This is what you need to know to trade today Monday May 30:
Risk flows extend into a new week this Monday as investors welcome the news that Shanghai authorities will lift many restrictions so businesses can resume business from Wednesday, easing a city-wide lockdown.
The mood of the market helps the dollar, which is a safe haven, continue its downward correction from two-decade highs. Fading hopes of aggressive Fed tightening following planned 50 basis point interest rate hikes in June and July also contribute to greenback weakness, while weighing on Treasury yields in the whole curve. 10-year Treasury yields are near the lowest level since mid-April.
Traders assess the recent series of disappointing US macroeconomic data, which have signaled an economic slowdown in the world’s largest economy, undermining sentiment around the dollar.
Meanwhile, Asian stocks are trading firmer with S&P 500 futures up 0.90% so far, reflecting the positive risk tone. In the coming hours, German inflation, eurozone consumer confidence data and the meeting of European Union (EU) leaders to discuss additional support for Ukraine and new sanctions against Russia will be closely watched. .
Before the summit, EU foreign policy chief Josep Borrell said “we will not fail on the oil embargo in the next sanctions package against Russia.”
The Memorial Day holiday in the United States is likely to keep activity in the forex market limited.
The EUR/USD consolidates around 1.0750 in early morning Europe, digesting dovish comments from ECB Chief Economist Philip Lane who favors a 25 basis point rate hike. The upcoming EU summit also keeps the euro on edge.
The GBP/USD hangs on to early gains as it trades below 1.2650. The pound’s rise seems capped by concerns about UK growth, despite fiscal support for households offered last week.
Among the other currencies, the USD/JPY is at the mercy of the dollar and the price action of yields, ignoring Bank of Japan Governor Haruhiko Kuroda’s comments on inflation. The pair is currently trading defensively around 127.00. AUD/USD is closing in on 0.7200 again, riding on the news about the reopening of Shanghai.
The Prayed it is trading above $1,860, aiming to retest two-week highs at $1,870, amid continued dollar weakness as well as yields.
Source: Fx Street
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