German data have backed the Euro, now trading at 1.664 against the dollar. The feed from the German CPI was that, despite the economic growth in the Union has decelerated, it remains far from being at risk, giving a positive hint on upcoming EU May inflation, to be out this Thursday. US figures, on the contrary, were disappointing, as the ADP survey showed the private sector added 178,000 new jobs in May, while April’s figure was downwardly revised to 163K from the previous estimate of 204K. Also, the Q1 GDP second estimate resulted at 2.2%, slightly below the previous 2.3%. US data expected today is the PCE price index, Fed’s favourite inflation measure for April.
The USD/JPY pair peaked during the American session at 109.06 but it was unable to hold on top of 109.00 and retreated to 108.80. Risk aversion eased across financial markets weakened the demand for safe-haven currencies like the yen. US data had no impact on markets and on Thursday, US personal income and spending numbers are due ahead of Friday’s NFP. The decline of the yen in the market looks corrective so far with the US Dollar being pulled back in the market.
Sterling continues its soft recovery ahead of Thursday’s London action, testing near the 1.3300 major level. The Pound though, remains deeply within bearish territory, declining steadily from an April high of 1.4376, after disappointing economic data and a deflated Bank of England that had held back their last rate hike. Thursday brings a smattering of data for the UK, starting with the Nationwide Housing Prices measure for the month of May, followed by April’s Consumer Credit and Mortgage Approvals.
Crude oil prices rose, with the API inventory flow data showing stockpiles added 1 million barrels last week Furthermore, the absence of fresh news-flow building on last week’s comments from Saudi and Russian officials signalling an on-coming easing of output curbs as well as the dollars downturn probably helped the near-term recovery.
Gold prices continued to mark time in familiar territory as a recovery in risk appetite presented the same conflicting cues that anchored the yellow metal amid risk aversion, albeit in reverse. Easing concerns about political instability in Italy saw the US Dollar give back some of its recent gains. An accompanying reversal of haven-seeking capital flows sent Treasury bonds lower and buoyed yields however. Taken together, that saw gold’s anti-fiat appeal offset by its role as the benchmark for non-interest-bearing assets.