Market Overview
- The forex market experienced significant movements, with major currency pairs and Gold reacting to various economic events and policy decisions.
- The Japanese Yen strengthened as the Bank of Japan (BoJ) Governor Kazuo Ueda reassured that the bank's financial position would not influence short-term rate decisions.
- The US Dollar weakened after Federal Reserve Bank of San Francisco President Mary C. Daly discussed the potential for a moderately restrictive policy to combat inflation.
- The Mexican Peso strengthened against the US Dollar due to weak US employment data and Banxico's cautious stance regarding rate cuts.
- The Australian Dollar rose in early Asian trading on Friday, despite renewed tariff concerns in the US.
- The Pound Sterling rallied back above 1.3500 as investors await US PCE inflation data.
- Gold prices rose over 1% as weak US jobs data increased demand for safe-haven assets.
Fundamental Analysis
- Major economic events included statements from central banks, data releases, and economic trends affecting forex markets.
- In Japan, life insurers reduced protection for their foreign assets against a stronger Japanese Yen to a 14-year low.
- The Tokyo Consumer Price Index (CPI) for May rose 3.4% YoY, slightly lower than the previous month's 3.5%.
- Inflation measures showed that high inflation typically boosts a country's currency value as central banks raise interest rates to combat it.
- The Bank of England Governor Andrew Bailey emphasized that the UK's economic needs are the main drivers of the BoE's reference rate.
Technical Analysis
- EUR/USD rallied as US jobless claims rose and Q1 US GDP confirmed contraction, leading to expectations of Fed rate cuts.
- GBP/USD rallied back above 1.3500 despite ongoing tariff concerns.
- USD/JPY was down 0.38% in response to BoJ Governor Kazuo Ueda's statement.
- Gold (XAU/USD) rose over 1% to above $33.00 as weak US jobs data increased demand for safe-haven assets.
Conclusion
- The forex market continues to be influenced by central bank decisions, economic data releases, and geopolitical events.
- Investors should monitor these factors closely for potential trading opportunities.
- The outlook for the market remains uncertain, with potential risks including ongoing tariff disputes and changes in central bank policies.
