Investing.com - Here are the top five things you need to know in financial markets on Tuesday, May 3:
1. Dollar extends losses against yen, euro
The dollar extended losses against a basket of six major currencies, slipping to a low of 91.89 at one point on Tuesday, its weakest level since January 2015. It last stood at 92.12 by 9:58GMT, or 5:58AM ET, down 0.44% for the day.
In early trading, the yen rose to a fresh 18-month high of 105.55 against the dollar, while the euro hit its strongest level since last August at $1.1615.
The dollar index has fallen more than 6% so far this year as expectations faded that the Federal Reserve would move to normalize interest rates due to fears over a global economic slowdown.
2. EU Commission cuts euro zone growth forecasts
Euro zone growth will be slower than previously expected with subdued inflation this year, the European Commission said in its economic forecasts on Tuesday.
The gross domestic product of the 19-country currency area is predicted to expand 1.6% this year, down from a previous estimate of 1.7% made in February. Consumer prices are also expected to increase by less than previously estimated. They are now seen up 0.2% this year, significantly below the 0.5% increase forecast in February by the Commission.
3. RBA cuts rates, Aussie slides
The Reserve Bank of Australia cut its benchmark interest rate by 25 basis points to a record low 1.75%, the first easing in a year, as it seeks to restrain a rising currency and stave off the creeping curse of deflation.
In the wake of the decision, the benchmark ASX 200 Index ended up 2.1%, compared with gains of around 0.5% before the decision. The Australian dollar dropped to as low as $0.7556 after the decision, from levels a tad above $0.7700 before the announcement. It last stood at $0.7575, down 1.2% for the day.
4. Factory activity in China, U.K. contracts in April
Fears over China's economic health intensified after data showed that factory activity shrank for a 14th straight month in April. The China Caixin manufacturing purchasing managers index (PMI) fell to 49.4 from March's 49.7, missing forecasts for 49.9.
Meanwhile, in the U.K., the Markit manufacturing PMI fell to 49.2 in April from a downwardly revised reading of 50.7 in March. It was the first time that the index fell below the 50.0 level separating growth from contraction since March 2013, highlighting concerns over a deepening slowdown in the sector at the start of the second quarter.
5. Gold climbs back above $1,300
Gold futures rose to an intraday peak of $1,303.85 a troy ounce as the U.S. dollar crashed to 15-month lows against a basket of other major currencies.
Dollar weakness usually benefits gold, as it boosts the metal's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.