Themes

· General mood is “risk off”

· U.S. Michigan Sentiment weaker at 58.4 from 59.1 talk

· U.S. PCE Core Inflation falls to 4.9% to 5.2% last

What’s Moving

European trade was quiet with a lack of economic data incentives combining with a lack of clear direction from Asia on Friday.

The U.S. session opened to Dollar weakness on the PCE Core Inflation data, which is the Fed’s preferred inflation number. Some saw this as lowering the risk of continued 50bp rate hikes in the U.S. which combined with position adjustment ahead of today’s public holiday saw Dollar weakness.

Stocks also firmer on the day, with U.S. equities snapping a series of weaker weeks, while gold and oil were both slightly firmer.

Thoughts

We are expecting a very quiet session in Asia today, with the U.S. on holidays tonight for Memorial Day and with no major local data due this session.

Early trading is seeing some short-covering on the Dollar and we expect a session of ultra-tight ranges today.