Article by: ETO Markets
Australia's GDP grew by 0.1% in the first quarter, as announced on Wednesday, falling short of the expected 0.2%. On an annual basis, the economy grew by 1.1%, slightly below the anticipated 1.2%. Meanwhile, the expansion of Australia's trade surplus in May provided support for the Australian dollar. Furthermore, Reserve Bank of Australia (RBA) Governor Michele Bullock indicated that the central bank might continue to raise interest rates if the Consumer Price Index (CPI) does not return to the target range of 1%-3%. Michele's hawkish remarks also contributed to the Australian dollar's rise.
Following the release of the ADP non-farm employment changes on Wednesday, the U.S. Dollar Index (which measures the dollar against a basket of major currencies) fell below 104 once again. The U.S. Department of Labor will release this week's initial jobless claims data later in the day. Additionally, investors will be closely watching Friday's upcoming reports on non-farm payrolls, average hourly earnings, and the unemployment rate.
Amid mixed economic data from the U.S., the dollar has entered a downturn, with increasing speculation about a Federal Reserve rate cut. The likelihood of at least a 25-basis point cut by the Fed has risen from 47.5% last week to nearly 70%. On Wednesday, the ISM Services Purchasing Managers' Index (PMI) for May surged to a nine-month high of 53.8, while the final Manufacturing PMI released on Monday also exceeded expectations, rising from 50.9 to 51.3. Meanwhile, the ISM Manufacturing PMI, JOLTS job openings, and ADP non-farm employment numbers all fell short of expectations. The ADP report indicated that the U.S. private sector added 152K jobs in May, compared to the anticipated 173K.
Multiple central banks have signaled interest rate cuts, reflecting concerns about slowing economic growth. The Bank of Canada (BoC) lowered its benchmark interest rate for the first time in four years on Wednesday, and the European Central Bank (ECB) is expected to cut rates for the first time since March 2016 at its June policy meeting later today. These signals have heightened expectations of a rate cut by the Federal Reserve. Additionally, the decline in U.S. Treasury yields has posed a significant challenge to the dollar.
Due to the lack of top-tier UK economic data releases this week, the GBP/USD pair will be more influenced by the dollar. Expectations of a U.S. rate cut have led to a continued rise in the pound's price. Investors will be focusing on Friday's release of the U.S. non-farm payrolls and unemployment rate.
Both the 100-DMA and 200-DMA are turning upwards, with buyers holding the advantage and aiming for the March 8 high of ... If a decline occurs, the month's low of … will provide support, followed by the May low of ...
Speculation about a U.S. rate cut has led to a slight appreciation of the yen this week. However, Japanese bond yields have retreated from recent highs, and domestic inflation continues to outpace wage growth, making policy normalization more challenging for the Bank of Japan (BoJ). Reuters reported on Thursday that BoJ board member Toyoaki Nakamura stated that, based on current data, it is appropriate to maintain the current policy for the time being.
The USD/JPY is in a bullish uptrend. Although it has pulled back this week, it rebounded after touching the 50-day moving average (DMA) of … JPY, recouping some of its losses. Unless it effectively breaks below … JPY, the uptrend is unlikely to be disrupted, and the USD/JPY could potentially reach new highs again.
