EUR/USD has stabilised above the 1.14 level

Jens Nærvig Pedersen Danske Bank A/S

Market movers today

Today, the June manufacturing PMI figures for Norway, Sweden, the euro area (including Spain and Italy), the UK and the US are due out .
The unemployment rate for the euro area in May is also due out today and we est imate it stayed at 9.3%. It is st ill our view that the unemployment rate will cont inue to fall this year as the economic recovery cont inues.
In the US, we est imate ISM manufacturing fell to 54.0 in June but regional PMIs and Markit PMI have pointed in different direct ions (an increase and a fall, respect ively).
Tomorrow in Sweden, we expect the Riksbank to stay on hold but remove its small cut probability in the updated rate path.

Selected market news

Caixin China manufacturing PMI rose to 50.4 in June from 49.6 in May. Hence, the index is now signalling a slight expansion rather than a slight cont ract ion in Chinese manufacturing. It was somewhat bet ter than expected by consensus. The copper price rose on the news.

In Japan, the quarterly manufacturing business confidence survey released this morning showed t hat Japan's manufact urers are t heir most posit ive since 2014. This improvement was in line with consensus. Consequent ly, the market react ion to the data release was muted.

The recent rally in EUR/USD found addit ional just ificat ion on Friday from st ronger euro area core inflat ion and weaker US PCE core inflat ion. In the euro area, core inflation rose to 1.1% y/y, while in the US it dropped to 1.4% y/y. EUR/USD has stabilised above the 1.14 level.

Oil prices Friday found support in the news that the number of oil rigs in the US dropped by two. This is the first sign so far of US crude oil producers react ing negat ively to the recent slide in oil prices.

Dry weather in the US and Europe has been a cause for concern recent ly in the world wheat market . On Friday, a report from USDA added to those concerns, providing addit ional fuel to the recent rally in world grain prices. Overall, world food prices are up about 10% since the beginning of May – something that could also potent ially come to the at tention of major global cent ral banks if it starts to pass through to inflation.

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Jens Nærvig Pedersen

Danske Bank A/S

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