Morning Market Review

[Solid ECN ✔️]

EURUSD
The European currency shows a moderate decline against the US dollar during the Asian session, building on the "bearish" momentum formed at the end of last week, when the euro retreated from its local highs from April 7. The pressure on the instrument is exerted by the previous factors of a gradually strengthening dollar against the backdrop of deterioration in global economic prospects. The military conflict in Ukraine is intensifying, despite the unprecedented sanctions imposed on the Russian economy by Western countries. Meanwhile, the EU is preparing another, sixth in a row, package of sanctions, which will likely be announced on April 25-29 and will significantly reduce the possibility of energy supplies from Russia. The issue of oil and gas imports for European countries is still extremely painful. Nevertheless, quite clear trends have been identified, and, not without pressure from the White House administration, the EU is gradually reducing its energy dependence on Russian resources, which, in turn, leads to an upward correction in energy prices, simultaneously pushing up the already high inflation in region. The macroeconomic statistics from Europe published last Friday did not have a noticeable impact on the dynamics of the instrument, despite the fact that the data, in general, was not disappointing. The eurozone Composite Manufacturing PMI rose from 54.9 to 55.8 in April, beating its forecast of a decline to 53.9 points. The Services PMI for the same period strengthened from 55.6 to 57.7 points, contrary to forecasts of a decline to 55 points.

GBPUSD
The British pound is trading with the downtrend at the beginning of the week, testing the psychological level of 1.2800 for a breakdown. The pound is developing a strong downward momentum, formed at the end of last week in response to the publication of disappointing macroeconomic statistics from the UK. UK Retail Sales fell 1.4% in March after falling 0.5% a month earlier. Analysts expected a decline of only 0.3%. In annual terms, sales volumes fell from 7.2% to 0.9%, while market forecasts assumed an increase of 2.8%. Additional pressure on the instrument was exerted by data on the GfK Consumer Confidence in the UK in April. The index fell from -31 to -38 points, which turned out to be noticeably worse than experts' estimates of a decline to -33 points. Finally, Markit Services PMI in April fell from 62.6 to 58.3 points, while analysts predicted a decline to 60 points. Thus, extremely weak macroeconomic statistics from the UK prompted investors to lower their expectations of further tightening of macroeconomic policy by the Bank of England in the near future.

AUDUSD
The Australian dollar shows a steady decline during the morning session, updating local lows from February 28. The instrument has been developing a downtrend since last Thursday, when the Fed Chairman Jerome Powell once again announced the need to raise interest rates by 0.50% at once at the May meeting. In addition, the regulator may launch a quantitative tightening program, which its representatives have also often spoken about recently. Investors took the official's speech as an additional signal to reduce risky positions, which provoked a noticeable strengthening of the US currency. The macroeconomic statistics released on Friday from Australia failed to slow down the development of the "bearish" dynamics for the instrument, despite the fact that the data turned out to be quite positive in general. The Commonwealth Bank Manufacturing PMI in April rose from 57.7 to 57.9 points, while analysts had expected growth to only 57.8 points. The Services PMI for the same period strengthened from 55.6 to 56.6 points, but the market expected a much more noticeable increase to 58.5 points. At the same time, the Composite PMI rose from 55.1 to 56.2 in April.

USDJPY
The US dollar shows flat dynamics against the Japanese yen in Asian trading, consolidating near 128.50 and new record highs, updated in the middle of last week. Low demand for risk still supports the positions of the US currency; however, the level of 130.00 still seems to be a barrier, for which there are few current drivers on the market. The macroeconomic statistics from Japan released at the end of last week turned out to be ambiguous. The National Consumer Price Index in Japan rose by 1.2% in March after rising by 0.9% a month earlier. Analysts expected growth of 1.3%. At the same time, Jibun Bank Manufacturing PMI in April fell from 54.1 to 53.4 points, which was worse than the expected 55.7 points. The yen is slightly supported by the Japanese macroeconomic data released today. Coincident Index in February increased from 96.3 to 96.8 points, while analysts expected a decrease to 95.5 points.

