The dollar held firm today in the Asian session after slightly softer-than-expected U.S inflation did little to chip away investors’ conviction that the Federal Reserve could tighten monetary policy if consumer price pressures continue to intensify. The dollar’s index against six other major currencies was steady at 91.793, having recovered from Friday’s low of 91.524 hit in the wake of the inflation readings. The U.S personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, increased 0.5% after advancing 0.7% in April. In the 12 months through May, the so-called core PCE price index, the Fed’s favorite gauge of inflation, shot up 3.4%, the largest gain since April 1992. Although inflation is expected to slow towards the year-end, signs of a tight labor market kept many investors fretting over wage-driven price pressures. Among a raft of economic indicators due this week, Friday’s payroll data is a key focus, with economists expecting an increase of 675,000 nonfarm payrolls. Depending on the outcome of the payroll’s data, the market could start pricing in more chances of a rate hike next year. December 2022 Fed funds rates futures are almost fully pricing in a 0.25 percentage point rate hike by the end of next year. The general mood around an ongoing economic recovery remained solid, as Republican Senate negotiators on an infrastructure deal were optimistic about a $1.2 trillion bipartisan bill after President Joe Biden withdrew his threat to veto the measure unless a separate Democratic spending plan also passes Congress. Cryptocurrencies bounced back from their weekend lows but ended the week lower. Sterling edged lower on Friday and was on track for its worst month against the dollar since September after the Bank of England kept its policy unchanged. The BoE on Thursday kept the size of its stimulus program at the same level and left its benchmark interest rate at an all-time low of 0.1%. It also said inflation would surpass 3% as Britain's economy reopens, but the climb further above its 2% target would only be temporary. Investors had hoped a more optimistic economic assessment from the BoE would push sterling back towards $1.40. News of the rapid spread of the Delta Covid-19 variant in Britain has also weighed marginally on sentiment. The euro zone is recovering faster than earlier expected, but still needs continued fiscal and monetary support so that the pandemic does not leave scars, ECB head Lagarde told European Union leaders on Friday.
Euro
The single currency gained as the euro zone is recovering faster than earlier expected, but still needs continued fiscal and monetary support so that the pandemic does not leave scars, European Central Bank head Christine Lagarde told European Union leaders on Friday. Fiscal and monetary policy continue to play their role in underpinning economic activity. Overall, the EUR/USD traded with a low of 1.1916 and a high of 1.1955 before closing the day around 1.1930 in the New York session.
Yen
The Japanese Yen fell today in Asian session as the dollar held firm after slightly softer-than-expected U.S inflation did little to chip away investors’ conviction that the Federal Reserve could tighten monetary policy if consumer price pressures continue to intensify. The U.S (PCE) price index, excluding the volatile food and energy components, increased 0.5%. Overall, the USD/JPY traded with a low of 110.67 and a high of 111.09 before closing the day around 110.84 in the U.S session.
British Pound
The British Pound edged lower on Friday and was on track for its worst month against the dollar since September after the Bank of England kept its policy unchanged. The BoE on Thursday kept the size of its stimulus program at the same level and left its benchmark interest rate at an all-time low of 0.1%. Overall, the GBP/USD traded with a low of 1.3888 and a high of 1.3984 before closing the day at 1.3920 in the New York session.
Canadian Dollar
The Canadian Dollar edged higher on Friday as oil prices climbed and investors grew less worried about the Federal Reserve's shift to more hawkish guidance, with the currency adding to this week's gains. Oil, one of Canada's major exports, notched a fifth consecutive week of gains on expectations demand growth will outstrip supply. Overall, USD/CAD traded with a low of 1.2279 and a high of 1.2338 before closing the day at 1.2321 in the New York session.
Australian Dollar
The Australian Dollar rose for a fifth consecutive session on Friday as analysts predict further gains in the period ahead led by strong commodity prices and still-buoyant risk appetite. The Aussie, a liquid proxy for risk, reached 80 U.S cents in February led by a global optimism about stronger global economic growth, successful vaccine rollouts in the United States and buoyant commodities prices. Overall, AUD/USD traded with a low of 0.7577 and a high of 0.7614 before closing the day at 0.7592 in the New York session.
Euro-Yen
EUR/JPY is trading below 14 and above 50, 100 days moving average. Fast stochastic is giving a bullish tone and MACD is issuing a bearish stance. The Relative Strength Index is above 47 and lies above the neutral zone. In general, the pair has lost 0.04%.
Sterling-Yen
Currently, GBP/JPY is trading below 14 and above 50, 100 days moving average. Fast stochastic is issuing a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 48 reading and lies above the neutral zone. On the whole, the pair has lost 0.37%.
Aussie-Yen
Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is also indicating a bullish stance. The Relative Strength Index is above 45 reading and lies above the neutral region. In general, the pair has gained 0.02%.
Euro-Sterling
This cross is currently trading below 14, 50 and 100 days moving average. Fast stochastic is indicating a bullish tone and MACD is also issuing a bullish signal. The Relative Strength Index is above 49 and lies below the neutral region. Overall, the pair has gained 0.34%.
Sterling-Swiss
This cross is trading above 14 and below 50, 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is also indicating a bullish tone. The Relative Strength Index is above 50 and lies below the neutral region. In general, the pair has lost 0.32%.
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