Title: Asian Markets Brace for Cautious Open as Investors Await US Jobs Data
Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist, have provided an analysis of the current market situation. The US dollar weakened overnight as Treasury curves flattened and equities climbed, causing the USD index to decrease. The USD/JPY pair is now approaching the 162 level. In Europe, markets improved due to political maneuvering ahead of the French second-round election, with the Stoxx 50 rallying 1.2%. The EUR/USD pushed higher but struggled to maintain levels above 1.0800 ahead of the French election this weekend. Due to the US holiday and the upcoming US jobs data, investors are expected to exercise caution and engage in some risk reduction and pre-positioning. Key events for today include US jobless claims, US ISM services, ECB’s Lagarde speaking, and the release of FOMC minutes.
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Title: Sterling Gains on Carry Flows, but Brexit Risks Linger
According to the May press release, the PMI for construction in the UK has shown significant recovery in all three subsectors—commercial, civil engineering, and housing—with commercial activity expanding at the highest rate. This increase in new contracts and the beginning of previously postponed projects have resulted in an increase in new orders and business expectations. Despite sterling’s recent increase in value, it has been primarily driven by inflows linked to carry and rates momentum rather than a decline in the Brexit risk premium.
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Title: Swiss Franc’s Safe-Haven Appeal May Strengthen as US Election Nears
The Swiss Franc is expected to see an increase in its safe-haven appeal as the US election approaches. Based on projections, core inflation in Switzerland is susceptible to negative shocks, and modest pricing pressures may arise for key goods and services. Due to the currency’s depreciation during the previous six months, core goods prices might see a slight increase. Given the CHF’s status as a safe haven, interest in selling it may decrease as the US election draws nearer.
