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Dollar pulls back as euro surges

US stocks edged lower on Tuesday as investors refrained from making big bets ahead of Friday’s official jobs report and uncertainty over Greek debt crisis weighed on market sentiment. The S&P 500 closed 0.1% lower at 2,109.60, with five of its 10 main sectors ending higher. New orders for US factory goods fell unexpectedly 0.4% in April, marking the eighth decline in nine months. Markets have been trading sideways the last few weeks as investors assessed economic news in the light of their impact on Fed’s decision when to start raising interest rates. Stock valuations are near record levels, implying likelihood of significant pullback and high volatility when the Fed eventually starts the normalization of interest rates. Federal Reserve Governor Lael Brainard, a voting member of FOMC, said on Tuesday first quarter data don’t support an immediate liftoff. Dollar retreated on news that Greece’s creditors have agreed on terms they will propose Athens. The ICE US dollar index declined 1.6% to 95.8150. Today at 12:00 CET Mortgage Applications will be released in US. At 13:15 CET May ADP Employment Change will be released. The tentative outlook is positive for the dollar. At 13:30 CET the revised April Trade Balance will be released. The tentative outlook is positive. At 15:00 CET May ISM Manufacturing PMI will be released. The tentative outlook is negative. At 19:00 CET the Federal Reserve releases the Beige Book. At 19:15 CET Chicago Fed President Charles Evans speaks at Banking Symposium in Chicago.

European stocks fell on Tuesday as concerns persisted about possible Greek default. Greece has to repay 1.6 billion euros to the International Monetary Fund this month, 300 million of which fall due on June 5. The Stoxx Europe 600 index dropped 1%. Euro surged 2.2% against the dollar on news that the IMF and European leaders agreed on terms of the deal to be proposed to Greece for unlocking bailout funds in return for economic reforms. Euro was supported also by better-than-expected inflation data indicating consumer price index in euro-zone rose 0.3% in May for the first time in six months. Today at 10:00 CET April Retail Sales and Unemployment Rate will be released in euro-zone. The tentative outlook is positive. At 12:45 CET European Central Bank rate decision will be announced, and at 13:30 CET the ECB press conference will start. The ECB is expected to raise its inflation forecast.

Nikkei fell 0.3 percent today as investors booked profits after 12 session rally that lasted until Monday. The earnings outlook for Japanese stocks is positive given falling yen, and Markit’s PMI report today indicated continued expansion in services and manufacturing sectors in May.

Oil prices rose on Tuesday on upbeat comments by the Organization of the Petroleum Exporting Countries officials and delegates ahead of its meeting on Friday. OPEC Secretary-General Abdullah al-Badri said he saw positive signs in the oil market, following Saudi Arabia's oil minister Ali al-Naimi’s comment on Monday about improving demand. Weaker dollar also provided support for oil prices. Today at 15:30 CET Crude Oil Inventories will be released in US.

Copper prices rose on Tuesday, breaking the longest slump in three months after news China expanded stimulus measures. China’s central bank allowed lenders to issue certificates of deposits to individuals and companies, and increased funds for long-term financing at low interest rates.



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