XAUUSD
Gold prices are falling during the morning session, developing a confident downtrend formed in the short term. The instrument is testing the level of 1915.00 for a breakdown, updating local lows from April 6. The pressure on the asset is still exerted by the prospects for further tightening of monetary policy by the US Federal Reserve. Last week, the Chair of the Fed, Jerome Powell, once again confirmed the intention of the regulator to raise the interest rate immediately by 0.50% already at the May meeting. In addition, in May, the US Federal Reserve may launch a quantitative tightening program, the need for which has also been discussed for more than one month. In turn, the demand for gold is supported by the general negative mood of investors, disappointed by the decline in global economic prospects. The problem of inflation, which updates record highs in many regions, reacting to the rapid rise in energy prices, is still acute.

[Solid ECN ✔️]

 

EURUSD

Euro quotes are consolidating after a "bearish" start to the week, which led EURUSD to update record lows since March 2020. The reason for the emergence of upward dynamics on Tuesday are technical factors, while the news background continues to strengthen the dollar as a "safe" asset. Currently, traders are concerned about the prospects for the recovery of the global economy against the backdrop of further escalation of the conflict in Ukraine, which is the cause of the crisis in the commodity areas. In addition, there are reports from Beijing of a rapid increase in the incidence of coronavirus infection among the local population. Recently a large-scale lockdown ended in Shanghai, and now a similar prospect seems to threaten the capital of China. Over the past day, about 22K cases of COVID-19 were detected in the country, and more than 21K infected occurred in Beijing. Further tightening of coronavirus restrictions could lead to a decline in energy consumption in the Chinese economy. Meanwhile, macroeconomic statistics from Europe published on Monday turned out to be optimistic: the IFO Business Climate in Germany rose from 90.8 to 91.8 points in April, while analysts expected it to decline moderately to 89.1 points. The Current Assessment indicator for the same period rose from 97.1 to 97.2 points, which also turned out to be noticeably better than market expectations at the level of 95.8 points. The index of Economic Expectations in April strengthened from 84.9 to 86.7 points, ahead of forecasts at the level of 83.5 points.

 

GBPUSD

The pound is showing an uptrend against the US currency, correcting after a sharp decline over the past two sessions, which caused the instrument to renew all-time highs for the instrument since September 2020. GBPUSD received a signal for a technical correction, but analysts note that the outlook for the British currency is very controversial. Against the background of the rapidly developing energy crisis in Europe, many experts believe that in the future one should not exclude the possibility of a recession in the British economy, which is most actively involved in the anti-Russian sanctions policy after the start of a special military operation on the territory of Ukraine. In addition, the consequences of Brexit, which at one time managed to be avoided relatively easily, can now reappear with a larger negative effect. Also traders pay attention to a rather difficult position of the Bank of England. Earlier, the Governor of the British regulator, Andrew Bailey, admitted that the issue of adjusting interest rates is now becoming more acute. On the one hand, officials are forced to fight record inflation; on the other hand, it is necessary to prevent the national economy from falling into recession.

 

AUDUSD

The Australian dollar is correcting during morning trading, recovering from a three-day "bearish" rally, which led to the renewal of local lows from February 24. The growth of the instrument on Tuesday is supported by technical factors, while the informational background changes slightly. In turn, the pressure on the position of the Australian currency is still exerted by the disappointing prospects for the recovery of the global economy. The escalation of the crisis in Ukraine at the moment does not mean that the conflict, or at least its acute phase, will end in the near future. Meanwhile, sanctions pressure on Russia continues to intensify, approaching the most sensitive aspects of the bans, the energy imports. Any restrictions beyond those already in place will inevitably lead to additional price increases, which will aggravate the already difficult situation with inflation and the energy crisis in Europe and in the world as a whole. Today, the focus of investors will be on a block of statistics from the US on the dynamics of Durable Goods Orders, as well as data on New Home Sales in March. Interesting data from Australia will appear only on Wednesday, with the release of statistics on consumer inflation for Q1 2022, and analysts suggest acceleration in prices from 3.5% to 4.6% year on year.

