Less than inspiring U.S data holds risk assets at bay; Chinese PMI in focus

A series of less than inspiring data points made for a choppy session overnight with U.S equity markets finishing the last day of the month with moderate losses. Earlier in European trade, we saw a bounce across the risk spectrum which failed to gain momentum in U.S trade with the DOW and S&P finishing down 0.21 and 0.23 percent respectively. Nonetheless, some signs of positivity were seen in Europe with markets finding solace in the latest jobs data from Germany which recorded no change in May against the expected decline of 7,000. The official unemployment rate edged lower to 6.7 percent, the lowest rate of unemployment in two-decade - a comforting factor considering the economic turmoil in Southern Europe. German retail sales recorded the second consecutive month of gains with April’s print showing a rise of 0.6 percent but still record a significant fall of 3.8 percent from a year earlier. Euro-Zone inflation slowed further in May with official estimates showing consumer prices rose 2.4 percent, down from 2.6 percent in April.

In contrast we saw data from the U.S prove to be more of a hindrance, with the ADP private employment gauge falling short of estimates showing 133,000 new jobs in May against expectations of 150,000. We also saw weekly jobless claims come in above estimates with both data points seen as a negative pre-cursor ahead of Friday’s NFP’s. U.S GDP recorded annual growth of 1.9 percent in the first quarter, down from previous estimates of 2.2 percent.

The Australian dollar fell to lows of 96.72 US cents in domestic trade but managed to stage an ascent overnight to reach highs of 97.7 US cents before succumbing to moderate selling in the latter part of US trade. The Euro followed a similar pattern with emphasis on the selling with the EURUSD pair failing to build momentum above 1.24-figure before posting fresh 23-month lows of 1.2336 in recent hours. Locally, the focus today will be on China with manufacturing PMI due for release this morning alongside the HSBC equivalent later in the session.

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