Forex Today − Asian Session: AUD and NZD Continue to Outperform as USD Gets Support from Treasury Yields

On Tuesday, New Zealand will report E-Card Retail Sales, Japan will release Household Spending data and Australia will release Retail Sales. China will release trade data, and Australia will release Westpac Consumer Confidence for May. In the evening in Australia, Treasurer Jim Chalmers will present the budget. On Wednesday, the key report for the week will be US consumer inflation.

Here’s what you need to know on Tuesday, May 9:

Wall Street opened the week with mixed results. Market participants are digesting the events of the past week, including central bank meetings and US labor market data. The Federal Reserve’s survey of banks did not come as any big surprises, as concerns about banks continue to subside, supporting market sentiment. Upcoming US inflation data, with the Consumer Price Index (Wednesday) and the Producer Price Index (Thursday), will be critical.

The dollar rallied during the US session, buoyed by higher US yields, but commodity currencies fared better, extending last week’s rally. The DXY rose slightly to 101.30 and remains close to the crucial 101.00 support zone.

Germany reported a 3.4% decline in industrial production for March, worse than the forecast drop of 1.5%. Investor confidence in the Eurozone worsened from -8.7 to -13.1 points. The EUR/USD pair has pulled back to the 1.1000 area as it continues to move sideways.

As for the German industrial production data, Commerzbank analysts wrote:

Industrial production unexpectedly fell by 3.4% in March. This meant that a considerable part of the gains made in the last two months was lost again. Due to the recent weakening in demand, a further decline in production is expected in the coming months. Instead of the economic recovery expected by many, a mild recession in the second half of the year is more likely.

GBP/USD hit fresh multi-month all-time highs before pulling back towards 1.2600. The rally lost momentum as it approached the 100 SMA, which is expected at 1.2700. The Bank of England will announce its decision on Thursday, with market participants expecting a 25 basis point rate hike.

USD/JPY moved sideways around 135.00 on Monday, little changed. The minutes of the Bank of Japan (BOJ) meeting on March 9 and 10 offered no surprises. On Thursday, the BOJ will publish the summary of views from the April 27-28 meeting.

The AUD/USD pair reached 0.6803, the highest intraday level since April 14, before pulling back slightly. It remains bullish, with an eye on the critical 0.6800 resistance zone. Australia will report Retail Sales, Westpac will publish the Consumer Confidence Index and the Government will announce the budget.

The NZD/USD pair rose for the fifth day in a row, hitting a high of 0.6358. The kiwi posted the highest daily close since February, driven by improving risk sentiment.

The Loonie lagged behind and USD/CAD ended flat around 1.3370/80, after approaching 1.3300.

Crude oil prices extended their recent recovery and rose more than 2%. Metals posted mixed results: Gold rose marginally, ending above $2,020, while Silver fell modestly to $25.50.

Cryptocurrencies fell on Monday, with Bitcoin losing almost 5%, falling to $27,500.

He Chilean peso (CLP) rallied after right-wing candidates won 33 of 50 seats in Chile’s Constitutional Convention vote. USD/CLP fell to 786.15, reaching the lowest level since February, but then rebounded towards 800.”