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Dollar strength was still the name of the game for the most part of the U.S. session. Traders adjusted their positions to be in sync with the Fed’s policy bias while a bit of risk aversion kicked in.

  • Canadian manufacturing sales up 1.1% vs. 0.9% forecast
  • U.S. initial jobless claims down from 245K to 237K vs. 241K consensus
  • U.S. import prices fell 0.3% instead posting projected 0.1% uptick in May
  • U.S. industrial production fell flat instead of rising by 0.2%
  • U.S. capacity utilization rate at 76.6% vs. 76.8% forecast
  • Empire State manufacturing index jumped from -1.0 to +19.8 vs. +5.2 consensus
  • Philly Fed index dropped from 38.8 to 27.6 vs. 25.5 consensus
  • U.S. NAHB housing market index down from 69 to 67 vs. estimate at 70
  • BOE Governor Carney’s speech cancelled

Major Events/Reports:

Mixed U.S. economic data

The numbers from Uncle Sam were in reds and greens but this didn’t stop the Greenback from piling on its post-FOMC gains.

Import prices dipped 0.3% in May instead of posting the projected 0.1% uptick to reflect weaker inflationary pressures down the line. Components of the report revealed that this was mostly due to lower energy prices. To top it off, the previous reading was downgraded from the initially reported 0.5% gain to just a meager 0.2% increase.

Industrial production was flat during the month instead of ticking up by 0.2% but the previous reading was upgraded from 1.0% to 1.1%. As it turns out, the pause in production activity for May was due to a slowdown in the manufacturing sector, dragged down by lower output in motor vehicles and parts. Capacity utilization came in at 76.6%, lower than the estimated rise to 76.8%.

On a less downbeat note, initial jobless claims improved from 245K the other week to 237K last week, still hinting at positive momentum in the jobs market even with the May NFP miss.

And on an upbeat note, the Empire State manufacturing index returned to expansionary territory by jumping from -1.0 to +19.8, outpacing the consensus at +5.2. The Philly Fed index also turned out stronger than expected at 27.6 versus the 25.5 consensus, but this was lower than the earlier 38.8 figure.

EU negotiators talk tough

The drama seems to be heating up in Europe as negotiators are gearing up for Brexit talks set to begin next week.

According to EU negotiators, the U.K. government needs to cough up funds if they want to walk away with a “soft Brexit” deal. To be specific, chief negotiator Michel Barnier says that Brits might need to pay around 60 billion EUR by 2019 if they want to retain trade ties.

Senior EU officials have been quoted saying that, if the U.K. government refuses to pay then they could end up with a more disruptive “no deal” situation that completely severs access to the single market and customs union. However, they did say that they’re willing to be flexible on the amount of money to be paid.

U.S. tech tumble resumes

Even with the improvement in sentiment for the U.S. economy, equity indices were unable to join the bulls’ party as the tech sector selloff resumed.

Apple shares chalked up another steep drop, dragging other big tech names along with it. By the looks of it, investors also seem to be worried that more tightening moves from the Fed could weigh heavily on business and consumer activity down the line.

On the flip side, shares in the real estate and utilities sector moved higher as these industries tend to serve as safe-havens in times of uncertainty.

  • S&P 500 index is down to 2,431.00 (-0.17%)
  • Nasdaq is down 21.87 points to 5,711.00 (-0.38%)
  • Dow 30 index is down to 21,363.39 (-0.05%)

The VIX index, which is considered a gauge of fear and uncertainty, spiked to 11.16 to chalk up its largest percentage gain in almost a month. Interestingly enough, gold is also down to $1275.05 (-1.48%) as dollar demand firmed.

Major Market Mover(s):

EUR

The shared currency was lower across the board as European traders seemed to flock back to the pound after the BOE decision.

EUR/USD is down 1.1218 to 1.1140 (-0.69%), EUR/GBP tumbled from .8800 to .8740 (-0.68%), EUR/AUD is down to the 1.4700 mark (-0.51%), and EUR/CAD fell to 1.4813 (-0.31%).

JPY

The Japanese currency was also in the losers’ bench as traders renewed their love for the dollar and started positioning ahead of the BOJ statement.

USD/JPY is up to 110.74 (+1.06%), GBP/JPY advanced from 139.68 to 141.20 (+1.09%), AUD/JPY is up from 83.16 to 83.89 (+0.89%), and CAD/JPY popped up to 83.31 (+0.71%).

Watch Out For:

  • 11:30 pm GMT: New Zealand Business NZ manufacturing index (56.8 previous)
  • Tentative: BOJ monetary policy statement (no change to -0.10% rate expected)
  • 7:30 am GMT: BOJ press conference