The market action remains choppy in the second half of the week and major currency pairs stay continue to fluctuate in their weekly ranges. Eurostat will release the final revision for the first-quarter Gross Domestic Product (GDP) growth and the weekly Initial Jobless Claims will be featured in the US economic docket on Thursday.

After the Reserve Bank of Australia (RBA), the Bank of Canada (BoC) became the second major central bank this week to surprise markets with a rate hike. The BoC raise its policy rate by 25 basis points to 4.75% after having held it unchanged in the previous two meetings. In its policy statement, the BoC said that concerns have increased that Consumer Price Index (CPI) inflation could get stuck materially above the 2% target. Following this development, USD/CAD fell to its weakest level in a month near 1.3320 before stabilizing near 1.3350 early Thursday.

The BoC’s unexpected hike triggered a rally in global bond yields. The benchmark 10-year US Treasury bond yield rose nearly 4% and settled at around 3.8%. Meanwhile, the CME Group FedWatch Tool’s probability of one more Fed rate hike next week climbed above 30% from 20% earlier in the week. Early Thursday, US stock index futures trade flat and the US Dollar Index stays calm near 104.00.

EUR/USD extended its sideways grind and closed virtually unchanged on Wednesday. The pair stays rengebound at around 1.0700 in the European morning on Thursday.

GBP/USD registered small gains on Wednesday and was last seen trading a few pips above 1.2450.

USD/JPY closed in positive territory on Wednesday but lost its bullish momentum after meeting resistance near 140.00. The data from Japan showed that the real Gross Domestic Product grew at an annualized rate of 2.7% in the first quarter, surpassing the initial estimate of 1.6%.

Pressured by surging bond yields, Gold price turned south and broke below $1,950 on Wednesday. Early Thursday, XAU/USD consolidates its losses but stays below $1,950.

Bitcoin failed to build on Tuesday’s gains and lost more than 3% on Wednesday. In the European session, BTC/USD trades in a tight channel near $26,500. Ethereum reversed its direction and declined toward $1,800 after having met resistance at $1,900 mid-week.

Major currency pairs continue to trade in familiar ranges mid-week as investors remain in search of the next significant catalyst. Later in the day, the Bank of Canada (BoC) will announce its interest rate decision and release the policy statement. The US economic docket will feature Goods Trade Balance and Consumer Credit Change data for April.

During the Asian trading hours, the data from China revealed that the trade surplus contracted to $65.81 billion in May from $90.21 billion in April. This reading came in much lower than the market expectation of $92 billion. On a yearly basis, Exports and Imports declined 7.5% and 0.8% respectively. Meanwhile, Australian Bureau of Statistics reported that the real Gross Domestic Product (GDP) grew at an annualized rate of 2.3% in the first quarter, compared to analysts’ estimate of 2.4%. Following Tuesday’s rally that was fuelled by the Reserve Bank of Australia’s (RBA) unexpected to decision to raise its policy rate by 25 basis points, AUD/USD lost its traction early Wednesday and was last seen trading in negative territory slightly above 0.6650.

The US Dollar Index clings to small daily gains above 104.00 and US stock index futures trade flat early. Meanwhile, the benchmark 10-year US Treasury bond yield continues to fluctuate at around 3.7%.

The BoC is widely forecast to leave its policy rate unchanged at 4.5%. USD/CAD trades in a tight channel above 1.3400 early Wednesday. Previewing the BoC event, “we expect the BoC to leave the policy rate at 4.5%, but after stronger-than-expected consumer price inflation and GDP and with the labour data remaining robust, we cannot rule out a surprise interest rate increase,” said economists at ING.

BoC Preview: Forecasts from six major banks, rates unchanged but hawkish bias.

EUR/USD closed in negative territory on Tuesday and continues to trade on the back foot below 1.0700 in the European morning.

GBP/USD struggled to find direction on Tuesday and closed the day little changed near 1.2400 for the second day in a row. Early Wednesday, the pair edges lower but manages to hold slightly above 1.2400.

