Summary:

  • European indices edge higher as political uncertainty wanes

  • US Dollar Index holds steady ahead of the NFP report

  • The UK manufacturing PMI bounces off the multi-month low

The final trading day of the week brought some clarity to the political situation in some of the biggest EU economies. In Italy a populist government is said to be sworn in today as president Mattarella once again asked Conte to be PM while in Spain opposition managed to gather parliament majority and oust PM Rajoy. Elsewhere, Scandinavian currencies outperform their G10 peers while the Japanese yen lags the most. Precious metals trade virtually unchanged. The focus now shifts to the US payrolls data.

Spirits among UK manufactures unexpectedly improved in May as PMI escaped from its April’s 17-month low. At the same time, there were more evidence with regard to rising cost inflation, a sign keenly observed by market participants as it could point whether more rate hikes are needed this year.

Digital assets continue to recover after most of the major coins tested their 2018 lows in the recent days. The capitalization of the whole market inched to $335 billion while the Bloomberg Galaxy Crypto Index bounced from 720 pts to 755 pts.

European banks have been battered so far this week in the wake of Italian political concerns, but Deutsche Bank has suffered particularly reigniting investors’ fear with regard its significance as for systemic risk. Shares of DB plummeted on Thursday reaching their new all-time low following an array of depressing reports.

It’s been an incredible week when it comes to Italian politics, and all in all it is going to end in no elections at all. Yet three days earlier everybody was talking about a date when elections may take place, but right now it looks that a 5SM/League government will be finally forged.

As always the NFP is in the spotlight at the beginning of the month. Previous releases and the weakish ADP lowered the bar a bit but honestly even the 185k looks a bit steep. However, the focus will be on wages. The consensus still sees somewhat contained +2.7% but the greenback needs more if it’s about to resume its rally.