Although, on Friday we got another positive surprise from the US services and particularly manufacturing PMI reports, released by S&P Global. That
Although, on Friday we got another positive surprise from the US services and particularly manufacturing PMI reports, released by S&P Global. That sent the US dollar rallying higher again, with USD/JPY gaining more than 100 pips. The report was surprisingly strong, with high numbers on new orders and price pressures that few analysts anticipated.
However, the USD gave back Friday’s gains as skepticism set in after the numbers ahead of the weekend. Ultimately, the USD rally reversed completely. USD/JPY held onto about 60 pips of gains from the low, but that was still not enough to erase the losses from European trading.
So, after this week’s economic data, there is uncertainty in the markets. For every data point that suggests a recession, there is another that shows the US economy is coming back to life. Next week, there is another round of data, but the market is less likely to be swayed by second-tier data points unless there will be a few reports running in the same direction.
Although, a worrisome sign was the underperformance of commodity currencies and crude Oil, which lost around $5. Other commodities such as Copper and Gold ended up slightly down as well. Some attributed this to softer global manufacturing PMIs besides the US, indicating a concerning sign for global resource demand.
The CAD, in particular, was weak due to weak details in the Canadian retail sales report. According to Adam Button, chief currency analyst at ForexLive, “High mortgage rates are starting to bite Canadians’ wallets. Canada is particularly sensitive to higher interest rates, and that will lead to divergence in US and Canadian economic performance in the second quarter and beyond.”
www.fxleaders.com