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    Aussie rebounds on AIG services, yen weaker after wages

    The Aussie rebounded on Friday in Asia, getting a boost from an upbeat services survey, but the yen tipped weaker on wage data as the market looks ahead to the Caixin China services PMI.

    AUD/USD traded at 0.7237, up 0.11%, while USD/JPY traded at 108.95, up 0.07%. EUR/USD traded at 1.1155, up 0.02%.

    In Australia the AIG services index jumped to 51.5 for May, compared with a level of 49.7 in April, putting the indicator in expansion territory.

    Capacity utilization fell in May and price measures remain muted, indicating lack of inflation pressure.

    "The return of the large services sector to expansion in May is a sign of the resilience of the economy even as it continues to transition in the wake of falling mining-related investment and lower terms of trade. While these are clear positive signs,expansion was notably concentrated in three of the nine services sub-sectors," AI Group Chief Executive Innes Willox said.

    In Japan, average cash earnings for April rose 0.3%, well below the 0.9% gain seen year-on-year.

    Later in China, the Caixin services PMI is expected at 52.0 in May, from 51.8 in April.

    The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was quoted down 0.01% to 95.55.

    Overnight, the dollar held steady against the other major currencies on Thursday, after the release of upbeat U.S. employment data and as European Central Bank President Mario Draghi warned that inflation is likely to remain low for some time.

    Payroll processing firm ADP said non-farm private employment rose by 173,000 last month, just below expectations for an increase of 175,000.

    The economy created 166,000 jobs in April, whose figure was upwardly revised from a previously reported increase of 156,000.

    Separately, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending May 28 decreased by 1,000 to 267,000 from the previous week’s total of 268,000.

    Analysts had expected jobless claims to rise by 2,000 to 270,000 last week.

    But the yen remained supported after Japanese Prime Minister Shinzo Abe said Tuesday he was planning to delay a scheduled sales tax hike amid ongoing weakness in the economy. He also announced plans to implement a fiscal stimulus package later this year.

    Speaking shortly after the decision, ECB President Mario Draghi said the bank revised its inflation forecast for 2016 up to 0.2% from 0.1% before, but kept its inflation forecasts for 2016 and 2017 at 1.3% and 1.6% respectively.

    Draghi also warned that inflation in the euro area is likely to remain very low, or negative, for some time.

    In addition, the ECB raised its growth forecast for 2016 up to 1.6% from 1.4%, but left its forecasts for the following two years unchanged.

    Draghi reiterated that the ECB will continue to run its bond-purchasing program until March 2017, or until inflation moves back towards the bank’s target of close to, but just below 2%.

    The ECB will start buying debt issued by companies on 8 June, as part of the stimulus program announced in March.

     


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