USD/JPY edges lower toward 139.00 on Wednesday. The data from Japan showed earlier in the day that the Coincident Index improved slightly to 99.4 in April’s flash estimate from 98.8 in March.

Gold price continues to move up and down in a narrow channel above $1,950 as the lack of volatility in the US yields makes it difficult for XAU/USD to gather directional momentum.

Bitcoin gained traction and erased all of its weekly losses by rising nearly 6% on Tuesday. BTC/USD, however, has lost its recovery momentum and retreated below $27,000 early Wednesday. Ethereum rose 4% on Tuesday and came within a touching distance of $1,900 before going into a consolidation phase.

The Australian Dollar outperforms its rivals early Tuesday following the Reserve Bank of Australia’s (RBA) unexpected decision to raise the policy rate by 25 basis points to 4.1%. The US Dollar struggles to find demand as markets see a growing possibility of the Federal Reserve (Fed) leaving its key rate unchanged at the next meeting. Retail Sales from the Euro area and the IBD/TIPP Economic Optimism Index from the US will be featured in the economic calendar.

For the second meeting in a row, the RBA went against the market expectation and opted for an increase in its policy rate. In its policy statement, the RBA reiterated that the board remains resolute in its determination to return inflation to target and added that some further tightening of monetary policy may be required. AUD/USD rose sharply during the Asian trading hours and was last seen rising more than 0.5% on the day above 0.6650.

RBA: Some further tightening of monetary policy may be required.

On Monday, the ISM Services PMI report revealed a loss of momentum in the service sector’s growth in May. Additionally, the publication showed a contraction in the sector’s employment alongside a softening of input inflation. In turn, the US Dollar Index (DXY) came under renewed bearish pressure and erased its gains to close the day flat. In the European morning, DXY stays in negative territory slightly below 104.00 and the benchmark 10-year US Treasury bond yield consolidates Monday’s losses at around 3.7%.

EUR/USD stage a late rebound on Monday and closed the day above 1.0700. Early Tuesday, the pair moves up and down in a tight range amid a lack of fresh catalysts. While speaking before the European Parliament in Brussels on Monday, European Central Bank (ECB) President Christine Lagarde reiterated that there was no clear evidence that underlying inflation has peaked.

GBP/USD erased the majority of its daily losses in the American session on Monday. The pair stays flat slightly below 1.2450 in the European session.

Gold price benefited from falling US yields on Monday and registered modest daily gains. Early Tuesday, XAU/USD fluctuate in a narrow channel near $1,960.

USD/JPY broke below 140.00 on Monday and extended its slide toward 139.00 during the Asian trading hours on Tuesday. Bank of Japan Governor Kazuo Ueda said earlier in the day that the Quantitative and Qualitative Monetary Easing (QQE) will continue until they achieve the inflation target.

Bitcoin came under heavy selling pressure and lost more than 5% on Monday. BTC/USD consolidates its losses near $25,800 on Tuesday. Ethereum stays dangerously close to $1,800 in the European morning after having decline 4% on Monday.

The US Dollar holds its ground against its major rivals at the beginning of the new week with the US Dollar Index (DXY) building on Friday’s gains. Nevertheless, US stock index futures trade mixed, reflecting a cautious stance. April Producer Price Index (PPI) and June Sentix Investors Confidence Index data will be featured in the European economic docket ahead of April Factory Orders and May ISM Services PMI releases from the US.

On Friday, the US Bureau of Labor Statistics reported that Nonfarm Payrolls (NFP) in the US rose 339,000 in May, surpassing the market expectation of 190,000 by a wide margin. Further details of the publication revealed that the Unemployment Rate edged higher to 3.7% from 3.4% in April. The DXY regained its traction on the strong NFP reading and retraced a portion of its weekly decline. Early Monday, the index continues to stretch higher and stays in positive territory above 104.00. In the meantime, the benchmark 10-year US Treasury bond yield is already up more than 1% on the day above 3.7%. Nevertheless, the CME Group FedWatch Tool shows that markets are still pricing in a more than 70% possibility that the Fed will leave its policy rate unchanged at the upcoming meeting.

