Forex Market Review (Asian Session) – Euro steady while yen and gold ease; Canadian dollar weakens

Forex Market Review (Asian Session) – Euro steady while yen and gold ease; Canadian dollar weakens

The euro remained steady, near five-month highs against the dollar, while the yen and gold retreated as the outcome of the French elections dampened demand for safe havens. Markets shrugged off North Korean artillery drills carried out today to mark the 85th anniversary of the Korean People’s Army.

Currency markets were relatively quiet during Asian trading due to a lack of key economic data releases as well as a public holiday in Australia and New Zealand, which left investors to digest the news of the French election results.  A likely success for centrist Emmanuel Macron in the May 7 vote has eased market jitters, which is helping underpin the euro, since Macron has a mainstream economic reform agenda. The latest polls are forecasting that he will handily defeat Marine Le Pen, who is a far-right populist urging an exit from the euro. An Ipsos poll predicts a 62% win for Macron versus 38% for Le Pen.

However, as the week gets underway, market focus may temporarily shift away from the elections to other important events such as the European Central Bank and Bank of Japan policy meetings, as well as key data on US GDP. Also, Trump said he will be announcing a light version of his tax reform plan possibly on Wednesday. Markets will also look out for any new developments regarding the risk of a US government shutdown amid a federal funding feud.

The euro touched its highest point in five months on Monday at $1.0919 before easing lower to trade in a tight range around $1.0860 before heading higher into the European session open. The euro was stronger against the yen to rise towards the key 120-yen level. Against sterling, the euro stayed close to the key 85 pence level.

The Canadian dollar was one of the worst performing major currencies after it weakened on news that US President Donald Trump plans to impose tariffs of up to 24% on Canadian lumber imported into the US. The USD / CAD pair rose to $1.3565.

The greenback rose back above the 110-yen level today, while gold eased down towards the $1271 an ounce level, due to fading safe haven demand.

Focus for the rest of the day will mostly be on US data, which includes housing and consumer confidence. New home sales figures are due, as well as the S&P/Case-Shiller house price index. The Conference Board consumer confidence report will be released as well.

Source: Trade Forex with XM.

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