The dollar was mixed against its major counterparts. The euro slipped and the pound rallied despite soft UK data. Oil prices erased earlier gains while gold hit a six-week high.
The pound rose to its highest level against the dollar in over a week after an election poll showed the Torie’s lead was back in double digits. The ICM poll showed an eleven-point lead for Prime Minister Theresa May’s Conservative Party over the opposition Labour Party just days before the June 8 national elections. The poll helped lift the pound to $1.2940 as markets shrugged off weak UK data which showed both the services and composite PMI readings were weaker than forecast in May, at 53.8 and 54.4 respectively, and lower than April’s readings. The data highlighted a renewed slowdown in business activity growth across the UK services sector.
After a steady start to the session, the euro slipped against the dollar to a low of $1.1233 but remained close to six-month highs. There was little market reaction to Eurozone data that showed business activity maintained growth in May. The Eurozone services PMI rose to 56.3 in May versus the 56.2 preliminary report. The composite index was unchanged from the flash estimate at 56.8. The main risk event for the euro will be the ECB policy decision this Thursday.
The US released the ISM non-manufacturing PMI for May, which came in at 56.9 versus the 57.1 expected. In the prior month the index came in at 57.5. The dollar fell against the yen after the softer data to touch a low of 110.40 yen.
The Canadian dollar erased gains made against the greenback earlier in the day as the oil-linked currency moved in line with crude prices. WTI oil prices were lifted above $48 a barrel ahead of European session trading in reaction to news of a diplomatic spat in the Middle East which saw Saudi Arabia and other Gulf nations cut diplomatic ties with Qatar. Oil prices failed to hold gains and slipped to $46.90 a barrel, helping the USD / CAD reverse back up to $1.3500 from $1.3461.
Gold prices rallied to a six-week high of $1283.27 an ounce, buoyed a relatively weaker dollar following Friday’s disappointing US jobs data which diminished the odds of further Fed rate hikes later in the year. The dollar index hovered near seven-month lows.
