A New South Korean President, Central Bank Developments, Service Sector PMIs, and Anticipating U.S. Jobs Data – Currency Thoughts

A New South Korean President, Central Bank Developments, Service Sector PMIs, and Anticipating U.S. Jobs Data

June 4, 2025

Lee Jae-Myung, a former human rights lawyer who successfully led opposition to South Korean martial law and  favors pragmatic diplomacy, has been elected to a 5-year term as the country’s next president. The South Korean Kospi stock market index jumped 2.7% today, and the won appreciated 0.9% against the dollar on the lessening of political uncertainty.

Investors now await tomorrow’s European Central Bank Governing Council decision — expected to be another 25 basis point cut of its interest rates. Meanwhile, the Bank of Canada will reveal its interest rate decision later this morning.

ADP’s monthly estimate of U.S. private sector employment growth, just 37K in May after a downwardly revised 60K in April, points to lessening hiring. Now investors await tomorrow’s weekly jobless insurance claims figures and Friday’s Labor Dept monthly jobs report for clarification of the slowing trend suggested by the private ADP analysis. At times ADP’s figure can deviate from the more comprehensive picture painted by government-compiled statistics.

Dollar movements overnight were limited to dips of 0.1% versus the euro and loonie, a 0.2% uptick against the yen, and no net change relative to sterling. Ten-year sovereign debt yields have risen a basis point in the United States, Japan, France and Spain and two basis points in Great Britain. The ten-year German bund yield is steady. Overnight moves in prices of Bitcoin, gold and oil have been minimal as well.

Equity markets closed up today by 2.3% in Taiwan, 0.9% in Australia, 0.8% in Japan and 0.6% in Hong Kong. The German Dax and Paris CAC are 0.6% firmer. U.S. futures were up marginally earlier but now show nil net movement in the wake of the disappointing ADP figure.

The week’s parade continued of May purchasing manager surveys:

• Euroland’s composite and service sector PMI readings got revised somewhat higher but still checked in at a 3-month low of 50.2 and a 6-month low of 49.7, respectively. Composite readings showed a dichotomy between above-50 scores of 52.5 in Italy (and a 13-month high) and 51.4 in Spain on the one hand but sub-50 readings in Germany and France of 48.5 and 49.3). A deceleration of pricing pressure further confirms the likelihood of an ECB interest rate cut tomorrow.
• The Japanese composite PMI was revised upward to a 2-month low of 50.2, while the services PMI of 50.2 was 0.2 points below its preliminary estimate.
• Australian composite and service sector PMIs of 50.5 and 50.2 reflected sluggish but still positive rates of improvement.
• A 5-month high in Sweden’s service sector PMI of 50.8 did not prevent the composite PMI of that economy from slipping 0.3 points to a 7-month low of 50.3.
• South Africa’s private PMI index climbed 0.8 points to a 6-month high of 50.8.
• The comparative strength of India’s growth rate was again reflected in its PMI scores: a 3-month high of 58.8 in the services sector and a 3-month low of 59.3 overall.
• In spite of the ongoing war in Ukraine, Russia’s composite and service sector PMIs last month were their highest since January, printing above 50 at 51.4 and 52.5.
• Lebanon’s private PMI edged 0.1 point lower to a 2-month low of 48.9.
• The non-oil PMI of the United Arab Emirates dropped another 0.7 points to a 44-month low of 53.3.
• Thailand’s manufacturing PMI shifted from a sub-50 49.8 in April to a 5-month high of 51.2 last month.
• Hong Kong’s private PMI of 49.0 was at a 4-month high, but Singapore’s private PMI fell to a 3-month low of 51.5.
• South Africa’s private purchasing managers index, 50.8, constituted a half-year high.
• Brazilian services and composite PMI readings in May were each below 50 for their second straight month. the services PMI of 49.6 conveyed a slower rate of contraction than seen in April, while the composite index extended the downtrend to a 4-month low of 49.1.

U.S. light motor vehicle sales took a mighty hit from tariff uncertainty, dropping from 17.25 million at an annual rate in April to a lower-than-forecast 15.65 million last month. With the U.S. 30-year fixed mortgage rate holding above 6.90%, mortgage applications last week fell for a third straight time.

Australian GDP last quarter grew more sluggishly than thought, rising a mere 0.2% on quarter and matching the prior quarter’s 1.3% year-on-year advance.

Armenian consumer price inflation accelerated to a 26-month high of 4.3% in May. Such previously had decelerated from 10.3% in mid-2022 to a trough of -1.7% in February 2024. In the Czech Republic, consumer price inflation rebounded from April’s 85-month low of 1.8% to a 2-month high of 2.4%.

Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: ADP private U.S. jobs estimate, composite and service PMI readings, South Korean election result

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on Wednesday, June 4th, 2025 at 6:38 am and is filed under New Overnight Developments Abroad – Daily Update, Uncategorized.
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