The Japanese yen bounced from a fresh two-decade low in yesterday’s session

• The Bank of Japan stepped into the market again to defend its ultra-low interest-rate policy
• Market expectations solidified for a first interest rate hike from the ECB as early as July
• The British pound climbed against the dollar, gaining after four days of losses

Forex market

The euro perked up to a one-week high today as market expectations solidified for a first interest rate hike from the European Central Bank as early as July. Joachim Nagel, president of Germany's Bundesbank, joined fellow policymakers this week in saying the ECB could raise interest rates at the start of the third quarter. 

Another policymaker Martins Kazaks said this week a rate hike in July "was possible". Against the U.S. dollar, the euro rose 0.4% to $1.0895 and its highest level since April 14. The euro's rise was quite broad-based, with the currency chalking up gains versus the yen, Swiss franc, and Norwegian crown. The euro is all about the ECB drumbeat for a July hike. Money markets are now pricing in a 20 basis point rise from the ECB by July and more than 70 basis points of cumulative increases by the end of 2022. That would take benchmark interest rates above zero for the first time since 2013. European political news was also supportive. 

Economic Calendar

French President Emmanuel Macron cleared a major hurdle ahead of Sunday's runoff election with a combative performance in a TV debate against far-right candidate Marine Le Pen. The Chinese yuan was the big loser in early London trading, its offshore unit declining nearly half a percent to 6.47 yuan per dollar and its lowest level since September. 

The British pound climbed against the dollar yesterday, gaining after four days of losses, with investor attention turning to potential policy signals from the Bank of England this week. Speeches today by Bank of England (BoE) policymaker Catherine Mann and Governor Andrew Bailey were seen as potentially key drivers for the pound. After data last week showed British consumer price inflation hit a thirty-year high of 7% in March, traders are watching for indications of how the BoE views the rating outlook. 

The BoE has recently softened its language on the need for more rate increases. IMF forecasts for British GDP growth this year were cut to 3.7% from January’s forecast of 4.7%.

Euro-EUR

The single currency perked up to a one-week high as market expectations solidified for a first interest rate hike from the ECB as early as July. President of Germany's Bundesbank joined fellow policymakers in saying the ECB could raise interest rates at the start of the 3rd quarter. Another policymaker Martins Kazaks said a rate hike in July "was possible". Overall, the EUR/USD traded with a low of 1.0782 and a high of 1.0865 before closing the day around 1.0851 in the New York session.

Japanese Yen-JPY

The Japanese Yen bounced from a fresh two-decade low yesterday after the Bank of Japan stepped into the market again to defend its ultra-low interest-rate policy, drawing a sharp contrast with the Federal Reserve's aggressive tightening path. The BOJ again offered to buy unlimited amounts of Japanese government bonds. Overall, the USD/JPY traded with a low of 127.43 and a high of 129.39 before closing the day around 127.82 in the U.S session.

British Pound-GBP

The British Pound climbed against the dollar yesterday, gaining after four days of losses, with investor attention turning to potential policy signals from the Bank of England this week. Speeches today by Bank of England (BoE) policymaker Catherine Mann and Governor Andrew Bailey are seen as potentially key drivers for the pound. Overall, the GBP/USD traded with a low of 1.2989 and a high of 1.3069 before closing the day at 1.3066 in the New York session.

Canadian Dollar-CAD

The Canadian Dollar strengthened to its highest level in more than three weeks yesterday, as domestic inflation data bolstered expectations for another upsized interest rate hike from the Bank of Canada in June. Canada's annual inflation rate accelerated faster than expected in March, hitting a 31-year high of 6.7%, amid broad price pressures. Overall, USD/CAD traded with a low of 1.2469 and a high of 1.2622 before closing the day at 1.2496 in the New York session.

Australian Dollar-AUD

The Australian Dollar shot to seven-year highs against a sinking Japanese yen yesterday as major shifts in trade flows and bond yields favored the resource-heavy currencies. Such was the exodus of cash from the yen that it helped the Aussie stabilize on its U.S counterpart after a run of losses. At the same time, the conflict in Ukraine has lifted prices for many commodities. Overall, AUD/USD traded with a low of 0.7358 and a high of 0.7416 before closing the day at 0.7410 in the New York session.

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Euro-Yen EUR/JPY

EUR/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is also issuing a bullish stance. The Relative Strength Index is above 61 and lies above the neutral zone. In general, the pair has lost 0.20%.

Sterling-Yen GBP/JPY

Currently, GBP/JPY is trading above 14, 50 and 100 days moving average. Fast stochastic is issuing a bullish tone and MACD is also indicating a bullish stance. The Relative Strength Index is above 60 reading and lies above the neutral zone. On the whole, the pair has lost 0.26%.

Aussie-Yen AUD/JPY

Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bullish tone and MACD is also indicating a bullish stance. The Relative Strength Index is above 76 reading and lies above the neutral region. In general, the pair has gained 0.24%.

Euro-Sterling EUR/GBP

This cross is currently trading above 14, 50 and below 100 days moving average. Fast stochastic is indicating a bullish tone and MACD is also issuing a bullish signal. The Relative Strength Index is above 53 and lies below the neutral region. Overall, the pair has gained 0.06%.

Sterling-Swiss GBP/CHF

This cross is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish stance and MACD is also indicating a bearish tone. The Relative Strength Index is above 45 and lies below the neutral region. In general, the pair has gained 0.14%.

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