There is a possibility of increased volatility in the forex market today because several central bank officials’ speeches are scheduled throughout the day. Traders will first keep an eye on RBA Governor Michele Bullock’s speech, as her comments may provide signals about the future interest rate outlook. In addition, Australia’s Goods Trade Balance is forecast at 1.79B, which is better than the previous reading of 1.23B and may support the AUD. In the European session, ECB President Christine Lagarde’s speech and Eurozone Retail Sales data (-0.3% forecast vs -0.1% previous) may set the direction for the Euro, while the UK Construction PMI with a forecast of 40.4 may affect the movement of the Pound.
Federal Reserve Commentary and Labor Market Data Hold the Key for USD
In the US session, the focus will remain on labor market data and comments from Federal Reserve officials. Initial Jobless Claims are forecast at 214K, which is close to the previous reading of 215K and indicates the strength of the labor market. At the same time, speeches by FOMC members Logan, Bark in, Bowman, Daly, and Schmid may influence market sentiment. Revised Nonfarm Productivity is forecast at 0.5% and Revised Unit Labor Costs at 2.4%, which will impact the outlook for inflation and economic growth. If Fed officials maintain a hawkish tone, strength may be seen in the US Dollar, while dovish comments may become a reason for profit booking and dollar weakness in the market.
AUD Gains Momentum Ahead of RBA Governor Bullock’s Speech
Mixed sentiment is being seen in the forex market today. The Australian Dollar appears relatively strong, with AUDUSD trading around 0.71288 and AUDJPY also maintaining gains. This strength is receiving support from RBA Governor Michele Bullock’s speech scheduled for today and Australia’s better Goods Trade Balance forecast. On the other hand, pressure remains on the Euro, with EURUSD trading at 1.16093 while weakness is expected in Eurozone Retail Sales data. In my view, if Bullock maintains a hawkish tone, buying opportunities may be seen in AUD pairs, especially in AUDUSD and AUDJPY.
Dollar Holds Firm as Markets Monitor US Economic Data
In the US session, traders’ focus will remain on Initial Jobless Claims and comments from Federal Reserve officials. USDJPY remains strong near 159.88, which reflects the overall strength of the Dollar, while GBPUSD is trading at 1.34270 and waiting for BOE Governor Bailey’s speech. If Fed members show a strict stance against inflation and Jobless Claims come in as forecast or better, further strength may be seen in the Dollar. I believe that selling pressure in EURUSD and bullish momentum in USDJPY may provide better opportunities for traders today.
US Dollar Climbs to Eight-Week High as Inflation Concerns Persist
The US Dollar has shown strength for the third consecutive session and has reached its highest daily close in eight weeks. Strong US economic data, coupled with inflation staying put and Fed officials being pretty hawkish, has kept the dollar robust. The ISM Services PMI hit 54.4, while the Prices Paid Index hit a four-year high of 71.4, showing that inflation isn’t budging. The dollar’s strength shows in market watch too; USDJPY is at 159.88 and USDCHF is steady at 0.7906. I reckon if US data keeps coming in strong, buys might keep flocking to the dollar on dips.
Euro and Pound Remain Under Pressure Ahead of Key Events
On the flip side, the Euro and Pound are under pressure. EURUSD and GBPUSD are hanging around 1.1609 and 1.3427, respectively. Today, expect key insights from ECB President Lagarde and BOE Governor Bailey; their talks could really move things. Meanwhile, folks are tweaking their bets before US Jobless Claims and Nonfarm Payrolls. Also, the strong dollar is hitting gold and risky investments. If Fed officials stay strict about inflation and jobs data beats forecasts, sales in EURUSD and gains in USDJPY might amp up. Traders should watch out for that.
