Following the last week’s considerable rise, the US Dollar Index dipped into negative territory on Monday as New Home Sales unexpectedly declined for a third month in March as demand in West plunged to record lows; however, the greenback managed to extend its strength against NZD and CAD as commodities remained weaker. The GBP and EUR were on the strong foot after the US President’s visit to UK propelled polls favoring UK to remain in EU while the Crude prices declined on Monday as Saudi Arabia and Iran seems in a mood to pump more of the oil into global supply glut and refrain from major oil producers’ agenda to cut the production when they meet in June. Furthermore, the Gold prices remained sideways but gained while JPY recovered its previous losses ahead of the crucial BoJ and FOMC meeting this week which can guide this week’s global moves.
On Tuesday, the market again started favoring the greenback and the Crude ahead of the important Durable Goods Order and CB Consumer Confidence details from US while speech from BoC Governor and the New-Zealand Trade Balance will provide additional volatility to traders.
Should the US Durable Goods Orders matches their optimistic forecasts and the Consumer Confidence also rallies, chances of the USD to regain its strength and extend the recent upward trajectory can’t be denied while a dovish tone of the BoC Governor, at Canada-US Securities Summit, coupled with the broader likelihood of weaker Crude prices, can drag the CAD to south.
Following dismal readings of US Durable Goods Orders, Services PMI and Consumer Confidence, the US Dollar Index (I.USDX) again dropped on Tuesday; however, woes that the BoJ might propel its monetary easing on Thursday, kept making the JPY a big looser across the board. The EUR and the GBP remained on the positive side as continued flow of ‘Brexit’ avoiders helped both these currencies without any big economic releases while AUD, NZD and CAD held their strengths intact mainly due to rising commodity prices. The Crude prices rallied to five month highs as World bank expected prices to rise during second half of 2016 while U.S. Crude inventories dropped by 1.07 million barrels last week, the American Petroleum Institute was said to report ahead of today’s stockpiles data.
Even as the market kept punishing the USD and JPY, Wednesday became a good start for both these currencies as a surprise drop in Australian headline inflation to the lowest since January 2009 signaled need for the RBA intervention and dragged the AUD while the same uncertainty helped the JPY to hold its further downside.
After witnessing heavy volatility during early hours, mainly due to Australian CPI, UK GDP and the monetary policy meetings of the Federal Reserve and the Reserve Bank of New-Zealand are likely to gain major market attention during the rest of the day. Additionally, US Pending Home Sales might also provide intermediate moves to USD pairs ahead of the Crucial FOMC.
Majority of the market consensus favor that the Fed is likely to provide signal for its June rate hike during today’s meeting; however, recent details haven’t been so promising and might stop the central banker from being hawkish. If this happens, the USD could become a bigger flop than the JPY. Though, an upbeat tone of the FOMC statement might help the greenback reverse its recent downside. Hence, it would be in the best interest of the market players to wait till the Fed announcement prior to taking any big trades on the USD.
Following the surprise drop in Australian CPI shook market during early trading hours of Wednesday, FOMC and RBNZ played their roles in a better way to provide extra-large volatile moves for the market during the day-end sessions. The Federal Reserve, in its monetary policy meeting on Wednesday, refrained from signaling any rate-cuts during June meeting by signaling improvement in global financial markets and downplaying recent weakness in the U.S. economy, market players considered it as dovish and dragged the USD towards south. The outcome was followed by the RBNZ meeting wherein the New-Zealand central dropped speculations of interest-rate cut and strengthened the NZD. Moving on, the CAD was benefitted from higher Crude prices which surpassed $45 on least US stockpile since October 2014 while the JPY remained weaker on Wednesday as BoJ was just around the corner.
On Thursday, Bank of Japan disappointed the global financial market after it refrained from signaling any further stimulus measures, which was much expected previously. After the news the Japanese currency rallied heavily across the board and reversed major part of its recent losses of nearly three weeks, indicating further downside towards its 107.80 support.
With the on-going flush in USDJPY, the US Advance GDP and Jobless Claims will add fuel into the pair during later hours. If only, the Jobless maintain its downward trajectory and the GDP also indicate an up-move than the 0.7% forecast, the US Dollar can recover some of its losses, else chances are higher that the greenback is up for further downside. Hence, it would be prudent to take the sell side of the USD rather than buying the greenback till anything promising from the world’s largest economy comes forward.
