Reversal in sentiment sends USD lower

Markets are trading as if somebody had a risk switch. After risk off day yesterday, London traders see a complete reversal and trade with risk on sentiment. Stronger than exp UK construction PMI did not prevent further GBP declines following comments from BoE member.

The only news released during the London session today was May Construction PMI from the UK that came slightly ahead of expectation at 54 from previous 53.3. Short sterling futures contract pushing to highest since Oct after BoE's FIsher said he would consider voting for another round of quantitative easing if the economy deteriorated.

New York session will start with unemployment claims due at 8:30 am EDT that are expected to increase slightly from 424K to 427K. Since the first week of April, claims have stayed above 400K which confirms an ongoing, poor situation in the US labor market. 10:00 am April factory orders are expected to drop from previous 3.4% to -0.3%.

CAD traders will want to pay attention to crude oil inventories data due at 11:00 am that is expected to decrease from 0.6M to -1.7M barrels. Over the past few months, inventories mostly surprised to the upside. Even though USD is being sold across the board it held up against the CAD.

Given that EU, IMF and ECB inspectors will issue a joint statement on Greece on Friday and the important NFP report, markets are unlikely to break out significantly out of the recent ranges. However, considering that the ADP report disappointed and that expectations for the NFP continue to be lowered, USD negative bias is likely.

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