Brazil Services Sector Continues To Log Sharp Fall In Activity

Trading 03 juin 2020 Commentaire »

Brazil's service sector shrank drastically in May as the coronavirus, or Covid-19, pandemic continued to hurt the economy severely, survey data from IHS Markit showed on Wednesday.

The services Purchasing Managers' Index was at 27.6 in May, largely unchanged from 27.4 in April. A PMI reading below 50 suggests contraction in the sector. New work declined sharply as demand remained poor amid the Covid-19 pandemic. Firms also signalled a sharp fall in employment. Overall sentiment in the services sector remained negative and firms intensified discounting to retain existing clients and attract new ones. The Composite PMI, which combines manufacturing and services, edged up to 28.1 from a record low 26.5 in April. "Hopes of any swift recovery to the pandemic are starting to evaporate as numerous firms reported reductions to their workforce numbers as part of wider efforts to control costs and provide some margin protection at a time of rapidly diminishing sales," Paul Smith, economics director at IHS Markit, said. "This is adding to an increasingly bleak outlook, with firms remaining negative overall about activity over the coming year as fears mount over the longer-term impact of COVID-19."


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*Fed Chair Powell To Hold Virtual Discussion With Cleveland Fed's Mester On Jun 19: Reuters

Trading 03 juin 2020 Commentaire »

Fed Chair Powell To Hold Virtual Discussion With Cleveland Fed's Mester On Jun 19: Reuters


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Canadian Dollar Higher After BoC Holds Rate Steady

Trading 03 juin 2020 Commentaire »

The Canadian dollar advanced against its most major counterparts in the New York session on Wednesday, after the Bank of Canada left its interest rate unchanged, saying that the impact of the COVID-19 pandemic seemed to have peaked.

The BOC maintained its benchmark rate at 0.25 percent, as expected.

The Canadian economy appeared to have avoided the most severe scenario presented in the bank's April Monetary Policy Report, the bank said in the accompanying statement.

"Decisive and targeted fiscal actions, combined with lower interest rates, are buffering the impact of the shutdown on disposable income and helping to lay the foundation for economic recovery," it said.

Although the outlook for the second half and beyond remained heavily clouded, the bank expects the economy to resume growth in the third quarter, it added.

Extending early rally, the loonie jumped to a 3-month high of 80.63 versus yen. The loonie is poised to challenge resistance around the 81.5 mark.

The loonie rose back to 1.3485 versus the greenback, not far from a 1-year peak of 1.3480 seen in the Asian session. The loonie is likely to face resistance around the 1.33 region, if it gains again.

The loonie bounced off to 1.5132 versus the euro, from a 2-day low of 1.5200 hit at 9:45 am ET. Next key resistance for the loonie is likely seen around the 1.49 level.

Survey results from IHS Markit showed that the euro area private sector contracted sharply in May, but improved from April as lockdown restrictions implemented to prevent the spread of coronavirus loosened in many economies.

The final composite output index rose to 31.9 in May from April's record low of 13.6. The score was above the flash reading of 30.5.

In contrast, the loonie held steady against the aussie, after having recovered from a 1-year low of 0.9415 set in the Asian session. At Tuesday's close, the pair was valued at 0.9323.


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U.S. Factory Orders Show Another Steep Drop In April

Trading 03 juin 2020 Commentaire »

After reporting a steep drop in new orders for U.S. manufactured goods in the previous month, the Commerce Department released a report on Wednesday showing another nosedive in factory orders in the month of April.

The Commerce Department said new orders plunged by 13.0 percent in April after plummeting by a revised 11.0 percent in March.

Economists had expected factory orders to tumble by 14.0 percent compared to the 10.3 percent slump originally reported for the previous month.

The continued nosedive in factory orders was partly due to another steep drop in durable goods orders, which cratered by 17.7 percent in April after tumbling by 16.7 percent in March.

The report showed orders for non-durable goods also plunged by 9.0 percent following a 5.4 percent slump in the previous month.

The Commerce Department said shipments of manufactured goods also tumbled by 13.5 percent in April, while inventories of manufactured goods dipped by 0.4 percent.

With shipments falling by much more than inventories, the inventories-to-shipments ratio spiked to 1.69 in April from 1.46 in March.


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U.S. Service Sector Index Rebounds From Eleven-Year Low In May

Trading 03 juin 2020 Commentaire »

Activity in the U.S. service sector continued to contract in the month of May, although a report released by the Institute for Supply Management on Wednesday showed the pace of contraction slowed by even more than economists had been expecting.

