What you need to take care of on Wednesday, May 18:
The American dollar edged lower across the FX board as the currency extended the bearish corrective decline that began on Monday. Upbeat US data helped the case for a better market mood, with global indexes closing in the green.
Nevertheless, the underlying concerns remain the same. Tensions between Europe and Russia continued after the latter invaded Ukraine. Russian Deputy Foreign Minister Andrey Rudenko was on the wires and said that Ukraine has practically withdrawn from negotiations.
Federal Reserve chair Jerome Powell offered a speech. Powell failed to surprise investors, repeating that the central bank is comfortable with 50 bps rate hikes. He also mentioned that they could speed up or slow down the pace of hikes accordingly to the economic health. Speaking of which, Powell added that the underlying strength of the US economy is really good at the time being. US indexes retreated from their highs with his words but retained the green.
The EUR/USD pair surged to 1.0555, helped by ECB’s Governing Council member Klaas Knot, who said that a 50 bps rate hike should not be excluded if data suggest inflation keeps broadening and accumulating. He also added that a 25 bps hike in July would be realistic.
GBP/USD hit 1.2498 and finished the day nearby, with the pound underpinned by a stronger-than-expected UK jobs report. The ILO unemployment rate contracted to 3.7% in the three months to March, while the April Claimant Count Change fell to -56.9K. Market participants ignored mounting Brexit tensions. Foreign Secretary Liz Truss updated the House of Commons on the government's intention to introduce legislation to make changes to the Northern Ireland Protocol. The government would prefer a negotiated solution with the EU but will anyway work on changing the protocol.
The AUD/USD pair trades above the 0.7000 threshold, while the USD/CAD extended its slump and trades near the 1.2800 level. The better performance of equities underpinned commodity-linked currencies, despite softening gold and oil prices. The bright metal settled at $1,816 a troy ounce, while WTI is now changing hands at $109 per barrel.
The USD/JPY pair ended the day little changed at 129.35, while USD/CHF fell to 0.9938.
US Treasury yields ticked higher, with that on the 10-year note flirting with 3%.
Like this article? Help us with some feedback by answering this survey:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.