Dollar Extends Gains; Jobs Data in Focus

USD

The dollar index which measures the greenback against a basket of major currencies raced higher to 90.62, the highest in three weeks, as investors brace themselves to the May jobs data. The US economic indicators continued to show a solid economic recovery. The ISM non-manufacturing PMI came in at 64.0, the highest on record, and the Initial jobless claims rose by only 385 thousand, the lowest since the beginning of the pandemic. The released data raised the chances of an upbeat jobs report, which could ease extended dovish bets on the dollar. The EURUSD declined to $1.2104, the GBPUSD fell to $1.4083, and the USDJPY rallied to a two-month high of 110.32.

Equities

Major US stock indices had a mixed performance yesterday with tech stocks suffering relative to other sectors. Investors cheered the strong reading of the ISM non-manufacturing PMI, but they are also waiting carefully for May's jobs report, as the Federal Reserve would assess the policy path based on jobs creation. On the other hand, some headlines regarding Biden's infrastructure plan financing raised volatility for a while but then faded. The Dow Jones Industrial Average futures hovered near 34600, the SPX500 futures traded near 4190, and Nasdaq futures held steady near 13550.

Metals

Precious metals declined sharply as the dollar recovered along with yields on solid US economic data. The price of a gold ounce plunged to a two-week low of $1856, the price of a silver ounce dipped to $27.03, and palladium eased to $2814.

Oil

Oil prices extended upside rally supported by optimism over the economic recovery and a drawback in US inventories. The economic data from the United States and Europe continued to indicate a robust economic recovery. Meanwhile, the US Energy Information Administration reported a decline of 5.080 million barrels in US oil inventories. West Texas Intermediate crude July contract rose to $69.37, and the Brent blend August contract advanced to $71.97.

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