 

USDJPY

The US dollar is developing flat trading dynamics in tandem with the yen during the Asian session, consolidating near 128.00. The development of the uptrend stopped last week, when USDJPY made new record highs, and the market plunged into a correction. Meanwhile, demand for the US currency is increasing in anticipation of a more aggressive approach to tightening monetary policy parameters by the US Federal Reserve, pushing buyers to open new deals, while the Bank of Japan is only cautious about the risks of rising inflation in the country. The latter, however, does not frighten Japanese investors at all, who are accustomed to the deflationary characteristics of the national economy. The Bank of Japan is likely to keep its rate unchanged at -0.10% at its meeting on Thursday and refrain from major adjustments in its forecasts for further actions, as rising commodity prices force it to focus on maintaining the economic recovery after the coronavirus pandemic. Macroeconomic statistics from Japan, released the day before, turned out to be restrainedly optimistic: the Coincident Index in February rose from 96.3 to 96.8 points, which turned out to be better than the negative forecasts of analysts for a decline to 95.5 points. The Leading Economic Index for the same period fell from 101.2 to 100.0 points, while the market expected 100.9 points. The Unemployment Rate in the country in March also corrected down from 2.7% to 2.6%.

 

XAUUSD

Gold prices are slightly increasing during the morning session, correcting after an active decline at the beginning of this week, which led XAUUSD to updating local lows from March 29. At the moment, the quotes are in the area of 1900.00 and are waiting for new drivers to move in the market. The pressure on the instrument is still exerted by expectations of further tightening of monetary policy by the US Federal Reserve. Already during the May meeting, members of the Fed can raise the key interest rate by 50 basis points, as well as launch a quantitative tightening program. In turn, the demand for "safe" gold is supported by the escalation of the conflict on the territory of Ukraine and the rapid growth of inflationary risks against the backdrop of further growth in energy prices.

[Solid ECN ✔️]

EURUSD
The European currency is showing multidirectional dynamics of trading in a pair with the US dollar during the Asian session, consolidating around 1.0500. Market activity remains subdued as traders await today's release of the US Federal Reserve's interest rate decision. Recall that the consolidated forecast assumes an increase in the indicator by 50 basis points at once, in addition, it is expected to announce the launch of a program to reduce the department's balance sheet by 9 trillion dollars. In turn, the European Central Bank (ECB) is still taking a wait-and-see position, despite the rapid growth of inflation in the region, although "hawkish" rhetoric is observed in the speeches of officials of this regulator as well. Earlier, the ECB executive board member, Isabel Schnabel, spoke in favor of the possibility of raising the rate in July, given that fuel and food prices will continue to increase. The macroeconomic statistics from Europe, published the day before, did not affect the dynamics of the instrument too much. Meanwhile, the Unemployment Rate in the euro area in March fell from 6.9% to 6.8%, which was only 0.1% worse than market expectations. The Producer Price Index confirmed the further acceleration of manufacturing inflation: in March, the indicator rose from 1.1% to 5.3%, and accelerated from 31.5% to 36.8% in annual terms.

GBPUSD
The pound shows flat trading dynamics against the US currency during the morning session on May 4, consolidating near the level of 1.2500. Traders are in no hurry to open new trading positions, preferring to wait for the publication of the US Fed Meeting Minutes. Analysts have little doubt that the key interest rate will be raised by 50 basis points at once; however, some of them allow for a correction by 75 basis points, citing record inflation over 40 years, as well as fairly stable trends in the labor market as arguments. Macroeconomic statistics from the UK released yesterday provided additional support to GBP. The Manufacturing PMI from Markit in April rose from 55.3 to 55.8 points, which turned out to be better than the neutral forecasts of analysts, and the BRC Shop Price Index released today showed an acceleration year-on-year from 2.1% to 2.7% in March, which coincided with analysts' estimates.

NZDUSD
The New Zealand dollar is slightly strengthening its position, recovering from the "bearish" start of the trading week, which led to the renewal of record lows since June 2020. Investors are cautious and do not rush to open new trading positions in anticipation of the publication during the day of the final minutes of the two-day meeting of the US Federal Reserve, at which the key interest rate is expected to be increased immediately by 50 basis points. As for the New Zealand macroeconomic statistics, it failed to provide significant support for the instrument quotes. The Unemployment Rate remained at the level of 3.2%, while the Participation Rate decreased from 71.1% to 70.9%, and the Employment Change increased by only 0.1% in the quarterly terms.

