Ahead Today
G3: US JOLTS Job Openings, US Durable Goods
Asia: India Election results
Market Highlights
Economic momentum in the US softened further, with the May US ISM Manufacturing printing below consensus at 48.7 (vs 49.5 expected). The forward-looking indicators such as new orders also dropped quite sharply to 45.4, while the new orders to inventory ratio fell further below 1. The good news is that the prices paid component, which has a decent leading relationship with goods inflation is starting to moderate, but relative to its levels in 2023 have certainly picked up.
All this led to US 10-year yields declining to 4.4%, while the US Dollar was weaker by around 0.5%, with EURUSD now at the 1.090 handle while USDJPY at 156. On this front, markets will watch for key US labour market indicators out this week including the non-farm payrolls this Friday, together with job openings and hiring rate data out tonight. This is because the Fed including key officials such as Governor Waller have mentioned a significant weakening in the labour market as one condition in which the central bank will consider rate cuts.
Regional FX
Regional FX
Asian FX markets were generally stronger heading into the US session, with KRW (+1%), MYR (+0.5%) and SGD (+0.4%) outperforming. India will release its official results for the 2024 Elections today. Exit polls over the weekend pointed to PM Modi and his NDA alliance gaining a larger majority in the lower house of parliament, which led to a 3.4% surge in the Sensex, lower INR rates, while INR strengthened to 83.145 against the Dollar. While exit polls are not always accurate historically, we are sanguine on the actual result as the vast majority of polls are pointing in the same direction, and the most credible polls are pointing to a possibility of the incumbent gaining a large majority in parliament of 400 seats. USDVND seems to be seeing better RHS dollar liquidity this week, with the shift in gold auctions by the central bank to get state-owned banks to better meet end-demand potentially helping. The domestic premium with international gold prices have dropped quite sharply on Monday.
