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Monday, May 22nd
The EUR/USD pair extended its consolidation pattern of 15-pips into early Europe, however, remaining near lower bound of its trading corridor just below 1.1200 on the back of mild recovery of the dollar against its main competitors, witnessed this morning. Last week the greenback came under strong selling pressure amid political uncertainty in the US and decreasing prospects of June Fed rate hike. However, the probability that the Fed will take monetary policy tightening measures at its next meeting is back near 80%, thereby providing some relief to the US currency. Looking ahead, today the economic data calendar will remain silent, so US dollar’s price actions will continue to determine pair’s further steps.
Today the GBP/USD opened with moderate bearish gap and refreshed daily lows in the 1.2980 region, following latest headlines on Brexit developments. Concerns over “hard Brexit” re-emerged over the weekend, after UK PM T.May and Brexit minister D.Davis threatened to quit Brexit negotiations if UK faces “divorce bill” of a EUR 100 billion. However, earlier PM Theresa T.May has already suggested that ‘money paid in the past’ should be taken into account in the final figures. It is also worth adding, that Brexit negotiations should start on June 19. Moreover, mild recovery of the US dollar and shrinking risk appetite are also collaborating with pair’s downside at the beginning of the week. Nothing noteworthy is scheduled in data calendar for this Monday, so USD price dynamics and developments surrounding Brexit negotiations will remain as key drivers at the start of this week.
The AUD/USD pair remained offered through Asian session, easing part of its Friday’s strong gains, on the back of another attempt of the greenback to recover part of its major losses. Seems that US bulls are trying today to retake control over the pair, sending it to the region 0.7450. However, further downside of the pair remains fragile, as market turns cautious ahead of D.Trump’s budget release, which is scheduled on this Tuesday. On the other hand, re-emerged risk-off sentiments, backed by N.Korean missile test, are driving flows away from higher yielding assets, including the Aussie. Adding to that, slightly weaker sentiments on the commodity market and especially around the copper are also negatively influencing the Australian currency as of late. In absence of any economic release, today the pair will follow USD price dynamics, which is largely driven by expectations of a June Fed rate hike, at the start of this working week.
The USD/JPY pair stalled its Asian recovery and stepped away some pips lower in early Europe, as shrinking risk appetite navigates the market this Monday. Weekend’s news of a launch of mid-range ballistic missile by North Korea, have reignited risk-aversion trend across the market, thereby lending some support on safe-haven assets, such as the yen. However, red numbers of the Japanese Trade Balance report and overnight’s attempt of the US dollar to recover its positions across the market provided stronger support the pair this morning. With no relevant data release for the pair this Monday, traders will set up their attention on upcoming US President D.Trump’s budget plan release, while broader risk trend and US dollar’s price actions will navigate the pair through this Monday.
Important events of the day:
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1055 R. 1.1287
USDJPY S. 110.65 R. 111.99
GBPUSD S. 1.2872 R. 1.3118
USDCHF S. 0.9665 R. 0.9833
AUDUSD S. 0.7380 R. 0.7506
NZDUSD S. 0.6856 R. 0.6972
USDCAD S. 1.3439 R. 1.3645
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