The market at the beginning of the week shows a moderate risk sentiment. The dollar market is experiencing consolidation and stability in the high levels reached since the end of last week.
The US employment report at the end of last week showed a stronger-than-expected increase in the number of employed individuals. However, the unemployment rate exceeded expectations, and the growth of average weekly wages slowed down slightly. With expectations of the Federal Open Market Committee (FOMC) keeping rates unchanged in June, the stock market saw buying activity, spreading a sense of reassurance in the market.
Tensions between the US and China have increased due to the abnormal closeness of US and Chinese ships in the Taiwan Strait. However, it doesn’t seem to be affecting the overall risk sentiment in the market. The Nikkei average has once again reached the 32,000 yen level, surpassing the post-bubble high, driven by the yen depreciation and dollar strength as the USD/JPY pair returned to the 140 yen range.
Upcoming economic indicators in the international market include the final readings of non-manufacturing PMI for Germany, France, the Eurozone, the UK, and the US (May), consumer price indexes for Switzerland and Turkey (May), producer price index for the Eurozone (April), ISM non-manufacturing index (May) and new orders for US manufacturing (April), and durable goods orders (revised) (April).
In terms of speaking events, ECB President Lagarde will attend the European Parliament’s Economic and Monetary Affairs Committee (ECON). Bundesbank President Weidmann will participate in an economic event, and Cleveland Fed President Mester will deliver a speech at the Economic Education Council. Since the blackout period has begun, it is not expected that President Mester will provide any comments on interest rate forecasts, etc.
Today, it is anticipated that there will be significant movements in USD after the release of the ISM non-manufacturing index. If taking a bearish stance on USD, it is expected that buying AUD/USD or selling USD/JPY would be more likely.