Currency Analyst since 2010

June 5: Asian session

EUR/USD went a bit higher approaching $1.3100. Yesterday the pair formed a swinging top, but managed to close in positive territory. There are important events coming soon such as the ECB interest rate decision on Thursday and the release of US non-farm payrolls on Friday. Kansas City Fed President Esther George yesterday urged a reduction in the central bank’s bond-buying program as growth quickens. San Francisco Fed President John Williams said a “modest adjustment downward” in purchases is possible “as early as this summer”. Today market players will be watching US ADP employment report (12:15 GMT). Before that pay attention to Spanish and Italian services PMIs, euro zone’s retail sales for April and the region’s revised Q1 GDP.

GBP/USD edged up to $1.5330. UK will publish services PMI today. Manufacturing and construction indices released earlier this week increased. USD/CAD reached 1.0365, but is now trading by 25 pips lower. Canadian building permits are due at 12:30 GMT. USD/CHF is trading in the 0.9500/0.9460 range.

AUD/USD dropped quickly to the $0.9600 zone on the disappointing GDP figure release, but later on recovered to $0.9640. Australia’s Q1 GDP rose by 0.6% q/q (vs. +0.7% expected and prior +0.6%) and by 2.5% y/y (vs. +2.7% expected and prior +3.1%). Meanwhile, China HSBC Services PMI for May came at 51.2 (prior: 51.1), what is the second-lowest reading since August 2011. NZD/USD is trading in the positive territory around $0.8040 after a test of $0.8060 earlier in the day. ANZ commodity price index for May contracted by 1.6% m/m (vs. +12.6% prior).

USD/JPY tried to rebound above the 100 mark, but was capped at 100.45 and slipped back to 99.60. The yen strengthened as Japan’s PM Abe disappointed the markets by not saying anything changing the game. He announced that long-term structural reform is the third of Abe's “three arrows” strategy for Japan's economy and includes measures like special economic zones to boost growth. The other two “arrows” are monetary and fiscal stimulus, which have already been put into place this year.

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