US Dollar finds a foothold, eyes on PMI surveys

Following Friday’s uninspiring performance, the US Dollar (USD) holds its ground against its rivals early Monday. Ahead of the ISM Manufacturing PMI report for June, The US Dollar Index clings to small daily gains above 103.00. The European economic docket will feature revisions to HCOB Manufacturing PMIs. Markets will also keep a close eye on comments from central bank officials. It’s worth noting that stock and bond markets in the US will close early on Monday and remain closed on Tuesday in observance of the Independence Day holiday.

Annual inflation in the US, as measured by the change in Personal Consumption Expenditures (PCE) Price Index, fell to 3.8% in May from 4.3% in April, the US Bureau of Economic Analysis reported on Friday. In the same period, the Core PCE Price Index edged slightly lower to 4.6% from 4.7%. The initial reaction to soft inflation readings caused the USD to lose some strength ahead of the weekend.

During the Asian trading hours on Monday, June Caixin Manufacturing PMI in China came in at 50.5, down from 50.9 in May but better than analysts’ forecast of 50.2. The Shanghai Composite Index remains on track to post a daily gain of more than 1% and Hong Kong’s Hang Seng Index is up 2% on the day. Nevertheless, US stock index futures trade flat in the European morning.

Following Friday’s rebound, EUR/USD closed the week virtually unchanged. The pair stays under modest bearish pressure early Monday and trades below 1.0900.

GBP/USD gained nearly 100 pips on Friday and ended the week near 1.2700. With the USD staying resilient on Monday, the pair fluctuates slightly below that level.

USD/JPY staged a downward correction on Friday but regained its traction at the beginning of the week. As of writing, the pair was trading in positive territory near 144.80. “Japanese companies expect consumer prices to rise an average 2.6% a year from now, lower than their 2.8% projections three months ago,” the Bank of Japan’s (BoJ) noted in its quarterly Tankan survey. Meanwhile, the headline Tankan Large Manufacturing Index improved to 5.0 in Q2 from 1.0 and surpassed analysts’ forecast of 3.0.

Australian Trade Minister Don Farrell said early Monday that they will be announcing new measures to improve trade relations with China soon. AUD/USD edged higher in the Asian session but reversed its direction in the European morning. AUD/USD was last seen losing more than 0.3% on the day below 0.6650. On Tuesday, the Reserve Bank of Australia announce its interest rate decision.

Gold snapped a four-day losing streak on Friday and erased a large portion of its weekly losses. XAU/USD stays calm above $1,910 early Monday.

Bitcoin struggled to find direction over the weekend and extended its sideways grind above $30,500 early Monday. Ethereum gathered bullish momentum and reached its strongest level since May above $1,950.