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Market News Forex Trading Alert: Upbeat Data Helps Dollar Climb, Euro Under Pressure As Inflation Hits New High
Forex Trading Alert: Upbeat Data Helps Dollar Climb, Euro Under Pressure As Inflation Hits New High
The euro fell against the dollar on Wednesday, as the euro remained under pressure thanks to upbeat U.S. economic data after another record high in euro zone inflation raised concerns about the region's growth prospects.
2022-06-02
8153
At the beginning of the Asian market on Thursday (June 2), the US dollar index was now at 102.55, which was high and volatile after rising for two consecutive days. The euro fell against the dollar on Wednesday, helped by upbeat U.S. economic data. The euro remained under pressure after another record high in euro zone inflation sparked investor concerns about the region's growth prospects.
The euro fell around 0.8 percent against the dollar on Wednesday, extending Tuesday's losses. Data on Wednesday showed U.S. manufacturing activity picked up in May as demand for commodities remained strong, which could ease fears of a looming recession. Separately, the number of job vacancies in the U.S. fell in April, but remains at very high levels.
"While overall job openings and turnover rates remain near record levels, beneath the surface there are clear signs of labor shortages in the hardest-hit industries," Michael Pearce, senior U.S. economist at Capital Economics, said in a note. is easing. This lends some support to the view that normalizing labor market conditions does not necessarily lead to a recession.”
Positive U.S. data put more pressure on the euro, which has been in decline following Tuesday's inflation data, which hit a record high in the euro zone.
"The dollar has edged higher since the long weekend, finding support from rising U.S. Treasury yields and other factors as a safe-haven hedge against worsening global inflation," said Joe Manimbo, senior market analyst at Western Union Business Solutions.
Hopes that inflation may have peaked are being challenged by oil prices, which have just posted their sixth straight monthly gain, the longest such streak since 2011.
"Oil holding above $115 does not inspire confidence that inflation has peaked or is close to it," Manimbo said.
European Union leaders agreed in principle on Monday to cut most of Russia's oil imports by the end of the year, the latest news to push prices higher.
David Forrester, senior foreign exchange strategist at ACM in Hong Kong, said: "Amid rising oil prices, rising U.S. Treasury yields and the Fed's quantitative tightening, the dollar has regained its strength, and the oil price may push up inflation, adding to the Fed. interest pressure.”
The Australian dollar rose more than 0.7% on Wednesday after data showed the country's economy performed better than expected in the first quarter, with strong domestic demand offsetting the drag from bad weather and an influx of imports, paving the way for more rate hikes aimed at fighting inflation. flat road. After that, the Australian dollar retreated and finally closed down 0.06%.
The Bank of Canada raised interest rates for the second time in a row by 50 basis points on Wednesday, raising the policy rate to 1.5% from 1.0%, and said it was ready to take "more forceful" action to rein in inflation if necessary, opening the door for more aggressive policy tightening. The greenback then fell to its lowest level in nearly six weeks against the Canadian dollar.
Sterling fell 0.89% on Wednesday as investors worried about a worsening growth outlook. A survey earlier showed UK manufacturing activity expanded at the slowest pace since January 2021 in May.
1. ING: EUR/USD could fall to 1.05 by the end of the month
Concerns over the risks to growth in the euro zone are weighing on the euro, which could fall to as low as 1.05 by the end of the month, after the European Union announced sanctions plans to ban imports of Russian oil. The euro has already priced in a lot of monetary tightening, and it's hard to find any strong bullish factors, although high inflation has underpinned expectations for a tightening of the ECB's monetary policy
2. ING Bank: The U.S. dollar is expected to stabilize or even strengthen for the rest of the week
Our bank believes that the U.S. dollar is expected to stabilize and even strengthen against most G10 currencies in the rest of the week, due to rising U.S. bond yields And US economic data still supports the Fed to tighten monetary policy. Dollar Index DXY on track to recover to 103 levels ahead of Fed meeting on June 15
3. European asset manager Amundi: EUR/USD is still expected to reach parity, we do expect a slowdown in the U.S. economy, but not a recession; the euro zone economy looks more fragile and the countries are more divided
4. AXA Investment Management chief economist Gilles Moec: The Bank of England is expected to raise interest rates further due to fiscal support
The UK will invest more money to cushion the impact of energy prices on income, which will push the Bank of England to raise interest rates further. The BoE's response is not necessarily because actual inflation will end up being higher than expected, but more importantly because the BoE will feel that with fiscal support, it can afford further tightening. Thanks to fiscal support, the Bank of England can help anchor inflation expectations without getting too nervous about economic conditions. We expect the BoE to hike rates in June, August, September and November, pushing rates to 2%
5. Wells Fargo CEO: It will be extremely difficult for the Fed to achieve a "soft landing", and the US economic growth trend has become less strong
The euro fell around 0.8 percent against the dollar on Wednesday, extending Tuesday's losses. Data on Wednesday showed U.S. manufacturing activity picked up in May as demand for commodities remained strong, which could ease fears of a looming recession. Separately, the number of job vacancies in the U.S. fell in April, but remains at very high levels.
