FX Week Ahead - Top 5 Events: BOE & RBA Meetings; Canada, New Zealand, US Jobs
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FX Week Ahead Overview:
The first week of a new month brings about the usual smattering of ‘high’ rated event risk from around the globe.
The global economic recovery from the coronavirus pandemic is in focus, with two central bank meetings and three major labor market reports (including April US NFP).
Overall, recent changes in retail trader positioning suggest that the US Dollar still has a mixed bias.
05/04 TUESDAY | 04:30 GMT | AUD Reserve Bank of Australia Rate Decision
The RBA’s May meeting may come and go without many surprises, given the recent tone that’s been established over the course of many weeks and months. But the fact of the matter is that the RBA still has some QE allocated henceforth, and there may be some language around the timing of bond purchases later this year. Absent that, however, the RBA may offer some light jawboning around the Aussie itself, which
Monthly Forex Seasonality - May 2021: Sell in May and Go Away? Not for USD, Stocks
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Weekly Fundamental US Dollar Forecast: Rise in US Treasury Yields May Not Help Greenback; April NFP Due
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Fundamental Forecast for the US Dollar: Neutral
The drop in the US Dollar has occurred even as US Treasury yields have stabilized (if not turned higher), suggesting that rising inflation expectations – not real US yields – are behind the move, which has historically been bad for the greenback.
The main economic event of the week will be the April US non-farm payrolls report due out on Friday, May 7.
According to the IG Client Sentiment Index, the US Dollar has a mixed bias heading into the first week of May.
US Dollar Forecast: Little Relief After April Fed Meeting - Levels for DXY Index, USD/JPY
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The US Dollar (via the DXY Index) has traded higher 10 days in April, while trading lower 11 days. Yet the gauge is still down by -2.75% on the month.
Rising US Treasury yields may help cushion the US Dollar in an environment otherwise defined by the Fed’s ultraloose monetary policy and rising inflation pressures.
US Dollar’s Lopsided April
The US Dollar (via the DXY Index)’s tough month of April has offered few opportunities for reprieve. The damage to the greenback has been asymmetric: even though the DXY Index has traded higher by 10 days thus far (including today) while falling on 11 days, it is down by -2.75% month-to-date with less than 48-hours to go. It’s been the third-worst April over the past decade, and price action at the end of the month has offered few signs of a sustainable reversal. The turn of the calendar coupled with rising US Treasury yields has a
Mexican Peso Forecast: Commodities Rally Boosts Peso s Appeal - Setups for MXN/JPY, USD/MXN
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Mexican Peso Outlook:
Amid a global commodity price boom in recent weeks, the Mexican Peso has benefited, achieving or nearing yearly highs versus the Japanese Yen and the US Dollar.
MXN/JPY rates are flagging after trading through multi-year downtrend resistance, suggesting a major turn may be arriving soon.
We can use the IG Client Sentiment Indexfor USD/CAD rates as a close proxy for USD/MXN exposure, which has a mixed bias.
Mexican Peso Retaining Strength
Throughout the month of April, the combination of stability in long-end global bond yields and a surge in global commodity prices, particularly agriculture and a subset of base metals, has provided a sturdy base from which the Mexican Peso has been able to rally. For the most part, price action remains in line with expectations outlined in our 1Q’21 Top Trade Opportunities and 2Q’21 Top Trade Opportunities. With s
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