USDJPY
The trading instrument shows mixed dynamics, remaining close to the record highs updated at the end of last week. Now the USD/JPY pair is testing 130.00 for a breakout; however, the "bulls" prefer to wait for the US Federal Reserve meeting, at which the rate can be raised immediately by 50 basis points. The markets have already included such an outcome in the current quotes of the instrument, and therefore a noticeable increase in the US currency may not follow. However, officials' comments will continue to be extremely important for assessing the situation in the near future. In addition, the possibility of a rate increase by 75 basis points is not ruled out, although this scenario remains unlikely. Japanese markets are closed on Wednesday due to the national holidays, and therefore new drivers for the movement of the trading instrument will appear only at the end of the week, when the April statistics on consumer price dynamics in the Tokyo region will be published.

XAUUSD
Gold prices are consolidating near the level of 1865.00 after an attempt at corrective growth the day before, which did not allow XAU/USD to consolidate on new local lows from February 16. The pressure on quotes is exerted by the growth in the yield of US Treasury bonds: the indicator for 10-year bonds last Monday exceeded 3% for the first time since December 2018 and remains in this area at the present time. The investment attractiveness of the precious metal is decreasing before the start of the US Federal Reserve's meeting on monetary policy, which will be held today at 20:00 (GMT+2). US officials are expected to raise interest rates by 50 basis points at once, and also announce the launch of a quantitative tightening program, which should help to reduce the almost 9 trillion dollars balance sheet. Higher short-term interest rates and US bond yields tend to increase the opportunity cost of holding zero-yield bullion.

[Solid ECN ✔️]

EURUSD
The European currency shows mixed trading dynamics, consolidating near 1.0600 and local highs from April 27. The day before, EUR/USD showed the strongest growth in the last few weeks, which was the market's reaction to the results of the two-day meeting of the US Federal Reserve. As expected, the US regulator raised the interest rate by 50 basis points to the range of 0.75%–1.00% and announced the start of a quantitative tightening program, but it will not immediately reach the final volumes of purchases. From June 1, the Fed will start selling securities for a total of 47.5 billion dollars, after which it will increase the total monthly sales to 95 billion dollars within three months. The "hawks", who expected that the regulator would immediately bring purchases to the final amount, were somewhat disappointed by this decision. Additional pressure on the dollar was exerted by the rhetoric of the Chair of the US Federal Reserve, Jerome Powell, who said that the issue of raising the interest rate by 50 basis points would also be discussed at the next meetings. Thus, the risks that the indicator will be corrected at a more aggressive pace have almost completely disappeared. In turn, pressure on the euro was exerted by frankly weak statistics on Retail Sales in the eurozone. In March, the indicator fell by 0.4% after rising by the same amount a month earlier, and in annual terms, the pace slowed sharply from 5.2% to 0.8%, while analysts had expected an increase of 1.4%.

GBPUSD
The pound is declining, correcting after the active growth the day before, which was caused by the publication of the final minutes of the meeting of the US Federal Reserve. The regulator, as expected, raised the rate by 50 basis points, but decided to slow down the pace of the quantitative tightening program. Also, the Chair of the Fed Jerome Powell signaled that the authorities have no plans to increase the rate by 75 basis points at the next meetings. Today, investors are actively closing their long positions on the pound, preferring to wait for the results of the Bank of England meeting. It is expected that the British regulator, following the US Federal Reserve, will raise the interest rate, but only by 0.25%, bringing it to the level of 1.00%. Traders will follow the updated forecasts and plans of the regulator in the field of monetary policy regulation.

AUDUSD
The Australian dollar shows negative dynamics against the US currency during the Asian session, correcting after a sharp rise the day before, which contributed to the movement of AUD/USD quotes to new local highs from April 22. Investors evaluate the results of a two-day meeting of the US Federal Reserve, at which officials raised interest rates by 50 basis points to 1.00%, and also announced a phased introduction of a quantitative tightening program. From June this year, the regulator will begin to reduce its balance sheet by 47.5 billion dollars a month, and from September the pace will increase to 95 billion dollars. In turn, the positive macroeconomic statistics provided significant support to the Australian dollar. The volume of Retail Sales in Australia increased by 1.6% in March after an increase of 1.8% a month earlier, although analysts had expected a sharp slowdown in the value to 0.6%. Today, the AUD/USD quotes are strengthening after the release of statistics on the Trade Balance, the surplus of which in March increased from 7.457 to 9.314 million Australian dollars, ahead of forecasts at the level of 8.500 million Australian dollars, while the current dynamics is fixed against the backdrop of a 5% decrease in imports, and export volumes remained virtually unchanged.

