Macro Roundup (Jun 6)

SHANGHAI, Jun 6 (SMM) – This is a roundup of global macroeconomic news last night and what is expected today.

Last night

Despite upbeat economic data, the US dollar weakened and fell below 94 overnight to close at 93.86. The euro rose following a report that the European Central Bank would discuss an exit from its quantitative easing program next week, which eased worries over the Italian political crisis.

Both LME and SHFE metals rose across the board overnight. LME zinc jumped over 2%, and copper rose close to 2%, hitting a six-week high at one point, on concerns of the labour negotiations at Escondida. LME nickel gained 1.65% with aluminium and tin edged up. LME lead inched up and registered a three-month high at one point as its SHFE counterpart rose close to 1% on intensive environmental efforts in China. SHFE nickel, zinc surged closed to 2%, copper went up 1.65% with tin and aluminium gained slightly.

China Caixin services purchasing managers’ index (PMI) came in unchanged in May from April at 52.9. The 50-mark separates growth from contraction. The composite PMI for manufacturing and services also remained steady in May at 52.3.

“The index of expectations regarding future output rose to a relatively high level, suggesting optimism across both the manufacturing and service sectors,” said Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, in a statement along with the data. “However, the impact of the recent credit contraction on small businesses is worthy of attention,” he added.

Eurozone retail sales fell short of expectations and gained just 0.1% month-on-month in April, slower than the revised 0.4% increase in March. In April, sales of food, drinks and tobacco declined, while non-food product sales advanced. On a yearly basis, retail sales volume grew in line with expectations and accelerated to 1.7% in April from revised 1.5% in March.

The US ISM non manufacturing PMI beat expectations and rose to 58.6 in May from 56.8 in April. The figure was close to the highest level of 59.9 since August 2005 that was again registered in January 2018, suggesting a robust expansion of services in the US. This sector accounts for some 90% of the overall economy.

Day ahead

Key factors to watch today include China's foreign exchange reserves in May, the US trade balance in April and US oil inventory data over the week ended June 1 from the American Petroleum Institute (API) and from the Energy Information Administration (EIA).

The US dollar is likely to continue its weak and rangebound pattern today while base metals are expected to continue their strong performance.

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