Dollar extends decline as sentiment improves


What you need to take care of on Wednesday, May 18:

The US dollar fell slightly across the forex market as the currency extended bearish corrective decline which started on Monday. Upbeat data from the US helped argue for better market sentiment, with global indices closing in the green.

Nevertheless, the underlying concerns remain the same. Tensions between Europe and Russia continued after the latter invaded Ukraine. Russian Deputy Foreign Minister Andrey Rudenko was on edge and said Ukraine had virtually withdrawn from the negotiations.

Federal Reserve Chairman Jerome Powell delivered a speech. Powell failed to surprise investors, repeating that the central bank is comfortable with rate hikes of 50 basis points. He also mentioned that they could speed up or slow down the pace of increases depending on economic health. Speaking of which, Powell added that the underlying strength of the US economy is really good at the moment. US indices retreated from their highs with his remarks but remained green.

EUR/USD jumped to 1.0555, helped by ECB Governing Council member Klaas Knot, who said a 50 basis point rate hike should not be ruled out if the data suggests that inflation continues to widen and accumulate. He also added that a 25 basis point hike in July would be realistic.

GBP/USD hit 1.2498 and ended the day close, with the pound supported by a UK jobs report stronger than expected. The ILO unemployment rate contracted to 3.7% in the three months to March, while the change in the number of April claimants fell to -56.9,000. market ignored rising Brexit tensions. Foreign Secretary Liz Truss has informed the House of Commons of the government’s intention to introduce legislation to make changes to the Northern Ireland protocol. The government would prefer a negotiated solution with the EU but will still work to change the protocol.

AUD/USD is trading above the 0.7000 level, while USD/CAD extended its slide and is trading near the 1.2800 level. The better performance of equities supported commodity currencies, despite falling gold and oil prices. The shiny metal settled at $1,816 per troy ounce, while WTI is now changing hands at $109 per barrel.

USD/JPY ended the day little changed at 129.35, while USD/CHF fell to 0.9938.

US Treasury yields rose, with the 10-year note flirting with 3%.

Dogecoin price hints at further decline towards $0.07

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