USDJPY
The day before, the US dollar showed a moderate decline against the yen, reacting to the publication of the minutes of the meeting of the US Federal Reserve. Despite the expected increase in the interest rate, as well as the launch of the quantitative tightening program, market participants were still disappointed by the rather cautious actions of the US financial regulator, as they were counting on a more aggressive approach in adjusting monetary policy parameters. An additional negative factor for the dollar was weak macroeconomic statistics from the US. The ADP report on employment in the private sector in April showed a drop in Nonfarm Payrolls from the previous 479 thousand to 247 thousand, while analysts expected a value of 395 thousand. The ISM Services PMI in April also showed an active decline from 58.3 to 57.1 points, while the market expected the index to rise to 58.5 points.

XAUUSD
Gold prices are actively growing, again trying to consolidate above 1.9 thousand dollars per troy ounce. The "bulls" are developing an upward momentum formed on Tuesday, when the instrument retreated from its local lows of February 16. The investor activity was facilitated by the results of the meeting of the US Fed. As expected, the regulator raised interest rates by 50 basis points and also announced the start of a quantitative tightening program starting June 1. Initially, it is planned to buy securities for a total of 47.5 billion dollars, but then within three months the volume will be increased to 95 billion dollars. Thus, the US financial authorities decided not to rush to tighten monetary policy, which crossed out the premature conclusions of traders on the upcoming rate hikes by 75 basis points at once. An additional negative factor for the dollar was weak macroeconomic statistics from the US. The ADP report on employment in the private sector in April showed a drop in Nonfarm Payrolls from the previous 479 thousand to 247 thousand, while analysts expected a value of 395 thousand. The ISM Services PMI in April also showed an active decline from 58.3 to 57.1 points, while the market expected the index to rise to 58.5 points.

[Solid ECN ✔️]

EURUSD
The European currency showed weak growth against the US dollar during the Asian session, correcting after a sharp decline the day before, as a result of which the single currency updated record lows for the instrument since January 2017. EUR/USD is trying to consolidate above 1.0400, but so far there are clearly not enough drivers for the growth of the single currency. During the day, investors will pay attention to the publication of statistics on the dynamics of Industrial Production in the eurozone for March, but the current forecasts of analysts do not suggest that the euro will be able to get any support for them. However, the instrument may show growth solely on technical factors, given that the macroeconomic calendar from the US is also neutral. The dollar is still in high demand in the market amid concerns about the prospects for growth in the global economy. US consumer inflation data released on Wednesday indicated that prices may be peaking but still high enough to prevent the US Fed from easing monetary tightening pressure.

GBPUSD
The British pound shows an uptrend in trading, correcting after another decline the day before, as a result of which GBP/USD updated its lows since May 2020. The growth of the pound on Friday is due to the strengthening of technical factors, while the fundamental picture changes slightly and still contributes to the further weakening of the British currency. The macroeconomic data released the day before in the UK turned out to be disappointing, which increased fears of a possible recession in the national economy. In March, the country's GDP fell by 0.1%, while analysts expected it to increase by 0.1%. In quarterly terms, growth slowed down from 1.3% to 0.8%, which was also worse than forecasts at 1.0%, while in annual terms, the economy is still showing positive dynamics and, according to the latest data, strengthened from 6.6% to 8.7%, only a little short of the expected value of 9%. The pace of Industrial Production in the country in March showed a decrease of 0.2% after falling by 0.3% a month earlier, although preliminary market estimates suggested a positive trend at the level of 0.1%.

