During the European session the USD resumed the bullish momentum and pushed higher across the board, but in early US session, the Buck experienced a decline, giving back the gains in made during the European session. This shift is accompanied by various economic indicators. The S&P manufacturing flash index fell short of expectations, coming in at 48.5 points for May compared to the anticipated 50.0 points, which shows that manufacturing is falling back into contraction.

However, the services index exceeded expectations. New home sales performed better than expected, but the Richmond Fed composite and manufacturing indices showed a decline. US yields also retreated from their recent high levels. As a result, stocks are trading lower. Besides that, Republican (GOP) leaders have made negative comments this morning as they position themselves for discussions scheduled for 11 AM ET. From the perspective of the GOP, the tone of these discussions appears to have worsened overnight. The USD is now reversing back up and GOLD is pushing lower after finding resistance at moving averages. We decided to open a sell Gold signal as the 100 SMA (green) continues to provide resistance on the H1 chart. USD/JPY on the other hand is heading for 139.

S&P/Global Manufacturing PMI for May

• Manufacturing PMI flash 48.5 versus 50 expected.
• Services PMI 55.1 versus 52.6 estimate
• composite index 54.5 versus 53.5 last month

Summary of the Manufacturing Flash PMI:

The S&P Global Flash US Services Business Activity Index in May reported a strong expansion in service sector output, standing at 55.1, the fastest growth in over a year. This growth was attributed to increased demand from new and existing customers.

There was also a significant rise in new business for service providers, the quickest since April 2022, surpassing the series average. A notable contribution to this increase was the growth in new export orders, which saw a positive trend for the first time in a year.

Despite the fact that inflation pressures remained high, the rates of input prices and output charges growth were faster than their respective series averages. Companies often pointed to higher wage bills as a primary driver of inflation.

Job creation also saw an uptick in May, with employment growth being the fastest in ten months, and levels of unfinished business remained stable due to improvements in capacity. Service providers reported confidence in continued growth of business activity over the next year, with the level of optimism reaching a one-year high, driven by expectations of sustained increases in client demand.