The US Dollar is generally higher as the week starts as markets are awaiting manufacturing data across the Atlantic. But, momentum isn't too strong for the moment as dollar index is staying in range around 80.40. That's mainly because the EUR/USD is struggling to find any clear direction and is staying in tight range above last week's low of 1.3585. In the European session, Swiss will release SVME PMI, Eurozone will release PMI manufacturing final, UK will release PMI manufacturing. From US, ISM manufacturing index will be featured. While some volatility would likely be triggered, traders will remain cautious ahead of the key events later this week, in particular the ECB rate announcement.
China released the official PMI data over the weekend. The May reading rose to 50.8, compared with 50.4 in April and market expectation of 50.7. The final HSBC PMI would be due today. The Chinese government announced late last Friday that it would cut the reserve requirement for some banks that have extended loans of a certain amount to rural borrowers and small companies. More details of the arrangement would be released later this week.
The Australian dollar got not support from the China data and instead, was pressured by its own data. Australian building approvals dropped sharply by -5.6% mom in April versus expectation of 2.0%. Prior month's data was also revised lower to -4.8% mom. TD securities inflation rose 0.3% mom in May. Also released in Asian session, Japan capital spending rose 7.4% in Q1, manufacturing PMI was finalized at 49.9 in May.
Looking ahead, four central banks will meet this week. ECB is widely expected to ease policy. The main refinancing rate could be cut from current 0.25% to 0.05%. Deposit rate could be cut correspondingly into negative territory. Meanwhile, ECB is expected to offer long-term loans to banks and pause sterilization of the crisis bond purchases. In addition to ECB meeting, we'll also have RBA, BoC and BoE meetings this week. Also there are a number of important economic data to watch this week. Here are some highlights:
- Monday: Swiss SVME PMI; Eurozone PMI manufacturing final; UK manufacturing PMI; US ISM manufacturing
- Tuesday: RBA rate decision, Aussie retail sales; China HSBC PMI manufacturing final; UK construction PMI; Eurozone CPI flash; US factory orders
- Wednesday: Aussie GDP; Eurozone PMI services final, GDP; UK PMI services; US ADP employment, trade balance, ISM services, Fed's Beige Book; BoC rate decision, Canada trade balance
- Thursday: Aussie trade balance; BoE rate decision; ECB rate decision; Canada building permits, Ivey PMI; US jobless claims
- Friday: Swiss CPI; UK trade balance; Canada employment, US non-farm payroll