Mid week Currencies report
USD is into an impressive recovery this week as there are certain speculation tendencies that FED will apply tapering, much faster than expected, due to high Inflation. The USD Index is already above 90, which is a very critical price level for the dollar’s trend and direction. Moreover, US Manufacturing PMI announced 61.2 and in combination with the positive expectations regarding the NFPs release on Friday, gives an extra boost to the greenback.
Inflation in the Eurozone was at 2% in May which is the highest rate in the last two years and it seems that it is a worldwide issue, not only a matter of the USA. We need to wait and see if the ECB will carry on the bond-buying program to the same degree or if they’ll decide to tighten the Monetary Policy.
EURUSD (current price 1.2188) turned bearish, despite the strong uptrend weekly opening due to the strong USD of the last 1-2 days. The Eurozone’s Unemployment Rate dropped to 8% in April and it creates hopes and perceptions that the economic recovery and growth in Europe is on the rails. Producer Price Index in Eurozone also announced better than expected but Retail Sales in Germany, really disappointed the EUR fans: 4.4% in April vs 10.1% expected. There’s a critical speech of Christine Lagarde in a few hours but all eyes are on the USD and the upcoming NFPs announcement. Technically, the bullish trend of EURUSD is still on.
GBPUSD (current price 1.4165) had a very volatile day yesterday but today it seems to return to its long-term bullish momentum. UK Markit Manufacturing PMI was close to the markets’ expectations but the impressive aspect that boosted GBP is that the UK reported zero deaths for the first time since the pandemic started. Tomorrow the UK will release the Monetary Policy Report from the Bank of England which will be followed by the speech of Andrew Bailey. The resistance of 1.4340 is very important for GBPUSD as it is a 3-years high price but until the end of the week, anything is possible since we don’t forget the NFPs in the USA
USDJPY (current price 109.73) is trying to get bullish as the first two days of the week, dropped to 109.33. The bond yields are moving to the south (US 10-year bond yield is currently at 1.60%, from 1.64% yesterday) but the pair appears bullish today due to USD strength. The JPY has more reasons to be weak as the Consumer Confidence Index and the Monetary Base in Japan did not meet the markets’ expectations. With no important news from Japan till the end of the week, most likely the pair will be led by the USD movements. Around 110, many sellers of USDJPY appear so the positive developments for USD should be strong enough for a bullish breakout.
USDCAD (current price 1.2066) is unable to find a trend this week because both USD and CAD are strong, each one for its reasons. USD is strong as the perception of tighter Monetary Policy in the USA dominates the traders and CAD is strong due to the rally in oil prices (oil is Canada’s major export commodity). USDCAD touched the strong support of 1.20 yesterday but it takes much more momentum to see prices below it as it will be the lowest price of the last 6 years! Oil is on its way to &70 (it’s $68.15 currently) but it takes a weaker USD for the pair to drop below 1.20. NFPs and Canada’s Unemployment Rate on Friday will cause high volatility.