Thursday proved to be a big drag on the USD strength as initial estimate of the Q1 2016 GDP number for the world’s largest economy grew slowest pace in two years as consumer spending softened and a strong dollar during early year undercut export earnings. Greenback’s weakness was well enjoyed by the commodity front wherein the Crude prices rallied for third consecutive day in marking fresh highs of 2016. The JPY was the biggest gainer of the day and is heading for its brightest week since 2008 after its central banker (BoJ) refrained from adding further stimulus in its bag and defied market forecasts for doing so. The EUR and GBP, as left without any major economics, remained stronger mainly due to USD weakness but were weaker while comparing to the JPY, AUD, CAD and NZD.
When the Japanese markets are off for near a week-long holidays starting from Friday, JPY continued gaining on the second consecutive day and surged to an 18-month peak while AU PPI dropped to four years’ low with -0.2% number, providing additional pressure on the RBA to announce interest-rate cut after the nation’s CPI plunged to seven years low on Wednesday. Additionally, the New-Zealand ANZ Business Confidence surpassed its prior 3.2 with 6.2 print.
During rest of the day, EU will release figures for gross domestic product, inflation and unemployment while Canadian GDP, US Personal Spending and Chicago PMI are additional details to propel market volatility. Considering the recent market turmoil, which raises bars for the Fed to announce another rate-hike, together with weaker GDP print, the USD might extend its downside for the rest of the busy Friday and end up closing on the negative front unless witness drastic positives from the scheduled numbers. Hence, it would be prudent to remain on the short side while taking USD trades.
Last week was full of surprises and market disappointment wherein the BoJ’s reluctance to signal additional monetary easing propelled the JPY towards highest level in more than 18 months and surprise dip in Australian Inflation dragged the AUD down while the US Dollar Index (I.USDX) registered third monthly negative closing as the Federal Reserve kept cutting down the talks to indicate another rate-hike backed by weaker GDP number. The EUR and GBP also remained sluggish due to downbeat economic data-points while NZD and CAD remained strong as commodity basket rallied on weaker Dollar and improvement in China. The Crude prices marked the biggest monthly gain in a year after seventh week of decline in US inventories and unfavorable weather at South America propelled the energy prices.
During the first full week of May 2016, Chinese official Manufacturing and Non-Manufacturing PMIs signaled that the dragon nation is slowly emerging out of its drawbacks as Manufacturing PMI printed another 50+ number for second consecutive month while Non-manufacturing PMI also remained on the above 50 contraction level. Further, the Japanese Manufacturing PMI, published on Monday, shrank in April at the fastest pace in more than three years, dragging a bit to JPY while most of the markets, including China and UK, are closed due to May labor-day holiday.
Given the absence major market players due to extended weekend, chances of fewer market moves taking place become brighter; though, US ISM Manufacturing PMI could provide signal for the USD to start its first trading-day of the Month. Should there be continued avoidance of the USD, backed by soft data-points, the US Dollar might extend its recent downturn; however, market players would wait for this week’s headline labor market details to determine further greenback moves. Moreover, Tuesday’s RBA will be important after the recent drop in AU inflation statistics, if the central banker adopts rate-cut, or provide strong signal to the upcoming one, the AUD can drop heavily while not doing so can reverse majority of its recent losses.
Following weaker than expected prints by the US ISM Manufacturing PMI and Construction Spending, the US Dollar extended its southward trajectory on Monday and dropped across the board. The EUR remained a bit strong as Final Manufacturing PMI improved while receding risk of ‘Brexit’, as reflected from recent polls showing major support for the UK remaining in the EU, helped the GBP to reverse almost all the losses of its during 2016. The JPY maintained its up-move amidst weaker Manufacturing numbers from globe supporting safe-haven demand while commodity currencies remained lackluster as Crude dropped for the first time in five sessions on the back of profit-booking.
Tuesday became another good-day of volatility wherein the RBA’s first in a year move to alter its benchmark rate, which was well forecasted, dragged the AUD towards south; however, the record low Cash-Rate decision by the RBA was sound like ephemeral as the Aussie (as it is nicknamed) aimed towards bounce in the present session. The JPY grew heavily as Chinese Caixin Manufacturing PMI became another detail which signaled global downturn in Manufacturing as it dipped to 49.4 mark against 49.8 forecast & 49.7 prior.
