Asia Watch: US Data Influences Dollar, Gold, and Currencies

Stay updated with the latest Asia session market trends and insights, as US data influences the dollar, gold, and regional currencies.

Overview of the US Session

The US economic landscape faced another challenge with the ISM Manufacturing PMI contracting for the second consecutive month. Falling from 49.2 in April to 48.7 in May, it also missed the market estimate 49.8. Significant declines in components such as new orders, production, and backlog of orders highlighted weak demand for manufacturing activities. Prices showed a notable pullback but remained elevated at 57. This weaker-than-anticipated PMI data led to a drop in the dollar index (DXY) from 104.55 to a low of 104.05, while spot gold prices rebounded strongly, climbing above $2,350/oz overnight.

Impact on the Asia Session

As Asian markets digested the latest U.S. macroeconomic data, the DXY hovered above the 104 thresholds while gold retreated below $2,350/oz. With no major economic news releases during Asian trading hours, the dollar and gold’s current trends are likely to continue through the initial part of the day.

Dollar Index (DXY)

Key News Events Today

• JOLTS Job Openings (2:00 pm GMT)
• Manufacturing Orders (2:00 pm GMT)

What to Expect from DXY Today?

Job openings in the U.S. have decreased over the past 12 months, indicating a slowdown in business hiring practices. The estimate for April is 8.4K, down from 9.9K in April 2023 and 8.5K in March this year. April’s estimate for manufacturing orders suggests a third consecutive month of growth, albeit slower. If data for job openings and manufacturing orders miss market expectations, the dollar will likely come under heavy selling pressure again.

Central Bank Notes:

• The Federal Funds Rate target range remains unchanged at 5.25% to 5.50%.
• The Fed seeks maximum employment and inflation at a 2% rate over the long run.
• The economic outlook is uncertain, and the Committee remains attentive to inflation risks.
• Inflation has eased but remains elevated, and economic activity has expanded steadily.

Gold (XAU)

Key News Events Today

• JOLTS Job Openings (2:00 pm GMT)
• Manufacturing Orders (2:00 pm GMT)

What to Expect from Gold Today?

A further drop in U.S. job openings and a softer pace of growth for manufacturing orders could lead to renewed selling pressure on the dollar, potentially boosting gold prices. However, deviations from these expectations could cause gold to face downside risks.

Asia Watch: US Data Influences Dollar, Gold, and Currencies

The Australian Dollar (AUD)

Key News Events Today

• No major news events.

What to Expect from AUD Today?

The AUD rebounded strongly, briefly hitting the 0.6700 thresholds overnight before retreating to 0.6675 as Asian markets opened. These are the support and resistance levels for today:

• Support: 0.6600
• Resistance: 0.6700

The Kiwi Dollar (NZD)

Key News Events Today

No major news events.

What to Expect from NZD Today?

The NZD bounced near 0.6200 overnight before returning to 0.6180 at the start of the Asia session. These are the support and resistance levels for today:

• Support: 0.6090
• Resistance: 0.6200

The Japanese Yen (JPY)

Key News Events Today

• No major news events.

What to Expect from JPY Today?

Weaker-than-expected data from the U.S. overnight saw the USD/JPY pair drop below 157, trading around 156.50 as Asian markets opened. These are the support and resistance levels for today:

• Support: 156.00
• Resistance: 157.70

The Euro (EUR)

Key News Events Today

• No major news events.

What to Expect from EUR Today?

The Euro rebounded overnight, breaking above a near-term resistance of 1.0900 and trading around 1.0910 as Asian markets opened. These are the support and resistance levels for today:

• Support: 1.0895
• Resistance: 1.0940

The Swiss Franc (CHF)

Key News Events Today

• CPI (6:30 am GMT)

What to Expect from CHF Today?

The Swiss Franc could strengthen ahead of the European session if CPI data, estimated at 0.3% for May, indicates more substantial growth, reinforcing the currency’s position.

The Pound (GBP)

Key News Events Today

• No major news events.

What to Expect from GBP Today?

The Pound rebounded overnight, breaking above a near-term resistance of 1.2800, trading around 1.2805 as Asian markets opened. These are the support and resistance levels for today:

• Support: 1.2800
• Resistance: 1.2860

The Canadian Dollar (CAD)

Key News Events Today

• No major news events.

What to Expect from CAD Today?

The USD/CAD pair tumbled to 1.3600 overnight but retraced higher to trade around 1.3640 as the Asia session began. These are the support and resistance levels for today:

• Support: 1.3600
• Resistance: 1.3650

Oil

Key News Events Today

• No major news events.

What to Expect from Oil Today?

Crude oil prices dived overnight, with WTI losing 3.5% and falling to $73.95 per barrel as Asian markets opened. The trend suggests a further slide today.

Summary

The Asian session will likely continue digesting the weaker-than-expected US manufacturing data, leading to possible further movements in currencies and commodities. The absence of major economic news in the Asian trading hours could maintain the current direction for the dollar, gold, and other key financial instruments.

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