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EUR Up, USD Down on Strong PMIs; US Durable Goods

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Rates as of 0500 GMT

Market Recap

Betterthanexpected preliminary purchasing managers indices PMIs on Friday drove a riskon mood that lifted US stocks, the commodity currencies and the euro while depressing USD and the other two safehaven currencies, JPY and CHF.

Only US manufacturing and German services missed expectations, the others all beat expectations, in some cases substantially. Of particular note the Eurozone servicesector PMI moved back above the 50 line and the Japan composite PMI not shown in table moved back above 50 for the first time since January 2020, i.e. even before the pandemic hit.

The huge beat by the French servicesector PMI, which came despite a national lockdown, was particularly encouraging to the FX market and helped to support EUR, along with overall betterthanexpected EU data. Oddly enough though it didnt support EU stocks, which fell slightly on the day Euro Stoxx 50 0.04, DAX 0.27, CAD 40 0.15 although US stocks gained SP 500 1.09, NASDAQ 1.44.

There was also a report on Bloomberg that European Central Bank ECB officials expect a heated debate at the June 10th ECB meeting on whether to start slowing bond purchases by the Pandemic Emergency Purchase Programme PEPP to keep it within its planned EUR 1.85tn limit. According to the report, some members think the Eurozone economy will be recovering strongly in Q3 and so they should start scaling back the purchases, while others want dont want to commit to staying within the planned…

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