Daily summary: Markets swing on hawkish JOLTS and dovish Fed speak

6:56 PM May 31, 2023
  • Wall Street indices trade lower today with Dow Jones dropping 0.5%, S&P 500 trading 0.4% lower and Nasdaq pulling back 0.3%. Small-cap Russell 2000 is top underperformer with a 1.3% drop at press time
  • US indices dropped to daily lows after a higher-than-expected JOLTS data for April but has bounced back a bit later on a dovish Fed speak
  • US JOLTS data for April showed 10.1 million job openings (exp. 9.4 million) and an upward revision to March, from 9.59 million to 9.745 million
  • Market pricing of Fed hikes jumped after JOLTS data. Money markets saw around-70% chance of a 25 bp rate hike at June meeting following data release, up from around-60% yesterday
  • However, those rate hike odds dropped below 40% later on after remarks from Fed member Jefferson
  • Fed Jefferson said that pause in rate hikes does not mean rates have peak and that skipping a rate hike at coming meeting would allow Fed to better assess incoming data
  • Fed Harker also said that he support skipping a rate hike at June meeting but data that is yet to come ahead of the meeting may change his mind
  • Republican debt ceiling negotiator McHenry said they have enough votes to pass the bill through the US House. Senate majority leader Schumer said that Senate will vote on the bill as soon as possible 
  • European stock market indices traded lower today with German DAX and French CAC40 dropping 1.5% while UK FTSE 100 traded 1% lower
  • Chicago PMI index for May plunged from 48.6 to 40.4 (exp. 47.2), reaching the lowest level since November 2022
  • Canadian economy grew at an annualized pace of 3.1% in Q1 2023 (exp. 2.5%). Q4 reading was revised lower from 0.0% to -0.1%
  • French CPI inflation decelerated from 5.9 to 5.1% YoY in May (exp. 5.5% YoY)
  • German CPI inflation decelerated from 7.2 to 6.1% YoY in May (exp. 6.5% YoY)
  • Italian CPI inflation decelerated from 8.2 to 7.6% YoY in May (exp. 7.4% YoY)
  • Official Chinese PMIs for May disappointed. Manufacturing index dropped from 49.2 to 48.8 (exp. 49.4) while services gauge dropped from 56.4 to 54.5 (exp. 55.1)
  • Japanese industrial production dropped 0.3% YoY in April (exp. +2.0% YoY) while retail sales were 5.0% YoY higher (exp. 7.0% YoY)
  • According to Reuters, combined output of 13 OPEC countries dropped by 460k bpd in May. Moreover, output data for April was revised lower by 150k bpd
  • Cryptocurrencies traded lower today with Bitcoin dropping 2.5%, Ethereum trading 2.2% lower and Dogecoin pulling back 1.4%
  • CAD and JPY are the best performing G10 currencies while CHF and EUR lag the most
  • Precious metals trade mixed today - gold gains 0.5%, silver jumps 1.8%, platinum slumps 2.1% and palladium plunges 2.7%

Correction on EURUSD accelerates. Key support zones to watch in near-term is 1.0580 area, marked with the lower limit of a market geometry, and 1.0500 area, marked with previous price reactions. A key resistance to watch can be found in the 1.08 area, where 100-period EMA can be found. Source: xStation5


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