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05.05.2023 Market Report


The EUR/USD pair has recovered firmly to near 1.1040 in the Asian session as the US Dollar index (DXY) has resumed its downside journey. The major currency pair is trying to revive Thursday’s sell-off inspired by a smaller interest rate hike from the European Central Bank (ECB).


GBP/USD rises for the third consecutive day to prod the late May 2022 high, piercing the 1.2600 threshold during early Friday. In doing so, the Cable pair cheers broad US Dollar weakness, as well as recently upbeat UK data, ahead of the key US Nonfarm Payrolls (NFP).


USD/JPY drops for the fourth consecutive day as bears approach the weekly low during early Friday, down 0.30% intraday near 133.85 by the press time. In doing so, the Yen pair renews its intraday bottom as it cheers the US Dollar weakness ahead of the key US employment report for April. It’s worth noting that Japan’s holidays fail to challenge the sellers.


The AUD/USD pair has climbed strongly above the round-level resistance of 0.6700 amid the release of hawkish quarterly Reserve Bank of Australia (RBA) Statement of Monetary Policy (SoMP). The minutes claim that more rate hikes will be announced if inflation continues to remain persistent. Interest rates would drop to 3% in mid-2025. The RBA believes that energy prices will considerably contribute to inflation in the coming year.


The NZD/USD pair has shown a recovery move of around 0.6280 in the early Asian session. Earlier, the Kiwi asset dropped sharply after failing to hit the 0.6300 mark. The correction in the Kiwi asset came due to a recovery move in the US Dollar Index (DXY). The USD index has moved higher after defending its crucial support of 101.43. The USD Index has gained traction as the focus has shifted to the United States Nonfarm Payrolls (NFP) data. Federal Reserve (Fed) chair Jerome Powell confirmed in the monetary policy statement after a 25 basis point (bp) interest rate hike that further policy action will be more data-dependent. US labor market conditions have broadly remained extremely tight, therefore, the NFP data holds significant importance as upbeat figures could force the Fed to reconsider its plan of pausing interest rate hikes from June.


The USD/CAD pair has witnessed an immense sell-off as the US Dollar Index (DXY) has extended its losses sharply and the oil price has shown a significant recovery. The Loonie asset is expected to extend its downside further toward the round-level support of 1.3500 amid a strengthening downside bias for the USD Index.


USD/CHF lacks clear direction around 0.8855 during early Friday in Asia, following a corrective bounce off a 28-month low, as traders await the key US and Swiss data. That said, sour sentiment underpins the US Dollar’s haven demand but a broad US Dollar weakness lure the pair sellers of late, especially amid the dovish Federal Reserve (Fed) interest rate hike.


Oil prices steadied on Friday, but were set for their worst weekly drop in nearly two months amid fears of slowing U.S. economic growth and a softer-than-expected rebound in Chinese demand.


Gold price is showing signs of volatility contraction around $2,050.00 in the Asian session. The precious metal is struggling to make a decisive move as investors are awaiting the release of the United States Nonfarm Payrolls (NFP) data for further action.

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