Investing.com – The dollar opened the week rising against other major currencies as supported by the steep rise in U.S. Treasury yields last Friday. This week’s currency market is occupied by a slew of economic data, as investors will see inflation data from Australia, Japan and the U.S. to look for cues.
The ECB meets on Thursday against a backdrop of concern about a global trade spat and a softening in euro zone economic data that could potentially hamper the central bank's plans to unwind its extraordinary monetary stimulus. In March, the European Central Bank dropped a long-standing pledge to increase its bond buying if needed, taking another small step in weaning the euro zone economy off protracted quantitative easing (QE). Just how much recent economic and international developments are impacting the ECB's plans to unwind QE could well make for a lively debate.
Investing.com - Gold prices will remain susceptible to any further gains in the dollar this week after declines on Friday on the back of a stronger greenback which was boosted by expectations for a more aggressive pace of policy tightening by the Federal Reserve this year.
Investing.com - Investors will be awaiting an update on the health of the U.S. and UK economies this week ahead of Friday’s data on first quarter growth. Monetary policy meetings in the euro zone and Japan will also be in focus.
This week, gold prices are expected to remain especially sensitive to the U.S. Dollar and Treasury yields as long as the geopolitical events remain under control.
Helping to boost yields was a comment from San Francisco Fed President John Williams who said last Tuesday that he expected U.S. inflation to rise to the U.S. central bank’s 2 percent goal this year and stay at or above that goal for “another couple of years.”
Euro zone creditors are working on a debt relief offer for Greece that would be an incentive for Athens not to backtrack on reforms from its three international bailouts and to continue to stick to prudent fiscal policy, senior EU officials said. Greece is to exit its bailout on Aug. 20 and return to market financing after eight years of living on cheap euro zone loans it got in return for painful reforms, after investors refused to lend to it in 2010 because of its ballooning deficit and debt. Once the bailout ends, Greece will be free to set its own economic policy - a political turning point for the country that has long been forced to implement highly unpopular reforms suggested by the euro zone and the International Monetary Fund.
Gold markets initially tried to break above the $1350 level during the week but rolled over to form a bit of a shooting star. However, I see there is more than enough support underneath that could continue to come into the market and singled higher.
The US dollar initially pulled back against the Japanese yen during the week but found enough bullish pressure to reach towards the top of the shooting star from the previous week. This is a very bullish sign, and we have a clear breakout point to watch.
The US dollar fell as low as the 1.25 region during the week but bounced enough to show signs of life. On Friday, we guide a very negative outcome when it comes to the CPI numbers coming out of Canada, so this only exacerbated the upward momentum.
The New Zealand dollar has fallen rather hard during the week, reaching down towards the 0.72 handle. That’s an area that has been supportive in the past, but the fact that we are closing at the very bottom of the candle suggests that we could continue to see more bearish pressure. I think this next week is going to be crucial.
The British pound initially tried to rally against the US dollar during the week but found enough resistance above the 1.43 level to roll over and fall rather significantly. The 1.40 level of course will offer a bit of support, and I think that if we can break down below that level it’s likely that we will probably go looking towards the uptrend line underneath, and of course the sideways support at the 1.3650 level should also offer support.
The British pound initially tried to rally against the Japanese yen during the week, but found the upward momentum lacking, thereby rolling over and reaching towards the 151 handle during the Friday session. However, we have several support levels underneath that should give buyers some hope.
The EUR/USD pair initially rally during the week, testing the 1.24 level before rolling over rather significantly. The market remains in consolidation, so even though this is a negative candle, I don’t put too much into what we are seeing. In fact, I think that it is difficult for longer-term traders to be involved currently.
The Euro rallied significantly during the week, using the 0.8650 level as support. I believe that these markets have a significant amount of resistance at the 0.88 handle, so I think that although we’ve seen some strength, when I look at this chart I see a gradual drift lower.
The Australian dollar has fallen over the course of the week but is near a major support area that could come into play. We are closing out the week at the bottom of the range, so that of course is a negative sign, and sets up a very important week ahead.
Gold market participants sold during the Friday session, reaching down towards the $1335 level. I think that there is plenty of support below though, so it’s only a matter of time before we turn around and rally again. I believe that the $1350 level above is of course massive resistance.
The US dollar initially pulled back against the Japanese yen on Friday but found enough support near the 107.50 level to turn around and rally significantly. I think that the 108 level above is major, so paying attention to this market is crucial now.
The US dollar has initially pulled back during the trading session on Friday, reaching down towards the 1.2625 level, but finding enough bullish pressure turn around and go much higher, reaching towards the vital 1.2750 level.
The New Zealand dollar fell rather hard during the trading session on Friday, reaching down towards the 0.72 level, an area that is important on the longer-term charts. It’s interesting to see how this level has reacted, and as I record this we have seen a small bounce. However, if we break down below this level, that’s a very negative sign.
The British pound continued to fall on Friday, reaching down towards the 1.40 level for support against the US dollar. This is partly due to Mark Carney suggesting that the Bank of England was a bit more dovish than people thought, and of course raising interest rates in the United States.
The British pound fell during the Friday session, reaching down towards the 151 handle, which looks to be offering a bit of support. I think that the market is going to make a significant decision rather soon, and a couple of levels could be important places to watch.