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Friday, June 1st
The EUR/USD pair remains pretty much directionless so far this session, keeping its positions just below the level of 1.1700. It seems that the common currency ignores bullish dynamics of the US dollar, thereby protecting the pair from any significant losses. Moreover, lack of further news from Italy has cooled off markets’ concerns over the formation of a coalition between populist parties, which in turn positively affects the common currency this Friday. On the other hand, re-ignited fears of a global trade war, following US President’s announcement that the US would impose tariffs on steel and aluminum, is limiting any further gains of the pair. As for the data, today we will have busy trading session ahead, featuring manufacturing data from the US and Germany, and the US non-farm payrolls, which will be able to determine pair’s further direction on Friday.
The GBP/USD pair failed to extend its recovery and today again fell below the level of 1.3300. The pair lost its positive mood after two days of recovery on the back of renewed demand for the greenback, which remains the key driving factor across the market on Friday. In addition, yesterday US President Donald Trump triggered a spike in demand for safety, having announced that the US would impose their steel and aluminum tariffs on three of the US' biggest trading partners - Canada, Mexico, and the EU. By this announcement, Mr. Trump re-ignited concerns over a global trade war, thereby weighing the pound, as a higher-yielding asset. In the day ahead, the pair will experience pretty volatile session, as the economic calendar will bring us plenty of important data, such as UK and US manufacturing reports, and US non-farm payrolls, which will be able to form pair’s near-term trajectory during the last trading session of this week.
The USD/JPY pair regained its positive tone and corrected above the level of 109.00. Today the comeback of the US dollar remains the main driving factor across the market, offering notable support to the pair. Meanwhile, the BoJ today announced reduction in JGB purchases that could be considered by markets as QE program tapering. However, market reaction to this news was limited, as experience shows that these actions will unlikely lead to easing of massive monetary policy stimulation. Looking ahead, further gains of the pair look limited, as now market’s attention remains glued to the major US jobs report. But for now slight cautiousness will continue to dominate the market, offering slight support to the safe-haven yen.
The AUD/USD pair remains the weakest asset of the Asian trending session, extending its yesterday’s retreat from 7-day highs, marked on the level of 0.7593 a day before. Renewed weakness of the pair can be explained by ongoing buying interest around the greenback. In addition, weaker-then-expected China’s manufacturing PMI and increased cautiousness ahead of important US employment data also exert pressure on the pair at the end of this week. Besides the NFP report, investors will also pay attention to the US manufacturing data, which will bring additional trading opportunities during the NA session.
Major events of the day:
German Manufacturing PMI – 10.55 (GMT +3)
UK Manufacturing PMI – 11.30 (GMT +3)
US Nonfarm Payrolls – 15.30 (GMT +3)
US Unemployment Rate – 15.30 (GMT +3)
US ISM Manufacturing PMI – 17.00 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1602 R. 1.1770
USDJPY S. 108.11 R. 109.37
GBPUSD S. 1.3235 R. 1.3377
USDCHF S. 0.9786 R. 0.9938
AUDUSD S. 0.7530 R. 0.7612
NZDUSD S. 0.6942 R. 0.7052
USDCAD S. 1.2747 R. 1.3097
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