Over the weekend, Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman said that Saudi Arabia will make an extra output cut of 1 million barrels per day from July. Moreover, OPEC and its allies (OPEC+) announced in a statement that they have reached a deal to target total output of 40.46 million barrels per day from 2024. Following this development, crude oil prices rise on Monday and the barrel of West Texas Intermediate was last seen rising nearly 2% on the day at $73.20. The commodity sensitive Canadian Dollar stays resilient early Monday and USD/CAD trades flat on the day slightly below 1.3450.

During the Asian trading hours, the data from Japan revealed that the Jibun Bank Services PMI declined to 55.9 in May from 56.3 in April. USD/JPY largely ignored this report and started the new week on a bullish note. At the time of press, the pair was trading in positive territory at around 140.50.

EUR/USD registered big losses on Friday and extended its decline early Monday. The pair was last seen trading below 1.0700.

Despite Friday’s pullback, GBP/USD ended up posting small gains last week. The pair stays on the back foot in the European morning and tests 1.2400.

In the early trading hours of the Asian session on Tuesday, the Reserve Bank of Australia (RBA) will announce its monetary policy decisions. The RBA is expected to leave its key interest rate unchanged at 3.85%. Ahead of this important event, AUD/USD stays in the red at around 0.6600.

Reserve Bank of Australia Preview: AUD/USD ready for another hike?

Gold price fell sharply on Friday and erased all of its weekly gains. XAU/USD stays under modest bearish pressure amid rising US yields and trades below $1,950.

Following an indecisive weekend, Bitcoin continues to move up and down in a tight channel slightly below $27,000. Ethereum failed to make a daily close above $1,900 despite having advanced above that level over the weekend. ETH/USD edges lower early Monday and was last seen losing nearly 1% on the day at $1,870.

Despite the upbeat market mood, the US Dollar (USD) preserves its bullish momentum in the second half of the week. Eurostat will release the May inflation figures in the European session and the European Central Bank will publish May Monetary Policy Meeting Accounts. In the second half of the day, ADP Employment Change for May, the US Department of Labor’s weekly Initial Jobless Claims data and the ISM Manufacturing PMI survey will be featured in the US economic docket.

US ADP Employment, ISM Manufacturing PMI Preview: First down, then up for US Dollar?

The US Dollar Index (DXY) touched its strongest level since mid-March above 104.50 on Wednesday after the US Bureau of Labor Statistics (BLS) reported that the number of job openings on the last business day of April stood at 10.1 million, compared to 9.74 million in March and the market of 9.37 million. Meanwhile, the Federal Reserve noted in its Beige Book that there was little change in the overall economic activity in April and early May. “Prices rose moderately over the reporting period, though the rate of increase slowed in many Districts,” the publication further read.

Investors breathed a sigh of relief late Wednesday after the House of Representatives passed a bill to suspend the debt limit through January 1, 2025. The DXY retreated from daily highs following this development but closed in positive territory. On the other hand, major equity indexes in the US, which closed before the vote, registered losses while the benchmark 10-year US Treasury bond yield managed to recover toward 3.7%. Early Thursday, US stock index futures trade flat while the 10-year yield holds near 3.7%. It’s also worth noting that Philadelphia Federal Reserve (Fed) Bank President Patrick Harker and Fed Governor Philip Jefferson both said on Wednesday that they were in favor of skipping a rate hike at the next meeting. These comments, however, don’t seem to be having a negative impact on the USD’s valuation for the time being.

Pressured by the broad USD strength, EUR/USD continues to trade on the back foot below 1.0700 on Thursday. The annual Harmonized Index of Consumer Prices is forecast to rise 6.3% in the Eurozone in May, compared to 7% increase recorded in April.

After having closed the first three trading days of the week in positive territory, GBP/USD has lost its traction and started to stretch lower toward 1.2400 in the early European session.

USD/JPY regained its traction on Thursday and advanced toward 140.00. The data from Japan revealed earlier in the day that Capital Spending rose 11% in the first quarter, much higher than the market expectation for an increase of 5.5%.

