# United States
The US dollar today displayed strength against all G10 currencies, although its gains were marginal. Early North America suggests additional dollar strength. Factors such as the breakdown of the US-China truce, looming US steel and aluminum tariff increases, and potential Russian retaliation for Ukraine’s drone strike hover around the current economic climate. Meanwhile, the OECD has revised the US growth projection downwards from 2.8% to 1.6% for this year. In factory orders, the significant decline in Boeing orders stands out, while the JOLTS report is anticipated to show a decrease in job openings for April. May’s auto sales could reflect a drop, a first since October-November 2023, as early-year sales surged to beat tariffs. This dynamic underscores weaker demand for durable consumer goods. In the market, US 10-year Treasury yields have decreased by nearly three basis points to 4.41%, while gold slipped below $3360 from a four-week high near $3392.
# Eurozone
The euro displayed a notable trading range today, initially peaking near $1.1450 before retreating and then recovering to $1.1455, ending near $1.1400 later in the day. The fall of the Dutch government had little market impact. Technical factors indicate a shift if movement below $1.1385 persists. The preliminary eurozone CPI for May was flat, dragging the annual rate down to 1.9%. The focus shifts to the ECB meeting on Thursday, with expectations of a rate pause while the base effect bears watching due to previous low readings. Switzerland’s May CPI reported a minor drop, suggesting the Swiss National Bank might reconsider rates at its upcoming meeting.
# United Kingdom
Sterling reached close to a three-year high yesterday at $1.3560 before retreating towards $1.3500 today. The currency encountered slight fluctuations, hovering around support at $1.3480, with a breakdown potentially targeting last week’s low of $1.3415. The UK gilt market received a boost from a strong long-bond auction, and the 10-year Gilt yield dropped by about six basis points due to increased demand.
# China
Despite a generally weakening dollar against other currencies, it made modest gains against the Chinese yuan yesterday. The offshore yuan saw minor changes today, with the dollar trading close to CNH7.1855 after peaking near a nine-day high of CNH7.2240. The Caixin manufacturing PMI for May fell to a surprising 48.3 from 50.4, contradicting expectations for a stability. This reading contrasts with the official PMI figures, suggesting varied economic signals in China’s manufacturing sector.
# Japan
Japanese markets saw the yen dip to a five-day low of JPY142.40 against the US dollar today, before recovering to JPY143.25. The ongoing steel and aluminum tariff discussions with the US could strain US-Japan trade talks further, with Japan showing reluctance towards concessions. The trendline formed by April and May lows remains a technical area of interest for market participants.
# Canada
The Canadian dollar remained relatively steady against the US dollar, holding above the CAD1.3700 mark today after nearing a new low for the year at CAD1.3675. Canada’s economic landscape is presenting challenges with soft overall growth yet rising underlying inflation. This context sets the stage for the Bank of Canada’s upcoming meeting, where the probability of a rate cut now appears less likely, shifting from a prevalent expectation of a cut following the inflation report.
# Australia
The Australian dollar faced a dovish environment today, slipping back to around $0.6450 after failing to maintain gains near the $0.6500 area. Recent central bank minutes hinting at a dovish stance add pressure to the currency, even as Australia’s first-quarter GDP figures and inventories suggest modest economic growth rates. The futures market anticipates another rate cut next month soaring from a 50% to an 80% chance of occurrence.
# Mexico
The Mexican peso showed extraordinary strength, outperforming all emerging market currencies with a 1.15% gain yesterday. Facing mixed market conditions, the peso reacted positively around the MX19.2030-MX19.2435 range today, with focus shifting to the broader macro trends and judicial votes. Potential support levels are analyzed relative to movement lows from last week, around MX19.1830, giving insight into investor sentiment.
