The direction of the dollar market remains unclear this week. Observing the dollar index, we see daily nervous movements, but there have been no significant changes in core levels. Yesterday’s daily candlestick formed a doji, indicating a complete loss of direction. Market sentiment is dominated by a wait-and-see mood ahead of next week’s FOMC and ECB meetings.
The current sentiment is somewhat tilted towards inflation concerns. The unexpected rate hikes by the Reserve Bank of Australia and the Bank of Canada, contrary to market expectations of no change, were driven by persistent inflation pressures. Strong employment market conditions in the United States also support rate hike speculations. However, market views have not shown any significant changes, with expectations of no change in June and a rate hike in July.
The economic indicators scheduled for release in the subsequent overseas sessions include Eurozone Real GDP (Final) for Q1 2023, South Africa Current Account Balance for Q1 2023, Mexico Consumer Price Index (CPI) for May, US Initial Jobless Claims (May 28 – June 3), and US Wholesale Inventories (Final) for April. Eurozone GDP is an important indicator, but since it is the final figure, if there are no significant changes from the preliminary figure, the market is likely to pass through without much impact. US Initial Jobless Claims are showing a slight upward trend. It will be important to observe whether the increasing trend becomes established as a sign of high interest rates restraining the labor market.
In terms of speaking events, there is a scheduled speech and Q&A session by Boudreau, Deputy Governor of the Bank of Canada. Although an unexpected rate hike was announced at the Bank of Canada meeting yesterday, any explicit statements regarding the future were avoided. It will be interesting to see if any hints can be gleaned from today’s speech.
Today, the plan is to follow any movements in the USD following the release of the US Initial Jobless Claims.
