Strong Data From The Eurozone, Not So In The US

Asian stocks are reversing the losses of the past four days, as fears are allayed that the Fed will discontinue its asset-buying program. The South Korean won reached its highest level in over seven weeks.

Manufacturing data from Europe and the U.S was released on Monday; the U.S. data was mixed. The Institute of Supply Managements manufacturing activity dropped to its lowest point in 5 years, causing fears for economic recovery in the U.S. This is a sure sign that the Federal Reserve will continue to stimulate the economy. The Markit PMI index data gained to 52.3 in May from 52.1 the previous month. This is obviously above the crucial 50 target. The ISM released data showing that its manufacturing activity had dropped to 49 in May from 50.7 the previous month.

Europe painted a brighter picture as Markit’s PMI for the eurozone rose to 48.3 in May from 46.7 the previous month. This is a 15 month high for the index. While Germany saw its three month high, it was troubled Spain and Greece that had the most pleasing results. Spain’s PMI level was at 48.1 for May, which denotes a 2 year high. A reading of 45.3 for Greece was also close to a 2 year high. Spanish data was showed that the number of jobless claims had fallen by 98 300 last month after a drop of 46 100 in April.

Stocks
Stocks in Europe were trading higher this morning after the bright Spanish jobless releases. The EURO STOXX 50 was up 0.39 percent, the French CAC 40 was up 0.27 per cent and the DAX 30 rose 0.23 per cent. The FTSE 100 gained 0.66 percent.

Forex
The USD/CHF gained today as the dollar made up its losses following yesterday's weak U.S. data. The pair touched 0.9512 this morning. The USD gained against most of its pairings including the yen, passing the 100 mark. Meanwhile, the GBP rebounded from session lows of 1.5290 against the USD following positive construction data in the U.K.

Today
Listen out for the FOMC members comments in the U.S. later today. There should be mention of the short term plans of the U.S. stimulus program.