US FX Handover Abysmal ADP Pristine PMI Dollar Dump Undone

Today’s top-tier US data painted a mixed picture: The May ADP Employment report printed at just +27k, well below expectations of 185k and the lowest reading since 2010. On the other hand, the ISM Non-Manufacturing PMI rose to 56.9, above 55.4 expected. The widely watched employment component of the report rose to 58.1 from 53.7 last month.
The market is becoming increasingly convinced that the US will NOT impose tariffs on Mexico, a sentiment recently echoed by Republican Senator (and head of the Senate Finance Committee) Grassley. Negotiations kick off tomorrow ahead of Monday’s deadline.
Both the US dollar and 2-year treasury yields recovered sharply off their morning lows – could this mark a near-term bottom? Traders are looking ahead to tomorrow’s ECB meeting and Friday’s NFP report for guidance.
In an unusual development, the New Zealand dollar was today’s strongest major currency, while its neighbor the aussie was the weakest major.
Oil prices continued their collapse, with WTI shedding another 3% after a big unexpected buildup in inventories.

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