U.S. Session Forex Recap – June 2, 2016

  • U.S. ISM manufacturing PMI up from 50.8 to 51.3 vs. 50.5 forecast
  • ISM manu PMI employment index unchanged at 49.2
  • ISM manu PMI prices index up from 59.0 to 63.5
  • Fed Beige Book: Most districts reported economic improvements
  • U.S. construction spending down by 1.8% in April vs. 0.5% estimate
  • New Zealand dairy  price index up 3.4% in latest GDT auction

Profit-taking was the name of the game during the U.S. trading session, with the Greenback reversing from its price action earlier in the day.

Major Events:

U.S. ISM manufacturing PMI – Contrary to what previous state-based manufacturing PMIs had been suggesting, the overall state of the industry has been pretty robust in May as the ISM index rose from 50.8 to 51.3. Analysts had been expecting a small dip to 50.5.

Components of the May ISM manufacturing survey showed that the gains were spurred by a large increase in the prices index, which jumped from 59.0 to 63.5, and higher supplier deliveries. Meanwhile, the employment index was unchanged at 49.2.

Fed Beige Book – Forex market watchers are on the lookout for more clues about a Fed rate hike in June, and it looks like the latest Beige Book are showing that the odds are ever in tightening’s favor. Most districts reported improvements in manufacturing, consumer spending, employment, and price pressures but several also noted that the energy sector and wage growth have been feeble.

Downturn in U.S. construction spending – While not normally a market-mover, the construction spending report influenced dollar price action yesterday as traders saw the worse-than-expected 1.8% slump in April as a potential reason for the Fed to sit on their hands this month. Analysts had been expecting to see a 0.5% uptick to follow the previous 1.5% gain, which was upgraded from the initially reported 0.3% increase.

OPEC chatter – With the much-anticipated OPEC huddle set to take place in a few hours, forex junkies couldn’t help but buzz about the potential outcome. Keep in mind that Saudi Arabia has a new oil minister and many are saying that he is more open to a compromise within the cartel. Some have even speculated that he could back an output ceiling and that he could keep looking for ways to get Iran to be part of the deal.

Wondering why this might be a big deal? Read up on Forex Gump’s primer on crude oil and the OPEC here.

Major Currency Movers:

USD – The U.S. dollar had a mixed performance but it was able to make big moves against some of its counterparts.

EUR/USD popped up from the 1.1150 area to a high of 1.1196, USD/JPY capped off its sharp selloff earlier in the day at a low of 109.06 and climbed back to a high of 109.70, USD/CHF hit a low of .9862 then retreated to the .9900 handle, and AUD/USD gave back some of its recent wins to a low of .7230.

GBP – The pound chalked up yet another losing day to its peers, as Brexit polls are suggesting that the lead is shifting in favor of the “leave” camp.

GBP/USD broke below the 1.4500 mark to a low of 1.4386, GBP/JPY is down to 157.60, EUR/GBP pulled all the way up to the .7765 level, GBP/AUD is down to 1.9885, and GBP/NZD slipped to the 2.1150 minor psychological support.

Watch Out For:

  • 1:30 am GMT: Australian retail sales m/m (0.3% expected, 0.4% previous)
  • 1:30 am GMT: Australian trade balance (-2.11B AUD expected, -2.16B AUD previous)
  • 5:00 am GMT: Japanese consumer confidence index

See also:

Asian Session Recap

London Session Recap

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