EU FX Handover Fed Rate Cut Expectations Rise Further

One of the key pre-NFP leading indicators, the ADP came in well below expectations at 27K vs.180K eyed, raising concerns that the jobs market may be cooling. The market is now pricing in a 75 basis point cut by end 2019!
Stock markets giving back some gains after a firmer open in Europe, but sentiment is still buoyed on hints of a rate cut in the US by a couple of Fed officials yesterday and expectations that the European Central Bank’s Mario Draghi will deliver a dovish press conference on Thursday, pushing rate hike expectations further out. But with the US-China trade uncertainty still lurking in the background, are investors being unreasonably too optimistic?
Aussie GDP was in line with expectations but the services PMI jumped in May from 46.5 to 52.5, and this helped to lift the AUD/USD to the key 0.70 handle. The other global services PMI data released today have been on the whole better than expected: China (Caixin) 52.7 vs. 54.3 expected, UK 51.0 vs. 50.6, Spain 52.8 vs. 52.5, Italy 50.0 vs. 49.9, France (final) 51.5 vs. 51.5, German (final) 55.4 vs. 55.0 and Eurozone (final) 52.9 vs. 52.5 expected. How will the US ISM Non-Manufacturing PMI fare later?

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

Contracts for Difference (CFDs) are not available to US residents.

FOREX.com is a trading name of GAIN Capital - FOREX.com Canada Limited, 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA is a member of the Canadian Investment Regulatory Organization and Member of the Canadian Investor Protection Fund. GAIN Capital – FOREX.com Canada Limited is a wholly-owned subsidiary of Stonex Group Inc.

Complaints are taken very seriously at FOREX.com. You can view our complaints procedure here.

Know your advisor