US Dollar finds a foothold, eyes on Fedspeak and US Retail Sales data

The positive shift seen in risk mood made it difficult for the US Dollar to find demand on Monday and the US Dollar Index (DXY) snapped a two-day winning streak. Early Tuesday, the DXY holds its ground as markets await April Retail Sales data from the US. In the European session, Eurostat will release the Gross Domestic Product growth data for the first quarter and ZEW Survey – Economic Sentiment for the Euro area and Germany will also be looked upon for fresh impetus. Market participants will continue to pay close attention to comments from central bank officials.

US stock index futures trade modestly lower on the day and the benchmark 10-year US Treasury bond yield stays in negative territory below 3.5%. Following the 0.6% decline recorded in March, Retail Sales in the US are forecast to rise 0.7% in April. US President Joe Biden will meet with Republican House of Representatives Speaker Kevin McCarthy and three other top congressional leaders at 1900 GMT for the next round of debt limit negotiations.

US April Retail Sales forecast: US Dollar unlikely to find reprieve.

Early Tuesday, the data published by the UK’s Office for National Statistics (ONS) revealed that the ILO Unemployment Rate edged higher to 3.9% in the three months to March. This reading came in higher than the market expectation of 3.8%. In the same period, wage inflation, as measured by Average Earnings Including Bonus, held steady at 5.8% but surpassed analysts’ estimate of 5.1% by a wide margin. Pound Sterling came under heavy selling pressure after the mixed jobs report and GBP/USD dropped below 1.2500.

EUR/USD registered small gains on Monday but closed below 1.0900. The pair stays relatively quiet early Tuesday. Citing Eurosystem sources, MNI reported on Monday that the European Central Bank (ECB) was most likely to raise key rates once or twice more in this tightening cycle.

Supported by rising US Treasury bond yields, USD/JPY climbed to its highest level in over 10 days above 136.00 on Monday. The pair seems to have gone into a consolidation phase early Tuesday and was last seen trading a few pips below 136.00.

USD/CAD fell sharply on Monday and closed below 1.3500 as rising crude oil prices helped the commodity-sensitive Canadian Dollar gather strength. Later in the day, Statistics Canada will publish the Consumer Price Index data for April, which is forecast to rise 4.1%, compared to 4.3% in March.

During the Asian trading hours, the data from Australia revealed that the Westpac Consumer Confidence Index worsened to -7.9% in May from 9.4% in March. AUD/USD stays under modest bearish pressure on Tuesday and trades in negative territory below 0.6700 after having failed to stabilize above that level on Monday.

Following a quiet Asian session, Gold price turned south in the European morning and dropped toward $2,000.

Bitcoin rose toward $28,000 on Monday but lost its bullish momentum before testing that level. BTC/USD stays on the back foot early Tuesday and trades in negative territory near $27,000. Ethereum posted small gains on Monday. In the European morning, ETH/USD fluctuates in a tight channel slightly above $1,800.