Gold price climbed above $1,970 on Wednesday but erased a large portion of its daily gains before closing slightly above $1,960. XAU/USD stays under modest bearish pressure in the European morning and trades near mid-$1,950s.

Bitcoin continues to decline on Thursday and was last seen losing 1.5% on the day at around $26,800. Ethereum lost more than 1% on Wednesday and extended its slide toward $1,850 early Thursday.

Market participants have turned cautious mid-week amid growing concerns over the US debt-limit bill facing resistance at both chambers of Congress after the House Rules Committee advanced it by a slim 7-6 margin on Tuesday. The US Dollar (USD) benefits from risk aversion mid-week ahead of JOLTS Job Openings data for April and Fedspeak. In the European session, Germany’s Destatis will publish inflation data for May.

Reflecting the souring market mood, US stock index futures are down between 0.35% and 0.45%. The US Dollar Index edges higher toward 104.50 following Tuesday slide and the benchmark 10-year US Treasury bond yield is already losing 1% on the day below 3.7%.

During the Asian trading hours, the data from China revealed that the business activity in the manufacturing sector continued to contract at a slightly faster pace in May than in April with the NBS Manufacturing PMI falling to 48.8 from 49.2. In the same period, the Non-Manufacturing PMI declined to 54.5 from 56.4 but came in much higher than the market expectation of 50.7.

AUD/USD came under bearish pressure in the Asian session and the pair was last seen trading at its lowest level since early November below 0.6500. The data published by the Australian Bureau of Statistics revealed on Wednesday that the Consumer Price Index (CPI) rose 6.8% on a yearly basis in April, higher than 6.3% recorded in March. While testifying before the Senate Economics Legislation Committee, Reserve Bank of Australia (RBA) Governor Philip Lowe reiterated that entrenched inflation would lead to higher interest rates and unemployment but these comments failed to help the Aussie find a footing.

EUR/USD rose toward 1.0750 and closed in positive territory on Tuesday. The renewed USD strength, however, weighed on the pair early Wednesday and dragged it back below 1.0700. In Germany, the annual Harmonized Index of Consumer Prices is forecast to rise 6.8%, compared to 7.6% in April.

USD/CAD gathered bullish momentum and advanced to the 1.3650 area early Wednesday. Later in the day, first-quarter Gross Domestic Product (GDP) growth from Canada will be watched closely by market participants.

USD/JPY closed the second straight day in negative territory on Tuesday and continued to stretch lower early Wednesday, pressured by falling US T-bond yields.  The pair was last seen trading slightly above 139.50.

GBP/USD held steady above 1.2400 on Tuesday but lost its traction mid-week. The pair stays on the back foot in the European morning and pushes lower toward 1.2350.

Gold price benefited from retreating US yields on Tuesday and rose toward $1,960. XAU/USD consolidates its recent gains on Wednesday and fluctuates above $1,950.

Bitcoin turned south early Wednesday and fell toward $27,000, losing more than 2% on the day. Ethereum registered marginal gains on Tuesday but reversed its direction on Wednesday. At the time of press, ETH/USD was down more than 1% on the day at $1,870

The US Dollar (USD) continues to gather strength against its rivals as trading conditions normalize following Monday’s subdued action. The US Dollar Index sits at its highest level since mid-March near 104.50 ahead of the Conference Board’s Consumer Confidence report for May and Housing Price Index data for March. The European economic docket will feature business and consumer sentiment surveys.

US Consumer Confidence Preview: Confidence remains down, but DXY aims up.

Following Sunday’s agreement between US President Joe Biden and Republican House Speaker Kevin McCarthy to suspend the debt limit, the House Rules Committee and the House is expected to vote on the bill on Tuesday and Wednesday, respectively. Meanwhile, Biden will reportedly hold calls with Democratic members of the House ahead of the vote.

Reflecting the positive impact of this development on risk mood, US stock index futures are up between 0.2% and 0.6% in the European trading hours. The Euro Stoxx 50 Index, however, trades virtually unchanged on the day.

