North American Summary and Highlights 22 May
Overview - The USD and GBP got some support from PMI data, but the EUR slipped on weaker PMI indices.
North American session
US data was mostly on the firm side of expectations. Initial claims saw a marginal dip to 227k from 229k, while S and P PMIs increased, both manufacturing and services to 52.3, from 50.2 and 50.8 respectively. Existing home sales fell 0.5% to 4.00m and the Kansas City Fed’s manufacturing survey edged up to -3 from -4, but with some cooling in the price indices.
UST yield more than fully reversed an early spike but FX and equity moves were modest. The USD had a slightly firmer tone, with USD/JPY reaching 144 and EUR/USD falling below 1.13 after an early correction above. EUR/GBP was softer, testing 0.84, as GBP/USD reversed a dip below 1.34.
European morning session
The USD fell back against the JPY early in the European morning, hitting a low at 142.80, but rebounded to finish the morning slightly higher at 143.45. EUR/USD started steady but fell back after weaker than expected May PMI data, slipping below 1.13 after opening at 1.1335. EUR/GBP also moved lower through the session, with UK composite PMI marginally above consensus. EUR/CHF edged lower to 0.9332 with the generally weaker EUR and a decline in equities after the PMIs, and AUD and CAD both fell against the USD as equities slipped lower.
The Eurozone composite PMI fell to 49.5 in May from 50.4 in April against a market consensus expectation of a rise to 50.7, with both services and manufacturing falling. The UK composite PMI rose to 49.4 from 48.5, driven by strength in services.