Here is what you need to know on Wednesday, June 3:
Large protests continue in the US, albeit with a quieter nature. Markets are focusing on stimulus, with stocks extending the gradual gains and the safe-haven dollar further falling. A busy day awaits traders with two Non-Farm Payrolls hints, the BOC decision, and additional data.
US demonstrations: Various American cities have seen protests against racial discrimination. Governors have refused to ask for help from the army but troops have reportedly been amassing outside Washington D.C. President Donald Trump seemed to tone down his threats to impose martial law.
Looting has diminished but protesters violated curfew orders in some cases. The lack of social distancing raises concerns about the second wave of coronavirus. COVID-19 statistics continue gradually descending in the US. Equities see though the events, focus on reopening, Federal Reserve support, and potentially additional fiscal support.
The US economic calendar is busy, including two hints toward Friday’s Non-Farm Payrolls. ADP’s private-sector jobs report is set to show a multi-million loss of jobs, and the ISM Non-Manufacturing Purchasing Managers’ Index for May is forecast to edge higher, yet still point to contraction.
- ADP Preview: Half as bad as April is still terrible but markets have moved on
- ISM Non-Manufacturing PMI Preview: If the bottom is in, is this higher?
Brexit: Hope by both sides that the other will concede have not materialized and the impasse continues. The EU now hopes for intervention from UK Prime Minister Boris Johnson. Brussels is open to a two-year extension of the transition period, yet London rejects this option. Markit’s final Services PMI for May is set to confirm the score of 27.8 initially reported.
Germany: Chancellor Angela Merkel has failed to agree on fiscal stimulus details with her coalition partners, and talks continue. Europe’s largest economy is projected to report a large increase in unemployment in April.
EUR/USD has topped 1.12 amid dollar weakness and ahead of the European Central Bank’s decision on Thursday. Investors expect the ECB to expand its Quantitative Easing program (preview). Final services PMIs will likely confirm the weakness.
Australia reported its economy contracted by 0.3% in the first quarter, en route to the first recession since the early 1990s. Nevertheless, Gross Domestic Product figures beat expectations and supported AUD/USD which reached 0.69.
Oil prices have been marching forward, buoyed by hopes that Saudi Arabia and Russia will continue their cooperation to keep production at lower levels. WTI is hovering around $38.
The Bank of Canada announces its rate decision on Wednesday, the first under Tiff Macklem, the new governor. Economists expect the BOC to leave rates unchanged. The tone in the accompanying statement will likely set the tone for the Canadian dollar. USD/CAD is battling 1.35 amid the greenback’s retreat and the rising petrol prices.
See: BOC Preview: Will Tiff Macklem be tough? Three ways the new governor can move USD/CAD
Cryptocurrencies are trying to find their feet after a swift sell-off on Tuesday that saw all digital coins collapsing at once.
Gold has retreated from the highs near $1,750 but remains well above $1,700.
See Fibonacci lines are golden, a gold trading idea, and more – Interview with Chris Svorcik