- Mar 3, 2022
The European currency is relatively stable against the US dollar during trading in the Asian session and is consolidating near local highs from May 5. The day before, the instrument showed active growth, which allowed leveling the results of Wednesday's "bearish" trend and brought the euro to a high at around 1.0600. EUR/USD was supported yesterday by expectations of the imminent end of quarantine due to the coronavirus in Shanghai, which will allow many enterprises to resume normal operation and have a positive effect on the dynamics of foreign trade. In turn, yesterday's macroeconomic data from the US put moderate pressure on the positions of the US currency. Initial Jobless Claims for the week ended May 13 increased from 197 thousand to 218 thousand, which was higher than market expectations by 18 thousand. Philadelphia Fed Manufacturing Index declined sharply in May from 17.6 to 2.6 points, while analysts expected the decline to only 16 points. The Minutes of the European Central Bank (ECB)'s meeting released the day before also contributed to the moderate growth of the single currency. In the report, the regulator pointed to the increasing risks associated with a sharp growth in inflation in the region, but at the same time maintained optimistic forecasts for both Q3 and Q4 of 2022. Also, many members of the ECB board are gradually speaking out in favor of tightening monetary policy. Analysts consider the rate hike at the end of summer or early autumn as most likely.
The British pound is traded with mixed dynamics against the US currency during the morning session, consolidating near 1.2450. On Thursday, the pound showed active growth, which allowed it to fully recover from the decline last Wednesday. Moreover, GBP/USD briefly rose above 1.2500, having updated local highs from May 5. The growth of the instrument was facilitated by the weakening of the US currency, which came under pressure against the backdrop of weak macroeconomic statistics from the US. In addition, by the end of the week, corrective moods are intensifying. In turn, the fundamental picture on the market is changing slightly, and investors are still disappointed by the statistics released this week from the UK on the dynamics of consumer inflation. In April, the Consumer Price Index in annual terms accelerated from 7% to 9%, which fell short of the average market forecasts by only 0.1%. On a monthly basis, inflation in the UK also accelerated from 1.1% to 2.5%. Today traders are focused on British statistics on the dynamics of Retail Sales. At the moment, investors are taking a lead from the statistics on GfK Consumer Confidence. In May the index fell from -38 to -40 points against the forecast of -39 points.
The Australian dollar is moderately declining against the US dollar during the Asian session, again testing 0.7000 for a breakdown. After active growth the day before, which allowed the instrument to renew local highs from May 9, corrective moods are again strong, and traders are in no hurry to open new purchases without the appearance of additional drivers. Also, the Australian dollar remains under moderate pressure after the publication of an ambiguous report on the labor market. The Employment Rate in Australia in April increased by only 4 thousand after an increase of 20.3 thousand in the previous month. Analysts were counting on an acceleration of positive dynamics to 30 thousand. The Full-Time Employment accelerated from 19.9 thousand to 92.4 thousand; however, a sharp reduction in Part-Time Employment by 88.4 thousand did not allow the final level to record a record growth. The Unemployment Rate remained at 3.9%, while the Participation Rate decreased slightly from 66.4% to 66.3%. The Australian dollar, in turn, is supported by upbeat news from China, where from June 1, the exhausting multi-week quarantine in Shanghai is expected to end, which significantly undermined the pace of Chinese economic recovery.
The US dollar shows mixed dynamics against the Japanese yen in Asian trading, consolidating near 127.70 and settling near the local lows of April 27. Demand for the yen is gradually increasing as interest in risk decreases; however, the dollar in this sense is also able to provide significant competition. Moreover, many investors prefer the American currency, since the difference between the interest rates of the US Federal Reserve and the Bank of Japan is high and will only increase in the future. In turn, inflationary risks in the two countries remain disproportionate. While the US regulator is extremely concerned about containing the growing price pressure, the Japanese one can afford to keep a wait-and-see attitude, managing only the quantitative easing program. Today's statistics on inflation in Japan reflected the increase in the National Consumer Price Index in April from 1.2% to 2.5%, which was significantly higher than market expectations at 1.5%. National CPI excluding Food and Energy in the country accelerated by 0.8%, while a month ago, analysts recorded its decline by 0.7%.
Gold prices are consolidating after active growth the day before, which brought the instrument to new local highs from May 12. XAU/USD is testing 1840.00 for a breakout; however, the market activity remains quite low. The macroeconomic calendar on Friday is relatively empty, and therefore, significant changes in the dynamics of the instrument should not be expected. Experts attribute yesterday's growth in gold to the weakening of the dollar against the backdrop of the publication of disappointing macroeconomic statistics from the US. In particular, Initial Jobless Claims for the week ended May 13 increased from 197 thousand to 218 thousand. Philadelphia Fed Manufacturing Index fell from 17.6 to 2.6 points in May, with a slight correction forecast to 16 points. Existing Home Sales fell 2.4% in April, while investors expected a 0.7% decline.