EUR/USD Calm as Eurozone Manufacturing Improves

The euro has posted slight losses on Monday. EUR/USD is trading at 1.0835 in the European session, down 0.11% on the day.

US: Manufacturing Slips Further into Contraction in May

The manufacturing sector has remained in contractionary territory for 18 of the last 19 months. The post-pandemic normalization of demand for goods and restrictive monetary policy have both weighed on the sector. The ISM Institute commented that "companies demonstrate an unwillingness to invest due to current monetary policy and other conditions".

ECB to Make the First Move

On Thursday, the ECB will hold its fourth rate-setting meeting for 2024. The rhetoric from ECB officials since the April 11 gathering leaves little doubt about the outcome. The much-awaited rate decision will be announced at 12:15 GMT by a press statement with the usual press conference following 30 minutes later.

Bank of Canada Edges Closer to Rate Cut But Will it be in June?

As the race to cut rates reaches fever pitch, much of the attention has been centred on the US Federal Reserve and the European Central Bank. However, the Bank of Canada may well steal the spotlight over the coming week by beating both central banks in cutting first. After finding itself in a similar situation as the Fed in the second half of 2023 when the progress in reducing inflation stalled, the Bank of Canada has had better luck in 2024.

June Flashlight for the FOMC Blackout Period

The FOMC remained on hold for the sixth consecutive policy meeting on May 1 as elevated inflation and strong job growth earlier this year led policymakers to conclude that policy easing at that time would not be appropriate.

Swiss Franc Climbing, Eyes Swiss Inflation

Swiss franc has extended its gains on Monday. USD/CHF is trading at 0.8961 in the North American session, down 0.68%.

Weekly Economic & Financial Commentary: Higher for Longer Mantra on Repeat in Week Replete with Fed Speak

The latest FOMC meeting minutes and a flock of Fed officials on the speaking circuit this week provided additional evidence that rate cuts this summer are not likely. On balance, the Fed communication channel conveyed a sense that monetary policy was transmitting through the economy at a slower pace than previous cycles and a desire for more patience in order to gain certainty that inflation is on its way to 2%.

Quiet Start to a Week Where Inflation Will Be in Focus

For the remainder of the week, we will especially be looking out for consumer confidence, GDP and PCE inflation data out of the US, unemployment, and CPI numbers out of the euro area, as well as PMIs out of China and Tokyo CPI out of Japan.

Trading Probably Will Take a Slow Start

Trading probably will take a slow start as US (Memorial Day) and UK markets (Spring Bank Holiday) are closed. German Ifo Business climate should confirm last week’s positive PMI’s and might provide further downside protection for EMU yields and the euro, admittedly in thin market conditions. Later this week, markets will keep a close eye at the April US PCE deflators and the first estimate of the EMU May inflation.

Crypto Market Struggles With Downtrend, Ethereum Tests Resistance

Ethereum has not abandoned its attempt to overcome $4000, hovering above $3900 early in the day on Monday. The ability to overcome this psychologically important round level could quickly take the price to the highs of November 2021, in the $4600-4800 area.