- The euro opened strong on Wednesday in the wake of U.S treasury yields surging.
- Inflation for the eurozone hit record levels in April.
- The Australian Dollar has been unmoved by an outstanding trade balance that beat market expectations.
Euro and US Dollar
The market is reflecting mixed market signals for this currency pair. The euro opened strong on Wednesday in the wake of U.S treasury yields surging. The U.S economic data that has been released this week has been strong, which has given the market confidence around the hiking cycle. This sentiment comes in contrast to last week's sentiment of an overconfident Federal Reserve.
The eurozone is under pressure in the wake of the Russian oil embargo with the possibility of Russia retaliating by potentially cutting off gas from the region, which may aggravate an already bad inflation situation and risk downside potential for the euro.
EUR/USD Price Chart
Eurozone inflation hit record highs
The market is reflecting mixed market signals for this currency pair. Inflation for the eurozone hit record levels in April, this means that it may be more likely that the European Central Bank (ECB) may implement a 50 basis point rate hike before the year-end. If this were to go through, it could underscore the Euro’s already steady rebound against the US Dollar and the Pound Sterling.
EUR/GBP Price Chart
Australian Dollar benefitting from a trade balance that beat expectations
The market is reflecting bullish market signals for this currency pair. The Australian Dollar has been unmoved by an outstanding trade balance that beat market expectations. In addition, the Reserve Bank of Australia (RBA) published their commodity price index (CPI) that accounts for the composition of Australian commodity exports yesterday.
AUD/USD Price Chart
The Japanese Yen weakened
The market is reflecting mixed market signals for this currency pair. The Japanese data revealed a jobless rate that exceeded market expectations, but retail sales stayed at 0.8% for April. The mood was then turned bad with a miss in industrial production. It was anticipated at -0.2% but came in at -1.3% for the month of April. The Japanese Yen weakened on this news as well as the higher oil price taking its toll on the energy importing economy.
EUR/JPY Price Chart
Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com