|

Forex Today: US dollar cheers Asia risk-on, holiday-thinned trading to extend

Easing tensions over the US-China trade dispute boosted the appetite for risk assets across the financial markets in Asia at the start of a brand new week. Across the fx board, the US dollar extended its upsurge and posted fresh five-month highs versus its main competitors.

The Yen emerged the weakest in Asia, having faced double-whammy amid risk-on markets profile. The Kiwi extended loses below the 0.69 handle following New Zealand’s retail sales miss while the Aussie bucked the trend and advanced above 0.7500 levels, tracking higher copper and oil prices. The common currency and pound were sold-off into broad-based US dollar strength while political drama continued to drive the sentiment around both the currencies.

Main topics in Asia

US' Mnuchin, Lighthizer deliver conflicting messages on China - WSJ

As reported by The Wall Street Journal, this weekend saw mixed messages from the US Treasury Secretary Steven Mnuchin and the US Trade Representative Robert Lighthizer regarding the US-China trade standoff.

NZ: Weaker retail spending numbers - Westpac

Satish Ranchhod, Senior Economist at Westpac, explains that it was a soft start to the year for New Zealand’s retail spending as after adjusting for price changes, retail spending was essentially flat over the March quarter.

US fiscal outlook has some alarming points - Goldman Sachs

Goldman Sachs' analysts delivered a weekend note on the United States' fiscal outlook, which carries some worrisome projections looking forward.

US stock futures jump, Nikkei flashes green on easing US-China trade tensions

US stock futures picked up a bid on Monday as China and US agreed to halt imposing punitive import tariffs.

Japan's trade surplus with the US rose 4.7 percent in April

Japan logged a trade surplus of JPY 615.7 billion with the US in April - up 4.7 percent year-on-year as exports rose 4.3 percent year-on-year in April, faster than a 0.2 percent annual increase in March, according to Reuters. 

Venezuela’s Nicolas Maduro wins the presidential election - Bloomberg

Bloomberg is out with the breaking news, citing that Venezuela’s Nicolas Maduro wins the presidential election for another six-year term.

5-Star, League want ECB to forgive €250 billion of Italy debt               

The anti-establishment 5-Star Movement and far-right Northern League plan to ask the European Central Bank (ECB) to forgive €250 billion of Italian debt.

Nicole Sturgeon to "restart" the debate on Scottish independence in the coming weeks

Scotland's Prime Minister Nicola Sturgeon has said she will "restart" the debate on Scottish independence in the coming weeks, according to The Independent. 

Key Focus ahead

Most major European markets remain closed today in observance of Whit Monday, leaving the fx pairs at the mercy of the US dollar dynamics and broader market sentiment. However, the ECB Financial Stability Review and Bundesbank monthly report will offer some trading incentives to the market. The NA session also remains data-quiet, with Canada on Victoria Day holiday while the US docket has nothing to report, except for a slew of speeches by the FOMC members Bostic, Kashkari and Harker.

Also, in focus remains the Oil and Petroleum Exporting Countries’ (OPEC) Joint OPEC-Non-OPEC Ministerial Monitoring Committee (JMMC) meeting, which will be held later on Monday.  

EUR/USD closed below 76.4% Fib despite oversold conditions, focus on Italy

The EUR/USD closed below 1.1790 - 38.2 percent Fibonacci retracement on Friday and dipped to a fresh four-month low of 1.1744, despite the oversold conditions as shown by the RSI.

GBP/USD stumbles below 1.3450, Sterling bulls on the back foot ahead of Wednesday's inflation hearing

The week is starting off on a quiet note for the Sterling, although Wednesday will be bringing Inflation Report Hearings at 08:00 GMT, followed by Retail Sales on Thursday. 

A test of the breakouts

This week should be all about contesting and consolidating last week’s significant breakouts in 10 year UST, EURUSD, USDJPY and Oil Prices.

The week ahead data preview: eyes on FOMC minutes - Nomura

Analysts at Nomura explained their outlook for the week's key events coming up.

GMT
Event
Vol.
Actual
Consensus
Previous
Wednesday, May 16
24h
 
 
Monday, May 21
24h
 
 
24h
 
 
24h
 
 
08:00
 
 
n/a
 
 
n/a
 
 
12:30
 
0.14
0.10
15:30
 
 
1.89%
15:30
 
 
2.035%
16:15
 
 
18:05
 
 
21:30
 
 
Tuesday, May 22
08:30
 
£7.301B
£-0.262B
09:00
 
 
12:30
 
0.7%
-0.8%
12:55
 
 
4.9%
12:55
 
 
0.8%
14:00
 
 
-3
15:30
 
 
2.2%
15:30
 
 
1.655%
17:00
 
 
2.498%
20:30
 
 
4.854M
Wednesday, May 23
00:30
 
53.3
53.8
01:30
 
1.0%
-19.4%
04:30
 
0.1%
0.4%
06:00
 
 
2.3%
06:00
 
0.3%
0.3%
06:00
 
 
1.6%

Author

FXStreet Team

Composed of a group of economic journalists and FX experts, the FXStreet content team produces and oversees all content published on FXStreet. It provides a purely journalistic approach to the Forex market.

More from FXStreet Team
Share:

Editor's Picks

GBP/USD bounces off lows, back above 1.3200

After bottoming out near 1.3160, GBP/USD manages to regain a bit of shine and reclaim the 1.3200 mark and beyond at the end of the week. Stronger-than-expected UK Retail Sales data seem to be helping the British Pound limit its losses, while the chaotic UK political environment keeps the bulls at bay for now.

EUR/USD looks consolidative around 1.1460

EUR/USD stages a modest rebound after slipping to a three-month low below 1.1420 at the end of the week. That said, the pair now looks to consolidate humble gains just above 1.1460 despite growing uncertainty surrounding the next round of US-Iran negotiations, which keeps the US Dollar’s downside contained.

Gold slips back to six-day lows, targets $4,100

Gold retreats for the third consecutive day on Friday, eroding gains seen in the first half of the week and approaching the key $4,100 mark per troy ounce. Indeed, the precious metal continues to face headwinds from the Fed's hawkish stance and renewed uncertainty surrounding the next round of US-Iran negotiations.

Breaking: Iran closes the Strait of Hormuz amid ceasefire deal violation
Iran says it is closing the Strait of Hormuz after accusing the United States (US) and Israel of violating the ceasefire. According to Iran, the decision came over the continued Israeli strikes in Lebanon. The Iranian Revolutionary Guard Corps Navy issued a warning to all vessels: "Do not approach the Strait of Hormuz; otherwise, your security will be jeopardized."
The Iran war didn't break the US economy, but what happens next?

Nearly four months after the start of the Iran war, the US economy remains remarkably resilient. While the conflict initially triggered a severe disruption to global energy markets and a sharp rise in Oil prices, recent diplomatic progress between Washington and Tehran has eased concerns about a prolonged supply shock.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.