The Euro-zone preliminary PMI readings for May hit the screens early in the European session, revealing something of a net recovery for the Euro-zone, the manufacturing index up to 52.3 from 52.0.  France did better (strictly less worse at 49.3 from 48.0), while Germany slipped to 51.4 from 52.1.  The small net improvement was a tad better than expected and gave some support to the Euro mid-session in the lead up to the US session and data.

A tripartite heads of state meeting between Hollande, Merkel and Tsipras is taking place after a EU Heads of State meeting in Riga, Latvia.  Hollande has been on the wires expressing confidence a deal can be struck by FinMins on Greece by late May/ early June.

Sterling was the one currency that did get a noticeable boost after the release of much better than expected April retail sales, rising by 1.2% against expectations of a 0.4% increase.  The ONS put this down to better weather and is a positive start to consumer spending for this quarter.

There was a swathe of US data, two regional manufacturing reports for May (both missing expectations), jobless claims broadly in line, the Chicago Fed national activity index missing as did the Existing Home sales report.  Though not the most sensitive reports, they play a little into the softer US story; the Leading Index was the exception, boosted by the recently reported jump in building permits.

The US Bureau of Economic Analysis is saying that they are re-examining the seasonal adjustment of GDP with hints of still residual Q1 weakness claimed by some, including some regional Feds, though not apparently by the Fed researchers in Washington.  Watch this space for any update that would be reflected in revisions when the Bureau publishes their preliminary Q2 GDP report on July 30.

The ECB’s Draghi and Fed Vice-Chair Stanley have been speaking at an event in Portugal on EU unemployment, Draghi saying that while growth has improved somewhat, growth is still too low everywhere.  Fischer has said that the Euro appeared to have weathered the crisis but that it would only be a success if it brought prosperity to its members.

Meanwhile, the AUD/USD has been marking time, trading in a 40 point range overnight and opens this morning close to 0.79 amid a rise in the spot iron ore prices yesterday, up $0.79 to $57.91.

Coming up today/tonight

A relatively quiet data lies ahead as far as scheduled data is concerned with no local AU data.  NZ has its May ANZ Consumer Confidence report.

San Francisco Fed President John Williams (voter) is speaking at 9.00am this morning on central bank governance.

Germany releases a breakdown of its overall Q1 GDP as well as possible revisions, though no revision is expected from the preliminary +0.3%/1.0% estimate.  That’s due at 4.00pm AEST.  That report will obviously watched but there’ll be more intense interest in the May German Ifo report with a slight slippage in activity expected after last month’s lift.  ECB President Draghi is scheduled to speak again in Portugal, as is BoE Governor Mark Carney.  Then focus shifts to the US April CPI (as well as the Canadian CPI and retail sales) with Fed Chair Yellen speaking as well.  The US Memorial Day holiday on Monday might well see lighter liquidity in tonight’s session.

Overnight

Equities higher in Europe and in the US: Eurostoxx 600 +0.4%, Dax +0.1%, CAC +0.3%, FTSE +0.1%.  Dow +0 points to 18,286, +0.0%, S&P 500 +0.0%, Nasdaq +0.2%, VIX 12.11 -6.0%.  Mumbai +1.9%, Nikkei 225 +0.4% and ASX 200 -0.1%; ASX SPI futures this morning +0.3%.  US bond yields: 2s at 0.57% (-1), 10s at 2.19% (-6).  WTI oil at $60.69 (+2.9%), Brent at $66.50 (+2.3%), Malaysian Tapis (yesterday) $67.26 (+2.0%).  Gold at $1205.90/oz (-0.2%). Base metals: LME copper +0.5%, nickel -0.9%, aluminium -0.6%. Iron ore $57.9/t +1.4% Chinese steel rebar futures +0.6%. Soft commodities spot futures: wheat +1.8%, sugar -0.8%, cotton -0.7%, coffee -5.6%.  Euro Dec 14 CO2 emissions at €7.33/t (-0.7%). The AUD/USD’s range overnight 0.7867-0.7911; indicative range today 0.7870-0.7920; the AUD/USD is 0.7895 now

Euro-zone Manufacturing PMI (May P) 52.3 (L: 52.0; E: 51.8); Germany 51.4 (L: 52.1; E: 52.0); France 49.3 (L: 48.0: E: 48.5)

UK Retail Sales (Apr) +1.2% (L: -0.5%; E: 0.4%)

Chicago Fed National Activity Index (Apr) -0.15 (L: 264K; E: 0.00); Jobless claims (w/e 16; payrolls survey week) 274K (L: 264K; E: 270K); Philly Fed index (May) 6.7 (L: 7.5; E: 8.0); Existing Home Sales -3.3% (L: +6.1%; E: 0.8%); Leading Index (Apr) +0.7% (L: +0.2%; E: +0.3%); Kansas City Fed manufacturing (May) -13 (L: -7; E: -4)

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