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Forex Currency Exchange for May 2024
U.S. Dollar:
The U.S. Dollar’s broad trade-weighted index increased by 1.2% in April, its largest rise since October. The greenback strengthened against all G10 currencies due to reevaluated Fed policy, elevated inflation, and robust demand. The market now expects fewer interest rate cuts in 2024. The US economy may lose momentum in Q2, potentially leading to a softer CPI and retail sales report in May, causing the Dollar Index to pull back.
Euro:
The eurozone economy recovered with 0.3% growth in Q1 24, its strongest since Q3 22. However, the manufacturing sector remains weak, and the recovery appears fragile. Inflation progress is stalling, with headline rates remaining at 2.4% in April. The core rate continues to fall, increasing the chances of the European Central Bank’s first rate cut on June 6. The euro has been affected by the divergence between the Fed and ECB, reaching a six-month low at $1.06 in mid-April. A close above $1.0810 could target $1.0870-$1.0900, then $1.0935-$1.0950.
Japanese Yen:
The Japanese yen’s performance was weak despite the Bank of Japan’s rate hike in March. US 10-year yield increases in April offset the hike, putting pressure on the exchange rate. Governor Ueda’s dovish tone and unchanged inflation forecasts added to the yen’s weakness. The dollar reached JPY158 and triggered intervention, followed by another intervention after the FOMC meeting. Japan’s Q1 GDP may show a contraction, and Tokyo’s April CPI fell more than expected. The yen is expected to enter a consolidative phase between JPY151 and JPY156.
British Pound:
The British pound declined for four consecutive months in April, despite UK interest rate increases and a revised Bank of England policy outlook. The market now expects fewer rate cuts this year. The Bank of England meets on May 9, and Q1 GDP data is due the next day, with a 0.2% growth expectation. The UK economy is growing slowly, and the labor market is weakening. Sterling’s exchange rate is sensitive to employment, wage, and CPI data. The pound reached its lowest point for the year on April 22 at $1.23 and peaked at $1.2635 after the US jobs report. A stronger US dollar could push the pound to $1.2700-$1.2750.
Canadian Dollar:
The Canadian dollar weakened against the US dollar in April, marking its largest decline in six months. The Bank of Canada downgraded its easing expectations, and the US two-year premium impacted the exchange rate. The US dollar’s strength has a strong correlation with the Canadian dollar’s exchange rate. The Bank of Canada raised its growth forecast in April due to stronger exports and immigration. The Trans Mountain pipeline’s operation could boost the economy. Bank of Canada Governor Macklem suggested a possible June rate cut, with a 2/3 chance in the market. A sustained drop below CAD1.36 may signal a US dollar peak. The April high was near CAD1.3850, the highest since November.
Australian Dollar:
The Australian dollar’s performance improved in April, making it the best among G10 currencies despite losing about 0.4% against the US dollar. The Reserve Bank of Australia is now less likely to cut rates this year. Mixed macroeconomic data include slower inflation, rising full-time employment, and a slightly increased unemployment rate. The RBA meeting on May 7 may reflect the reduced urgency for rate cuts. The Australian dollar’s rally in metals like iron ore, copper, and gold might have boosted sentiment. A move above $0.6670 could indicate a recovery towards $0.6750-$0.6800.
Chinese Yuan:
China’s yuan has experienced minimal depreciation compared to other emerging market currencies, with a 1.8% decline year-to-date. The PBOC resists pressure for yuan depreciation. Chinese stocks and bonds have performed well, with the 10-year government bond yield reaching record lows. The mainland’s CSI 300 and Hong Kong-traded mainland shares experienced growth. Despite speculation, there’s skepticism about a large yuan depreciation due to officials emphasizing exchange rate stability. As the yuan recovers and Chinese equities perform better, monetary policy may have more flexibility. The Third Plenary session in July may bring additional economic reforms.
Thanks for reading the Currency exchange for May 2024 with us, Be informed by the TPwithUS team, and take profit with us in the Forex market.
source:https://www.marctomarket.com/2024/05/may-2024-monthly.html
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