After trading in a relatively tight range and closing virtually unchanged near $220, Ethereum (ETH/USD) gained traction on Saturday and advanced to its highest level since March 8th at $234.28. As of writing, the pair was trading at $232, up 5.33% on a daily basis. With this latest upsurge, Ethereum is now gaining more than 16% since the start of the week.
- EUR/USD has been advancing amid European and US optimism. The European Central Bank's decision, Non-Farm Payrolls, and disease developments are eyed. Early June's daily chart is painting a mixed picture. The FX Poll is pointing to a gradual decline for the currency pair.
- AUD/JPY is printing higher highs and lows as the positive sentiment in Wall Street remains intact. The quote finally broke above the 71.75 level as the month of May comes to an end. Looking up, the next resistance can be seen near the 72.50/88 price zone. On the other hand, a turn lower below the 71.10 level could be seen as bearish in the medium-term with supports lined up near 70.15 and 69.60 levels.
- DXY dropped to the 98.20/98.00 support zone while under below the main SMAs. If the market can find some footing here, the index might rebound. However, a break below 98.00 can send the index towards the 97.50 and 97.00 levels in the medium term while resistance could be seen near the 98.80 and 99.00 levels initially.
Next Friday, the US official employment report for May is due. Market consensus and also analysts at Wells Fargo expect a decline of 8 million in payrolls. They explain the key question is how many of the temporary layoffs will become permanent job losses.
Analysts at MUFG Bank point out the EUR/USD pair finally broke above the 1.1000 level and argue the current advance was built on firmer foundations. They consider the pair could test the top of the 1.0800/1.1200 trading range.
The USD/MXN dropped to 22.00 on Friday, hitting a fresh two-month low and then rebounded. Near the end of the week, it is trading at 22.25, up for the day but about to post the second weekly slide in a row and the lowest close since early March.
The rally of the Mexican peso lost momentum but it held most of its monthly gains. Among the most traded currencies, the peso has been the best performer during May.
The key driver was an improvement in market sentiment amid fiscal and monetary stimulus and the re-opening of many economies. Over the last session, sentiment deteriorated as tensions between the US and China escalated.
"China broke their word to ensure the autonomy of Hong Kong," US President Donald Trump told a news conference on Friday. "China's action on Hong Kong is a plain violation of treaty obligations."
Risk sentiment improved modestly on this headline but investors remain cautious while waiting for President Trump to host the news conference, that was supposed to start at 1800 GMT. As of writing, the Nasdaq Composite was gaining 0.58% on the day while the S&P 500 and the Nasdaq Composite were down 0.17% and 0.52%, respectively.
The Federal Reserve Bank of New York announced on Friday that it will purchase approximately $4.5 billion in Treasury securities every day next week.
With this decision, the total amount of weekly purchases will be lowered to $22.5 billion from $25 billion this week.
Previewing the European Central Bank's monetary policy meeting next week on June 4th, "the focus of the June meeting will likely be the expansion of the PEPP that the ECB has telegraphed," said TD Securities analysts.
- GBP/USD retreats from two-week highs at 1.2395 to levels right above 1.2300. Pound loses steam as risk appetite wanes awaiting Trump's conference on China. Above 1.2363, the pair might advance towards 1.2643/48 – Credit Suisse.
Investors remain cautious during the American session on Friday. As of writing, the US Dollar Index was virtually unchanged on the day at 98.48. Meanwhile, the Dow Jones Industrial Average and the S&P 500 were losing 0.93% and 0.52%, respectively.
- NZD/USD lost its traction after advancing to 0.6240 earlier in the day. Souring market sentiment helps greenback gather strength in American session. Investors are waiting for US President Donald Trump's press conference on China.
Analysts at MUFG Bank maintain a short GBP/JPY trade idea in anticipation that the weakness in the pound will extend further in the near-term. They see a target in the cross at 126.60 with a stop loss at 134.10.
- AUD/JPY is making higher highs and lows as the bullish sentiment stays intact. The quote is about to challenge the 71.75 level as the risk-on mood in Wall Street remains present. To the upside, the next resistance can emerge near the 72.50/88 price zone. On the flip side, a convincing break below the 71.10 level could lead to further selling in the medium-term with supports awaiting near 70.15 and 69.60 levels.
The US dollar increased its bearish pressure on Thursday after breaking below the bottom line of the last two months’ triangle pattern at 0.9650 area. The pair has extended losses on Friday, reaching levels near the last 2, ½ month lows, at 0.9590 with the market on a risk-off tone, awaiting US President Trump’s conference on China.
A convincing move below the mentioned 0.9590 (May 1 low) might encourage sellers to push the pair towards 0.9545 (50% retracement of March’s rally) on its way to March 27 low at 0.9500.
On the flip side, the USD/CHF should move back above the broken trendline support, now at 0.9660, to ease bearish pressure and attack the 50 and 100-day SMA, at 0.9685/0.9700 before trendline resistance at 0.9730.
US President Donald Trump is weighing sanctions that target China's financial sector through sanctions and trade policy over Hong Kong, Reuters reported on Friday, citing a tweet by a Bloomberg reporter.
At 1800 GMT, President Trump is scheduled to hold a news conference.
Analysts at HSBC point out that in the current climate, gold may rally even if the US dollar goes up, and could be firm even if the equity market is strong.
According to the Research Department at BBVA, despite the downside surprise of 1Q GDP in Turkey, they still maintain a 2020 GDP forecast of 0%, with risks still somehow balanced, depending on the recovery pattern in the rest of the year.
The euro rally o=bserved over the last two weeks has been fuelled by the coronavirus stimulus proposal says the FX analysts’ team at Rabobank, who see the pair still vulnerable, aiming towards 1.05 in the next three months.
Analysts at Wells Fargo, point out that thanks to a massive surge in government transfer payments, April 2020 goes down in the history books as the largest monthly increase in personal income on record.
- After attempting to break above the 133.00 resistance one more time, GBP/JPY remains choppy as the month of May comes to an end. As the overall trend remains bearish, sellers would be looking for a break below the 132.00 level with the possibility of a breakdown towards the 131.33 and 130.75 levels. On the other hand, the spot is expected to meet strong resistance near the 133.00 level.
Data released on Friday, showed real GDP contracted in Canada at an annualized rate of 8.2% during the first quarter. According to National Bank of Canada analyst Krishen Rangasamy, the horrible handoff from March and an even uglier April, suggest an even deeper decline for real GDP in the second quarter.
“If anything, we expect him (BoC Governor Macklem) to defer to the terms of trade as the primary driver of the CAD. On this basis, the terms of trade are rather poor given the deterioration in oil prices.”
“Moreover, trade and household liquidity issues are likely to surface as considerable drags for the CAD. Indeed, we expect US/China pressures to escalate and 'smaller open' economies like Canada may serve as a proxy battleground, as is the case with Australia already.”
“We are inclined to fade moves towards 1.37 while 1.3850 will now be notable resistance. A break above the latter will likely have us strongly consider a more significant topside move.”
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