USD

For a second successive day the USD found itself in last position among the major currencies, losing an average of 0.4%. The US economic data, the economists and the Fed all contributed to its downfall.

America's two manufacturing purchasing managers' indices both fell short of forecast, with Markit at 50.5 and the ISM at 52.1. At the same time the National Association for Business Economics reported that the consensus among economists is that there is a 60% chance of a US recession before the end of next year. The results created a general lack of enthusiasm for the US economy and the dollar. The notion of rate cuts by the Federal Reserve gained added traction from James Bullard, the head of the St Louis Fed. He said in a speech that rates are "inappropriately high" and that "a downward policy rate adjustment may be warranted soon".

EUR

Where the US economic data weighed on the USD, Monday's mostly-worse readings from Euroland had no obviously negative impact on the EUR. It is 0.6% higher on the day. The difference in reaction is partly because Europe is not engaging in trade wars that act as a brake on its economy and partly because prolonged near-zero interest rates are hard-wired into investors' expectations.

This morning's euro zone economic data were mixed. Unemployment unexpectedly edged lower to 7.6% but inflation was lower too, down from 1.7% to 1.2% and a long way from the ECB's 2% target.  

CAD

The link between oil prices and the CAD was at best tenuous on Monday. After rising and falling nearly two dollars WTI crude was unchanged on the day. The Loonie, meanwhile, crept steadily higher against the USD, netting a 0.6% gain. It was more a matter of investors substituting the CAD for the USD than of any overwhelming fondness for the CAD.  

Certainly the day's only Canadian ecostat did no favors to the Loonie. The Markit manufacturing PMI dropped from 49.7 to 49.1 when it was supposed to have improved fractionally. Markit noted that the "manufacturing downturn [was] sustained in May" and that "new orders fell at the fastest rate in over three years".

GBP

The pound is minutely higher on the day against the USD. Whilst investors are not big fans of either currency, they are currently more averse to the USD than to the GBP.

This morning's UK construction sector PMI delivered the second disappointment in as many days. At 48.6 it was two points lower on the month and two points below forecast. Sterling dipped after the announcement but turned higher again after less than 20 minutes.

JPY

Investors are unusually lukewarm about the yen. Whatever concerns they may have about trade and the global economy, it looks as though the JPY they already have on board are just about enough for now. The yen is 0.1% firmer on the day against the USD.  

Japanese data released overnight showed a provisional 3.6% annual increase in the monetary base, ahead of the 3.2% rise forecast by economists. The services PMI comes out tonight.