Key overnight events:
- The S&P 500 Index declined 0.1% after erasing a 0.5% slide in the last hour of trading, leaving it up 1.5% for the month of May – its third straight month of gains and the longest rally since June 2014. The US dollar held steady with the Bloomberg Spot Dollar Index climbing 0.1% to cap its first monthly advance since January.
- US consumer spending grew 1.0% in April, more than the 0.7% predicted, while the PCE deflator, the Fed’s preferred gauge of inflation, rose 0.3% month-on-month and 1.1 % year-on-year, matching estimates. However, consumer confidence in May fell to 92.6 from 94.7, below the expected 96.1 and Chicago PMI dropped to 49.3 from 50.4, worse than the median estimate of 50.5.
- WTI futures expiring in July slipped 0.5% to $49.10/bbl, trimming its May advance to 6.9% and extending its longest run of monthly gains since 2011. OPEC is due to meet Thursday although the general expectation is that any agreement to limit output is unlikely to be reached.
- A new poll printed yesterday by the Guardian showed that 45% of participants favoured Leave, while 42% voted Stay; the news resulted in the sterling pound dropping as much as 1.1% to a one week-low of 1.4460.
- According to Credit Suisse, the Fed is likely to wait until July to hike instead of June as Brexit risks remain sufficiently high to keep the Fed from hiking this month.
- Bloomberg’s latest Fed funds futures pricing shows the odds for a June hike has decreased to 24% from 30%, while July’s odds remained steady at 53%.
- Japanese Prime Minister Abe is set to hold a press conference at 5pm HKT and is expected to announce a delay in the nation’s planned sales-tax increase.
- China’s manufacturing PMI in May remained steady at 50.1, slightly higher than the 50.0 expected.
- Spot 1.3796
- USDSGD ended 2.6% higher for the month of May, but declined 0.2% earlier today to a session low of 1.3757 as it continues to struggle to break above the 100-day moving average of 1.3820.
- Spot 0.7272
- The Australian economy expanded 1.1% quarter-on-quarter and 3.1% year-on-year, beating estimates of 0.8% and 2.8% respectively even as disinflation pressures prompted the RBA to cut interest rates in May.
- AUDUSD rallied by as much as 0.8% to 0.7299, breaking above the 200-day moving average resistance in the process.
- This was Australia’s fastest pace of expansion in 4 years, underpinned by a 4.4%-jump in exports and a 0.7%-increase in household spending.
- Spot 1.3071
- Canada’s 1Q GDP grew at an annualized pace of 2.4%, slower than the 2.8% expected but improving from its previous growth figure of 0.5%. GDP in March slipped 0.2% from February, more than the 0.1%-contraction predicted.
- March’s contraction was led by a 2.8%-drop in the mining, quarrying and oil and gas extraction category.
- USDCAD initially rose 0.6% to 1.3134 but soon pared back most of its gains.
- Spot 6.5985
- The PBOC fixed its reference rate at a five year-low earlier today, 0.15% weaker at 6.5889. USDCNH rose 0.2% to its highest in almost four months.
- Onshore yuan weakened by as much as 0.4% to 6.5933 against the dollar, less than 0.1% away from the five year-low made in January.
- Spot 8.3703
- USDNOK remains largely unchanged, staying within its previous session’s range.
- Wage talks between Norway’s oil companies and the industry’s biggest union broke down and ended in less than a minute, intensifying the risk of oil strikes which would aggravate the country’s ongoing oil crisis.