AUDUSD
The Australian dollar is showing active corrective growth against the US dollar during the morning session, recovering from a strong decline the day before, as a result of which AUD/USD hit its record lows since June 2020. Investors fix short positions, which leads to a technical correction, while the fundamental picture of the instrument changes slightly. The US dollar is still in high demand in the market as a safe-haven currency, as investors fear a further slowdown in the global economy, which may be exacerbated by the "hawkish" policy of the world's leading central banks. The latest data from the US indicated that consumer inflation may be at its peak, but so far its slowdown is slower than analysts' expectations. There is no need to count on a quick change in the vector of the US Federal Reserve's monetary policy, and as the interest rate rises in the future, the growth prospects of the American economy are likely to decline. In turn, pressure on the positions of the Australian currency today is exerted by weak macroeconomic statistics from Australia. HIA New Home Sales fell 1.2% in April after rising 3.9% in March.

USDJPY
The US dollar shows corrective growth against the Japanese yen in Asian trading, correcting after a sudden decline the day before, which led to the renewal of local lows from April 27. The Japanese yen is one of the few currencies on the market against which the dollar showed a negative trend on Thursday. Among other things, analysts attribute this behavior to the "hawkish" policy of the US Federal Reserve, which in the foreseeable future may lead to a slowdown in economic growth in the country. In its turn, the Bank of Japan still maintains a wait-and-see attitude and has not yet launched a cycle of raising the interest rate. Existing inflationary risks have quite a positive effect on the Japanese economy, which is fairly prone to deflationary phenomena, which makes the yen quite an attractive safe-haven currency, despite the growing gap in Japanese and US interest rates. The yen was additionally supported yesterday by optimistic macroeconomic statistics from Japan. In April, Eco Watchers Current Situation index rose from 47.8 to 50.4 points, and Eco Watchers Outlook strengthened from 50.1 to 50.3 points.

XAUUSD
Gold prices are recovering during the Asian session, retreating from the local lows of February 7, updated at the opening of Friday's trading. The growth of quotes is facilitated by technical correction factors, while the fundamental picture still supports the further strengthening of the US currency. US inflation statistics published in the past few days indicated that prices are still demonstrating an alarming increase, despite the passage of its peak. This may require the US Federal Reserve to strengthen measures aimed at curbing price growth, including through an increase in interest rates. The risks of a 75 basis point increase during the June meeting of the regulator are still quite low, but one should not forget that the US Federal Reserve has other leverage. In particular, the department may accelerate the launch of the quantitative tightening program.

[Solid ECN ✔️]

EURUSD

The European currency is relatively stable against the US dollar during trading in the Asian session and is consolidating near local highs from May 5. The day before, the instrument showed active growth, which allowed leveling the results of Wednesday's "bearish" trend and brought the euro to a high at around 1.0600. EUR/USD was supported yesterday by expectations of the imminent end of quarantine due to the coronavirus in Shanghai, which will allow many enterprises to resume normal operation and have a positive effect on the dynamics of foreign trade. In turn, yesterday's macroeconomic data from the US put moderate pressure on the positions of the US currency. Initial Jobless Claims for the week ended May 13 increased from 197 thousand to 218 thousand, which was higher than market expectations by 18 thousand. Philadelphia Fed Manufacturing Index declined sharply in May from 17.6 to 2.6 points, while analysts expected the decline to only 16 points. The Minutes of the European Central Bank (ECB)'s meeting released the day before also contributed to the moderate growth of the single currency. In the report, the regulator pointed to the increasing risks associated with a sharp growth in inflation in the region, but at the same time maintained optimistic forecasts for both Q3 and Q4 of 2022. Also, many members of the ECB board are gradually speaking out in favor of tightening monetary policy. Analysts consider the rate hike at the end of summer or early autumn as most likely.

