Market Drivers for June 4, 2018
Europe and Asia
AUD: Retail Sales 0.3% vs. 0.4%
GBP: UK PMI Construction 52.5 vs. 52.0
EUR: EZ PPI 0.0% vs. 0.3%
North America
USD: Factory Orders 8:30
The dollar was weaker at the start of the week’s trade, as short covering flows and better risk appetite helped push all the majors higher in both the Asian and European sessions.
the Aussie was the star of the show today, rising by more than 1% on the day as it smashed resistance at .7600 and traded towards .7650 by mid-morning London dealing. The AUD/USD pair got a boost from good data earlier as Company Profits, Retail Sales, and Inventories all beat across the board.
Aussie Retail Sales printed at 0.4% versus 0.3% with food retailing and household goods leading the way. The jump in Retail Sales is a positive piece of news for Aussie bulls and may jolt the RBA out of its neutral slumber when it meets tonight for its monthly meeting. If the statement offers even a hint of a more hawkish bias, the pair could challenge the .7700 figure by midweek.
Meanwhile, in the UK the data was also better as UK Construction PMI came in at 52.5 versus 52.0 eyed. This was the second PMI to beat expectations and now sets up the stage for a possible beat of PMI Services which is the most important of the PMIs. Cable climbed steadily towards 1.3400 as the day progressed and could easily take out 1.3500 if tomorrow’s data beats and the market begins to price in the prospect of a rate hike from BoE once again.
The euro was also higher, taking out last week’s highs as the anti-dollar flows were universal in today’s trade. The fact that today’s rally comes after a strong US NFP report on Friday is a testament to just how oversold most of the majors were. With little US data on the docket, the short covering rally should continue as the day proceeds and yen crosses should push higher in a full reversal of last week's anti-risk sentiment.