EUR/USD registered small losses on Monday and continued to stretch lower early Tuesday. The par was last seen trading at its weakest level in 10 weeks below 1.0700. Earlier in the session, the data from Spain showed that the annual Harmonized Index of Consumer Prices declined 0.2% on a monthly basis in May, dragging the annual increase lower to 2.9% from 3.8% in April.

Despite the persistent USD strength, GBP/USD manages to keep its footing on Tuesday and extends its sideways grind near 1.2350.

After rising toward 141.00 during the Asian trading hours on Tuesday, USD/JPY reversed its direction and fell sharply. At the time of press, the pair was trading in negative territory below 140.50. Earlier in the day,  “the Bank of Japan (BoJ) will patiently maintain the easy monetary policy as there is still a distance to go to stable 2% inflation,” said BoJ Governor Kazuo Ueda.

Gold price slumped to its lowest level since early March near $1,930 on Tuesday but reversed its direction in the European morning. With the benchmark 10-year US Treasury bond yield losing nearly 1% below 3.8%, XAU/USD erased its daily losses and turned flat above $1,940.

Bitcoin failed to build on Sunday’s gains and posted marginal losses on Monday. BTC/USD holds steady above $27,500 early Tuesday. Similarly, Ethereum lost nearly 1% on Monday but managed to stabilize near $1,900.

Following the choppy action witnessed ahead of the weekend, financial markets stay relatively calm early Monday amid thin trading conditions. UK markets are closed due to the Spring Bank Holiday and American traders will be enjoying a long weekend on Memorial Day. Later in the week, several high-tier data releases, including European inflation figures and the US jobs report, will likely ramp up volatility.

Over the weekend, US President Joe Biden and Republican House Speaker Kevin McCarthy reached an agreement to temporarily suspend the debt-limit to avoid a US debt default. The House of Representatives and Senate still need to approve the deal, which will suspend the $31.4 trillion debt-ceiling until January 1, 2025, in coming days. The market reaction to this development, however, is likely to be observed early Tuesday when US stock index futures and US bond markets return to action.

In the meantime, the US Dollar Index (DXY) rose 1% last week and registered gains for the third straight week. Early Monday, the DXY fluctuates in a tight channel at around 104.00.

EUR/USD managed to shake off the bearish pressure on Friday but still ended up losing more than 100 pips on a weekly basis. The pair edges slightly higher in the European morning and trades below 1.0750.

GBP/USD seems to have gone into a consolidation phase at around 1.2350 at the beginning of the week following last week’s slide.

USD/JPY added nearly 300 pips last week and registered its highest weekly close since October above 140.00. The pair moves up and down in a narrow band near 140.50 in the European morning. In the early Asian session on Tuesday, April Unemployment data from Japan will be looked upon for fresh impetus.

Gold price fell sharply last week and touched its weakest level in over two months below $1,940. XAU/USD struggles to gather recovery momentum early Monday and continues to trade below $1,950.

Bitcoin rose nearly 5% on Sunday and broke out of the two-week-old trading channel. BTC/USD, however, lost its traction after meeting resistance at $28,500 early Monday and retreated below $28,000. Following a quiet start to the weekend, Ethereum gathered bullish momentum and advanced to a fresh three-week high above $1,900 on Sunday before staging a technical correction on Monday.

The US Dollar (USD) continues to gather strength against its major rivals on Thursday and the US Dollar Index trades at its strongest level since mid-March above 104.00. In the second half of the day, the US Bureau of Economic Analysis will release the first revision to the first-quarter Gross Domestic Product (GDP) growth. The US economic docket will also feature weekly Initial Jobless Claims and Pending Home Sales data for April.

The risk-averse market environment amid the uncertainty surrounding the outcome of the US debt-limit negotiations helped the USD outperform its rivals mid-week. US House Speaker Kevin McCarthy reassured on Wednesday that the US would avoid a default but noted that they had still a difference over spending.

Hawkish comments from Fed Governor Christopher Waller, who said that he would not support stopping rate hikes unless there was clear evidence that inflation was moving down towards the 2% objective, provided an additional boost to the currency. In the late American session, the minutes of the Fed’s May policy meeting revealed that policymakers were split on the support for more interest rate increases but this publication failed to trigger a noticeable market reaction.

