This is what you need to know to trade today Wednesday June 1:
The dollar took advantage of the safe haven money flows on Tuesday and the index of the US dollar DXY snapped a three-day losing streak. The 10-year US Treasury yield continues to rise and helps the dollar hold ground early on Wednesday as market sentiment remains cautious. The ISM Manufacturing PMI for May will be published on the US economic calendar. The Bank of Canada (BoC) will announce its interest rate decision and the US Federal Reserve will publish its Beige Book.
See: ISM Manufacturing PMI Preview: Discouragement persists despite US economy expanding
The president of the Atlanta Fed, Raphael Bostic, explained that his view on the possibility of the Fed taking a “pause” in its rate hike cycle in September should not be taken as suggesting that the central bank is going to bail out the markets. Bostic also added that he would be “totally comfortable” with continuing to raise rates if inflation didn’t come down significantly. For her part, the US Treasury Secretary, Janet Yellen told CNN that new inflationary shocks cannot be ruled outas crude oil prices remain high.
At the start of the Asian session on Wednesday, China data showed Caixin Manufacturing PMI improved to 48.1 in May. Although this data exceeded market expectations of 47, it pointed to a continued contraction in activity in the manufacturing sector. Reuters reported that China admitted on Wednesday that it had held military exercises near Taiwan earlier this week.. Nonetheless, US stock index futures posted modest gains in early European morning trading.
The EUR/USD fell below 1.0700 on Tuesday amid dollar strength. Data published by Eurostat showed that the IPCA of the euro zone rose to 8.1% annual in May, but high inflation did not help the common currency gain strength. The pair remains relatively quiet early on Wednesday and consolidates its losses above 1.0700.
The USD/CAD fell to its lowest level in more than a month and closed Tuesday for the fifth straight day in negative territory. Statistics Canada reported that the Canadian economy grew at an annualized rate of 3.1% in the first quarter, against the analyst estimate of 5.4%, which limited the pair’s decline in the second half of the day. It is expected that the BoC raises its policy rate by 50 basis points later in the day as USD/CAD trades in a tight range around 1.2650.
See: BoC Preview: USD/CAD to Fall on Aggressive Rate Hike and Optimum Conditions for Bears
The AUD/USD is holding on to its weekly gains near 0.7200 early on Wednesday. Australian data revealed in the Asian session that the GDP expanded by 3.3% annually in the first quarterslightly better than the market forecast of 3%.
The GBP/USD Posts small daily gains and holds above 1.2600 in European morning.
The Prayed It broke below its weekly range amid rising US Treasury yields and extended its decline towards $1,830 on Wednesday.
The Bitcoin struggled to gain any upside momentum after Monday’s rally and closed mostly flat on Tuesday. BTC/USD continues to move sideways above $31,000 in European morning. The ethereum staged a downward correction and lost almost 3% on Tuesday after failing to recover $2,000. ETH/USD is now posting small daily losses at $1,930.
Source: Fx Street
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