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Monday, June 5th
The GBP/USD pair extends its consolidation pattern in the region of 1.2870 level into the European session after opening with a bearish gap. The pound remains one of the most discussed currencies of this Monday, as various events are influencing the British currency at the start of this week. UK bulls were unable to hold its Friday gains and allowed the pair to step away from the region of 1.2890-2900, as another terrorist attack hit the UK over the weekend, weakening sentiments around the pound. By the moment of writing, Islamic State has claimed responsibility for the London Bridge terrorist attack. Moreover, investors continue to stay cautious, as only four days left until the UK general election. According to the latest polls, Conservatives slightly improved its positions lately, however, remaining on a short distance from its main opponents – Labour party. On the other hand, the market continues to digest positive UK construction data and disappointing NFP, providing support to the pound this Monday. Now immediate focus shifts toward the UK Services PMI report, while ISM Non-Manufacturing PMI will hog the limelight in NY trading hours.
The EUR/USD pair continues to retreat from this year tops, posted at 1.1285 level on the back of disappointing NFP data. On Friday, the pair met strong wave of bids after the US employment report for May reflected weaker-then-expected numbers, sending the US dollar sharply lower against its main competitors. The sharp retreat of the greenback may also be explained by the fact that investors had already managed to price in positive outcome of Friday’s crucial event, as US ADP Nonfarm Employment Change, seen last Thursday, came sharply higher market’s expectation, indicating on a significant increase in jobs in the US labor market. However, despite negative data from the US labor market, the greenback managed to stage a minor recovery during the Asia, as chances that the Fed will implement tightening measures to its monetary policy remain very high. Looking ahead, today Eurozone will offer only secondary data reports, while the US economy will release ISM Non-Manufacturing PMI, which will attract most part of market’s attention in NA session.
After having opened with a bearish gap at the start of this week, the AUD/USD pair regained its upside, which began on Friday on the back of disappointing NFP data. Currently the pair is trading within striking distance of its 7-day highs, marked this morning at 0.7487 spot, after the Australian economy provided the market with positive data from the labor market. Additional support the Aussie received from China services PMI, which came out above market’s expectations. However, mild recovery of the US dollar, as well as lower copper prices could limit pair’s further bullish rally. Further, in focus will stay data from the US economy, while any sharp moves of the pair remain restricted, as we are getting closer to RBA Interest Rate Decision, which is scheduled on tomorrow’s morning.
The USD/JPY staged a minor recovery this morning, after sharp drop, seen last Friday. Seems that the US bulls are trying to recover at the start of this week after strong sell-off led by weaker-then-expected NFP, as odds of a June Fed rate hike are still above 80%. In addition, the pair received extra support during Asia hours, after positive Chinese data reignited risk-appetite across the market. However, further recovery remains capped, as markets are still digesting recent London Bridge terror act, thereby boosting demand for traditional safe-haven assets. Today investors will keep their focus on a fresh set of US macroeconomic data, featuring ISM Non-Manufacturing PMI, for fresh impetus on the pair in NA session.
The main events of the day:
UK Services PMI – 11.30 (GMT +3)
US ISM Non-Manufacturing PMI – 17.00 (GMT +3)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.1177 R. 1.1335
USDJPY S. 109.43 R. 112.19
GBPUSD S. 1.2820 R. 1.2938
USDCHF S. 0.9553 R. 0.9751
AUDUSD S. 0.7345 R. 0.7493
NZDUSD S. 0.7028 R. 0.7204
USDCAD S. 1.3434 R. 1.3568
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