For the rest of the day, chances are higher that the AUDUSD could reverse its recent dip and the GBP & JPY can continue gaining ahead. However, UK Manufacturing PMI and the quarterly release of New-Zealand job details will be the best to observe as disappointing numbers might reverse the recent gains of the NZD and the GBP. Moreover, the USD is less likely to stop its running decline with no major economics to track.
While dimming concerns of Fed’s rate hike and Monday’s downbeat data-points dragged the US Dollar to year’s low during early Tuesday, the greenback reversed the losses and registered a positive closing after two Federal Reserve officials, namely Atlanta Fed President Dennis Lockhart and San Francisco’s John Williams, favored chances of a rate-hike during next month’s FOMC. The GBP which also rallied to the highest levels since January start, dipped during the later part after Manufacturing PMI dropped to the three years’ low and tested the contraction region with 49.2 mark while the EUR also remained sluggish with no major releases to publish. At the commodity front, the Crude extended its slide as fears of global economic slowdown, coupled with news of middle-east expected to pump extra oil into the markets, dragged the energy prices down which in-turn became negative for the NZD, CAD and AUD. The AUD was biggest looser after the RBA cut its year-long inaction by cutting the interest-rate to a record low of 1.75% while the JPY also lost some of its charm on the back of profit-booking.
As the US Dollar managed to rise for the first time on Tuesday, market players extended their support for the greenback on Wednesday when the Japanese markets are shut for the second day of a three-day holiday. However, headline PMI numbers from US, EU and UK, US ADP Non-Farm Employment Change, Trade Balance and the Factory Orders are likely governing market moves for the rest of the day.
Considering the recent rout in favor of the USD, a better print of the ADP, an early signal for Friday’s NFP, and the Factory Orders, could be considered as a green signal for the US currency to recover its recent losses; however, pessimistic prints could again fetch it below the year’s low and help the rest of the global currency basket. Hence, it would be in the best interest of the market player to keep checking on the data-points, together with the Crude inventory details, to foresee near-term trend.
Five month high US ISM Non-Manufacturing PMI and better than forecast & prior Factory Order gifted the US Dollar another positive daily closing on Wednesday while EUR remained weaker with downbeat Services PMI and Retail Sales. The GBP also dipped after the Construction PMI dropped to the lowest since July 2013 and the JPY maintained its downturn even during holidays at Japan. The commodity currencies, namely the CAD, AUD and NZD failed to strengthen against greenback even as the Crude oil marked its up-move with lowest US Crude stockpiles in right months and wildfires in Canada. Moreover, the USD up-move also hurt the Gold prices and dragged them for second consecutive day.
On early Thursday, the Australian Dollar reversed some of its recent losses after AU Retail Sales marked four month high & Trade deficit dropped to the lowest in a year. However, talks that the RBA Deputy Governor will replace the current Governor in September month capped further gains of the Aussie. Germany, Switzerland and Japan are again on holiday today while UK Services PMI, Canadian Building Permits and the US Jobless Claims are likely to gain market attention during the rest of the day.
During the absence of some developed financial markets, chances are higher that the on-going favor for the US Dollar might get extended if the Jobless Claims prints another welcome number. However, the rise in Crude prices, considering the again irrupted geo-political tensions in Libya and wildfires at Canada could become a good move to watch. Also, a dip in UK Services PMI, which is more likely, can extend the GBP downside.
Even with the highest Jobless print in five weeks, the US Dollar continued on its northward trajectory during Thursday as market players remained hawkish about Friday’s NFP & other headline job details. The Euro remained weaker even if major European centers were on holiday while the GBP witnessed another shock when the Services PMI dropped to three years’ low. Moving on, the AUD and NZD, together with CAD, remained sluggish against USD as gains in Crude prices, mainly due to the wildfire in Canada’s oil sands, failed to rally with rising US Dollar.
On Friday, the Reserve Bank of Australia’s quarterly monetary policy statement provided additional weakness to the AUD when it slashed inflation forecasts, suggesting open door for another interest rate cut. Japanese markets resumed trading after three days of holidays and made the JPY recover some of its recent losses while the USD also remained weaker compared to AUD, NZD, CAD and CHF in a tension trades ahead of job numbers.
Considering the recent stats relating to US job world, chances are higher that these details might fail to provide upbeat readings; however, chances are also lower that it would disappoint markets and drag the USD down. Hence, unless the NFP drops below 200K mark and the Unemployment also improves, chances of the USD to close the week on a positive side can’t be denied.
