The US dollar continues declining on the foreign exchange market after last Friday's disappointing NFPR data in the US that significantly lowered the expectations of interest rate raising in the US in June.
However, it should be noted that the dollar's decline has slowed down. In her Monday's statement, Federal Reserve Chair Janet Yellen did not clarify the issue of the Federal Reserve's further steps in terms of tightening the US monetary policy. Yellen confirmed the Fed's intention to use caution when raising interest rates. The disappointing data on NFPR in May is certainly a negative factor. However, Yellen does not regard this as a catastrophe.
Moreover, the unemployment rate decreased to 4.7% (with forecasted 4.9% and 5.0% in April), showing an approximation to full employment of the US population. The inflation indicator (labor costs per production unit) published yesterday increased by 4.5% (against 4.0% and 4.1% in the previous quarter), and this has a positive effect on the growth of inflation in the US, which is the aim of the Fed. The consumer price index was up by 1.1% y-o-y in April. The Beige Book (report of the Federal Reserve on economic conditions in the US regions) published last week pointed out that «most regions experiencing a strengthening in labor markets». Wages and employment growth were referred to as moderate.
Naturally, the anticipation of interest rate raising in the US at the Fed meeting on June 15, has declined after the release of weak NFPR data for May. However, US dollar is unlikely to fall much further before the Fed's meeting. Even if the rate is not raised in June, the market participants have reason to believe such an increase is possible in July.
There were no signals as to minimizing of the program for gradual tightening of monetary policy in the United States in Yellen'd Monday speech.
Until June 15, EUR/USD pair is likely to remain in the range between the levels 1.1285 and 1.1430.
The euro is receiving support from revised positive data on euro zone GDP in the first quarter ( 0.6% and 1.7% y-o-y), published yesterday, which was better than expected. However, the euro remains under pressure through EUR/GBP cross pair from the pound that strengthened yesterday amid regular surveys conducted by Times/YouGov, according to which 43% of respondents would vote for the UK to retain membership in the EU, 42% would vote for exit.