How Events of May Affected the Market
Let’s take a look at the state of things on the Forex market after the last weekend of spring.
Regardless of the increase in Treasury yields, the US dollar has weakened, while the price of gold has gone up. Everyone is busy with the US ISM Manufacturing PMI and Fede, and coronavirus seems to be losing its influence over the US and European economy. It is still, however, a serious issue for Asian investors. Apart from gold, we can also see a rise in S&P 500 futures.
Now let’s get into a little more detail about what this all means for the market.
We are yet to find out what this Friday’s NFP release will tell, but we can already draw some conclusions from the US ISM Manufacturing PMI. The inflation levels are causing worry in the financial world. After all, too much tension in the world’s biggest market can dramatically influence businesses and institutions all over the world.
After this week’s speeches, it will become more clear what decisions are going to be made by financial institutions this month. At the moment, a possibility of tapering is being discussed as a result of positive dynamics in the latest economic data.
Once all data is summarized and made public, it will be easier to determine what direction the markets will be taking and how you can participate. In the meanwhile, educate yourself on ways you can operate in the financial market. If you are looking to change your approach or are just starting out in the finance world, you could visit https://nsbroker.com/investment-strategies. The website offers various strategies of different complexity that will diversify your trading experience.
The pace of the UK vaccination campaign is causing the US dollar to diminish in value compared to the British pound. While the governor of the Bank of England is expected to speak later on, experts are discussing the yet unconfirmed possibility of rates going up further this year. In the meanwhile, the vaccination campaigns seem to drown the fear of the Indian variant of the virus to postpone the reopening on June, 21.
Due to the US dollar weakening and the prospects of Germany attenuating covid restrictions thanks to the decrease in the number of cases, the EUR/USD currency pair is currently a little above 1.22. Another positive movement is expected in Markit’s final Purchasing Managers’ Indexes for the services sector. Current statistics of the previous month allow us to expect an adequate rise in the headline Consumer Price Index.
In other news, the Reserve Bank of Australia maintains its policy and acknowledges the fast recovery from the pandemic. As a result, the AUD/USD pair is still going up. Nonetheless, the institution from Canberra keeps on tapering its bond buys. It’s possible that this strategy is carried out in the expectancy of the Federal Reserve Board.
China keeps on attempting to lower the price of the yuan by requiring 15% in foreign reserves from financial institutions (against 5%). The yuan hit its highest price since 2018.
One concise conclusion can be drawn from all this. It is important to keep following the news regarding the virus all over the world. However unsettling this is, the economy is still strongly influenced by the restrictions the pandemic has brought onto the world.
The state of the commodities market will become clear once the meeting of OPEC+ members takes place. A decision to increase the production of oil may be made. This is an expected outcome that is based on the current increase in demand for oil and its price accordingly. The decision is to be made by either Saudi Arabia or Iran. At the moment, the situation is unclear due to the fact that Iran might be allowed to export crude. This depends on the outcome of nuclear negotiations in Vienna.
It’s only been a couple of months since the US and Iran decided to work on complying with the nuclear deal that was made back in 2015. The outcome is yet to be announced.
Cryptocurrencies are currently strengthening. The price of BTC is a little above $37 000, while Ethereum is sold for $2 530. Bitcoin is yet a long way from recovering from Elon Musk’s decision to stop accepting it at Tesla. We are yet to discover when the cryptocurrency will climb back up to the all-time high of $60 000 it hit last month.
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