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U.S. Dollar Wilts On Global Recovery Flow

By MarketPulse (Jeffrey Halley)ForexMay 07, 2021 05:03AM ET
U.S. Dollar Wilts On Global Recovery Flow
By MarketPulse (Jeffrey Halley)   |  May 07, 2021 05:03AM ET
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Dollar dips ahead of NFP report

The US dollar abruptly changed direction once again overnight, the dollar index retreating 0.40% to 90.90, easing slightly in Asia today to 90.86. Ongoing global recovery hopes and sky-high Nonfarm Payroll expectations were behind the demise, helped along by US yields unexpectedly reducing as well. The euro was the primary beneficiary amongst the index components, EUR/USD rising 0.50% to 1.2067, lifting it clear of important support around 1.2000.

The commodity currencies were the primary beneficiaries of the US dollar rotation as commodity prices continued climbing, notably platinum group metals, iron ore and copper. USD/CAD fell 0.95% to 1.2150, with the loonie seemingly unstoppable whilst the commodity rally flames burn high. Canadian labour market data could cause the USD/CAD to pause, but it is likely to be just that, a pause.

The AUD/USD and NZD/USD pairs rose 0.48% and 0.25% respectively overnight, with the China concerns being quickly forgotten. AUD/USD remains hemmed in a 0.7800 to 0.7900 range despite a choppy week, with NZD/USD bouncing like a pinball between 0.7100 and 0.7300.

The same could also be said of the dollar index, which has not managed to break out of its 90.50 to 91.50 trading range despite the noise. Although the Chinese yuan has strengthened to 6.4600, dragging Asian currencies higher with it, I am hesitant to jump on the bullish bandwagon. That requires a directional breakout of the trading ranges of the dollar index and commodity currencies, ex Canadian dollar. Hopefully, todays US data will give us more insight.

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U.S. Dollar Wilts On Global Recovery Flow

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U.S. Dollar Wilts On Global Recovery Flow

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