The US dollar index declined in overnight trading as the market reacted to news of a new Covid-19 vaccine being developed by Moderna. The company joins a list of hundreds of other international companies that are developing a vaccine and therapy for the illness. Notable companies are Gilead Sciences, AstraZeneca, and Sanofi. The dollar will react to the building permits and housing starts data and Redbook. It will also react to testimony the Fed chair will deliver to congress.
The British pound rose slightly in overnight trading partly due to a strong dollar. The currency will react to the March jobs data from the UK. Analysts expect the unemployment rate to jump to 4.4 per cent. Wages with bonus are expected to have risen by 2.6%, down from the previous month’s 2.9%. The wages are expected to rise by 2.5% without bonus. Meanwhile, the number of people applying for jobless claims is expected to jump by 676k. While these numbers will be watched, they won’t be especially significant because they don’t include the reading from April.
The Australian dollar formed a bearish engulfing pattern after the RBA released the minutes of the previous meeting. In the meeting, the members started their discussion on the deteriorating global economy and the actions other central banks have put in place. The members noted that the Australian economy would contract by about 10 per cent in the first half of the year. They also expect household consumption to contract by about 15% with the unemployment rate set to peak at about 10%. In the meeting, they decided to leave interest rates unchanged as things started to improve in Australia.
EUR/USD
The EUR/USD rose sharply in overnight trading as the market reacted to a new vaccine by Moderna. The pair rose to a high of 1.0928, which is the highest it has been since May 4. On the hourly chart, the price is above the short and medium-term moving averages and slightly below the 61.8% Fibonacci retracement level. The RSI remains above the overbought level of 70. Therefore, the pair may form a pennant or flag pattern today, before eventually continuing with the upward trend.
AUD/USD
The AUD/USD pair formed a bearish engulfing pattern after the RBA released the minutes of the last meeting. The pair is trading at 0.6530, which is slightly below the daily high of 0.6550. The price is above the 100-day and 50-day exponential moving average while the RSI has moved from the overbought level of 70 to the current 67. The pair may continue falling as bears attempt to test the 0.6500 support level.
NZD/USD
The NZD/USD pair jumped in overnight trading as the market reacted to the vaccine and the country’s reopening. The pair is trading at 0.6042, which is slightly lower than yesterday’s high of 0.6057. On the hourly chart, the price is slightly below the 50% Fibonacci Retracement level. It is also below the 50-day and 25-day exponential moving averages. The pair may move slightly lower today as bears attempt to retest the support at 0.6000.
