Today was an exciting day for financial markets as currency pairs took a joyous ride with recent economic reports shaking up the markets. The EUR/USD cross hovered around the 1.1400 psychological level. It demonstrated great resilience in the wake of what were truly awful US employment. Another underwhelming ADP report for May added fuel to the bearish US Dollar fire.
The ADP report pointed to slower than expected job growth, fueling further speculation about what action the Federal Reserve will take in the future. What the EUR/USD is really picking up on. Traders are jumping back into euro vs dollar positions on the back of this data. Analysts are noticing heightened bullish interest near the 1.1400 handle for the currency pair. This indicates a continuation of the upwards trend and a good sign if it continues.
The GBP/USD traded as high as the 1.3530 area. This increase reflects the whiplash reaction to recent US economic data. Following the release of the ADP figures, GBP/USD maintained its position around 1.3530, indicating market participants’ confidence in the British pound amid a softening dollar.
At the same time, gold prices languished around $3,350 today, failing to make a decisive move as traders digested the broader ramifications of the ADP report. Gold prices are actually very flat here. Signaling for investors on one side, new economic data finds its way into the news cycle almost daily.
The other currency under pressure was the Australian Dollar, which sold off against the US Dollar. Nevertheless, the AUD/USD pairing continued to remain in the black, despite the mixed economic indicators published out of Australia. This unexpected resilience shows how complicated the new economic normal is, such that local factors could be throwing off currency valuations.
In Canada, the Bank of Canada (BoC) is widely expected to hold its key interest rate steady, at 2.75%. Putting the prediction in context This would be consistent with recent history, as the BoC has similarly paused interest rate increases in March and April. According to market expectations, the central bank will almost certainly hold rates where they are in June. This decision is indicative of its dovish turn while grappling with shifting economic signals.
Combined with the disappointing ADP report, the stage has been set for a US Dollar bearish tone. In response, investors are taking a harder look at their portfolios. This change in mood has weighed on the Australian Dollar. It is now in deep waters, buffeted on all sides by an unfortunate confluence of external and internal economic forces.