Previous session overview
The markets are back to full strength Tuesday with both the UK and U.S. returning from a long weekend. Europe finds the major currencies little changed from levels late Friday.
On Monday, the dollar was confined to extremely narrow trading ranges against its major rivals.
On Monday, EURUSD trading took a calm start to the week as US investors enjoyed the Memorial Day holiday and the European calendar contained no economic releases of importance. So, EURUSD hovered sideways in thin, order-driven trading and closed the session at 1.5770, almost unchanged from the close on Friday.
On Monday, USDJPY also held a very tight 103.15/103.45 trading range as US markets were closed for Memorial Day. A poor start of the stock markets in Japan caused the dollar to test the 103.15 area, but there was no follow through price action.
U.K. Hometrack House Price Index plunged 1.9% (YoY) in May, the largest drop since Nov 2005, which was bearish to the pound. GBP/USD now traded at 1.9820. Yesterday GBPUSD didn't have enough power to test 1.9850 area and topped only at 1.9831.
The Australian dollar climbed sharply late in Asian trading, buoyed by a renewal in risk appetite as Asian stock markets posted solid gains.
Market expectation
The CHF could prove immune to the stagflation fears undermining other major currencies. If anything, the CHF could capitalize as global risk appetite retreats once again and investors turn back to safe asset markets.
AUDUSD hovering close to key support at 0.9580, any break below will send pair to 0.9545.
Traders mention stops placed below USD1.9750, suggest this interest could be targeted during the day.
JPY has slipped as risk appetite grows on the back of a +1.5% rally in the Nikkei Tuesday. There is no European data of note this session, so equities and oil should lead the way into the U.S. open, where housing and confidence data take the spotlight.
EURUSD falling due to selling by some big Russian trader.
Monday was rather quiet as both the US and the UK markets were closed. Today however activity on the macroeconomic calendar is picking up as we will receive news on the confidence of the American consumer this afternoon. Although the index has fallen dramatically in the past six months and analysts expect a further drop in May.
Market players will be watching to see if new data justify the dollar's retreat that began last week.
New York session will bring the April figures for new home sales from the U.S. Census Bureau. The arrival of data from the typically busier spring season for the housing market means this latest report should draw more attention than those from the winter.
