Inflation data from Germany and Spain yesterday showed price rises accelerated in May

• The U.S dollar resumed its slide as risk appetite across markets tentatively strengthened
• Trade was light as U.S stock and bond markets were closed for the Memorial Day public holiday
• Data on Friday showed that U.S consumer spending rose more than expected

Forex market 

The U.S dollar resumed its slide yesterday as risk appetite across markets tentatively strengthened, supported by encouraging economic data and bets that the Federal Reserve will tighten policy at a slower pace. The dollar index - which tracks the greenback against six major rivals - is on track for its first monthly drop in five, as the safe-haven currency loses steam after a breakneck start to the year. 

The dollar index is on track for a more than 1.5% drop in May - although it remains up about 6% on the year. Trade was light as U.S stock and bond markets close for the Memorial Day public holiday. Data on Friday showed that U.S consumer spending rose more than expected in April as households boosted purchases of goods and services, and the rise in inflation slowed. Analysts said the encouraging data, coupled with bets on a more cautious tightening path by the Fed, was weakening the dollar. 

World share markets rose on Monday as easing COVID-19 restrictions and new stimulus in China helped sustain last week's rebound. How the US consumer plays out from here and from a global perspective how the Chinese economy performs will be crucial determinants for broader investor risk appetite. A slew of further economic data is due this week which could give clues on the outlook for global growth, including U.S. jobs numbers and Chinese Purchasing Managers' Index figures. 

Economic Calendar

Inflation data from Germany and Spain showed price rises accelerated in May, pushed up by soaring energy prices, ahead of eurozone inflation figures today. The inflation numbers helped keep a lid on the euro's gains. The safe-haven yen fell back 0.5% and the Sterling edged up 0.1%.

Euro-EUR

The single currency traded higher as the U.S dollar resumed its slide yesterday as risk appetite across markets tentatively strengthened, supported by encouraging economic data and bets that the Federal Reserve will tighten policy at a slower pace. Trade was light as U.S stock markets were closed for the Memorial Day public holiday. Overall, the EUR/USD traded with a low of 1.0469 and a high of 1.0563 before closing the day around 1.0497 in the New York session.

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Japanese Yen-JPY

The Japanese Yen steadied as the bank of Japan Governor Haruhiko Kuroda pledged to patiently stick to powerful monetary easing to help the economy recover from the COVID-19-induced doldrums, shrugging off any suggestion about a departure from its stimulus policy. Kuroda told parliament the yen was regaining stability after its recent rapid weakening. Overall, the USD/JPY traded with a low of 128.32 and a high of 131.23 before closing the day around 130.82 in the U.S session.

British Pound-GBP

The British Pound edged higher against a faltering U.S dollar yesterday and was set for its first monthly gain in five as the risk-sensitive currency benefited from improving sentiment. As markets have readjusted their rate hike expectations from the Federal Reserve lower, the dollar index has weakened over 3.5% from its mid-May peak. Overall, the GBP/USD traded with a low of 1.2409 and a high of 1.2568 before closing the day at 1.2455 in the New York session.

Canadian Dollar-CAD

The Canadian Dollar rose to its highest level in more than five weeks against the greenback in yesterday’s session, as data showed Canada's current account surplus turning positive and ahead of an expected interest rate hike this week by the Bank of Canada. Canada's current account surplus was C$5.0 billion in the first quarter. Overall, USD/CAD traded with a low of 1.2788 and a high of 1.2877 before closing the day at 1.2805 in the New York session.

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Australian Dollar-AUD 

The Australian Dollar extended a two-week rally yesterday as investors cut back on long positions in the U.S dollar ahead of a packed schedule of major local and offshore economic data. The rally owes much to a pullback in the U.S dollar and speculation the Federal Reserve will go slower once it has hiked by 100 basis points over the next two months. Overall, AUD/USD traded with a low of 0.6826 and a high of 0.6951 before closing the day at 0.6853 in the New York session.

Euro-Yen EUR/JPY

EUR/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also issuing a bearish stance. The Relative Strength Index is above 35 and lies below the neutral zone. In general, the pair has gained 1.25%.

Sterling-Yen GBP/JPY

Currently, GBP/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is issuing a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 33 reading and lies below the neutral zone. On the whole, the pair has gained 1.16%.

Aussie-Yen AUD/JPY 

Currently, the cross is trading above 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 36 reading and lies below the neutral region. In general, the pair has gained 1.45%.

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 58 and lies above the neutral region. Overall, the pair has gained 0.12%.

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 50 and lies below the neutral region. In general, the pair has lost 0.42%.

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