Forex Market Commentary for 5/6/2019
The euro strengthened on Tuesday, closing at 1.1255(+10 pips) against the greenback. The greenback was unable to recover the ground lost Monday, hit by trade war-related headlines and mounting speculation about a rate cut in the US. On Tuesday, Fed’s Chief Powell spoke about the Federal Reserve’s policy strategy, tools, and communication practices, and despite no direct reference to future policies, odds for a cut decreased modestly. Powell said that policymakers would act as appropriate to sustain the expansion, different from the official Fed’s ‘patient’ stance. In the data space, the EU released May preliminary inflation estimates, which missed the market’s expectations, up by 1.2% YoY vs. the expected 1.3%, also below the previous 1.7%. Core CPI in the same period posted a modest 0.8% advance against the 0.9% forecasted, while the unemployment rate in the Union decreased to 7.6% in April. The US published the ISM-NY Business Conditions Index, which collapsed in May to 48.6 from 77.3 previously, and April Factory Orders, which declined by 0.8%, better than the -0.9% expected. This Wednesday, Markit will release the final services PMI for both economies, while the US will release the official ISM Non-Manufacturing PMI, this last expected at 50.9. Earlier in the day, the EU will release April PPI and Retail Sales, this last, seen decreasing monthly basis by 0.4%.