 

GBPUSD

The British pound is traded with mixed dynamics against the US currency during the morning session, consolidating near 1.2450. On Thursday, the pound showed active growth, which allowed it to fully recover from the decline last Wednesday. Moreover, GBP/USD briefly rose above 1.2500, having updated local highs from May 5. The growth of the instrument was facilitated by the weakening of the US currency, which came under pressure against the backdrop of weak macroeconomic statistics from the US. In addition, by the end of the week, corrective moods are intensifying. In turn, the fundamental picture on the market is changing slightly, and investors are still disappointed by the statistics released this week from the UK on the dynamics of consumer inflation. In April, the Consumer Price Index in annual terms accelerated from 7% to 9%, which fell short of the average market forecasts by only 0.1%. On a monthly basis, inflation in the UK also accelerated from 1.1% to 2.5%. Today traders are focused on British statistics on the dynamics of Retail Sales. At the moment, investors are taking a lead from the statistics on GfK Consumer Confidence. In May the index fell from -38 to -40 points against the forecast of -39 points.

 

AUDUSD

The Australian dollar is moderately declining against the US dollar during the Asian session, again testing 0.7000 for a breakdown. After active growth the day before, which allowed the instrument to renew local highs from May 9, corrective moods are again strong, and traders are in no hurry to open new purchases without the appearance of additional drivers. Also, the Australian dollar remains under moderate pressure after the publication of an ambiguous report on the labor market. The Employment Rate in Australia in April increased by only 4 thousand after an increase of 20.3 thousand in the previous month. Analysts were counting on an acceleration of positive dynamics to 30 thousand. The Full-Time Employment accelerated from 19.9 thousand to 92.4 thousand; however, a sharp reduction in Part-Time Employment by 88.4 thousand did not allow the final level to record a record growth. The Unemployment Rate remained at 3.9%, while the Participation Rate decreased slightly from 66.4% to 66.3%. The Australian dollar, in turn, is supported by upbeat news from China, where from June 1, the exhausting multi-week quarantine in Shanghai is expected to end, which significantly undermined the pace of Chinese economic recovery.

 

USDJPY

The US dollar shows mixed dynamics against the Japanese yen in Asian trading, consolidating near 127.70 and settling near the local lows of April 27. Demand for the yen is gradually increasing as interest in risk decreases; however, the dollar in this sense is also able to provide significant competition. Moreover, many investors prefer the American currency, since the difference between the interest rates of the US Federal Reserve and the Bank of Japan is high and will only increase in the future. In turn, inflationary risks in the two countries remain disproportionate. While the US regulator is extremely concerned about containing the growing price pressure, the Japanese one can afford to keep a wait-and-see attitude, managing only the quantitative easing program. Today's statistics on inflation in Japan reflected the increase in the National Consumer Price Index in April from 1.2% to 2.5%, which was significantly higher than market expectations at 1.5%. National CPI excluding Food and Energy in the country accelerated by 0.8%, while a month ago, analysts recorded its decline by 0.7%.

 

XAUUSD

Gold prices are consolidating after active growth the day before, which brought the instrument to new local highs from May 12. XAU/USD is testing 1840.00 for a breakout; however, the market activity remains quite low. The macroeconomic calendar on Friday is relatively empty, and therefore, significant changes in the dynamics of the instrument should not be expected. Experts attribute yesterday's growth in gold to the weakening of the dollar against the backdrop of the publication of disappointing macroeconomic statistics from the US. In particular, Initial Jobless Claims for the week ended May 13 increased from 197 thousand to 218 thousand. Philadelphia Fed Manufacturing Index fell from 17.6 to 2.6 points in May, with a slight correction forecast to 16 points. Existing Home Sales fell 2.4% in April, while investors expected a 0.7% decline.

[Solid ECN ✔️]

EURUSD
The European currency starts the new week with moderate growth against the US dollar, again testing 1.0600 for a breakout and settling near the local highs updated last Thursday. Moderate support for the single currency at the beginning of the week is provided by the weakness of the US dollar, which came under pressure amid a noticeable correction in the yield of US Treasury bonds. Last Thursday, analysts recorded a decline in the yield of 10-year bonds to a three-week low of 2.77%, while earlier during the month the bonds showed a yield of 3.2%. In turn, pressure on the euro is exerted by the soft monetary policy of the European Central Bank (ECB), or rather the growing gap between the rates of the European regulator and the American one. Representatives of the ECB are beginning to speak out in favor of the idea of launching a rate hike program, but the official position of the Bank is still quite cautious. However, it is unlikely that the ECB will be able to remain on the sidelines for a long time, and the point here is not in the competition of rates or exchange rates. Inflation in the eurozone is growing at a record pace, and here the European regulator is at risk of following the path of the US Federal Reserve, which for a long time considered record price growth to be only a temporary phenomenon.

