Market update:
MoC reported Thailand’s headline inflation quickened to the highest in 14 months in May. Headline inflation increased to 2.62% (vs. 2.45% in April) while core inflation rose to 1.75% (vs. 1.66% in the previous month). Higher inflationary pressure was driven by higher food and energy price, at the same time weakening Thai baht also contributed. This seems to lower the flexibility for MPC to ease policy rate further.
Eurozone’s final reading on manufacturing PMI in May edged slightly lower to 52.2 from the previous month of 52.5. The index come softer than expected as it stood at the 6-month low level though remaining above the neutral level of 50. At the same time, Germany’s CPI rose only 0.6%YoY (compared to market’s expectation of 1.0%YoY), recording the lowest since February 2010. Yesterday’s data raised expectation that ECB would implement more easing at Thursday’s meeting; Bloomberg and Reuters’ survey showed that economist expected negative interest rate to be employed. UK’s manufacturing PMI showed some deceleration as index declined slightly to 57.0 from 57.3 in April.
U.S. manufacturing activities from ISM index showed that manufacturing activities continued to expanded as the index rose to 55.4, up from 54.9 in April, boosting markets’ sentiment about the U.S. economic direction. While construction spending rose 0.2%MoM, increasing at a slower pace than consensus expected of 0.6%MoM growth.
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