The dollar remains behind
What you need to take care of on Wednesday, May 25:
The US dollar remained weak on Tuesday, despite the lackluster mood in the markets. EUR/USD bounced above 1.0700 as more ECB officials promised a 50 basis point rate hike. GBP/USD, however, fell on weaker than expected local data to end the day at the 1.2520 price zone.
S&P Global has released preliminary estimates of its May PMIs. Most of the European manufacturing and services indices were below market expectations, with the exception of the German indices, which were slightly better than those of April. The EU services PMI fell to 56.3 from 57.7 the previous month, while the manufacturing index came in at 54.4, below the 54.9 expected.
The UK figures were also disappointing, as slow business activity at its lowest level since early 2021, according to the official report. Finally, the company said the US manufacturing index slipped to 57.5 as expected, while the services index contracted to 53.5 over the same period.
Meanwhile, inflation has not receded as China’s coronavirus-related lockdown has exacerbated supply chain issues. In fact, JP Morgan lowered China’s growth forecast to 3.7% from 4.3% in 2022, while other research institutes followed suit.
AUD/USD is trading just below the 0.7100 level, while USD/CAD is holding above 1.2800. Safe-haven currencies rose sharply, with USD/JPY falling to 126.80.
The price of gold is trading near its weekly high at $1,869.71 per troy ounce, while crude oil prices posted modest gains. WTI is now changing hands at around $110.00 per barrel.
The Asian and European indices closed in the red. Wall Street spent most of the day in negative territory but managed to claw back some ground in the final hour of trading. The DJIA moved into positive territory, but its counterparts remained in the red.
Demand for safety boosted government bonds, with yields hitting new weekly lows.
the Reserve Bank of New Zealand will announce its monetary policy decision and is expected to raise the policy rate by 50 basis points to 2%.
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