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US Dollar gains before critical NFP number
Information is not investment advice
Ichimoku Kinko Hyo
GBP/JPY: The pair is trading below the cloud. A downward pressure would lead the pair to exit further the cloud, confirming a bearish outlook.
XAG/USD: Silver continuous to stand above 38.2% retracement area. Bearish pressure gains momentum.
EU Market View
Asian equity markets traded cautiously following the tech-led declines in the US and with sentiment constrained by US-China tensions. Asian stocks followed Wall Street lower on Friday as signs of a strengthening U.S. recovery boosted bets for higher inflation and an earlier tapering of Federal Reserve stimulus.
U.S. Treasury yields jumped, lifting the dollar and hurting tech shares, after better-than-expected employment data overnight raised expectations for a strong reading for nonfarm payrolls on Friday, while a measure of service sector activity climbed to a record high. While Fed officials have consistently said they expect current inflationary pressures to be transitory and for ultra-easy monetary policy to stay in place for some time, they are also increasingly touting the need to at least start talking about a tapering of stimulus. New York Fed President John Williams said on Thursday that the U.S. economy is still far from the point at which the central bank might begin to withdraw its support, although it makes sense for officials to begin discussing their options for adjusting policy. Fed Chair Jerome Powell speaks on central banks and climate change at a conference later in the global day. Investors are carefully parsing the economic data to gauge if inflation could prove sticky enough to force the Fed's hand on tapering. Last month, much-weaker-than-expected nonfarm payrolls numbers knocked back those expectations, weakening Treasury yields and the dollar.This month, economists forecast private payrolls likely increased by 600,000 jobs in May, after rising only 218,000 in April.
The dollar climbed in early European trade Friday, reaching multi-week highs after a spate of strong economic data ahead of the monthly payrolls release raised the possibility of early Federal Reserve tightening. The dollar has been under pressure for much of 2021 as traders have reacted to ultra-easy Fed policies, and the suggestions that these would stay in place for some time. However, this narrative is starting to change as the U.S. economic rebound gains in strength, throwing up the possibility of it driving policy tightening.
Looking ahead, highlights include EZ and UK Construction PMIs, US and Canadian Jobs Reports, US Factory Orders, Fed’s Powell, ECB’s Lagarde, Villeroy, de Cos, PBoC’s Yi Gang, BoJ’s Kuroda
EU Key Point
- Germany reports 3,165 new coronavirus cases, 86 deaths in latest update today.
- Gold is back to unchanged on the session after its early drop.
- US President Biden will speak on the May NFP Friday at 1415 GMT.
- More Australian analysts change their RBA forecasts, ANZ say the Bank to move to 'flexible' QE.
- Chinese media cites analysts, says expectations for yuan appreciation have abated.
- US authorities investigations of ransomware hacks similar priority as terrorism.
- USDCHF retraces back into swing area on the hourly chart.
- Fed Williams: The time is not now to take any action.
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