Forex Today: Markets cautious after Chinese data, Musk melts Bitcoin, Fed speakers eyed

Yohay Elam FXStreet

Here is what you need to know on Monday, May 17:

The week begins with a moderate risk-off mood as Chinese data has missed estimates and Friday's miss in US retail sales. Tesla's Musk hinted he is selling Bitcoin, triggering a crypto sell-off. A long list of Fed speakers is eyed.

S&P 500 futures are down on Monday and the safe-haven dollar is rising in a risk-off mood. China reported an increase of 17.7% YoY in April's retail sales, well below expectations. The parallel release in the US also missed estimates by remaining flat last month. The publication included a sharp drop in the Control Group of sales and was accompanied by a fall in consumer confidence.

On the other hand, the University of Michigan's consumer sentiment data also showed a leap in inflation expectations, adding to concerns that the Federal Reserve would be forced to raise rates sooner rather than later. Vice-Chair Richard Clarida and several of his colleagues are scheduled to speak later in the day.

Can the Fed keep US rates in check?

EUR/USD is trading below 1.2150 amid the rush to the dollar and despite Europe's accelerating vaccination campaign. GBP/USD is also pressured under 1.41, shrugging off Britain's new step in reopening, which includes international flights.

COVID-19 cases have risen in Asia, which had spared the worst of the first wave of the disease. An outbreak in Taiwan is wracking havoc, while China has ramped up its immunization campaign.

Elon Musk, the founder of Tesla and SpaceX, spent his weekend bashing Bitcoin, also hinting his company is selling its holdings in the granddaddy of cryptocurrencies. BTC/USD extended its falls, nearing $42,000. Ethereum was dragged lower to below $3,400 and XRP to under $1.40. Dogecoin, which Musk has been hailing, is also on the back foot, changing hands at around $0.48.

See Bitcoin price extends sell-off after Elon Musk implies Tesla may have sold BTC holdings

Gold stands out with an upswing, trading above $1,850. Several metals such as copper and iron ore advanced last week.

Week Ahead on Wall Street (SPX, QQQ): Don’t fight the Fed continues to be the narrative as data disappoints

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

EUR/USD looks weak below 1.1800

EUR/USD has slipped back under pressure, breaking through the 1.1800 support and drifting towards the weekly lows near 1.1770 ahead of the opening bell in Asia. The move reflects renewed strength in the US Dollar, with steady geopolitical tensions keeping its demand firm. Moving forward, the release of the German labour market report and flash inflation figures should keep European investors entertained on Friday.

GBP/USD threatens the 200-day SMA near 1.3440

GBP/USD rapidly leaves behind Wednesday’s strong advance, coming under heavy pressure and retesting the 1.3440 zone, where the critical 200-day SMA is located. Cable’s deep pullback follows the strong gains in the Greenback, while investors continue to pencil in a potential BoE rate cut in March.

Gold trims gains, slips back to around $5,170

Gold is now facing some downside pressure, hovering around the $5,170 region on Thursday. The yellow metal surrenders part of its earlier gains on the back of the resurgence of the buying interest in the Greenback. In the meantime, geopolitical tensions in the Middle East continue to limit the downside potential for now.