Stronger Dollar
June 3, 2026
The dollar has benefitted from solid U.S. economic data and fresh doubts that peace and shipping traffic will be restored in the Middle East. The biggest dollar gains overnight involved 0.7-1.0% rises against the won, peso, kiwi and rupiah as well as lesser 0.2-0.5% advances relative to the euro, Swiss franc, Aussie dollar, loonie and sterling. The yen stayed pinned at the red line of 160 per dollar but didn’t go through that level due to feared or possibly actual forex ntervention support.
The oscillating pattern of financial markets from day to day was particularly exemplified by sharp declines Tuesday in ten-year sovereign debt yields and equally sharp advances today including six-basis point moves in Japan, Italy and Spain.
Prices for WTI oil and Bitcoin have risen today by 1.2% and 1.3%, while those for gold and silver have dropped so far by 1.0% and 0.8%.
Stock market changes too are all over the map, with 2.5% and 2.0% advances in Japan and Taiwan but also drops of 4.1% in Indonesia, 1.6% in Hong Kong, and 1.3% thus far in Germany. Major U.S. equity barometers are lower as well.
The United States economy appears to be handling never-ending geopolitical chaos and intensifying inflationary pressures better than other countries. The ISM’s non-manufacturing purchasing managers index for May points to quickening economic growth with a reading of 54.5, 0.9 points further above the neutral 50 level than April’s score. The Commerce Department today also reported a 4.8% monthly leap in factory orders, the most in 11 months. Meanwhile, ADP’s estimated 122k rise in private sector workers during May beat expectations and would be the most in 16 months.
The latest OECD set of 2026 growth forecasts is calling for a 2.0% pace in the United States but expansion rates of just 1.2% in Canada, 0.7% in Germany and France, 0.6% in Japan, and 0.5% in Italy. India (6.3%) is against projected to grow faster than China (4.5%).
Canadian labor productivity sank 0.5% last quarter and constituted the third quarterly drop in the last four periods. In year-on-year terms, productivity fell 0.6%, while unit labor costs went up 3.2%, almost three times the 1.1% year-on-year rise in the first quarter of 2025.
Among today’s other May purchasing manager survey releases today,
- Euroland’s composite index of 48.5 was the most contractionary in 18 months and down from 52.8 in November. The result is consistent with GDP falling about 0.2% in the second quarter of 2026.
- Japan’s composite PMI score of 51.1 was unrevised from the preliminary estimate and at a 5-month low.
- Australia’s composite index had moved above 50 in April but dropped back to a 2-month low of 48.7 last month.
- Composite PMI readings in India and China of 59.3 and 54.0 were at 6- and 3-month highs.
- Russia’s composite PMI stayed below 50 but only barely at 49.2. South Africa’s 49.6 reading, a 5-month low, was also below the expansion versus contraction threshold.
- Non-oil PMI scores improved to a 28-month high of 47.1 in Egypt, a 2-month high of 52.6 in the U.A.E. and a 3-month high in Saudi Arabia of 52.8. Lebanon’s 49.2 reading was a little better than in April.
- Hong Kong private PMI (50.4) crossed above 50 for the first time since February.
The Federal Reserve Beige Book of U.S. regional economic conditions gets released later today.
In the euro area, producer prices rose another 0.6% in April, catapulting the 12-month rate of increase to 4.9% verfsus 2.0% in March and -3.0% in February.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Canadian productivity, composite purchasing manager surveys, Euroland PPI, U.S. factory orders
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