Forex Today – Asian session: Dollar breaks lower and remains under pressure

Chinese inflation data is the highlight of the Asian session on Friday. Later, Canada will report on employment. Markets cheered weak US jobs data which sent the dollar down sharply on Thursday. Investors are preparing for the key events in the coming week, which include the US CPI and the Fed and ECB meetings.

Here’s what to know on Friday, June 9:

Wall Street indices rose sharply on Thursday, buoyed by easing expectations for a hawkish Federal Reserve. However, rising initial jobless claims in the United States pushed the dollar lower. The dollar ended the day vulnerable to further losses.

US Treasury yields eased, reversing Wednesday’s advance. The 10-year yield stood at 3.71% and the 2-year yield at 4.50%. European yields also fell. The Yen and metals benefited from the move. Gold rose from $1,940 to $1,970 and Silver rose 3.50%, breaking above $24.

On Friday, the economic calendar will be almost empty. China will publish the consumer price index for May, which is expected to rise 0.3% from a year ago; the producer price index is also expected to be in negative territory, at -4.3%. These figures will be closely watched against a backdrop of mounting pressure on the Chinese authorities to provide stimulus and cut rates.

Eurozone GDP was revised down from 0.1% qoq to -0.1%. The figure did not alter the expectations of the European Central Bank for the coming week. The EUR/USD pair posted the highest daily close in almost a month, around 1.0780, and above the 20-day SMA. The pair gained more than 80 points.

Societe Generale economists commented on the Eurozone data:

This revision is attributable to the revision of German first quarter GDP, from 0% q/q to -0.3% q/q, and Irish GDP, from -2.7% q/q to -4.6% q/q. Some observers might say that the Eurozone has entered a technical recession. Our opinion is not that far apart.

USD/CAD fell slightly and stabilized around 1.3350/60. The CAD lagged after Wednesday’s rally on the Bank of Canada’s unexpected rate hike. On Friday, Canada will report employment for May.

TD Securities comments on Canadian data:

We expect the Canadian economy to add another 25,000 jobs during the month of May, slowing the recent trend and keeping the unemployment rate at 5.0% for the sixth consecutive month. Wage growth is expected to post a modest decline to 5.1% yoy, but it will remain uncomfortably high for Bank of Canada.

AUD/USD and NZD/USD rallied strongly on risk appetite and US dollar weakness, posting their highest daily close in weeks at 0.6710 and 0.6095, respectively. USD/JPY pulled back from the 140.00 zone to levels below 139.00.

In a volatile session amid reports of an agreement between the US and Iran, denied by the White House, crude oil prices lost more than 2%. The WTI barrel was below $71.00.

The improvement in market sentiment dragged down the cryptocurrencies upward. The BTC/USD pair gained 1% to $26,600, and Ethereum rose as high as $1,850.