Europe Summary and Highlights 1 Jun
Lack of signoff delivery, and ongoing frictions lift oil off the lows (+3%)
Stems NZD (-0.6%, rolled from 0.6); and SEK (-0.5%) as leaks back into some dollar support
EUR/USD consolidates at 1.1650 decision point
European morning session
Oil prices +3-3.5% as Friday’s Trump meeting fails to deliver and tensions persist (further military exchanges; Israel strikes and expanded ground operations ordered in Lebanon - cited by Iran as among factors delaying the diplomatic process).
Leaking now slightly into FX, trapped in consolidation by the wait (EUR/USD still stuck at 1.1650~), but dollar getting a bit of support back through on the likes of SEK and NZD as hopes for something imminent ebb. NZD/USD also turned back from near 0.6~ range highs after last week’s big adjustment run, also arresting AUD/NZD after shakeout.
Eurozone final May manufacturing PMI 51.6 from 52.2, but slightly above expectations at 51.4. Prices charges at 3 ½ year highs.
EZ M3 down to 2.7% vs mkt 3.2% and the latest ECB survey has 1yr inflation expectations steady at 4.0%, 3yr easing to 2.9% from 3.0% and 5yr unchanged at 2.4%. Consumers are pessimistic on the 1yr growth (-2.2%) and income expectations.
ECB’s Pereira says need to act sooner rather than later on inflation, to avoid a greater second-round impact.
In the UK, Nationwide house prices cool, with a 0.6%m/m drop taking the yr/yr rate back to 1.7% from 3%.
Asia Session
There is a barrage of headlines over the weekend but none suggest a quick resolve. The latest one would be Iran pushing back Trump's edit on the agreement and suggesting their own edit. The USD is trading individually and see USD/JPY rising 0.14% at 159.45.
The broader risk sentiment seems to be hopeful without anything concrete regarding the Middle East picture. While U.S. Rubio is proposing a Lebanon ceasefire, the progress regarding the U.S. - Iran deal is very limited if not deteriorating. AUD/USD is trading unchanged at 0.7184 as regional equities are not as upbeat. NZD/USD is trading 0.32% lower while USD/CAD rises 0.09% despite higher oil. Else, EUR/USD is down 0.08% and GBP/USD is up 0.02%.