- China's retail and factory activity fell sharply in April following extensive COVID-19 lockdowns
- ECB policymaker said the Euro's weakness could lurk the efforts to steer inflation towards its target
- Canadian factory sales fell 2.5% in March from March, Statistics Canada said
Forex market
U.S dollar index was lower yesterday after hitting a 20-year peak last week, with the global economy in focus after weak economic data from China highlighted worries about the prospects for a global slowdown. Creating a risk-off mood yesterday, China's retail and factory activity fell sharply in April as extensive COVID- 19 lockdowns confined workers and consumers to their homes.
But Shanghai did set out plans for the return to a more normal life from June 1. Following the release of China's data trading was focused on macro-economic data yesterday. It's important to highlight that the risks are towards a stronger dollar and primarily, that's because if you look at the macroeconomic climate, the fundamentals don't look good. From a risk-off perspective that should still support the dollar against most currencies. But the greenback was consolidating after its recent strength and more range-bound trading sessions were possible. It makes sense for some period of consolidation before the next leg is higher.
Economic Calendar
Trading in the dollar may be muted partly because a lot of bad news has already been priced in but also because investors are waiting for events such as the U.S. retail sales data release and a public appearance by Fed Chair Jerome Powell both scheduled for today. The euro was pulled from its earlier lows after European Central Bank policymaker Francois Villeroy de Galhau said the common currency's weakness could threaten the ECB's efforts to steer inflation towards its target.
The Australian dollar, which is highly exposed to the Chinese economy, reversed course as the day wore on and was last up against the dollar after falling as much as 0.9%. The dollar index was last down 0.37% at 104.16, after briefly crossing the 105 level on Friday - its highest level since December 2002, after six successive weeks of gains.
Euro-EUR
The single currency has tumbled almost 9% since February and fell to its lowest levels since 2017 last week, a move that accelerated upward pressure on inflation in the euro area, which is already running at a record high 7.5%. The euro's weakness on currency markets could threaten the ECB's efforts to steer inflation towards its target. 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.
Japanese Yen-JPY
The Japanese Yen traded lower with the global economy in focus after weak economic data from China highlighted worries about the prospects for a global slowdown. Creating a risk-off mood yesterday, China's retail and factory activity fell sharply in April as extensive COVID-19 lockdowns confined workers and consumers to their homes. 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 steadied yesterday after Bank of England Governor Andrew Bailey said the current inflation surge was the central bank's biggest challenge since it gained independence in 1997. In a choppy day, sterling had fallen both against the U.S. dollar and the euro as weak Chinese economic data added to pressure on risky currencies. 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 weakened against the greenback yesterday, and the yield on benchmark government debt slipped. Canadian factory sales fell 2.5% in March from March, Statistics Canada said. Analysts polled by Reuters had expected factory sales growth of 1.7%. Canadian wholesale trade grew by 0.3% in March. 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.
Australian Dollar-AUD
The Australian Dollar suffered a fresh setback yesterday when stunningly weak economic data out of China stoked fears of a global recession, undermining risk assets and commodities. Chinese retail sales sank 11.1% in April from a year earlier, far beyond forecasts of a 6.1% drop and testimony to how tough coronavirus lockdowns have been there. 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.
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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 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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