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.

AUD/USD looks offered just above 0.7100

AUD/USD has extended Monday’s pessimism, briefly breaching below the key. 0.7100 contention zone to hit three-day lows. The firmer tone in the Greenback has been keeping the Aussie under pressure while investors continued to gear up for the upcoming Trump-Xi Summit on Thursday.

USD/JPY holds small gains near 157.50 as JPY intervention risks loom

USD/JPY posts modest gains while trading near 157.50 in the Asian session on Tuesday as intervention fears help limit losses for the Japanese Yen. However, the BoJ's dovish rate hike to a 31-year high keeps JPY bulls on the back foot. Meanwhile, the US Dollar retains a bullish undertone amid the Fed's hawkish outlook and escalating Middle East tensions, providing tailwinds for the pair.

Gold makes a U-turn; focus shifts to $4,400

Gold regains balance and now trades with decent gains, approaching the key $4,400 mark per troy ounce on Tuesday. The yellow metal’s advance comes despite the resumption of the buying interest in the US Dollar, mixed US Treasury yields and geopolitical uncertainty.

XRP retains bullish outlook despite paring gains above $1.50

Ripple (XRP) trades elevated above $1.52 on Tuesday despite experiencing a minor correction from the previous day’s high of $1.57. XRP framed the uptrend last week, rising alongside the broader bullish cryptocurrency market.

Trump meets Xi: Why markets are watching this summit so closely

United States (US) President Donald Trump and Chinese President Xi Jinping are set to meet in Washington on Thursday for a summit closely watched by markets. After several months of easing trade tensions between the US and China, the meeting could determine whether the world's two largest economies extend their truce or enter a new period of uncertainty.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.