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Key Events in the US Session and Implications for Asia

Key Events in the US Session and Implications for Asia

Discover pivotal US session events and implications for Asia markets, from currency movements to economic indicators.

U.S. and U.K. Markets Closure

U.S. and U.K. markets were closed on Monday due to public holidays subdued global trading activity. The primary economic focus shifted to the IFO Business Climate index for Germany, a key indicator of economic sentiment in Europe’s largest economy.

German Business Sentiment Steady

The IFO Business Climate index for May held steady at 89.3, indicating continued recovery in the manufacturing, trade, and construction sectors despite declining service sector sentiment. The report noted that companies were less satisfied with their current business situation, but their expectations for the future had improved. The Euro responded positively, hovering around 1.0850 before peaking at 1.0867.

Implications for the Asia Session

Australian Dollar (AUD)

Retail Sales Data Release

Australia’s retail sales figures are set to be released. Expectations are for a 0.3% MoM increase for April following a 0.4% decline in March. A rebound in consumer spending could bolster the Australian Dollar soon.

Central Bank Outlook

The Reserve Bank of Australia (RBA) kept the cash rate target at 4.35%. The RBA projects inflation to return to the target range of 2-3% by the second half of 2025, although domestic petrol prices and services inflation remain high. The central bank is cautious about future rate adjustments, emphasizing the uncertain economic outlook.

Next 24 Hours Bias: Weak, Bullish

Dollar Index (DXY) and Key Economic Indicators

Upcoming Releases

S&P/CS Composite-20 Home Price Index (1:00 pm GMT)

  • Anticipated to rise 7.3% YoY for March, reflecting tight inventory levels and slightly lower mortgage rates despite high interest rates.

CB Consumer Confidence (2:00 pm GMT)

  • Expected to decline to 96 points for May, indicating ongoing consumer pessimism.

Key Events in the US Session and Implications for Asia

Federal Reserve Stance

The Federal Reserve maintains the federal funds rate target range at 5.25% to 5.50%, focusing on achieving maximum employment and 2% inflation. Despite recent economic expansions and low unemployment, inflation remains a concern, prompting the Fed to stay vigilant.

Next 24 Hours Bias: Medium Bearish

Gold (XAU)

Economic Indicators Impact

Gold prices are influenced by the same key indicators affecting the dollar. Declining consumer confidence and steady home prices might lead to a weaker dollar, potentially lifting gold prices.

Next 24 Hours Bias: Weak, Bullish

Japanese Yen (JPY)

BoJ Core CPI

The Bank of Japan’s core CPI for May will remain unchanged at 2.2% YoY. Continued low inflation pressures may deter the BoJ from raising its policy rate, potentially weakening the Yen further.

Next 24 Hours Bias: Weak, Bullish

Euro (EUR)

Market Movements

At the start of the Asia session, the Euro traded around 1.0870. With no major news events expected, support and resistance levels for the day are set at 1.0800 and 1.0890, respectively.

Next 24 Hours Bias: Medium Bullish

Swiss Franc (CHF)

SNB Chairman Jordan’s Remarks

SNB Chairman Thomas Jordan’s upcoming speech could provide insights into the central bank’s future policy moves. Any dovish comments could pressure the franc, potentially boosting USD/CHF.

Next 24 Hours Bias: Weak Bearish

Pound (GBP)

Market Reopening

The UK markets will reopen today after the Spring bank holiday. The Pound trades above 1.2750, with support and resistance levels at 1.2690 and 1.2800, respectively.

Next 24 Hours Bias: Weak, Bullish

Canadian Dollar (CAD)

Oil Prices Impact

A rebound in oil prices strengthened the Canadian Dollar, causing USD/CAD to fall below 1.3650. The pair is currently trading around 1.3625.

Next 24 Hours Bias: Medium Bearish

Oil

Price Movements

WTI oil prices gained over 1%, trading above $79 per barrel, driven by continued bullish momentum in the Asian markets.

Next 24 Hours Bias: Medium Bullish

In the Asia session, the focus remains on key economic indicators and central bank remarks. Retail sales data will impact the Australian Dollar, while the Dollar Index reacts to housing and consumer confidence reports. Gold prices may edge up on weak consumer confidence. The Japanese Yen could weaken further if the core CPI stagnates. The Euro and Pound could see modest gains, while the Swiss Franc’s movement depends on SNB Chairman Jordan’s comments. The Canadian Dollar might face pressure amid fluctuating oil prices. Traders will adjust positions based on data and central bank cues, shaping currency and commodity trends.

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