Daily Market Commentary 2nd June 2023

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EU inflation followed French and German numbers, lower. EU inflation fell from 7% to 6.1%, with core inflation easing back to 5.3%. This is good news from the European zone and relieves pressure on interest rates and the ECB. The EUR regained some lost ground, jumping back to 1.0750, while the GBP spiked above 1.2500. Manufacturing in Europe remains in tatters, with Manufacturing PMI data showing the de-industrialisation of the engine room of Europe, is well under way. German Manufacturing is in a state of collapse, with French and Dutch following. The extended energy crises is taking it’s toll. Market focus is turning to the US labour market and the Non-Farm Payroll number set to be released tonight. The ADP Jobs Report was stronger than expected, adding 278,000 private sector jobs, boding well for a strong NFP’s number. A strong US labour market is not what the Federal Reserve wants, as a tight labour market, may ensure a further rate rise is on the way?

Manufacturing PMI in Japan and China were far more positive than in Europe, with both pushing above the magic 50 level, into the expansion zone. Australian Manufacturing PMI slipped back below 50, into contraction mode. The weaker reserve allowed the AUD to bounce back towards 0.6600, while the NZD regained the ‘BIG-NUMBER’ of 0.6000, ahead of key trade data set to be released today. All eyes will turn to the Non-Farm Payroll numbers, set to be released tonight, in the USA.

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