Currencies:
Weekly changes: EURUSD +0.71%, GBPUSD +0.64%, USDJPY +0.58%, USDCAD -1.11%
EURUSD rose to 1.1975 during the week but closed Friday at 1.19342. The U.S. dollar relied on Fed officials' comments. By the end of the week, the dollar became stronger and pushed the pair lower. Nevertheless, the pair traded significantly below the level it was at ten days ago.
The Bank of England left its interest rate and monetary policy unchanged. Traders expected this outcome. The investors remained disappointed by the Fed's dovish tone of voice as if it had not previously shown any intentions for raising the rate. The pair closed the week at 1.38777, but within these days, the price fluctuated in a 1.3850-1.4000 price corridor.
By midweek, USDJPY consolidated near the two-month tops, holding above 110.00. Thursday's upbeat U.S. data continued supporting the greenback. Nervousness ahead of NFP benefitted the safe-haven Japanese currency. However, the currency pair fell sharply after the release and lost 0.52% each day, stopping at 109.70 by Friday night.
KEY POINTS
The EURUSD pair mainly traded within a tight price corridor during the week, as the risk appetites rose or declined. By Friday, the risk aversion became less noticeable than it was seven days earlier. The market had corrected the extremely oversold setting of the pair, witnessed in the previous week. As a result, technical indicators remain within neutral levels. However, the upcoming week will give some essential data releases on both sides of the Atlantic, influencing the pair.
Economists expected no policy changes by the Bank of England, as the regulator wanted to test if the recent jump in inflation was temporary. However, the market awaited some response to the Fed's statements with no sign of an early end to quantitative easing. And the reply the GBP had given to the situation was entirely appropriate. Therefore, two important events influencing both sides of the currency pair will be at the sight of the investors in the upcoming week.
USDCAD seems to be among the few currency pairs, which managed to get back to 'pre-Fed' levels of the week and a half ago. The pairs' decline demonstrated the oil-based potential of the Canadian dollar again. The oil prices were rising and are likely to increase further as the global recovery gathers strength. In the meantime, Friday's American nonfarm payrolls will dominate markets. The weak numbers will damage the U.S.dollar.
Gold:
Weekly changes: XAUUSD +0.62%
Gold prices were little changed in choppy trade this week, with gains kept in check by a firm dollar. Investors turned their attention to U.S. Fed chief Jerome Powell's testimony. He reaffirmed the Federal Reserve's intent to encourage a 'broad and inclusive' recovery of the job market and not raise interest rates too quickly based only on the fear of coming inflation.
Lately, gold hasn’t lived up to its billing as a hedge against inflation or the best store of value in times of financial or political troubles. For instance, the key U.S. inflation gauge monitored by the Federal Reserve rose for the third month in a row in May. Meanwhile, according to data, the personal income and consumer sentiment fell, which demonstrated growing price pressures against weaker buying from Americans.
KEY POINTS
Gold will likely continue to stabilize as most of Fed Chair Powell's policymakers agree with him that inflation will be transitory.
Important levels: 1,754, 1,769 , 1,790 , 1,816
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