Overall, the currency market moved strongly during the first part of the overnight session, but slowed as the market headed towards the European session. The market will likely pick up more momentum during the U.S. session, as news reports make their way into the market. The majors advanced against the dollar and the yen during the Asian session, but lost some ground during the European session.
The Euro (Eur/Usd) gained almost 70 pips during the Asian trading hours, but shed half of those gains as the market moved closer to the European open. Later this week, on Thursday, the market expects the ECB to reduce the interest rate to 1% and announce new quantitative easing methods.
The PMI release shows the euro-area manufacturing side of the economy has contracted for eleven consecutive months. The release number of 36.8 is slightly bigger than what analysts expected. The Sentix report improved slightly in May, but the released number is considerably below the market’s expectations. The index rose only 1.0 point from April, to -34.3. The Euro-zone's assessment is in-line with the other important regions. TheLFB Trade Team noted that every sub-index of the report for the current and future situation improved in May from the previous month.
The Pound (Gbp/Usd) was unable to move anywhere above the 1.4980 level, after gaining 70 pips during the Asian session and then retreating to its opening price. This could be a consequence that the U.K. market is closed this morning, and the pair may pick up additional momentum during the U.S. open.
The Aussie (Aud/Usd) was propelled higher during the first trading day of the week as the market expects the RBA o hold the key interest rate at 3% tomorrow, but gave back most of the gains. The aussie broke above Thursday’s high, reaching the highest value since October 2008.
The Cad (Usd/Cad) declined 50 pips on very low volume during the overnight session. For now, the cad is trading just below the 200-day simple moving average for the first time since July 2007. This week, the cad has an empty calendar until Wednesday.
The Swissy (Usd/Chf) is trading just below the 200-day simple moving average, the swing area of the last period of trading. The swissy managed to break under the low reached on Friday, during the Asian session, but reversed the move as the market was heading towards the London open.
The Purchasing Managers Index shows the industrial sector contracted in Switzerland for the eight consecutive month. The PMI number was released at 34.7, higher than expected. “The Swiss PMI confirms that the economy is taking a similar path as the Euro-area and the U.S. economies, which are in recession
The Yen (Usd/Yen) struggled in the overnight session to break above the 99.50 resistance area, where it also peaked on Friday. So far, the yen has low liquidity, probably a consequence of the closed Japanese markets.