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FX Traders Unfazed By Weak U.S. Data As Recovery Prospects Grow

By Kathy LienForexMay 14, 2021 02:53PM ET
www.investing.com/analysis/fx-traders-unfazed-by-weak-us-data-as-recovery-prospects-grow-200580233
FX Traders Unfazed By Weak U.S. Data As Recovery Prospects Grow
By Kathy Lien   |  May 14, 2021 02:53PM ET
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Forex traders were unfazed by weak data on Friday as currencies and equities extending their recoveries. Consumer spending stagnated in the month of April after soaring in March. Excluding the costs of autos, which have risen significantly in recent months, spending experienced an unexpected decline of 0.8% against 0.7% forecast. Industrial production growth also slowed and the University of Michigan’s consumer sentiment index plunged to 82.8 from 88.3. Economists were looking for sentiment to improve on the back of the record-breaking moves in stocks.

While this month’s economic reports show the U.S. recovery losing momentum, it is far from a peak, as recovery prospects continue to improve. The muted reaction to Friday’s economic reports indicates that investors are positive on the economy and market opportunities, but high-beta currencies, like euro, the Canadian, New Zealand and Australian dollars are benefitting the most. Commodity prices are strong and inflation is generally a bigger problem for these central banks. The euro area is just beginning to ease restrictions, while large parts of Canada remain in lockdown. According to Ontario Premier Doug Ford, the region’s stay-at-home order will remain in place until at least June 2.

Yet, the Canadian dollar is one of the strongest currencies because the Bank of Canada, being one of the first to taper, sent a very strong signal to the market about confidence in their recovery. There’s no question that when Canada comes back, growth will be very robust. Investors are so optimistic that they shrugged off Bank of Canada Governor Tiff Macklem’s comments about the appreciation in the currency. He said they needed to ensure that the appreciation did not affect exports. The New Zealand dollar, the day’s best performer, soared despite weaker manufacturing activity. The decline in the country’s PMI index to 58.4 in April from 68.3 lifted the currency by reducing rate cut bets.

Looking ahead, we don’t see any near-term threats to the risk recovery. We have another busy week to look forward to with Chinese retail sales data, Japanese Q1 GDP, UK and Australian labor market numbers, UK and Canadian inflation reports, FOMC minutes, UK, Canadian and Australian retail sales, along with May PMI numbers from the Eurozone and UK. Inflationary pressures are running hot across the globe and all of next week’s reports should reflect that. Some central banks will be more eager to react than others, and those currencies will appreciate the most.

FX Traders Unfazed By Weak U.S. Data As Recovery Prospects Grow
 

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FX Traders Unfazed By Weak U.S. Data As Recovery Prospects Grow

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Comments (13)
Elvis Okoh
Elvis Okoh May 17, 2021 11:54AM ET
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Hello
Stan Smith
Stan Smith May 16, 2021 3:07PM ET
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Currency Collapse Will Be the Culmination of Fifty Years of "I O U Nothings"
FATME sahraie
FATME sahraie May 16, 2021 11:06AM ET
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hi,dear
Orlando Mehmet
Orlando Mehmet May 16, 2021 11:06AM ET
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investor on crypto currency$1000 to $5000
Luqman Firdaus
Luqman Firdaus May 15, 2021 7:37PM ET
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ok darling
William Bailey
William Bailey May 15, 2021 7:01PM ET
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Undazed , unfazed, loose credit-cash motivated markets..... 14 yeas of nearlt free cash and our japanese moment close at hand
MohdAsmadibinramli Ramli
MohdAsmadibinramli Ramli May 15, 2021 10:31AM ET
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Yes why people hacked my phone
Precious Okolie
Precious Okolie May 15, 2021 8:21AM ET
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Great 👌
Veronica Radulescu
Veronica Radulescu May 14, 2021 9:54PM ET
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????
Philani Dhlamini
Philani Dhlamini May 14, 2021 9:46PM ET
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good read though fundamentals follow technicals, hardly worry about news.
Ike Naira
Ike Naira May 14, 2021 6:07PM ET
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nice!
Ike Naira
Ike Naira May 14, 2021 6:07PM ET
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new follower! good article
Lloyd Manjenje
Lloyd Manjenje May 14, 2021 3:56PM ET
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I love your report nicely explained keep it up
Laurent Chavey
Laurent Chavey May 14, 2021 3:08PM ET
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speculators are pushing all equities up
 
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