Asian equity markets kicked off the week positively amid fluctuating expectations for global interest rates, especially in the US. Late Friday, US data confirmed April inflation expectations based on the Fed’s preferred PCE deflator measure, but also indicated weaker consumer spending, which led to lower US Treasury bond yields and put pressure on the US dollar. Meanwhile, China’s Caixin manufacturing PMI increased to 51.7, reaching its highest level in nearly two years.As we enter June, there are two major market events to look forward to at the end of the week. The European Central Bank will announce its rate decision on Thursday, followed by the release of U.S. non-farm payrolls on Friday.The U.S. has a busy data schedule ahead, including ISM manufacturing PMI, factory orders, JOLTS job openings, ISM services PMI, and weekly jobless claims. The non-farm payrolls report previously showed a gain of 175,000 jobs.In the eurozone, German industrial production will be the highlight of a light data calendar. The ECB is expected to reduce rates by 25 basis points to 3.75% on Thursday, but may take a cautious and data-driven approach to further cuts as inflation eases. ECBWATCH predicts 57.74 basis points of cuts for 2024.The UK will have a quiet week with construction PMI’s being the only significant data release, investor attention will be on the upcoming July 6th election, with party manifesto’s likely to be published later this week.There is little notable data expected from Japan this week, so focus may shift to Bank of Japan Deputy Governor Ryozo Himino’s panel discussion on business and the economy on Tuesday. Additionally, BOJ board member Toyoaki Nakamura will deliver a speech and hold a press conference on Thursday.There are no scheduled Fed speakers this week in the lead-up to the June 11-12 monetary policy meeting. Overall, market positioning anticipates that the US data will support the Fed’s current position to keep interest rates steady for a while longer, possibly until late in the year when markets start to factor in the first rate cut.
Overnight Newswire Updates of Note
(Sourced from Bloomberg, Reuters and other reliable financial news outlets)
FX Options Expiries For 10am New York Cut (1BLN+ represent larger expiries, more magnetic when trading within daily ATR)
CFTC Data As Of 31/05/24
Technical & Trade ViewsSP500 Bullish Above Bearish Below 5270
EURUSD Bullish Above Bearish Below 1.0830
GBPUSD Bullish Above Bearish Below 1.2750
USDJPY Bullish Above Bearish Below 156
XAUUSD Bullish Above Bearish Below 2360
BTCUSD Bullish Above Bearish below 67000
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