Headlines:
- Eurozone May preliminary CPI +8.1% vs +7.7% y/y expected
- Money markets increase bets on ECB rate hikes after inflation data
- Oil gains to 12-week highs after EU agrees to ban on Russian oil imports
- Reminder: US president Biden to meet with Fed chair Powell later today
- France May preliminary CPI +5.2% % vs +5.0% y/y expected
- France Q1 final GDP -0.2% vs 0.0% q/q prelim
- Italy Q1 final GDP +0.1% vs -0.2% q/q prelim
- Switzerland Q1 GDP +0.5% vs +0.3% q/q expected
- China Cabinet issues a series of policies to bolster economic stability
- Gazprom says Russia has cut off gas supplies to the Netherlands
- ECB's de Cos: What we can do is to gradually remove stimulus
- ECB's Visco: Rate hikes will have to be gradual given economic uncertainties
- ECB's Villeroy: Inflation figures in May confirm need for progressive policy normalisation
Markets:
- USD leads, NZD lags on the day
- European equities lower; S&P 500 futures down 0.5%
- US 10-year yields up 7 bps to 2.82%
- Gold down 0.6% to $1,844.70
- WTI crude up 2.9% to $118.42
- Bitcoin up 1.6% to $31,748
It is the final trading day of May and inflation continues to take center stage as Eurozone CPI hits a new record high, pushing past the 8% mark.
Alongside a negative revision to French Q1 GDP, that is stoking worries surrounding the growth outlook in the region with mounting pressure also on the ECB to act steadfastly to normalise policy.
With US markets returning today, we're sort of properly kicking start the new week but month-end trading is also a consideration for trading today. The dollar is higher, equities are down while bond yields are pushing higher amid the inflation data from Europe.
EUR/USD is nudged lower from 1.0750 to 1.0690 while USD/JPY is up 0.5% from 127.90 to 128.20 at the moment. GBP/USD is also seen slumping back down below 1.2600 to 1.2580 from around 1.2630 to start the session.
The dollar is the led gainer as it also holds an advance against the commodity currencies, with AUD/USD down 0.3% to 0.7175 and NZD/USD down 0.7% to 0.6510 at the moment. The loonie is managing to hold on somewhat as oil prices are surging on the week with Brent rising above $123 and WTI crude testing $119. The China reopening and Europe's crusade to ban Russian oil imports are positive factors driving oil to fresh 12-week highs today.
