Today in forex market AUD remained under pressure after weak employment data, while EUR PMI data remained mixed where manufacturing was somewhat strong but services were weak. Due to geopolitical tensions and Fed’s hawkish tone, USD and JPY received support, resulting in overall risk-off sentiment in the market. Gold and NZD also remained under pressure, while traders are currently focusing on central bank cues and the US session.
Pressure on Australian Dollar, Euro PMI Data Remained Mixed
In today’s economic calendar, the main focus was on AUD red folder data. Australia’s Employment Change came at -18.6K while the forecast was +16.7K, which shows weakness in the labor market. At the same time, the Unemployment Rate increased to 4.5%, while expected was 4.3%. Both of these figures are negative signals for the Australian Dollar, so in the short term selling pressure can be seen on AUD pairs like AUD/USD and AUD/JPY. The market may also price in a softer stance for RBA’s future rate policy.
On the other hand, on the EUR side, orange folder PMI data remained mixed. French and German Manufacturing PMI stayed above 50, showing slight expansion in the manufacturing sector, but Services PMI is still below 50 which indicates weakness in the services sector. Due to this mixed data, strong bullish momentum did not build in the Euro, but because of manufacturing support downside in EUR may remain limited. Overall today market sentiment against AUD can remain bearish and in EUR neutral to slightly positive, especially if US session dollar strength continues.
Forex Market Movement: AUD Weakened, Yen Captured the Market
Today in forex market AUD remained among the weakest currencies where AUD/USD slipped to 0.71189, while AUD/JPY was seen trading at 113.213. After weak Australian employment data, traders continued AUD selling. On the other hand strength was seen in Japanese Yen, due to which USD/JPY and GBP/JPY remained under pressure at 159.016 and 213.546. On the Euro side EUR/USD remained stable in a bullish tone at 1.16192, while EUR/JPY traded at 184.776. Pound also remained relatively strong and GBP/USD moved around 1.34293 level. Overall market risk-off sentiment dominated where investors moved towards safer currencies after weak economic data.
Geopolitical Tensions Keep Forex Market Cautious
Today geopolitical tensions also heavily impacted forex market sentiment. Due to Iran-related uncertainty and Middle East risks, investors were seen moving towards safe-haven assets, which supported US Dollar and Japanese Yen. Due to hawkish Federal Reserve comments, Gold prices remained under pressure and EUR/USD was seen consolidating above 1.1600. Swiss Franc also remained weak against Dollar strength, while New Zealand Dollar despite stronger trade balance data remained under downside pressure. On the European side ECB officials signaled future rate hikes due to inflation risks, but traders are still closely monitoring geopolitical developments and possible central bank interventions.
Market Sentiment: Strong Demand for Dollar and Yen, Traders in Defensive Mode
Today the whole forex market was seen in a defensive mood. Due to Iran tensions and Fed hawkish stance, traders started moving away from risky currencies, which is why strong buying was seen in USD and JPY. USD/JPY traded around 159.016 while EUR/USD consolidated in a limited range at 1.16192. AUD was already under pressure due to weak jobs data and AUD/USD moved down to 0.71189. Gold also, despite normally being a safe-haven, slipped due to strong Dollar. ECB officials’ rate hike comments tried to support Euro, but the main focus of the market is still on geopolitical uncertainty and possible central bank reactions.
Central Bank Update: Fed Hawkish, BoE Cautious and BoJ Focused on Inflation
Yesterday’s central bank updates had a strong influence on the forex market. Federal Reserve FOMC minutes and officials’ comments signaled that the Fed is still cautious and maintaining a relatively hawkish stance regarding inflation, which supported the US Dollar. On the Bank of England side policymakers clarified that an immediate June or July rate cut is not necessary, but future easing is also not completely rejected, which is why GBP/USD could not build strong momentum and traded flat around 1.34293. On the other hand Bank of Japan’s Koeda said that core inflation is already near 2% and managing inflation through monetary policy is appropriate. After these comments traders supported the Yen, which created pressure on USD/JPY. Overall in the market central banks’ focus is still centered on inflation and geopolitical risks.
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