's Ibex -0.30%

In the US debt market, US yields are lower for the 2nd consecutive day as concerns about passing the debt ceiling fades:

  • 2 year yield 4.411% -6.2 basis points
  • 5 year yield 3.761% -5.9 basis points
  • 10 year yield 3.646% -4.8 basis points
  • 30 year yield 3.867% -3.3 basis points

in the European debt market, yields are lower as well:

European benchmark 10 year yields