Asian session review: the US dollar stabilized against major currencies

During today's Asian trading, the US dollar consolidated against major currencies after falling sharply yesterday and reaching its lowest level since May 9 amid disappointing data from ISM.

The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) fell by 0.03% to 104.12. Yesterday, the index fell by 0.51% after the Institute for Supply Management stated that manufacturing activity in the U.S. unexpectedly contracted at a slightly faster rate in May. Manufacturing PMI fell to 48.7 from 49.2 in April, with a reading below 50 indicating contraction. Economists had expected the index to inch up to 49.8. The unexpected decrease by the headline index partly reflected a faster contraction in new orders, as the new orders index fell to 45.4 from 49.1 in April. The production index also slipped - to 50.2 from 51.3 in April. On Wednesday, the ISM is scheduled to release a separate report on service sector activity. The services PMI is expected to rise to 50.5 in May from 49.4 in April. Meanwhile, the JOLTS job openings report for April will be in the focus of investors' attention today. Data on the number of vacancies and labor turnover (JOLTS) continue to signal that the US labor market is gradually cooling, despite strong nonfarm payrolls growth. The number of vacancies at the end of March fell to 8.488 million, which is 12% lower compared to the same period in 2023, and 30% lower than the peak in March 2022. At 5.1%, the vacancy rate fell to a more than three-year low. The softening in the JOLTS data does not only apply to the total number of vacancies. In the April report, market participants will closely monitor the level of layoffs. According to forecasts, the number of vacancies fell to 8.35 million in April from 8.488 million in March.

The Australian dollar fell by 0.35% against the US dollar, as Australian data indicated an unexpected swing to a current account deficit in the first quarter, along with a larger drag on GDP from net exports. Current account deficit amounted to AUD4.9 billion compared with a surplus of AUD2.7 billion in Q4 of 2023. Economists had expected a surplus of AUD5.9 billion. A separate report showed that company gross operating profits fell by 2.5% QoQ in the first quarter of 2024. That missed forecasts for a decline of 0.9% following the downwardly revised 7.1% increase in the previous three months (originally 7.4 percent). On a yearly basis, profits slumped 8.6%.