Upbeat Factory Orders and higher than revised down Earnings report helped the US Dollar to shrug off the six month low NFP and helped the greenback index (I.USDX) to mark first week of May on a positive side. The EUR remained mostly on a negative side with absence of major economic data-points while the GBP dropped on disappointing readings from headline PMIs. Moreover, the JPY also weakened against majority of its counterparts with the Japanese markets closed for three days during the week and the commodity currencies plunged heavily with weaker Crude prices and pessimistic economics. Amongst which, CAD and the AUD were badly hit as RBA cut its benchmark interest-rate to the record low while news of Canada’s most destructive wildfire damaged the CAD.
During early trading hours of the Monday, markets remained titled towards USD as weekend’s comments from New York Federal Reserve President, William Dudley, in favor of two rate hikes a year, coupled with broader pessimism helped the greenback while on-going speculations that the BoJ should take measures to cut the JPY strength capped its gains. On the data front, Chinese Trade Balance, which on the face of it showed higher surplus, disappointed commodity market and global industrial producers as imports slumped more than 10%. However, the German Factory Orders, was a good news for EUR traders as it advanced 1.9% from the prior month when they fell a revised 0.8%.
Moving ahead, the US Dollar, even if registered noticeable up-move, is less likely to sustained its recent advances as broader economics, from Manufacturing to NFP, favors that the Fed would take some time and might go to even one rate-hike a year than two indicated recently. Moreover, this week’s Retail Sales and PPI would also help forecast near-term moves of the greenback. Hence, it would be in the best interest of market players to keep calm during the current week which is mainly governed by BoE’s “Super Thursday” and Japan’s comeback after a holiday season.
Even with the absence of any major economics on Monday, the US Dollar extended its recent north-run as gloomy outlook at majority of global markets, except the US where even the one rate-hike is likely, propelled the greenback. The EUR couldn’t enjoy upbeat reading of the German Factory Orders while the GBP remained on the downside ahead of the “Super Thursday”. Further, the JPY extended its slide as Japanese authorities communicated readiness to control the currency’s recent strength, if it hurts the growth and inflation outlook. Additionally, the AUD, CAD and NZD kept marking their downsides with broader commodities’ decline while Crude also dipped as control over Canadian wildfire added pressure into global supply-glut.
The second day of the week, Tuesday, carried the previous USD gains forward even if the Chinese CPI matched its forecast with 2.3% gain and PPI dropped less than expected to -3.4%. The JPY marked fresh low of the month, as the Japanese Finance Minister, Taro Aso, reiterated his Monday’s dovish comment. Additionally, the EUR witness a bit of pullback as surprisingly strong increase in German exports surpassed downbeat Industrial Production number.
With the recent market moves favoring the USD during May, which has historically a strong month for the USD, chances are higher that the greenback can continue on its north-run; however, weekend releases of Retail Sales and PPI, together with UoM Consumer Sentiment would be observed in detail. Also, Thursday’s releases from BoE are likely being catalyst for near-term GBP moves and the EUR GDP may help forecast immediate trend of the regional currency. For the day, the bi-annual release of RBNZ’s Financial Stability Report is likely to provide further downside to the NZD as market speculations favor another easing approach by the New-Zealand central bank.
Tuesday proved to be just another day for the US Dollar to extend its recent up-move for the sixth consecutive daily session as details from JOLTS Job openings (Job Openings and Labor Turnover Summary) revealed that the openings rallied to the second-highest since 2000 in March, supporting the FOMC member’s weekend comment that favoring possibility of an interest-rate hike. The EUR and the GBP maintained their declines with some third-tier economics printing downbeat numbers while the commodity prices gained a bit after upbeat Chinese inflation numbers rejuvenated speculations that the dragon nation is slowly emerging out of its weakness, which in-turn helped the CAD, NZD and AUD to stop their running downside for the time being.
During early hours of Wednesday, the markets turned around form their recent favor to the USD and again pumping the JPY towards north as nearness to the BoE’s QIR and mentions of macro-economic risks by the RBNZ (in its bi-annual Financial Stability Report) again spurred demand of safe-havens, including Gold and JPY. The RBNZ, even after being dovish on the broader outlook, refrained from announcing any changes into the policies to control the housing bubble and hence propelled the NZD. The Crude which managed to close on the upside on Tuesday, again lost today as news from Iran revealed that the middle-east would compromise on prices to manage their market share, increasing the oil supply-glut.
