Major currencies were steady at the start of trading in Asia today with the euro stuck near yesterday’s lows and the dollar mostly flat against a basket of currencies. The yen on the other hand held firm against most currencies as risk appetite was scarce ahead of the US non-farm payrolls report later today.
Data out of Asian markets on Friday consisted of services PMI for China and Japan. Services activity slowed slightly in China according to the Caixin services PMI. The index fell to 51.2 in May from 51.8 in April. On Wednesday, the official services PMI also pointed to slower growth in the sector.
It was the opposite story in Japan as services activity returned to growth after contracting in April. The services PMI rose to 50.4 in May from 49.3 the prior month. Wage data was not as positive though as real wages in Japan slowed from 1.6% year-on-year in March to just 0.6% in April.
The dollar touched a 2½-week low of 108.48 yen earlier in Asian trading today before firming to 108.71 yen in late session. The euro meanwhile fell to a fresh 3-year low of 121.05 against the yen yesterday following the ECB’s policy meeting, which concluded with a slightly more cautious note than what markets had been expecting. The single currency also fell against the dollar and the pound and was last trading at 1.1151 dollars and 0.7736 pounds.
The ECB yesterday made only modest upgrades to its growth and inflation projections and kept open the possibility of further easing in the future. The euro came under pressure as markets had been expecting a more upbeat message from ECB head Mario Draghi.
Oil prices were stable and held within their recent trading range despite the lack of any agreement in yesterday’s OPEC meeting. Members of the organization failed to agree to any new measures to curb supply as Iran pledged to continue raising production. However, Saudi Arabia indicated that it won’t flood the market with more oil and this provided some support to prices. Brent crude was slightly up today at $50.13 a barrel, while US light crude was trading around $49.25.
Looking ahead to the rest of the day, trading is likely to be cautious ahead of the US jobs report. Non-farm payrolls are expected to rise by 164k in May and the data will be closely watched as investors weigh the probability of a June rate hike by the Fed. The US ISM non-manufacturing composite and factory orders will follow the NFP report, but before that, Eurozone and UK services PMI will come in focus in the European session.
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