By Lukman Otunuga Research Analyst, ForexTime
Trading in most assets is fairly quiet, with the exception of oil which continues to grind higher and is hitting two-year highs as the market focuses on the brightening demand picture across the globe. The slow pace of nuclear talks between the US and Iran is also helping the supply side with Brent bulls now eyeing up the April 2019 highs at $75.58.
FX major pairs are stuck within ranges, but the (even more important) monthly US labour market out tomorrow is building up to be the major risk event for the month of June, setting the scene for the next FOMC meeting mid-month. Although though the recent tone of Fed policymakers is subtly shifting, any key data misses will move the narrative once again back to an uber-patient Federal Reserve on “go-slow” with regard to policy changes and tapering bond purchases. On the flipside, Fed expectations should be gradually built into assets from here as the world heals and the recovery continues to pick up steam.
EUR/USD trading around 1.22
The world’s most popular currency pair has printed two bullish pin bar candles in recent sessions which suggest buyers are in the ascendency and stepping in when prices fall too far, too quickly. With the region’s vaccination surge gathering momentum, so the single currency should push materially higher above 1.22 so consolidating its two-month bullish trend. But for now, we know what’s on everyone’s mind, so we will be rangebound until 1.30pm BST tomorrow!
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Big day for USD/CAD…tomorrow
After failing to hold gains to fresh, six-year high against the USD, the loonie is finding some support versus the dollar’s advance on the back of firm oil prices. Canadian GDP showed decent growth and even though the monthly figures highlighted the April slowdown due to the more lockdowns, the BoC remains in the hawkish central bank camp.
USD/CAD continues to consolidate across the 1.20 support zone. The longer it does so, the more explosive the breakout but gains will need to push above the 1.2150 zone to arrest the strong downtrend. The double hit of the NFP and a Canada jobs report tomorrow will no doubt determine direction.
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