US Dollar Hits New High Against Major Currencies Despite Market Uncertainty

New York, United States – The US dollar saw a boost last week, driven by stronger-than-expected data and hawkish minutes from the FOMC. Despite market expectations of reduced ECB easing, the euro experienced a setback after a five-week increase. Additionally, the Japanese government bond yield surged above 1%, and the US dollar traded above JPY157 for the first time since the alleged BOJ intervention earlier in the month. In the UK, though facing setbacks in flash composite PMI and retail sales data, the pound remained resilient.

The G7 finance minister statement is anticipated to take a harder stance against China’s trade practices. The coming weeks are set to reveal preliminary eurozone and Tokyo CPI data, likely to show an increase compared to April. The US PCE deflator, targeted by the Fed, is not expected to mirror the softness of the April CPI. Looking ahead, forecasts for the June 7 US non-farm payroll have decreased in Bloomberg’s survey, potentially signaling no immediate concerns for the Fed.

In the US, concerns about “stagflation” have been circulating, with Q1 growth expected to be revised lower. Speculations of a Fed rate cut in June have been fluctuating, with market sentiment leaning towards a potential cut. However, recent data suggest a gradual economic slowdown, potentially overstating the current situation. In the Eurozone, upcoming economic forecasts and data releases could influence ECB decisions on rate cuts.

Japan’s monetary policy adjustments under BOJ Governor Ueda aim to make policies more effective, despite temporary economic fluctuations. Notably, Tokyo’s CPI figures are closely watched ahead of the national data release. China continues to face deflation and low capacity utilization, indicating the need for further stimulus measures to achieve growth targets. The Australian dollar fell last week, reflecting weaknesses in retail sales and CPI data in the country.

The Bank of Canada is set to report Q1 GDP data, with expectations of a slight increase in consumption and overall economic growth. Canada’s retail sales decline and corrective market forces have influenced the recent performance of the CAD. Meanwhile, Mexico’s inflation report is expected to acknowledge a slower pace of improvement, with unemployment rate remaining at a generational low. The Chilean peso faced a decline due to falling copper prices and monetary policy adjustments.

Overall, global economic trends and policy decisions continue to shape currency markets, impacting exchange rates and market sentiments worldwide.