May Market Overview
$Us Dollar: May started with disappointing ISM Manufacturing and increased Unemployment Claims while Non-Manufacturing PMI improved. This followed with disappointing ADP Non-Farm and Non-Farm Employment Change. Unemployment Rate remained at 5% and Average Hourly Earnings m/m came unchanged. Crude oil Inventories came above expectations first week and well below the second week. Core Retail Sales m/m, Retail Sales m/m and Preliminary UoM Consumer Sentiment improved while PPI m/m improved. Second half of the month brought disappointing Building Permits, improved CPI m/m and unchanged Core CPI m/m. Filly Fed Manufacturing Index disappointed and Unemployment Claims increased. FOMC minutes indicated a possibility of June Rate hike. The month ended with improved Core Durable Goods Orders m/m and Unemployment Claims while Preliminary GDP q/q came as expected. Ms Yelen ended the month with the statement that’ it is probably appropriate to increase the interest rate in the coming months if economic data improve’.
G7 on FX: Head of State Summit 26 and 27 May began with Japan Prime minister warning of the risk of crisis on the scale of Lehman if appropriate polices are not adopted. G7 affirmed: ‘1.Existing exchange rate commitments to market determined FX rates; 2.Will consult closely in regard to actions in FX markets; 3.We reaffirm our commitment to keep markets open, fight all forms of protectionism; 4. We reaffirm our fiscal, monetary policies will remain oriented to meeting our respective domestic objectives and not target FX rates; 5. We underscore importance of countries refraining from competitive devaluations; 6. Excess volatility, disorderly moves in FX rates can have adverse implications for economic and financial stability.
CNY: The month started with reduced Manufacturing PMI and Caixin Manufacturing PMI. Trade Balance came well above expectations. Industrial Production y/y came disappointing while CPI y/y remained unchanged.
EurUsd: EU spring economic forecast: ‘Staying the course amid high risk’. Greece returned to centre stage on 9 May with the continuing debt crisis and deliberations of further bailout. German Factory Orders m/m and preliminary GDP q/q came above expectations while Flush GDP q/q came below. Final CPI y/y came unchanged at -0.2. German Zew Economic Sentiment was very disappointing but Ifo Business Climate improved.
The month started with Manufacturing, Construction, Services PMI and Manufacturing Production m/m below expectations. BOE kept interest rates on hold. CPI y/y reduced to 0.3 while Average Earnings Index 3m/y Claimant Count Change and Retail Sales improved. Estimated GDP q/q came as expected.
AudUsd: The month started with Cash Rate reduction to 1.75%. Building Approvals, Retail Sales and Trade Balance all came above expectations. Employment Change and Unemployment Rate came above while Private Capital Expenditure q/q came well below expectations.
Week ahead in the News
USD: CB Consumer Confidence, Non-Farm Employment Change, Unemployment Rate, ISM Manufacturing and Non-Manufacturing PMI, Unemployment Claims and Unemployment Rate.
CNY: Manufacturing PMI, Caixin Manufacturing PMI; Eur: Minimum Bid Rate; GBP: Manufacturing, Construction and Services PMI; AUD: GDP q/q, Trade Balance, Retail Sales; CAD: Trade Balance, GDP m/m.
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