$Us Dollar: The month started with lower than expected trade balance and manufacturing PMI, improved Non-Farm Employment Change and unemployment rate remaining at 5.4%. The second week brought lower than expected retail sales and subdued prelim consumer confidence despite reduced unemployment claims. Building permits and core CPI came above expectations, home sales below and the month ended with unemployment claims higher than expected but below 300,000 for the straight 12th week indicating signalling the labor market remains firm amidst slow rebound in economy from the first quarter slump. FOMC minutes concluded that the first quarter slowdown was unlikely to persist but many of the participants thought it unlikely that the interest rate rise would be warranted by stronger data in June. Both Yellen and Fisher stated they are worried about the global economy, with the growth remaining slow which could delay the increase on $US interest rates. The month ended with Preliminary GDP Q/Q slightly better than expected.
Second Half of the month saw $US dollar strengthening against all majors.
EurUsd: ECB council agreed that 60 billion euro/ month asset buying program was working as intended but key reforms in the ECB block economies are required for the full benefit to be felt. The Greece default is still a possibility. After a choppy start and some gains against $US, Euro ended Phase 2 Up in the 6 month cycle retracing close to 50% Fib and then tumbled down 650 pips in the second half of the month, retracing in the last 3 days to the downward trendline & to 50% Level on the last cycle.
GbpUsd: The Market saw a spectacular rise of 726 Pips to the 7 month high of 1.5814 following the win of the conservatives in the parliamentary elections 7 May. Pound tumbled in the second half of the month on the BE cut in the growth forecast due to low productivity and 0.0% inflation. Interest rates remained on hold. The price broke through upward trendline and is now sitting at Fib 78.6%.
AudUsd: RBA cut interest rates from 2.25 to 2% which was followed by an unexpected rise and then, after the release of annual budget it rally to the highest level since January. This rally was reversed mid May as the Ausie has continued it’s decent to the end of May ending below 78.6 Fib & on the trendline, weak CNY and Aud data being contributors.
NzdUsd: following Aud and mostly unfavourable local economic data saw Kiwi braking through the long term support around 0.7115 and continuing it’s decent to 0.7079, the lowest level since 2010. It is heading towards 127.2% Fib extension. Downtrend is likely to continue.
UsdCad: After a choppy start to the month mixed economic data and the cut in a growth forecast saw Cad following all majors in the decent against $US. Now hovering between 61.8 and 78.6 Fib.
UsdJpy: After ranging for the last 5 months this Pair climbed to a 12 and a half year high of 124.45 breaking through 124.14 a long term resistance (2007 high) and closing the month at 124.11.
Week ahead in the News
Usd: ISM Manufacturing and Non-Manufacturing PMI, ADP Non-Farm Employment Change 3 June followed by Non-Farm Employment Change and Unemployment Rate 5 June. Strong volatility can be expected in that time, best to stay away in the second half of the week and wait for the market to settle and get a direction. Care to be taken with the running positions in that time.
Eur has Minimum Bid rate and ECB press conference 3 June. GBP: release of PMI data and official Bank Rate; Aud: Building approvals, Cash rate, GDP Q/Q, Retail Sales and Trade balance; Cad will see Trade Balance, Employment Change and Unemployment Rate in second half of the week.