Market Highlight 06.06.2024

The U.S economic data released last night showed a recovery in this country’s services sector that PMI rising to 53,8 points in May from 49,4 points in previous month. The May result also marked the highest level since last August. Growth rate in new orders in the services sector also picked up again after declining for the previous two months, while the measure of input costs for services decreased. Along with the services sector playing a crucial role in U.S. economic growth, this unexpected recovery will make FED policymakers more hesitant to cut interest rates, as they have repeatedly warned about the complexity of inflation in the services sector. Additionally, the private sector employment report showed that businesses created the fewest jobs last month since the beginning of the year, while small businesses experienced the first wave of layoffs in six months, the latest signs that the U.S. labor market is gradually cooling. The mixed picture of the world's largest economy will complicate the FED's options at its meeting next week. Debates will need to address whether the FED will implement two interest rate cuts later this year or just one.

The CAD slightly weakened against the USD after the Bank of Canada announced a reduction in the interest rate from 5% (which had been maintained for the past 11 months) to 4,75%. It is forecasted that the BOC may implement four more cuts to bring the interest rate to 3,75% by the end of this year in which the next cut is expected in July.

The USD/VND exchange rate was traded mainly around a range of 25.410 – 25.425 yesterday as the market lacked strong enough factors to drive the trend. Trading sentiment is awaiting results from important U.S. economic reports this week and meetings of major central banks worldwide from now until the end of next week. It is forecasted that today exchange rate will continue to be traded stably around range of 25.400 – 25.450.

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