The Japanese yen was little changed after the latest inflation and flash manufacturing PMI data. According to the country’s statistics agency, headline inflation declined by 0.3% in April after rising by 0.2% in the previous month. The CPI declined by 0.4% on an annualized basis. This is notable since other countries have recorded strong inflation numbers recently. For example, in the United States, the headline CPI rose by 4.2% while in the UK, it doubled to 1.5% in April. Meanwhile, data from Markit revealed that the manufacturing PMI declined from 53.6 to 52.5 in May. The researchers noted that order books were rising but manufacturers continued to face supply issues.
The British pound was little changed during the Asian session ahead of the latest UK retail sales numbers. Economists expect the data to show that the headline sales rose by 4.5% in April while the core sales rose by 4.2%. They expect year-on-year sales to rise by 36.8% and 31.7%, respectively. The latter numbers will not be all that reliable since the UK sales declined sharply in April last year amid the pandemic. The sterling will also react to the latest flash manufacturing and services data from the UK.
The US dollar was little changed in the overnight session as traders reacted to strong initial jobless claims numbers. According to the Bureau of Labour Statistics, the number of people filing for initial claims declined from 478,000 to 444k last week. This was the lowest figure since the pandemic started and it is a sign that the labour market is tightening. The number of continuing claims increased from 3.64 million to 3.75 million. Later today, the dollar will react to the flash manufacturing and services PMIs and the existing home sales numbers.
EUR/USD
The EUR/USD pair is trading at 1.2228, which is slightly below the key resistance at 1.2245. On the four-hour chart, the pair is slightly above the middle line of the Bollinger Bands. It is also being supported by the 25-day moving average. Also, the pair is slightly below the upper side of the ascending channel that is shown in pink while the Relative Strength Index (RSI) is slightly below the overbought level. Therefore, the pair’s bullish trend will be confirmed if bulls manage to move above 1.2245, which is the YTD high.
GBP/USD
The GBP/USD pair is holding steady ahead of the UK retail sales numbers. The pair is trading at 1.4175, which is slightly below this week’s high of 1.4220. On the four-hour chart, the pair is slightly above the 25-day moving average. It is also forming a rising wedge pattern that is usually a bearish sign. It is also forming an ascending head and shoulders pattern. Therefore, for today, the pair will likely keep rising as bulls target the upper side of the channel.
USD/CHF
The USD/CHF pair declined to 0.8975, which is slightly below the important resistance at 0.9050. It is between the falling channel and below the 25-day and 15-day moving averages. The price is also slightly below the Parabolic SAR dot and the Ichimoku cloud. Also, the signal and histogram of the MACD kept falling. Therefore, the pair may keep declining as bears target the lower side of the channel at 0.8920.
