Weekly Market Update 4 June – Dollar slid lower following disappointing NFP numbers, BOC and ECB monetary policy meeting in focus next week

Weekly Market Update 4 June – Dollar slid lower following disappointing NFP numbers, BOC and ECB monetary policy meeting in focus next week

1. Dollar pared recent gains on Friday as the Non-Farm Payrolls numbers fell short of expectations, with 559K jobs added in the US economy, well below the market forecasts of 645K jobs. Meanwhile, the decline in unemployment rate and increase in average hourly earnings provided reassurance that the world’s largest economy is on track for a steady recovery. Looking ahead, investors will be keeping a close watch on the consumer price report for May, which could show inflation rate rising to 4.6%, well ahead of the Fed’s inflation target of 2%. Investors will also be keeping a close watch on Fed’s upcoming policy meeting in mid-June for a clearer direction on the Dollar.

2. Euro pared recent gains despite vaccinations picking up pace, along with the German Final Manufacturing PMI data surpassing expectations. Looking ahead, European Central bank will deliver its latest monetary policy decision where interest rates are likely to remain unchanged. Elsewhere, Pound underperformed against most of its major peers last week. In the coming week, investors will be waiting for the UK monthly GDP figures, which should show a pickup in the UK’s economy due to stronger industrial and construction output.

3. The unemployment rate in Canada increased from 8.1% to 8.2% in May, in line with market expectations, while the Ivey PMI and GDP data exceeded market expectations. Looking ahead, with Canada looking to ease restrictions in June, we could see an increase in the number of jobs available. Elsewhere, investors will be keeping a close watch on the Bank of Canada for their policy meeting next week although interest rates are likely to remain unchanged.

Outlook on EURCAD: Limited downside before a bounce
EURCAD struggles to overcome last Friday’s high of 1.47086, down 0.15% intraday as we head into Monday’s European Session. Currently, prices remain under pressure from its descending trend line and we could see a further downside to test our support zone at 1.46694 – 1.46784, in line with the fibonacci retracement levels. Keeping in mind that the views on the H4 and daily time frames echo a more bullish bias as prices broke its previous resistance zone, this pullback in prices could present an opportunity to play the bounce.

Outlook for EURCAD: Limited downside before bounce by Salzworth on TradingView.com