EUR/USD started the month of June on a high note, consistently trading above the 1.1400 mark. This increase came despite the US dollar’s weakness, signaling strong international demand. Second, the Euro is now climbing against the US dollar, thanks to continued jitters over US-China trade relations. This risk-averse market environment is pushing gold prices higher.
On that note, as the first trading day of June got going, EUR/USD began to gain momentum. This increase was made possible by a significant weakening of the US dollar. Market focus now shifts to Thursday’s US ISM Manufacturing PMI data for May. This release is set to provide a plethora of clues about the economic landscape and therefore has a major potential to move the currency markets.
US-China trade tensions have flared up once more. This development is deepening fears that the two countries will be unable to make progress on a trade agreement. This ambivalence had been a major sentiment overhang on the markets, forcing investors to flee to safe haven assets. As a result, gold prices have soared, crossing the $3,350 barrier, as investors took the risk-off stance amid geopolitical uncertainty.
And more recently, the escalating conflict between Russia and Ukraine has only added to a market environment characterized by strong risk aversion. Investors are getting more and more concerned over the meaning of this continuing humanitarian crisis and what it might mean for global economic security. This increased risk aversion has spurred gold’s demand, making the precious metal a go-to asset during times of heightened unease.
At the same time, GBP/USD has seen a definitive rally, touching as high as above 1.3500 on the day. For one, selling pressure on the US dollar has helped the British pound. Such a move represents a departure in currency trading that reflects a much larger trend, fueled by increasing worries over the state of US-China relations.
Market participants are increasingly focused on US PMI data. Analysts expect that these data will significantly drive currency movements in the day’s advance. The delicate dance between economic indicators and geopolitical factors further compounds the uncertainty, providing an almost ideal environment for active trading.