Fundamentals on major pairs for 22 May 2014. USD strengthened as bond yields recovered, USDJPY rebounded, and GBPUSD rallies might be disrupted by GDP release.
This week, we saw a startlingly weak USD. What happened? One reason is that Janet Yellen in her testimonial as Fed Governor said nothing on the topic of monetary policy but that they will continue to taper. The second reason, US Treasury Bond yield slumps makes it difficult for USD bulls to awaken. This is an example of how bonds influence forex market.
Despite experiencing a brief climb, the USD ultimately returned to its pre-NFP low levels. Why is the Greenback seemingly disregarding strong NFP figures and declining unemployment rates?
Forex market volatility this week is predicted to rise along with the many news releases from almost every region in the world. Ukraine has made its way back to headlines to end a quiet market last week. For now, the issue may get to stand in the sideline as several news releases that probably more relevant and significant for the global market is going to be published.
NZD skyrocketed after Reserve Bank of New Zealand lifts its benchmark interest rates 0.25 basis point. This marks the second time RBNZ hikes Official Cash Rate (OCR) this year. Their hawkish insistence gives Kiwi an edge, and NZD to USD soars to 0,8633.
Unemployment in the US and UK dwindled and economic condition seems like getting better. UK unemployment rate dwindled to the lowest level since January 2009. As well, US unemployment retained at under 7% since the beginning of the year. But GBP and USD bullish movements is in precarious position.
Central banks perspectives are still going to play an important part in forex trading this week as fundamental releases such as CPI and unemployment will indicate future policies.
Greenback tumbled in most pairs, with exception on EUR/USD and USD/JPY. It seems market players are more concerned on the divergence of direction among central banks than mere NFP.
