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Title: Dollar slips after debt ceiling bill progresses; payrolls due later

Jun 02, 2023 03:07AM ET

By: AnalysisWatch

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The U.S. dollar slipped lower in early European trade Friday, adding to the previous session’s sharp losses after the U.S. Congress approved the debt ceiling bill, while traders awaited the widely watched monthly payrolls release.

At 02:55 ET (06:55 GMT), the US Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 103.433, near a one-week low.

The index dropped 0.6% on Thursday, its worst day in almost a month, and is on course to fall 0.7% this week, which would be its worst week since mid-January.

This news has hit the dollar, which had been a key beneficiary of the uncertainty because of its safe-haven status.

Attention now turns to the release later Friday of the official monthly U.S. jobs report, which is expected to show that the largest economy in the world added 180,000 jobs in May.

The jobs report will be one of the last pieces of data before the Fed’s June meeting and could help to determine whether the central bank agrees to pause its 14-month rate hiking campaign.

This likelihood appeared to grow over the last couple of days after both Philadelphia Fed President Patrick Harker and Fed Governor Philip Jefferson came out in favor of such a move.

Elsewhere, EUR/USD rose 0.1% to 1.0773, climbing to a one-week high after European Central Bank President Christine Lagarde pointed to further interest rate hikes even as the May eurozone inflation release came in weaker than expected on Thursday.

GBP/USD rose 0.1% to 1.2544, USD/JPY rose 0.1% to 138.88, after dropping to as low as 138.44 on Thursday for the first time since May 24, while AUD/USD rose 0.6% to 0.6611.

The Australian dollar was boosted by the news that the country's independent wage-setting body will raise the minimum wage by 5.75% from July 1, adding to inflation worries.

The Reserve Bank of Australia meets next week, and this has lifted expectations of a quarter-point rate hike.

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Title: Eurozone Bond Yields Edge Higher as Market Looks for Little Change in PMI Data -- Market Talk

May 23, 2023 02:25 AM ET

By: AnalysisWatch

Eurozone government bond yields moved higher as the market awaits data from the flash purchasing managers' survey. "Given our expectation that the composite PMI is likely to remain broadly unchanged, it is possible that we will see further losses on EGBs [eurozone government bonds] during the day," analysts at UniCredit Research wrote in a note. In a poll by The Wall Street Journal, analysts forecast the flash composite PMI for the eurozone will fall to 53.5 points in May from 54.1 points in April. The yield on 10-year German bunds is trading 0.7 basis point higher at 2.465%, according to Tradeweb.

Title: Russian rouble falls to one-month low as drones attack Moscow

May 30, 2023 03:02 AM ET

By: AnalysisWatch

The ruble fell to a more than one-month low against the dollar on Tuesday as drones attacked Moscow and the Russian currency lost the support of a favorable tax season.

Ukraine launched one of its biggest drone attacks on Moscow, according to Russia, whose defense ministry said all were destroyed near the city. Kiev made no immediate comment, but has not publicly acknowledged launching attacks against targets inside Russia.

At 0646 GMT, the ruble was 0.5% weaker against the dollar at 81.24 (RUBUTSTN=MCX), having earlier reached 81.39, its weakest point since April 28. Against the euro, the EURRUB lost 0.2% to trade at 86.99 and against the yuan it lost 0.4% to 11.43 (CNYRUBTOM=MCX).

Monthly tax payments were due on Monday, which usually support the ruble as exporters remit foreign currency income to pay local obligations.

"The ruble lost support yesterday from a tax period that never seriously strengthened it," Alor Broker said in a note.

Brent crude BRN1!, the global benchmark for Russia's main export, fell 0.7% to $76.56 a barrel.

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Title: EUR/USD skates on thin ice near 1.0700, EU/US Consumer Confidence, US default jitters in focus

May 30, 2023 12:01 AM ET

By: AnalysisWatch

The EUR/USD currency pair remains at a 10-week low around the 1.0700 level heading into Tuesday's European session.

The euro pair remains on the back foot for the sixth straight day amid a hawkish stance by the Federal Reserve (Fed) as well as doubts over the European Central Bank's (ECB) ability to hike rates further. Downward pressure on the major currency pair is also exerting pressure on the latest change in market sentiment as traders seek to encourage a deal by US policymakers to extend the debt ceiling until January 2025 ahead of the House of Representatives and Senate vote on the bill ahead of the US default date of June 05.

Weak German growth data last week renewed concerns about the slowdown in the old continent's economy and pushed back the ECB's hawkish bets, even as policymakers continue to cite higher inflation woes and advocate tighter monetary policy. Among them was the ECB's latest policymaker Pierre Wunsch, who said on Saturday, "We have raised by 400bp and we may have to do more."

In addition, Spanish Prime Minister (PM) Pedro Sanchez has called snap elections for July, while the Greek President is set to appoint an interim PM ahead of a June 25th re-election, which in turn is raising geopolitical concerns in the bloc and weighing on EUR/USD prices.

