- Forex today was centred around trade concerns and the U.S.
- CPI that failed to break FX out of any ranges. The major focus today will be the Aussie jobs data.
Meanwhile, there were a number of antagonistic Tweets and headlines circulating around financial and commodity markets that dampened the risk-on mood. Trump reminded markets that more tariffs will be implemented on both Mexican imports and Chinese if he doesn’t get what the U.S. requests from any agreement with either nation. Additionally, Trump was threatening sanctions over Germany’s planned gas pipeline (Nord Stream 2) from Russia.
Elsewhere, as for U.S. data, the U.S. dollar was a touch softer immediately after a benign US CPI report, although given that there was something for both bears and bulls in the report, the dollar bounced back and traded back into its familiar sideways form. Headline inflation climbed by just 0.1%, with the annual pace easing back to 1.8% from 2%. Core inflation rose by just 0.1% as well taking the annual rate down from 2.1% to 2.0% and slightly below expectations.
- As for pairs, the EUR dropped to1.1283 (-0.3% on the day) over threatened sanctions on Germany.
- USD/JPY dropped and popped following the CPI data between 108.55 and 108.22.
- AUD/USD extended losses ahead of today’s key jobs report, falling from 0.6960 to 0.6925.
- NZD/USD traded between 0.6565 and 0.6595.
- GBP/USD slid from1.2758 to a low of 1.2681.
Key notes from Wall Street:
Wall Street sulks on trade war angst; DJIA is on pace for a slight weekly gain of 0.1%
Key events ahead:
The major event today in Asia comes with Australia’s May labour force survey (11:30am Syd/9:30am Sing/HK).
Analysts at Westpac offered a preview as follows:
- “As the RBA cut the cash rate last week, Governor Lowe said the Board “will continue to monitor developments in the labour market closely.” By cutting in June, the RBA has reinforced Lowe’s focus on the unemployment rate. Recall that April employment surprised consensus on the strong side, up 28k, lifting annual jobs growth to 2.6%, well ahead of GDP growth.”
- “But the participation rate rose to 65.8%, a record high. This raised the unemployment rate to 5.2%, up from the 4.9% cycle low in Feb and enough to confirm the rate cut. In the May survey, Westpac looks for a deceleration in job creation, with a modest 5k gain, keeping the unemployment rate at 5.2%. Consensus is +16k and 5.1%.”