Moving on, today’s UK Manufacturing Production and US Crude inventories are likely to govern today’s market moves while another high in Crude stockpiles, amidst the recent halt in Canadian wildfire, can become harmful for the energy prices. Also, the USD might reverse early day’s losses, except against JPY, as chances are higher, after the JOLT number, that the Fed would go ahead for one rate-hike soon. Hence, it would be prudent to hold the longs in favor of the greenback unless the Friday’s Retail Sales, PPI and Consumer Sentiment gauge prints pessimistic marks.
The US Dollar finally lost its vigor after running up for six consecutive days and registered a negative closing as weaker US equities and Crude up-move, mainly backed by a surprise drop in stockpiles, dragged the greenback towards south. The GBP remained weaker against majority of its counterparts, except USD, as weaker than expected Industrial and Manufacturing Production details, curbed the British currency’s strength ahead of the crucial BoE QIR. Further, the EUR maintained its strength with no major releases while commodity currencies regained their charm after the Crude prices advance. Moreover, the JPY also held strong even if the BoJ official’s verbal fire to control its strength.
Having witnessed reversed moves on Wednesday, the market braces for “Super Thursday” when the Bank of England is expected to fuel the volatility with its Quarterly Inflation Report (QIR). The GBP started behaving strongly ahead of the release while the EUR dipped as chances are higher that the central bank might discuss “Brexit” during this time. The JPY remained strong as uncertainty kept favoring the safe-haven demands and the USD regained its charm with the Crude prices going down due to Canadian energy markets’ revival after the wildfire during last week.
Other than the BoE’s QIR, where major attention would on the language of policymakers relating to “Brexit” and inflation forecasts, New-Zealand Retail Sales and US Jobless Claims would provide additional details to observe for the market players. If the BoE maintain its recently dovish tone and spread worries for its departure from EU, also cuts down the Inflation and growth predictions for one more time, the GBP becomes vulnerable to liquidate its recent gains while another downbeat Jobless Claims can provide additional weakness to the USD. Moreover, the JPY may continue on its upward trajectory as global market uncertainty can maintain its safe-haven demand. Furthermore, the Crude prices might fails to sustain its recent bounce as Canada’s comeback into the global oil market after a week-long break can add into already existing supply-glut.
Even if the US Jobless Claims rallied to more than a year, the US Dollar failed to reflect that loss and registered a daily positive closing as major contribution in the number was from New-York which has initial factors that need not be addressed as severe. Further, hawkish comments from two of the Federal Reserve officials provided additional strength to the US Dollar. The GBP remained lackluster after rallying heavily near the BoE QIR release wherein the two-year inflation forecast was upwardly revised; however, the cut in GDP and downbeat tone concerning the “Brexit” dragged the British currency towards south. The JPY maintained south-run while commodity currencies remained weaker even if the Crude prices marked fresh six month high on concerns that Canadian wildfire can continue hurting near-term crude supply.
On Friday, German GDP rallied to six quarters high while New-Zealand Retail Sales grew lesser than expected and strength of the USD kept dragging the Crude prices, which in-turn was reflected in additional weakness by the NZD, CAD and AUD. Moreover, comments from BoJ Governor, that they can take considerable measures to tame the recent JPY strength dragged the Japanese currency.
For the rest of the day, EU Flash GDP, US Retail Sales, PPI and the Prelim UoM Consumer Sentiment will govern the market moves. With the recent trend of the USD beating even negative data-points, an upbeat Retail Sales and/or consumer sentiment gauge might further propel its northward trajectory. Additionally, the JPY and the commodity currencies might be helpless with no major details scheduled except Saturday’s Chinese Industrial Production and can remain weaker.
Following the Tuesday’s upbeat JOLTS Job openings detail, which rallied to highest levels since the year 2000, the US Dollar maintained its upstream during last week and an eleven month highs by Core Retail Sales and PPI, together with the highest level of Retail Sales in two years, pumped the greenback index (I.USDX) towards marking another weekly gain. The EUR remained weaker with not so hawkish data-points, including the Flash GDP, while dovish tone of the BoE, coupled with a cut of Growth forecast and concerns for Brexit, dragged the GBP towards south. The JPY also dipped across the board as Japanese policy makers remained worried about currency’s recent gains and said to take measures, if needed, while AUD and NZD dragged down with dovish outlook of RBA meeting minutes and RBNZ Financial Stability report. Further, the Crude prices maintained their up-move as growing concerns over the recent Canadian wildfire might hurt the near-term Crude output, together with surprise decline in US stockpile and Goldman Sachs’ bullish forecast for the energy product favored its rise towards fresh highs in six months.
