What to watch for on Wednesday, June 1:
The day will kick off with the release of Australia’s first quarter Gross Domestic Product and May AIG Manufacturing PMI. Disappointing readings could spark risk aversion after poor Chinese data released early on Tuesday.
EU inflation soared to a record 8.1% year-on-year in May, according to preliminary estimates, further fueling concerns about the future of major economies. Asian and European stocks fell. Wall Street tried to trim early losses, but gave in before the close and ended the day lower as well.
Meanwhile, the EU representatives reached an agreement on the sixth package of sanctions on Russia. They agreed to ban 90% of the country’s oil imports by the end of the year. Charles Michel, President of the European Council, said the measure would immediately affect 75% of Russian oil imports. The embargo covers oil and its derivatives introduced by sea, with a temporary exemption for imports by pipeline.
The sanctions also include asset freezes and travel bans for individuals, as well as the exclusion of Russia’s largest bank, Sberbank, from the SWIFT system. Finally, the leaders agreed to provide Ukraine with a €9 billion aid tranche to support the economy of the war-torn country.
Crude oil prices soared earlier in the day, but fell sharply during US trading hours. Black gold was hit by headlines that OPEC members are considering exempting Russia from their oil production deal. WTI traded at $119.96 a barrel, but settled around $115.20.
Gold was unable to take advantage of the bad environment and ended the day in the red, below $1,840 a troy ounce.
On the currency front, there was little change. The US dollar appreciated during the first half of the day, but fell during the American session. The EUR/USD pair is trading around 1.0730, while the GBP/USD is trading around 1.2600.
The USD/JPY pair advanced alongside US Treasury yields, now trading around 128.60, but USD/CHF saw little action and is currently trading at 0.9590.
The AUD/USD pair cut back at the end of the day, posting modest losses as it traded around the 0.7170 area. The Canadian dollar appreciated along with oil, and the USD/CAD fell to 1.2640.
Source: Fx Street
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