On the other hand, traders are trying to cheer the successful negotiation aimed at avoiding a US default as some US politicians, mostly Republicans, are against the compromises that were made on their previous demands to reach a deal. Politicians are also showing a readiness to challenge the agreement in both the House of Representatives and the Senate, which in turn fuels the previous risk sentiment in the market and keeps the US dollar on the front foot.

Against this backdrop, US equity futures are printing modest gains, but Treasury yields remain under pressure and are challenging bulls on the US Dollar Index (DXY) as the greenback hovers around a nine-week high against the six major currencies.

Title: GBP/USD Price Analysis: Defends downside near 1.2340 as BoE to raise rates further

May 30, 2023 01:17 AM ET

By: AnalysisWatch

The GBP/USD currency pair rebounded after defending downwards near the key support around 1.2340 at the start of the European session. Cable showed a recovery as the US Dollar Index (DXY) faced pressure as it attempted to regain its daily high above the 104.33 level. Further gains in the dollar index seem possible as it is not showing signs of a bearish reversal yet.

Futures on the S&P 500 index are showing choppy moves after the close of Asian trading as investors expect wild moves when New York opens after the long weekend. The overall market sentiment is cautious as investors expect the Federal Reserve (Fed) not to break the spell of policy tightening in June.

Sterling has come into focus as the Bank of England (BoE) is expected to raise interest rates further given that UK inflation is not easing as expected.

The GBP/USD currency pair is showing a volatile contraction after falling to near horizontal support drawn from the March 23 high at 1.2344. The cable is expected to deliver broader tics and witness heavy volume after the volatility contraction pattern explodes.

It is very likely that a medium-term moving move to the vicinity of the 50-period exponential moving average (EMA) at 1.2390 would trigger a downside bias.

The Relative Strength Index (RSI) (14) has so far moved into the 40.00-60.00 range from the bearish 20.00-40.00 range, indicating a loss of downward momentum. However, a downtrend is not ruled out for now.

If the asset falls below the May 25 low at 1.2308, US dollar bulls will strengthen further and drag the cable towards the April 03 low at 1.2275 and subsequently the March 14 high at 1.2204.

On the flip side, a recovery above the May 09 high at 1.2640 will propel the major currency towards resistance at the round 1.2700 level and the April 26 2022 high at 1.2772.

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Title: USD/JPY Price Analysis: Grinds higher around mid-140.00s within rising channel despite overbought RSI

May 30, 2023 01:46 AM ET

By: AnalysisWatch

USD/JPY is trading at 140.50 as bulls and bears tug of war over mixed technical signals heading into Tuesday's European session.

Still, the yen pair is plotting a three-week-old bullish channel that is currently between 140.20 and 141.85, keeping buyers hopeful.

However, overbought conditions at the RSI (14) line join Monday's "Shooting Star" candle and suggest that the bulls are running out of breath.

As a result, USD/JPY traders should remain cautious before taking any new positions, especially on the short side given the broad strength in the US Dollar, unless the quote remains within the indicated channel.

Even if the quote breaks the 140.20 support, the 140.00 psychological magnet will act as another filter to the south before directing the bears towards the 200-SMA level of 137.25.

Following this, the key to buyers' defense will be the rising support line from March 24, at the latest near 135.80.

On the other hand, the successful trading of the USD/JPY pair above the previous day's peak at 140.92 contradicts the bearish candle. However, buyers will need to overcome the round 141.00 level to be convinced.

In that case, the late November 2022 peak at 142.25 may act as a temporary stop before directing the bulls to the aforementioned upper channel line around 142.85.

Title: AUD/USD declines towards 0.6500 as USD Index prints a fresh 10-week high amid hawkish Fed bets

May 30, 2023 01:09 AM ET

By: AnalysisWatch

AUD/USD is falling towards support at 0.6500 at the start of the European session. The Aussie asset witnessed huge selling pressure as the US Dollar Index (DXY) printed a new ten-week high at 104.45 on expectations that the Federal Reserve (Fed) will not stop its policy tightening spell0 in June and will continue to raise interest rates further to keep pressure on stubborn inflation in the United States.

Futures on the S&P 500 index continuously eased published gains in Asia on Monday as investors worried that Tuesday's trading session could be extremely volatile after a long weekend. The overall market mood turned cautious as investors await one more interest rate hike from the Federal Reserve.

The U.S. Dollar Index (DXY) refreshed its 10-week high as investors shifted their focus from issues related to the U.S. debt ceiling amid optimism that Congress will pass it, to the Federal Reserve's June monetary policy meeting after observing the resilience of consumer spending.

Meanwhile, the White House's confirmation of the US borrowing ceiling hike created a net pressure on US Treasury yields. Yields on offered 10-year US Treasury bonds fell below 3.77%.

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