The ISM said its non-manufacturing index rebounded to 45.4 in May after plunging to an eleven-year low of 41.8 in April.

A reading below 50 still indicates a contraction in service sector activity, but the index came in above economist estimates for a reading of 44.0.

Despite the rebound by the index, Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee, noted, "Respondents remain concerned about the ongoing impact of the coronavirus."

"Additionally, many of the respondents' respective companies are hoping and/or planning for a resumption of business," he added.

The bigger than expected increase by the headline index was partly due to a substantial rebound by the business activity index, which spiked to 41.0 in May from 26.0 in April.

The new orders index also jumped to 41.9 in May from 32.9 in April, while the employment index rose to 31.8 from 30.0. The readings below 50 still indicate contraction.

On the inflation front, the prices index inched up to 55.6 in May from 55.1 in April, pointing to a slight acceleration in the pace of price growth.

"We may be past the bottom and non-manufacturing activity may start to slowly improve in June, but we are still a long way from returning to pre-virus conditions," said a note from economists at Oxford Economics.

The added, "The road ahead is fraught with significant downside risks, and severe demand destruction, supply chain disruptions, tighter financial conditions, and concerns of a second wave of coronavirus contagion minimize chances of a strong rebound."

The ISM released a separate report on Monday showing manufacturing activity in the U.S. contracted at a slightly slower rate in the month of May.

The organization said its purchasing managers index rose to 43.1 in May from 41.5 in April, coming in just below economist estimates for a reading of 43.6.

While the index rebounded from its lowest level since April of 2009, a reading below 50 still indicates a contraction in manufacturing activity.


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*U.S. Crude Oil Inventories Drop 2.1 Million Barrels In Week Ended 5/29

Trading 03 juin 2020 Commentaire »

U.S. Crude Oil Inventories Drop 2.1 Million Barrels In Week Ended 5/29


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*Canadian Dollar Firms To 3-month High Of 80.63 Versus Yen After BoC Decision

Trading 03 juin 2020 Commentaire »

Canadian Dollar Firms To 3-month High Of 80.63 Versus Yen After BoC Decision


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U.S. Private Sector Job Losses Show Substantial Slowdown In May

Trading 03 juin 2020 Commentaire »

After reporting a record drop in private sector employment in the previous month, payroll processor ADP released a report on Wednesday showing the pace of job losses slowed by much more than anticipated in the month of May.

ADP said private sector employment slumped by 2.76 million jobs in May after plummeting by a revised 19.557 million jobs in April.

Economists had expected employment to plunge by about 9.0 million jobs compared to 20.236 million job nosedive originally reported for the previous month.

"While the labor market is still reeling from the effects of the pandemic, job loss likely peaked in April, as many states have begun a phased reopening of businesses," said Ahu Yildirmaz, co-head of the ADP Research Institute.

The report said employment in the service-providing sector tumbled by 1.967 million jobs, reflecting a particularly steep drop in jobs in the trade/transportation/utilities industry.

Employment in the goods-producing sector also sank by 794,000, as employment in the manufacturing industry slumped by 719,000 jobs.

ADP also said employment at large businesses plummeted by 1.604 million, while employment and midsized and small businesses decrease by 722,000 jobs and 435,000 jobs, respectively.

On Friday, the Labor Department is scheduled to release its more closely watched employment report for May, which includes both public and private sector jobs.

Employment is expected to tumble by about 8.0 million jobs in May after plunging by 20.5 million jobs in April. The unemployment rate is expected to jump to 19.7 percent from 14.7 percent.

Noting the ADP data has not provided an accurate guide to the Labor Department figures in the past, Michael Pearce, Senior U.S. Economist at Capital Economics, said he will wait for the official report before drawing any firm conclusions.

"But this report does add weight to the message from the recent decline in continuing jobless claims, indicating that rehiring could be beginning to outpace the continued flood of new layoffs," Pearce said.

He added, "As more states move to reopen, we expect that trend to continue, with employment rebounding potentially quite sharply from June onwards."


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Loonie Strengthens After BoC Decision

Trading 03 juin 2020 Commentaire »

As expected, the Bank of Canada maintained the benchmark rate at 0.25 percent. The loonie advanced against its major rivals after the decision.

The loonie was trading at 80.52 versus the yen, 1.5143 versus the euro, 1.3493 versus the greenback and 0.9323 versus the aussie around 10:04 am ET.


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*U.S. Factory Orders Plunge 13.0% In April

Trading 03 juin 2020 Commentaire »

U.S. Factory Orders Plunge 13.0% In April


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