Last week we saw another solid week from risk majors to the USD. Gains were stable throughout the week and peaked after Friday’s US and Canadian employment data. Central bank meetings maintained the expected rates as the Reserve Bank of Australia and the Bank of England held rates at current levels.
Tensions Escalate Between Australia and China
The current diplomatic tensions between China and Australia continued to grow, with the Australian government saying they may review the lease over the port of Darwin, which’s currently held by a Chinese firm. This is on the back of canceling the belt and road deal signed by the Victorian government. This didn’t go down well, as China suspended all economic dialogue with Australia. The AUD took a hit on this news but recovered by week's end.
Bank of England Governor’s Comments
The Bank of England’s Bailey commented that a slow down in asset purchases doesn’t change current monetary policy. He also noted that the UK has missed two years in production growth. The GBP saw a positive week. The USD traded higher for a second week to the JPY.
The EUR fought back to the JPY and USD but failed to hit new weekly highs. Regardless it was positive performance to the upside after the stall it saw to the USD. The European Central Bank did comment that there’s a possibility bond purchases may slow down in June.
The USD helped drive Gold to a great week, the yellow metal jumped back above $1800 USD. This week’s jump continued the current fightback trend that continues to develop.
Employment Data
Friday’s employment data was a decent factor to close out last week as figures shocked the market on the negative side. The US added 266K jobs in April, sharply below the 990K expected. Canada’s came in at -206K. US unemployment increased to 6.1% breaking the trend declining trend we have seen for some time now. Canada’s unemployment also increased to 8.1%
This was a bit of a nail, as it show’s some cracks in the recovery, and also shows that stimulus will remain the course for now. This should make sense as we saw declines in the USD and gains in US stocks. Rates are another topic and were raised this week, not due to inflation, but they could be used to stop overheating due to US government spending. This did little to worry the Dow and SP500 as they moved into new all-time highs last week.
USDCAD: The Pair to Watch This Week
This week data-wise, traders will be watching US CPI and retail sales. Comments from the Bank of Canada could be interesting if they on last weeks shock in their jobs data. Gold and US indexes will be a focus this week. Will we see further extensions? Gold could be overextended but will the USD continue to fuel demand? The USDCAD has been hit hard. Could we see a move back to 1.2050, or are we getting closer to a technical pullback?
No comments:
Post a Comment