It has been a slow start to the week, but I am still seeing a lot of bullish momentum in the USD/CAD as the markets crave more downside momentum. Despite the softness in the USD/CAD and Euro, the markets continue to find reasons to bid up the USD. It is hard to call the markets in the first week of August, but I think this is an important week.
The US Dollar did not get off to a great start today, as it traded sideways early in the day. The USD was expected to fall, as the Bank of Japan decided to raise interest rates. The market was also disappointed by the weaker than expected March jobs report, as it primarily showed that wages were not rising fast enough to keep up with the high pace of inflation.
- US dollar moves slightly despite positive PMI
- Euro strengthens whileopens further
- Wall Street recovers
The Forex week began with little movement in any direction for the US dollar, which remains caught between rising inflation, highlighted by key benchmarks such as last week’s PCE and this week’s CPI, which proved strong, and a steadily improving economy that is also becoming more productive. The result was a lack of clear direction, and the strengthening of the euro benefited from this, as did the impressive figures coming out of the region. Wall Street also continued last week’s positive sentiment on the first trading day of the week and month.
Improving purchasing managers’ indices do not support dollar strength
The dollar remains weak during this new trading month, despite the fact that the economy is showing very clear signs of improvement and positive indicators in many sectors reflect the same. The ISM PMI for manufacturing exceeded analysts’ expectations with a figure of 61.2. This indicates a clear improvement in the sector and is a step higher than the predicted 60.7. However, this did not affect the value of the dollar for Forex traders. The U.S. dollar index, a key indicator of the currency’s exchange rate against a basket of other major currencies around the world, remains below the important 90-point benchmark. A key factor in this regard is the continuing concerns about inflation. This trend was also underlined by today’s CPI data, which came in above expectations at 2% for May.
The euro stays where others disappear
The continued weakness of the dollar may benefit other major currencies. This opportunity has been missed by IDPs, who continue to struggle with a number of internal problems. Meanwhile, the EUR continues to receive support according to currency brokers. This is reflected in the fact that the currency has now reached 1.225 against the USD. This strength was largely due to the fact that the EU PMI data were stronger than those of the US. German economic data for May was revised upward to 64.4 and final EU data was also revised upward to 63.1. This exceeded earlier expectations and boosted the currency.
Markets continue to move higher
Wall Street markets continue to project an optimistic economic outlook even as Treasury bond yields have risen. The Dow Jones jumped another 150 points during the opening bell, and the S&P 500 also approached an all-time high. Not only the inventory data are checked. Gold prices are now above $1,900 and oil prices have hit a two-year high following news that the OPEC+ group has agreed to ease production restrictions and put more than 2 million barrels a day on the market during key summer months.
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