Last week was a bad one for the US dollar. Market participants questioned whether it was premature to assume a June rate rise was forthcoming and that the path of future interest rate rises would be the same as those as set out by the FOMC’s projections.
Economic data out of the UK released in the last couple of days has been pound-positive, yet the GBPUSD is still holding below the 1.30 handle. But for how long? Given that the positively-correlating EURUSD pair has already broken well above its own corresponding psychological hurdle at 1.10 after a sharp rally, the cable could be playing catch up.
The euro continues to defy gravity. The single currency is up sharply against all of its major rivals, including the pound which took a beating despite stronger UK inflation figures released this morning.
China’s central bank renewed its cash injection via open market operations to ease liquidity on Tuesday after suspending the move for two trading days.
The Australian dollar has rallied during the session on Monday, breaking above the 0.74 level. We found a bit of resistance at the 0.7450 level, and then dropped.
The price of oil has surged higher at the start of the new trading week. This has helped to lift energy stocks and also underpin commodity currencies such as the Canadian dollar (FXC, quote).
The EURUSD pair broke higher during the session on Friday, clearing the top of both the Wednesday and Thursday candles after less than stellar US numbers came out.
AUDUSD has been trending lower recently and is now moving inside a descending channel on its 4-hour chart. Price just bounced off support and is looking to pull back to the resistance at the .7450 minor psychological level.
The dollar buying witnessed at the start of the week was driven by rising expectations about a June rate hike following last week’s FOMC statement and a solid US monthly jobs report.
The USDCAD pair had a very rough session on Thursday, initially surging much higher, then pulling back drastically, only to bounce again to the highs, and then pulling back to show weakness yet again.
