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The Euro-zone PMI services index was revised marginally higher to 55.2 from the flash reading of 55.1 and final April figure of 50.5. The Spanish and Italian figures both registered significant gains on the month, although the Euro was unable to gain any further traction following the release.

The dollar gained initial support from Russia’s announcement that it would remove dollar assets from its sovereign wealth fund.

ADP reported an increase in private-sector US payrolls of 978,000 for May following a revised 654,000 increase the previous month and well above consensus forecasts of around 650,000. The data has had only limited correlation with the monthly employment data releases, but the data helped underpin confidence in Friday’s release.

Initial jobless claims declined to a fresh 14-month low of 385,000 in the latest week from a revised 405,000 the previous week and slightly below market expectations of 390,000. Continuing claims increased slightly to 3.77mn from 3.74mn the previous week.

The final PMI services index was revised to 70.4 from 64.7 previously which was a fresh record high for the series. The ISM non-manufacturing index strengthened to 64.0 for May from 62.7 the previous month and slightly above consensus forecasts. There was a stronger rate of growth in new orders and business activity for the month. As was the case for the manufacturing index, there was a significantly slower rate of employment growth while there was a stronger reading for the prices index with the second highest reading on record amid cost increases across a very wide range of commodities.

The data maintained underlying concerns surrounding inflation pressures. The dollar gained ground following the ADP employment data and the advance gained further traction following the business confidence data with a covering of short positions. The Euro continued to drift lower into the European close with a sharp overall retreat to around 1.2120. There is liable to be sharp moves following Friday’s employment report with the dollar holding gains on Friday as the Euro traded around 1.2110.






US Treasuries retreated after the US data releases with the 10-year bond yield moving above 1.60%. Wall Street equities bounced strongly following reports that President Biden had shifted his stance on tax increases and would look to aim for a minimum tax rate of 15% rather than hiking tax rates to 28%. Higher yields and a paring of equity-market losses, allied with a general US currency recovery pushed the dollar back above the 110.00 level with highs just above 110.30.

There was further hawkish rhetoric from Dallas Fed President Kaplan who stated that the housing market did not need the current level of support and the central bank should wean markets off bond purchases. New York Fed President Williams maintained a more dovish stance with comments that now was not the time for action on reducing bond purchases. Rhetoric following Friday’s US employment data will be monitored closely.

Underlying yen sentiment remained weak as Japan’s vaccination programme continues to lag and the dollar settled around 110.25 in early Europe on Friday.





The final UK PMI services-sector index was revised to 62.9 from the flash reading of 61.8 and the highest figure on record.  The data helped maintain a positive Sterling tone early in the European session amid expectations of a strong near-term recovery. The UK currency was, however, blocked at the 1.4200 level and drifted lower, especially under the influence of weakness across the commodity complex and less confident risk conditions.

There was some disappointment over the latest announcement on UK travel with restrictions tightened rather than being eased as had been expected. Markets will also monitor developments surrounding the Indian variant closely in the short term.

Dollar gains dominated, however, with the UK currency sliding to below the 1.4100 level while the Euro settled close to 0.8600 from lows at 0.8585. US dollar developments are likely to dominate on Friday with Sterling little changed in early Europe and held below the 1.4100 level.




The franc overall was held in relatively narrow ranges during Thursday with underlying consolidation ahead of the US jobs data. The Euro closed with marginal gains to around 1.0965 while the dollar advanced to highs around 0.9050 amid wider US currency gains.

Markets continued to monitor global inflation developments during the day as overall volatility increased. The franc held steady on Friday with global risk conditions in focus while National Bank Chairman Jordan is likely to repeat his comments that the franc remains highly valued.


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