European session:

Market news

1 June 2011

European session:

Data:

01:00 China Manufacturing PMI (May) 52.0

01:30 Australia Gross Domestic Product (YoY) (Q1) 1.0%

01:30 Australia Gross Domestic Product (QoQ) (Q1) -1.2%

07:55    Germany    Purchasing Manager Index Manufacturing    May    62.0    58.2    57.7
08:00    Eurozone    Purchasing Manager Index Manufacturing    May    58.0    54.8    54.6
08:30    United Kingdom    Purchasing Manager Index Manufacturing    May    54.4    54.0    52.1
08:30    United Kingdom    Consumer credit, bln    April    0.1    0.3    0.1

The euro erased an advance versus the dollar on speculation European Union officials may seek to encourage bondholders to continue lending to Greece.
Investors may be offered preferred status, higher coupon payments or collateral as inducements to buy bonds replacing Greek debt maturing between 2012 and 2014, said two people with knowledge of discussions by policy makers, who declined to be identified because the talks are in progress.
So-called negative incentives are also under consideration, such as cutting off old Greek bonds from eligibility for use as collateral with the European Central Bank, the people said.

In the morning the dollar fell to a three-week low against the euro before reports likely to show U.S. companies hired fewer workers and manufacturing cooled.

The U.S. currency declined against 13 of its 16 most-traded peers before the private ADP Employers Services report is released today, followed by Labor Department figures on June 3.

Australia’s dollar strengthened against all its major counterparts after a government report showed the economy shrank last quarter by less than some analysts forecast.

The Institute for Supply Management’s factory index, due today in the U.S., probably fell to 57.1 last month, the lowest since October, according to the survey median. Readings above 50 signal expansion.

The euro reached the highest level in more than a week against the British pound as concern eased that Greece will default on its debt and on speculation that the European Central Bank will raise interest rates to curb inflation.

Greece is close to an agreement with the European Commission, ECB and the International Monetary Fund on a fiscal plan and privatization program, Kathimerini newspaper reported, citing people close to Prime Minister George Papandreou. Details are expected to be settled by tonight or tomorrow morning, the newspaper said.

EUR/USD: the pair traded within the limits of $1.4383-$1.4440.

GBP/USD: the pair eased to $1.6380 before gained up to $1.6430.
USD/JPY: traded within the limits of Y81.10/50.

US data starts at 1100GMT with the weekly MBA Mortgage Application Index, which is followed at 1130GMT by Challenger Layoffs and then at 1145GMT by the weekly ICSC-Goldman Store Sales data. Also today in the US, domestic-made light vehicle sales are expected to slow to a 9.7 million annual rate in May after the slight improvement in April. The seasonal adjustments factors for May tend to be one of the strictest, so raw sales will need to be strong to keep the seasonally adjusted selling rate steady or rising. US data continues with the 1215GMT relesae of the latest ADP National Employment Report.

US: May ADP pvt payrolls +38k.

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