North American Summary and Highlights 31 May
Overview - EUR was supported by Eurozone CPI data while softer US core PCE prices saw the USD take a hit, though the USD recovered from its losses, JPY weakness leading the rebound.
North American session
The USD slipped on a 0.2% rise in the US core PCE price index, though the surprise was marginal, with the gain before rounding being 0.249%. Overall PCE prices at 0.257% were rounded up to 0.3%. The report was generally subdued, with personal income up by 0.3% and spending weaker than expected at 0.2%. Later a very weak Chicago PMI of 35.4 was released.
USD/JPY fell as low as 156.56 while EUR/USD rose as high as 1.0882, but the move was subsequently reversed and the USD ended little changed overall, the bounce led by USD/JPY which moved slightly above pre-data levels to near 157.35, while EUR/USD settled near pre-data levels around 1.0845. EUR/GBP came off its European highs and EUR/CHF gains were mostly erased. The USD rebound came despite UST yields remaining lower.
USD/CAD showed little reaction to the US data with a 1.7% rise in Q1 Canadian GDP on the low side of consensus, but USD/CAD also did not move higher as the USD rebounded. AUD gains on the data versus both USD and CAD were more than fully erased.
European morning session
EUR/USD gained 25 pips and USD/JPY gained half a figure through the European morning session. The EUR gains were supported by a stronger than expected Eurozone CPI number, which showed a 2.6% y/y rise in May against market expectations of a 2.5% increase. The core rise of 2.9% was even further above the consensus of 2.7%. The rise to 2.8% in Germany and 2.7% in France were the main drivers of the Eurozone gains, although the national data was weaker than the HICP basis number.
There was no obvious trigger for JPY weakness, which suggests there may be some impact from end of month flow. However, EUR/CHF also rose significantly to 0.9825 from 0.9790, and AUD and CAD also made gains, suggesting a risk positive tone, although there was little movement in equities.
Other data included slightly weaker than expected German retail sales data for April, and mixed UK money and credit data, with mortgage lending stronger than expected but consumer credit somewhat weaker.