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Despite seeing mostly downbeat U.S. data, the Greenback managed to chalk up some gains against a few rivals while the Aussie and Kiwi staged a strong rebound.

  • U.S. core PCE price index down by 0.1% as expected
  • U.S. personal spending posted flat reading vs. projected 0.2% uptick
  • U.S. personal income up by 0.2% vs. estimated 0.4% gain
  • ISM manufacturing PMI fell from 57.2 to 54.8 vs. 56.6 consensus
  • U.S. construction spending down by 0.2% vs. expected 0.5% gain

Major Events:

Slowdown in U.S. consumer sector?

The latest batch of readings from Uncle Sam were mostly in the red as the consumer sector appears to be showing signs of a slowdown. Duhn duhn duhn…

The core PCE price index, which is said to be the Fed’s preferred inflation measure, posted a 0.1% dip as expected, erasing part of the 0.2% gain seen in the previous month. Personal income increased by 0.2%, half the estimated 0.2% rise, while personal spending was flat instead of advancing by the 0.2% consensus. Components of the report indicated that consumers spent less on durable goods but increased purchases slightly for services and household utilities.

 

Steeper drop in ISM manufacturing PMI 

The ISM manufacturing index also turned out weaker than expected, as the reading slumped from 57.2 to 54.8 to reflect a slower pace of industry expansion compared to the projected dip to 56.6.

Underlying data showed that the prices component had a smaller than expected fall from 70.5 to 68.5 in April, even with the sharp drop in energy prices back then. Meanwhile, the index for employment dropped from 58.9 to 52.0, reflecting a slowdown in hiring for the period and hinting at a possible downside NFP surprise later this week. The index for new orders also posted a large drop from 64.5 to 57.5 while the inventories component climbed from 49.0 to 51.0.

Major Market Movers:

AUD &  NZD

The Aussie and Kiwi were big winners for the day while the Loonie failed to join its comdoll buddies on talks of higher oil production in Libya.

AUD/USD recovered from .7509 to a high of .7541, NZD/USD advanced from .6872 to a high of .6913, AUD/JPY is up from 83.90 to a high of 84.26, NZD/JPY is up from 76.78 to a high of 77.32, and EUR/AUD is down from 1.4522 to a low of 1.4470.

Watch Out For:

  • Tentative: BOJ monetary policy meeting minutes
  • 2:45 am GMT: Chinese Caixin manufacturing PMI (51.4 expected, 51.2 previous)
  • 5:30 am GMT: RBA interest rate decision (Check out Forex Gump’s latest Australian Economic Roundup!)
  • 6:00 am GMT: BOJ core CPI y/y (0.2% expected, 0.1% previous)