Following the red close for European stock markets yesterday today has been a similar story with the Eurostoxx (-0.90%) dropping back to trade close to the 3000 handle. The Dax (-0.71%) and FTSE (-0.58%) also spent the vast majority of the day in negative territory after opening near their highs. Stateside US indices are also in the red, but they have enjoyed a fairly strong bounce off their lows following an upbeat ISM manufacturing print, which showed a reading of 51.3 for May and the US500 (-0.18%) is not far from moving back to flat for the day.
The data gains greater significance ahead of Friday’s NFP and a strong print in that indicator may provide further reason for the FOMC to look to raise rates this month despite markets expectations of any action declining substantially this week. The ISM reading itself was stronger than both the expected and prior data points and contributes positively to the recent recovery we’ve seen in this figure.
Oil markets rallied into the European close after spending most the day lower and Brent ( 0.32%) is currently trading back in the green. The catalyst for the rally into the cash close was comments from OPEC sources ahead of tomorrow’s meeting that suggested a production ceiling could be implemented for the cartel once more. This came after earlier comments from the Iraqi deputy oil minister in which he stated the organisation would reach some agreement tomorrow and combined have raised expectations heading into the meeting.
In the currency space the pound has continued yesterday’s slide with the GBPUSD (-0.55%) now trading back at the 1.44 handle. The US dollar has been under pressure most of the day and despite a pop higher on the ISM number the USDJPY (-1.10%) remains firmly lower on the day. The EURUSD ( 0.33%) is slightly higher heading into tomorrow’s ECB meeting and whilst expectations for any substantial alterations to monetary policy are low, the press conference from Draghi could throw up a surprise.
Looking ahead the two main events tomorrow are the previously mentioned OPEC and ECB meetings. The rate decision for the latter comes at 12:45 with the press conference following at 13:30. US ADP Non-farm employment change data is due out shortly before this at 13:30 and is seen by some as a good indicator for Friday’s NFP main event. We also have crude oil inventories at 16:00 a day later than usual due to the bank holiday in the US on Monday.
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