FX Week Ahead - Top 5 Events: Chinese, German, US Inflation Rates; Banxico Rate Decision; US Retail Sales
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FX Week Ahead Overview:
The second week of May sees a global focus in the first half and a North American focus in the second half.
US economic data due in the second half of the week doesn’t appear that it will change the hearts and minds of traders after the disappointing April US jobs report.
Overall, recent changes in retail trader positioning suggest that the US Dollar has a mixed bias.
05/11 TUESDAY | 01:30 GMT | CNY Inflation Rate (APR)
With respect to any inflation figures anywhere, it’s been widely anticipated that a significant base effect would be making its way through data series over the coming months. China is not excluded from this expectation. Accordingly, the People’s Bank of China may thus look through any spike in the inflation figures that would, in an otherwise normal environment, suggest that a reduction in monetary support might
Chinese Yuan Technical Analysis: EUR/CNH, USD/CNH Rates Outlook
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Chinese Yuan Outlook:
USD/CNH rates have tumbled towards their yearly low, and in the grand scheme of things, the rally seen at the start of 2021 may have been a brief setback before a deeper setback.
More weakness in USD/CNH is good for risk appetite, regardless of what’s happening in EUR/CNH.
Falling US Treasury yields, higher US equity markets, and surging commodity prices suggest that traders are finding the environment not so favorable for the US Dollar.
Chinese Yuan Says ‘Go’
Stable if not softening US Treasury yields have proved to be among the most significant factors driving asset allocation decisions within the EM FX space in recent weeks, and the latest drop in US yields following the April US labor market report has spurred another rally in EM FX. For traders, a weaker US jobs report means the Federal Reserve will keep rates lower for longer without altering its QE program.
Weekly Australian Dollar Technical Forecast: Fresh Highs in Sight for AUD/JPY, AUD/USD
Technical Forecast for the Australian Dollar: Bullish
It may not be the most seasonally friendly time of year for the Australian Dollar, but a prevailing ‘risk-on’ mood in global financial markets is giving a bid to the commodity-linked currency.
Both AUD/JPY and AUD/USD rates are breaking higher out of recent consolidations, suggesting that near-term technical structure is bullish.
Australian Dollar Rates Week in Review
The first week of May proved a strong start for the trio of commodity currencies, which were the top three performers among the major currencies. Coming in first place, the Australian Dollar was able to post gains against all of its major counterparts, with pairs like AUD/JPY (+1%) and AUD/USD (+1.66%) posting the strongest gains. With the Reserve Bank of Australia now in the rearview mirror and a relatively benign economic calendar due in the days ahead, even though it ma
Will Lumber Prices Prick US Housing Bubble or Will Low Mortgage Rates Prevail?
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US Housing Market Outlook:
There’s a lot of chatter among market participants about the state of the US housing market, which has seen its strongest run of price growth since 2006 – right before the US housing bubble burst, which helped lead to the Global Financial Crisis.
Supply chain issues (e.g. closed sawmills) have helped lift lumber prices to all-time highs, leading to over a $35K increase in new home prices in the US since the start of 2021.
Low mortgages have kept measures of housing affordability within reason, but US Treasury Secretary Janet Yellen’s warning this week about higher interest rates are a stark warning.
Gold Price Forecast: Flag Forms as Double Bottom Breakout Stalls - Levels for XAU/USD
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Gold Price Outlook:
Ever since clearing consolidation resistance in mid-April, gold prices have been tediously moving sideways.But gold prices may simply be flagging – in a bull flag, that is – after establishing their double bottom, meaning that more upside may be ahead yet.
Seasonality, which was extremely bullish for gold in April, has taken a dramatic turn: May has been one of the worst, if not the worst, months of the year for gold prices.
According to the IG Client Sentiment Index, gold prices have a bullish bias in the near-term.