GBPUSD
The pound shows the uptrend in trading in tandem with the US currency during the morning session, testing the level of 1.255 for a breakout and updating local highs from May 5. The strengthening of the British currency at the beginning of the week is facilitated by the growth of corrective sentiment for the US dollar against the backdrop of a noticeable decrease in the yield of US Treasury bonds. Also, traders are still taking a lead from relatively optimistic macroeconomic statistics from the UK on Friday, which turned out to be significantly better than negative forecasts. In April, Retail Sales added 1.4% after falling by 1.2% a month earlier, although analysts had expected a decline of 0.2%. In annual terms, the indicator showed a sharp drop of 4.9% after increasing by 1.3% in March, while preliminary market estimates suggested a more active decline of 7.2%. Retail Sales excluding Fuel increased by 1.4% MoM, but decreased by 6.1% YoY, while the forecast was for a contraction of 0.2% MoM and 8.4% YoY. Today, statistics on housing prices in the UK were released. Rightmove House Price Index increased by 2.1% in monthly terms and by 10.2% in annual terms, which turned out to be slightly higher than the previous values at the levels of 1.6% MoM and 9.9% YoY.

NZDUSD
The New Zealand dollar is showing solid growth against the US dollar during the Asian session, building on the strong "bullish" momentum that was formed last week. NZDUSD is testing 0.6450 for a breakout, updating local highs from May 5. The instrument shows an uptrend against the backdrop of a correction in the US currency, which, in turn, reacts sharply to a decrease in the yield of US Treasury bonds. Also, the positions of the New Zealand dollar are strengthening on the news from Shanghai, where the authorities plan to lift the previously imposed quarantine restrictions from June 1. At the same time, the macroeconomic background from New Zealand remains rather neutral. Data released on Friday showed a slowdown in Credit Card Spending in April from 3.4% to 1.1%, which was worse than analysts' average forecasts of growth of 1.6%. Exports from New Zealand in April slightly decreased from 6.48 billion to 6.31 billion dollars, but against the backdrop of a sharper drop in imports from 7.06 billion to 5.73 billion dollars over the same period, the country's Trade Balance increased in April by 584 million after a decline of 581 million dollars a month earlier. Traders are waiting for the results of the meeting of the Reserve Bank of New Zealand (RBNZ), which will be announced on May 25, counting on another increase in interest rates by 50 basis points.

USDJPY
The US dollar is traded against the Japanese yen with a downtrend during the Asian session, once again testing the level of 127.50 for a breakdown. USD/JPY is located near the local lows of April 27, maintaining momentum for further development of the downtrend in the short term. The development of "bearish" trend is facilitated by corrective sentiment in the US currency, associated with a drop in the yield of US Treasury bonds. Investors also fear a further deterioration in inflation in the country, despite the fact that the latest data on consumer prices in the US reflected the possible passage of the peak of growth. One way or another, the policy of the US Federal Reserve has not changed much so far, and at its next meeting the regulator plans to raise the interest rate by another 50 basis points. In turn, the Bank of Japan maintains a wait-and-see attitude, preferring to limit itself to managing the quantitative easing program. Friday's statistics on inflation for April in Japan reflected the growth of the National Consumer Price Index by 2.5% after increasing by 1.2% a month earlier. Market forecasts assumed an increase of only 1.5%.

XAUUSD
Gold prices continue to show moderate growth at the beginning of the new week, updating local highs from May 12. The instrument is testing 1850 for a breakout, showing no clear signs of a weakening trend. The main factor in the growth of gold at the moment remains the weak dollar, which came under pressure after the publication of not the most optimistic macroeconomic statistics last week. In addition, investors are reacting negatively to the sharp decline in US Treasury yields. This week, market participants are waiting for the publication of the minutes of the last meeting of the US Federal Reserve, hoping to receive clear evidence of the continuation of the "hawkish" monetary policy. Also on Thursday, updated data on the dynamics of US GDP for Q1 2022 will be published. The previous estimate reflected the fall of the US economy by 1.4% in annual terms.