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Thursday, May 11th
The NZD/USD pair slumped to its 11-month lows, marked at 0.6818 in early Asian hours, following RBNZ decision to leave its official cash rate at its record low level of 1.75%. Furthermore, cautious speech of RNZB governor G.Wheeler also added some pressure on the Kiwi, where head of the Bank noted that interest rate could be increased only if inflation shows better growing pace, but adding that right now the Bank does not see any prospects of a further rapid move in inflation. However, the NZD/USD pair managed to recover some pips during the Asian trading session, as better risk-on sentiments and ongoing recovery of oil prices, fueled by bullish EIA inventory report, provided the pair with much needed relief. Now focus shifts on the US PPI report, that will be released in NA session, while the market will continue to digest recent crucial event, thereby adjusting further course for the pair.
Today the GBP/USD pair is showing low volatility level, as traders gear up for crucial BOE events, ignoring better tone of the US dollar. The pair is trading in 20-pips narrow range this Thursday, consolidating its positions in the region of 1.2940, ahead of BoE quarterly Inflation Report and its Interest Rate Decision, that are scheduled on European afternoon. Expectedly that the Bank will keep its monetary policies stance unchanged at today’s meeting, while any comments regarding further economic projections or monetary policy easing measures (since the latest economic reports of UK were not so optimistic) could set up next directional move for the pair. Besides UK crucial events, the US docket will also bring some data releases, however, the reaction on them will be silenced, considering importance of possible changes in British economy.
Seems that US bulls took a breather this morning, allowing the EUR/USD pair to recover from its yesterday’s lows, posted at 1.0853 in response to better sentiments around the greenback. Yesterday the pair faced strong selling pressure, unable to keep its position within 1.09 level, as improved prospects of a June Fed rate hike are still dominating the market, thereby broadly supporting the US dollar. Adding to that, dovish comments of ECB President M.Draghi, delivered yesterday, are also negatively influencing the pair this Thursday. The head of the CB said that it is too early to talk about a full recovery of the Eurozone economy, hinting that rush in rate increase or QE program tapering is inappropriate at the moment. Looking ahead, today traders will await for EU economic forecasts and the US PPI report for fresh impetus, while crucial events, scheduled in UK calendar, might also bring additional volatility to the major currency pair.
The USD/JPY pair is continuing to trade within striking distance of its 2-monht highs, posted at 114.38 earlier in Asia in wake of broadly stronger US currency. Recently increased prospects of a June Fed rate hike are still navigating the market, providing the buck with significant support across the board. Moreover, slightly improved investors' appetite for higher-yielding instruments is also driving flows away from safe-haven assets, such as the Japanese Yen. Later during the day, bloc of the US data, featuring PPI report and several second tier releases, will be closely watched for short-term trading impetus, while outcome of the UK interest rate decision will also serve as an additional catalyst for the pair.
The main events of the day:
UK Manufacturing Production – 11.30 (GMT +3)
BoE Inflation Report – 14.00 (GMT +3)
BoE Interest Rate Decision – 14.00 (GMT +3)
US PPI – 15.30 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.0828 R. 1.0918
USDJPY S. 113.34 R. 114.84
GBPUSD S. 1.2889 R. 1.3011
USDCHF S. 1.0031 R. 1.0123
AUDUSD S. 0.7308 R. 0.7422
NZDUSD S. 0.6861 R. 0.6983
USDCAD S. 1.3592 R. 1.3762
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