EU FX Handover: Fed Rate Cut Expectations Rise Further
Fawad Razaqzada June 5, 2019 2:00 PM
A summary of news and snapshot of moves ahead of the US session.
- One of the key pre-NFP leading indicators, the ADP came in well below expectations at 27K vs.180K eyed, raising concerns that the jobs market may be cooling. The market is now pricing in a 75 basis point cut by end 2019!
- Stock markets giving back some gains after a firmer open in Europe, but sentiment is still buoyed on hints of a rate cut in the US by a couple of Fed officials yesterday and expectations that the European Central Bank’s Mario Draghi will deliver a dovish press conference on Thursday, pushing rate hike expectations further out. But with the US-China trade uncertainty still lurking in the background, are investors being unreasonably too optimistic?
- Aussie GDP was in line with expectations but the services PMI jumped in May from 46.5 to 52.5, and this helped to lift the AUD/USD to the key 0.70 handle. The other global services PMI data released today have been on the whole better than expected: China (Caixin) 52.7 vs. 54.3 expected, UK 51.0 vs. 50.6, Spain 52.8 vs. 52.5, Italy 50.0 vs. 49.9, France (final) 51.5 vs. 51.5, German (final) 55.4 vs. 55.0 and Eurozone (final) 52.9 vs. 52.5 expected. How will the US ISM Non-Manufacturing PMI fare later?
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