"While overall job openings and turnover rates remain near record levels, beneath the surface there are clear signs of labor shortages in the hardest-hit industries," Michael Pearce, senior U.S. economist at Capital Economics, said in a note. is easing. This lends some support to the view that normalizing labor market conditions does not necessarily lead to a recession.”
Positive U.S. data put more pressure on the euro, which has been in decline following Tuesday's inflation data, which hit a record high in the euro zone.
"The dollar has edged higher since the long weekend, finding support from rising U.S. Treasury yields and other factors as a safe-haven hedge against worsening global inflation," said Joe Manimbo, senior market analyst at Western Union Business Solutions.
Hopes that inflation may have peaked are being challenged by oil prices, which have just posted their sixth straight monthly gain, the longest such streak since 2011.
"Oil holding above $115 does not inspire confidence that inflation has peaked or is close to it," Manimbo said.
European Union leaders agreed in principle on Monday to cut most of Russia's oil imports by the end of the year, the latest news to push prices higher.
David Forrester, senior foreign exchange strategist at ACM in Hong Kong, said: "Amid rising oil prices, rising U.S. Treasury yields and the Fed's quantitative tightening, the dollar has regained its strength, and the oil price may push up inflation, adding to the Fed. interest pressure.”
The Australian dollar rose more than 0.7% on Wednesday after data showed the country's economy performed better than expected in the first quarter, with strong domestic demand offsetting the drag from bad weather and an influx of imports, paving the way for more rate hikes aimed at fighting inflation. flat road. After that, the Australian dollar retreated and finally closed down 0.06%.
The Bank of Canada raised interest rates for the second time in a row by 50 basis points on Wednesday, raising the policy rate to 1.5% from 1.0%, and said it was ready to take "more forceful" action to rein in inflation if necessary, opening the door for more aggressive policy tightening. The greenback then fell to its lowest level in nearly six weeks against the Canadian dollar.
Sterling fell 0.89% on Wednesday as investors worried about a worsening growth outlook. A survey earlier showed UK manufacturing activity expanded at the slowest pace since January 2021 in May.
Thursday's Important Data Preview
Institutional view
1. ING: EUR/USD could fall to 1.05 by the end of the month
Concerns over the risks to growth in the euro zone are weighing on the euro, which could fall to as low as 1.05 by the end of the month, after the European Union announced sanctions plans to ban imports of Russian oil. The euro has already priced in a lot of monetary tightening, and it's hard to find any strong bullish factors, although high inflation has underpinned expectations for a tightening of the ECB's monetary policy
2. ING Bank: The U.S. dollar is expected to stabilize or even strengthen for the rest of the week
Our bank believes that the U.S. dollar is expected to stabilize and even strengthen against most G10 currencies in the rest of the week, due to rising U.S. bond yields And US economic data still supports the Fed to tighten monetary policy. Dollar Index DXY on track to recover to 103 levels ahead of Fed meeting on June 15
3. European asset manager Amundi: EUR/USD is still expected to reach parity, we do expect a slowdown in the U.S. economy, but not a recession; the euro zone economy looks more fragile and the countries are more divided
4. AXA Investment Management chief economist Gilles Moec: The Bank of England is expected to raise interest rates further due to fiscal support
The UK will invest more money to cushion the impact of energy prices on income, which will push the Bank of England to raise interest rates further. The BoE's response is not necessarily because actual inflation will end up being higher than expected, but more importantly because the BoE will feel that with fiscal support, it can afford further tightening. Thanks to fiscal support, the Bank of England can help anchor inflation expectations without getting too nervous about economic conditions. We expect the BoE to hike rates in June, August, September and November, pushing rates to 2%
5. Wells Fargo CEO: It will be extremely difficult for the Fed to achieve a "soft landing", and the US economic growth trend has become less strong
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