Early Thursday, US stock index futures trade mixed with the Dow Futures losing nearly 0.5% and the technology-heavy Nasdaq Futures adding more than 1%. Meanwhile, the benchmark 10-year US Treasury bond yield stays flat near 3.75% following Wednesday’s rally.

EUR/USD stays under persistent bearish pressure and trades at its lowest level in over two months below 1.0750 early Wednesday. Earlier in the day, the data from Germany revealed that the GDP contracted at an annualized rate of 0.5% in the first quarter, compared to the initial estimate of 0.1%.

Despite stronger-than-expected Consumer Price Index (CPI) figures, Pound Sterling failed to hold its ground against the USD and GBP/USD registered its lowest daily close since late March below 1.2400 on Wednesday. The pair stays relatively quiet early Thursday and consolidates its weekly losses slightly above 1.2350.

Fuelled by rising US T-bond yields, USD/JPY advanced toward 140.00 and reached its highest level since November. The pair stages a technical correction in the European morning and trades modestly lower on the day below 139.50.

Pressured by the broad USD strength and the decisive rebound seen in the benchmark 10-year US Treasury bond yield, Gold price suffered large losses on Wednesday. XAU/USD struggles to gain traction and trades at around $1,960 early Thursday.

Bitcoin fell more than 3% on Wednesday and continued to stretch lower in the Asian session on Thursday. After having dropped below $26,000 earlier, however, BTC/USD erased a portion of its daily losses and was last seen trading near $26,200. Similarly, Ethereum fell 3% on Wednesday and broke below $1,800.

Investors cling to a cautious approach mid-week amid a lack of progress in US debt-ceiling negotiations between Republicans and White House. US stock index futures trade modestly lower in the European morning and the US Dollar Index consolidates Tuesday’s gains. IFO sentiment survey from Germany will be featured in the European economic docket. In the late American session, the US Federal Reserve (Fed) will release the minutes of May policy meeting.

FOMC Minutes Preview: The complicated task of searching for clues.

During the Asian trading hours on Wednesday, the Reserve Bank of New Zealand (RBNZ) announced that it raised its policy rate by 25 basis points to 5.5% as expected. The policy statement revealed that the RBNZ expects to hold the rate unchanged at 5.5% by September. In the post-policy meeting press conference, “we are getting on top of inflation,” RBNZ Governor Adrian Orr said and noted that the labour market was becoming less pressured. NZD/USD fell sharply and was last seen trading at its lowest level in nearly a month at 0.6150, losing more than 1.5% on a daily basis.

The UK’s Office for National Statistics reported early Wednesday that the Consumer Price Index rose 8.7% on a yearly basis in April. This reading followed the 10.1% increase recorded in March but surpassed the market expectation of 8.2%. The Core CPI, which excludes volatile food and energy prices, increased 6.8%, compared to analysts’ estimate of 6.2%. Finally, the Retail Price Index rose 11.4%, down from 13.5% in March. Following the stronger-than-expected inflation figures, GBP/USD gained traction and climbed above 1.2450.

EUR/USD touched its lowest level in two months at 1.0760 on Tuesday and spent the Asian session in a very tight range on Wednesday. The pair tries to stage a rebound early Wednesday but stays well below 1.0800. European Central Bank President Lagarde will be delivering a speech at 1745 GMT.

Following Monday’s upsurge, USD/JPY fluctuated in a narrow range on Tuesday and closed the day flat. The pair remains indecisive early Wednesday and moves up and down at around 138.50.

Gold price fell toward $1,950 on Tuesday but managed to stage a rebound in the late American session amid retreating US Treasury bond yields. XAU/USD consolidates its losses near $1,970 in the European morning.

Bitcoin registered modest gains for the second straight day on Tuesday but came under renewed bearish pressure early Wednesday. BTC/USD was last seen losing nearly 2% on the day at $26,700. Ethereum rose toward $1,900 on Tuesday but lost its traction before testing that level. ETH/USD stays on the back foot and declined toward $1,800 in the European morning.