Daily Market Commentary 1st June 2023

European inflation is tumbling lower, with French and German numbers crashing back to earth. German CPI has fallen from 7.6% to 6.3%, easing concerns in markets and perhaps signalling to the ECB to ease on the rate rises. The EUR fell back below 1.0700 , as European Bond Yields drift lower, while the GBP regained 1.2400. The US Jolt’s Job Openings signalled a loosening in the US Labour market, with job openings surging above 10 million, ticking another box for the Federal Reserve. Inflation easing in Europe and the USA will mean ‘peak interest rates’ may be fast approaching.

Chinese Manufacturing PMI was weaker than expected and commodity demand continues to fall, easing prices. This did nothing to support the commodity currencies, with the NZD falling below 0.6000, while the AUD dipped below 0.6500. Market attention will now turn to the US Labour market, with reports from ADP and Challenger, in the lead in to Non-Farm Payrolls, Friday.