North American Summary and Highlights 30 May

North American session

The USD was mostly little changed in North America, but USD/CAD fell, eventually by a big figure to 1.3715, after a stronger than expected Q1 GDP increase of 2.2% annualized, which was seen as reducing the changes of a BoC easing on Wednesday. AUD/USD saw only modest gains to .6440 from .6420, while EUR/USD edged up to 1.1355 from 1.1330. GBP/USD was little changed near 1.3470, as was USD/JPY near 143.90, the latter in the middle of a big figure range seen over the session. 

US data had a limited impact. A sharp fall in the April advance goods trade deficit to $87.6bn from a record $162.3bn as imports plunged from inflated pre-tariff levels was the main surprise and will support Q2 GDP. Core PCE prices with a rise of 0.1% and personal spending with a rise of 0.2% were subdued as expected in April but personal income saw a strong rise of 0.8%. May’s Final Michigan CSI was revised up to 52.2 from a preliminary 50.8, as inflation expectations were revised lower after the reduction in tariffs on China, the 5-10 year view to 4.2% from 4.6%.  

European morning session 

The USD edged slightly higher against the EUR and AUD in the European morning, but was otherwise little changed. EUR/USD lost around 20 pips to 1.1325, and AUD/USD fell 15 pips to 0.6415.  

Newswise, German retail sales for April came in weaker than expected at -1.1% m/m, but underlying trends remain positive. Swedish Q1 GDP was revised down to -0.2% from flat, but follows a 0.8% gain in Q4 so is not seen as particularly worrying, and EUR/SEK was little changed. Spanish preliminary May CPI was on the soft side of consensus, but Italian CPI was essentially in line and German state CPI was on the strong side, suggesting we may not see the expected decline in the national CPI y/y rate later.