On Wednesday, the US dollar retraced ground versus almost all the major currencies. The Bank of Japan governor Kuroda who said that the yen wouldn’t weaken much more provoked the move. As a result, USD/JPY plummeted from by 200 pips to 122.50. Afterwards the greenback depreciated against the other majors, especially the commodity block currencies.
Tomorrow the market will be focused on the US May retail sales data. According to the forecast, the indicator rose by 1,1% versus a 0% growth in the April. We expect the demand for the US currency to return ahead of the release.
EUR/USD holds above 1.1300 as the German yields still support the euro. Strong resistance is seen at 1.1500, while support is gathered around the 1.1050 mark. We expect the bearish pressure to resume on Thursday. There are no important releases on the euro zone’s agenda tomorrow.
GBP/USD jumped to 1.5550, testing the 200-day MA to the upside. The pair consolidates slightly below the 38.2% Fibonacci retracement. Data today showed the UK NIESR GDP estimate rose 0.6% in May, overcoming expectations of 0.4%. We would like to note that the cable’s rally has already become overstretched – beware of a sharp selloff tomorrow.
Tonight we’ll get a bunch of important news for the commodity block currencies. Watch the RBNZ policy decision (some expect a rate cut to be announced), Australia labor market data (employment is expected to grow by 12.1K) and Chinese May industrial production figures (forecast – upbeat). All in all, the risky currencies could suffer from the tomorrow’s US retail sales. Strong data will likely increase the Fed’s rate hike expectations.
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