During the current week, the markets turned around after witnessing disappointing Chinese details in weekends, helping the safe-haven demand of the JPY while the EUR and GBP also bounced even if the European markets are close. However, the US Empire State Manufacturing, to be released at later sessions of the day, becomes important to determine USD moves for the rest of the day.
Considering the recently published hawkish US data-points, chances of the US rate-hike again came into play, which is more likely to support the greenback’s further up-move; however, minutes of recent FOMC meeting, and the US CPI, will be important to foresee its near-term up-moves.
The first day of week gifted negative closing to the US Dollar Index (I.USDX) after the Empire State Manufacturing Index, unexpectedly dropped to negative and market players seemed not satisfied after Friday’s strong numbers. The Euro remained sluggish with majority of its markets on close while the GBP gained some ground against majority of its counterparts ahead of the crucial UK CPI, up for release today, and an increase in polls favoring “Bremain” than the “Brexit”. The JPY kept on declining across the board ahead of this weekend’s G7 meeting wherein the global leaders might discuss coordinated policy measures counter present gloomy environment, which in-turn might force the BoJ to act against its strong currency. The Crude continue rallying towards north as a recent forecast of Goldman Sachs was backed by some other front-tier analysts. Also, news of Chinese oil production drop and Nigerian production halt, mainly due to Geo political tension in the Nigeria, provided additional support to the Crude prices advance. Due to this, commodity currencies strengthened after nearly a week’s heavy drop.
On early Tuesday, the RBA minutes provided strong support to the AUD, which rallied heavily against majority of its counterparts after the central banker asked for some time to analyze the effects of its recent rate-cut prior to taking any measures which market expected strongly. Further, the New-Zealand Inflation expectations remained steady at its record low 1.6% mark while the Swiss PPI also matched 0.1% forecast against 0.0% prior.
Moving on, headline inflation numbers from US and UK are likely to gain major market attention during the rest of the day while Canadian Manufacturing Sales, US Housing Starts, Industrial Production and the New-Zealand PPI are some second-tier releases that could propel the market volatility. Should these Inflation numbers rally, chances of further up-moves by the USD and the GBP can’t be denied.
Although US CPI rallied to the highest levels in almost a year, and helped the USD to gain a bit during initial trading after the data release, Fed’s preferred measure of Inflation kept remaining below 2.0% target rate which then reversed some of the USD gains. However, hawkish comments from three of the US regional Federal Banks’ Presidents, favoring a live chances of June rate hike together with nearly 2-3 rate-hikes during 2016, propelled the greenback towards completing a day in a positive side. The EUR remained as Trade balance details were not upto the mark while the GBP gained heavily as recent polls showed more people favoring the “Bremain” than the “Brexit”. Further, the AUD and NZD held their gains as absence of rate-hike signal in RBA meeting minutes, coupled with not so weaker NZ details and rising crude prices helped these commodity currencies; though, the CAD failed to strengthen as Canadian Manufacturing Sales dipped more than expected and worries also spread that recent wildfire cold provide greater damages to the Crude production.
Wednesday started with a good liquidity into the markets as Japanese GDP surprisingly rallied to the highest levels in a year and helped the JPY but failed to hold the gains as comments from the Chief Cabinet Secretary sound dovish and favored the delayed Sales Tax hike to take place in the current year. The Crude prices also maintained its up-move and rallied to seven months high on expectations favoring another dip in US stockpiles favoring already established views of short-term supply slack. The same moves helped the USD during earlier market hours while Gold and commodity currencies dropped.
Further, the UK jobs report and the US FOMC meeting minutes, coupled with US stockpile details, are likely to govern the market moves for the rest of the day. Even if the recent comments from some the US policymakers sound bullish lesser chances favor a hawkish tone in the minutes and can provide a pullback to the greenback; though, a surprise upbeat remarks can propel the USD’s upward trajectory. Hence, it would be better to remain supporting the USD ahead of the minute release, if already have long position, but should avoid taking new positions prior to announcement.
