AUDUSD pares weekly loss amid sluggish markets

A long weekend in the US and the UK join a light calendar elsewhere to restrict the market moves early Monday. Even so, Friday’s mixed US data and cautious mood ahead of this week’s key inflation clues weigh on the US Dollar, especially after the Greenback marked weekly gains. Additionally, upbeat clues from China and an absence of risk-negative headlines from elsewhere also facilitate the US Dollar’s retreat and allow commodities, as well as Antipodeans, to consolidate the previous losses.

It’s worth noting that the EURUSD and GBPUSD fail to cheer the US Dollar’s pullback amid dovish bias about the European Central Bank (ECB) and the Bank of England (BoE). However, USDJPY prints the first daily loss in three as the Bank of Japan (BoJ) officials hesitate to defend the easy-money policy.

AUDUSD and NZDUSD extend Friday’s recovery on upbeat China data and hopes of witnessing more stimulus from the largest customer, namely China. In contrast, the USDCAD pares the biggest daily loss in nine weeks despite a corrective bounce in crude oil prices. That said, oil prices benefit from Chinese updates and concerns about the OPEC+ output cut agreement. However, hawkish Fed concerns test the energy buyers of late. Moving on, Gold price licks its wounds after posting the biggest weekly fall since September 2023, especially amid the US Dollar’s pullback and due to China headlines.

Elsewhere, BTCUSD grinds higher after reporting a two-week uptrend whereas the ETHUSD holds a position on the bull’s radar after rising the most in a week since May 2021. It should be observed that optimism surrounding the US SEC’s spot ETH ETF approvals and the FIT21 bill helped cryptocurrencies to remain firmer of late.

Following are the latest moves of the key assets:

• WTI Crude oil defends the previous day’s recovery from a three-month low while posting mild gains around $78.00 at the latest.
• Gold consolidates the biggest weekly loss of 2024 by rising half a percent intraday to $2,345 by the press time.
• The USD Index stays pressured after snapping a four-day uptrend the previous day, mildly offered near 104.70 as we write.
• Wall Street closed with mild gains and allowed the Asia-Pacific shares to edge higher. That said, European shares posted minor gains during the initial trading hour.
• BTCUSD and ETHUSD print intraday gains near $68,500 and $3,910 as we write.

US Dollar retreats during holiday-thinned trading…

Upbeat US inflation clues and hawkish FOMC statements pushed back the Fed rate cut concerns the last week and allowed the US Dollar to print a weekly gain. Also favoring the US Dollar were the fears emanating from the Middle East, China, and Russia.

However, Friday’s softer growth of the US Durable Goods Orders and Michigan Consumer Inflation Expectations triggered the US Dollar’s pullback. The Greenback’s retreat extends early Monday amid the long weekend in the US and the UK, as well as due to China-linked cautious optimism.

That said, China’s Industrial Profits for the January-April period reported a steady 4.3% growth compared to last year. It should be noted that the monthly figures were impressive for April as it showed 4.0% growth versus a 3.5% contraction reported in March. Apart from the upbeat China data, the news suggesting the Dragon Nation’s launching of a US $47 billion state-backed fund to boost the semiconductor industry also allowed the commodities and the Antipodeans to consolidate the previous weekly losses.

Despite the US Dollar’s pullback, ECB officials confirmed the June rate cut and stopped the EURUSD from stretching the previous day’s rebound from the 100-SMA. On the same line, downbeat UK Retail Sales raised doubts about the hawkish BoE talks and joined the political jitters in Britain ahead of general elections to test the GBPUSD bulls.

USDJPY prints the first daily loss in four as BoJ Governor Kazuo Ueda and Deputy Governor Shinichi Uchida both pushed back concerns surrounding the Japanese central bank’s preference for the easy-money policy. Additionally, Finance Ministers from the Group of Seven (G7) indirectly favored Japan’s defense of the Yen and hence allowed the Japanese Yen (JPY) to recover.

Elsewhere, cautious optimism and the US Dollar’s retreat, as well as upbeat China clues, join the recently hawkish communique from the Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ) to underpin a corrective bounce in the AUDUSD and the NZDUSD. It should be observed that the Aussie pair gains more attention than its Kiwi counterpart due to the presence of Australia’s monthly inflation data on the weekly calendar.

USDCAD dropped heavily the previous day, and posted the biggest daily loss since late March, as the US Dollar’s retreat joined upbeat Oil prices. Even so, Friday’s downbeat Canada Retail Sales and the comparatively dovish tone of the Bank of Canada (BoC) than the Fed keep the Loonie pair on the bull’s radar.

Crude Oil edges higher amid holiday-thinned trading as hopes of witnessing more energy demand from China, due to the latest stimulus news and the upbeat data, join the OPEC+ decision to postpone the meeting by one day to June 02 and make it online rather than meeting in Vienna.

Gold marked the biggest weekly loss of 2024 in the last as traders trimmed expectations of witnessing more than one rate cut from the US Federal Reserve (Fed). Also challenging the precious metal could be the recent cautious mood in the markets ahead of general elections in the major economies. However, hopes of witnessing lower rates and the US Dollar’s struggle to defend the bulls, as well as fears of a huge US government deficit, keep the XAUUSD bulls hopeful.

• Strong buy: USDCAD, USDJPY, US Dollar
• Strong sell: AUDUSD, NZDUSD, GBPUSD
• Buy: BTCUSD, ETHUSD, Nasdaq, Gold
• Sell: DAX, FTSE 100, BTCUSD, EURUSD

Inflation data is the week’s eye candy…

Although the absence of British and American traders will restrict market moves for the day, this week’s US Core PCE Price Index, the Fed’s favorite inflation gauge, will be an important read for market watchers. Also crucial will be the inflation clues from Australia and Germany, as well as the US CB Consumer Confidence and China PMIs for May. Given the latest shift in the rate bias about the Fed, the US Dollar may well extend the earlier gains during the late week and weigh on the commodities and Antipodeans.

May the trading luck be with you!