USD gained on higher-than-expected inflation metrics
The USD temporarily strengthened against a basket of other currencies on Friday, after the release of higher-than-expected inflation measures and therefore the Fed’s expectations to cut its quantitative easing program intensified, the attention now turning to the May US jobs report, due on Friday. Australian traders are turning their attention to the release of the RBA’s interest rate decision and the bank is expected to remain on hold at 0.10%, if the bank’s tone were tilted to the accommodative side in the statement. accompaniment of Governor Lowe, we could see the Aussie weakening. . The Looney has tended to resist the strengthening of the USD, but CAD traders are turning their attention to today’s financial releases and the OPEC meeting tomorrow. Oil prices tend to stay high ahead of tomorrow’s OPEC meeting, where a possible relaxation of production quotas is to be discussed. Gold prices hit an almost 5-month high, benefiting from the weakness of the US dollar and as US yields appear to retreat as the 10-year hit 1.581%.
EUR / USD fell on Friday as the USD strengthened but recovered its losses, floating above the support line at 1.2175 (S1). We would need a clear break out of the uptrend line initiated since April 1 in order to fully adopt a sideways bias, and that looks set to happen, also given the pair’s low volatility over the course of the year. the last two days, with the exception of Friday’s US session. If the buyers regain control of the direction of the pair, we might see it breaking through the resistance line of 1.2275 (R1) and aiming for the 1.2350 (R2) level. If the bears gain the upper hand, we might see the pair breaking through the support line at 1.2175 (S1) and aiming for the support level at 1.2100 (S2).
USD / CAD continued to test the 1.2060 (S1) support line without being able to break it and the pair remained comfortably in a sideways move between the 1.2060 (S1) support line and the 1.2140 (R1) resistance line. We intend to maintain our bias for a sideways move as long as the pair stays between the aforementioned levels and given that the RSI indicator below our four hour chart follows the reading of 50, implying a rather indecisive market. If the pair finds new buy orders along its path, we might see it breaking the 1.2140 (R1) resistance line and aiming for the 1.2230 (R2) level. On the other hand, if a ask interest was shown by the market, we could see the pair breaking the 1.2060 (S1) support line and aiming for the 1.1995 (S2) level.
Other economic highlights today and the following Asian session:
Please note that in today’s European session we get Germany’s preliminary HICP rate for May. In the US session, we get from Canada the current account balance for the first quarter and the producer prices for April. During tomorrow’s Asian session, we note final Australian PMI figures for May, Jibun Bank of Japan’s manufacturing PMI for May, Australia’s construction approval growth rate for April, manufacturing PMI Caixin from China for May and finally from the Australian RBA’s interest rate decision.
As for the rest of the week:
On Tuesday we get the UK house prices for the month of May, the GDP rate for Switzerland for the first quarter, the final euro area HICP rate for the month of May, the rate of the Canadian GDP for the first quarter and US ISM manufacturing PMI for May. On Wednesday, we get Australia’s first quarter GDP rate, Germany’s retail sales, Eurozone producer prices, and Canada’s building permits, all for April. On Thursday, we get Australia’s retail sales and trade balance for April, China’s Caixin services PMI for May, final services for France, Eurozone, Germany and the UK. Uni and Composite PMI readings for May, the US ADP employment figure for May, the weekly jobless claims figure and the ISM non-manufacturing PMI for May. On Friday, we receive Eurozone retail sales for April, the US employment report for May and Canada employment data for May as well as US factory orders for April, while that Fed Chairman Jerome Powell should speak.
EUR / USD H4 Chart
Supported: 1.2175 (S1), 1.2100 (S2), 1.1990 (S3)
Resistance: 1.2275 (R1), 1.2350 (R2), 1.2445 (R3)
USD / CAD H4 Chart
Supported: 1.2060 (S1), 1.1995 (S2), 1.1920 (S3)
Resistance: 1.2140 (R1), 1.2230 (R2), 1.2320 (R3)