US Dollar Index rallied to seven week’s high on Wednesday after minutes of April FOMC meeting signaled that a June interest-rate increase is a live probability if the incoming economics continue improving. Even if the greenback managed to strengthen against majority of its counterparts, it failed to register gains against GBP as upbeat labor market readings, coupled with recent polls showing more number for the “Bremain” favored the UK currency while the -0.2% EU Final CPI dragged the EUR across the board. The JPY also dipped due to speculations that the Japanese policy makers might take measures to curb the currency’s strength while commodity currencies, namely AUD, NZD and CAD, reversed their prior declines because of weaker Crude prices, mainly due to stronger USD and higher exports from Iran. The Gold also opted for first negative daily closing in a week as rising USD and speculations of June rate-hike cut down its safe-haven demand.
On Thursday, market witnessed some important announcements that shook the trading patterns seen during early week-days. One amongst them was the Moody’s cutting down the US growth forecast and saying “At Most” rate hikes in 2016 while also discussing gloomy future outlook for China. Further, Japanese Core Machinery Orders, which surprisingly rose, wasn’t considered as good news for JPY as many producers said recent strength of the currency will hurt the orders in near-future. Moreover, the Australian Unemployment was steady at 2.5 years’ low and the full-time positions fell for the second consecutive month.
Moving on, UK Retail Sales, US Philly Fed Manufacturing Index and the Weekly Jobless Claims are likely headlines that could propel the market liquidity. Given the UK releases continue to outshine, chances of GBP reversing its recent looses can’t be denied. Additionally, another higher mark from the Jobless Claims can be a drag for the USD which can be beat by the Manufacturing number. Hence, it’s better to have USD & GBP longs while JPY and AUD, together with CAD and EUR, are likely to weaken further.
With the market bracing on the recent FOMC minutes’ tune, backed slew of hawkish comments from leading FOMC members, the US Dollar printed one more daily positive closing on Thursday. The Jobless claims also dropped from 14 month high and helped the USD Bulls to extend the greenback’s upward trajectory against almost all of its counterparts except GBP. The GBP remained strong across the board as recent waves favoring the Britain to remain in the EU, backed by positive economic data-points, let’s say yesterday’s Retail Sales, helped the UK currency while the JPY also stopped its downside ahead of the crucial G7 meeting which might provide clues relating to further moves of the BoJ. Moreover, the commodity currencies remained lackluster on the weaker commodity prices, mainly due to strong USD.
Moving on, the Friday started with G7 meeting in Japan wherein the global leaders struggled to come up to solution for the prevailing macro pessimism; however, the meeting is still on and might provide decisive moves to mainly the JPY. Also, the on-going raft of “Brexit” versus “Bremain” continue providing GBP a strong hand while the speculations governing June hike helps the USD towards marking the best rally since January.
For the rest of the day, Canadian CPI, Retail Sales and the US Existing Home Sales are some of the data-points that can continue pumping the market liquidity. Should the US details keep remaining on the positive foot-hold, the USD can again prove that May is a best month for its up-move. Additionally, the poll outcomes concerning the Brexit and the G7 details might also become important for market players to observe.
Hawkish comments from FOMC meeting minutes, backed by upbeat Inflation and housing numbers, weighed concerns for the US Federal Reserve’s June rate hike and helped the US Dollar Index to secure third weekly gains, the longest winning streak since January. Additionally, some of the influential Fed policy makers also termed the June-Hike as a Live possibility and fuelled the greenback’s across the board rally, except GBP, which was up against all with labor market numbers and favoring support of “Bremain”. The EUR maintained its downside with weaker economics and Greek tantrum, which recently slowed down during weekend as Greece agreed to take demanded measures to receive IMF aid-funds. The JPY stretched its south-run as BoJ head also seemed worried for recent JPY strength and said the central bank can take further measures, if required. Furthermore, the commodity currencies also weakened against USD even as the Crude prices continued rallying due to weaker Oil production report from US and supply worries at Canada and Nigeria.
During early Monday, the market traded against the USD and helped the commodity currencies, together with JPY even as the Japanese Flash Manufacturing PMI contracted at the fastest pace in more than three years. Also, Flash readings of German Manufacturing & Services outweighed the consensus & helped the EUR. However, the same readings for EU are still pending and may be important to forecast further moves of the regional currency.
As the Canadian markets followed holiday and fewer economics are left for release during the rest of the day, except EU Flash numbers and US Flash Manufacturing PMI, chances for the initial day moves to stretch are higher. Though, unless strong EU numbers come-up, the EUR can’t be expected to moves further highs while the USD and JPY may remain volatile with JPY mostly seen strong.