Weekly Forex Forecast: 04 - 08 May (2024)

The US Dollar saw a roller coaster ride last week as with most of the currency pairs. However, towards the end of the week, the Greenback managed to regain some of its lost ground, while the previously gaining currencies such as the Aussie and the Kiwi dollars eased back from their gains. The Yen turned out to be the weakest currency of the week, losing ground across the board as most of the currencies that rallied managed to keep their gains against the Yen.

The Euro, single currency was the star performer of the week as the currency managed to rally across the board, gaining over 3% for the week, followed up the Swiss Franc.

Fundamentals for the Week 04 – 08 May

Currencies/Events to Watch this Week

RBA Interest rate decision: There were rumors last week about RBA leaks to some select media outlets about a May rate cut, which was the case with its February rate cut. However, taking these rumors with a pinch of salt, the markets are heading into another closely contested RBA meeting. Economic data does not warrant any rate cuts at the moment however the strengthening Australian dollar is something of a concern, but to expect a rate cut to weaken the Australian dollar is a case that is farfetched. Expect to see some volatility as we expect the RBA to put rates on hold but severely talk down the Aussie from further strengthening. Also on tap later in the week will be the monthly jobs reports from Australia with forecasts of a 6.2% increase in unemployment rate from 6.1%. Retail sales, new home sales make up the rest of the data for the Aussie this week.

Will the Euro keep its gains this week? There is not much of major economic events from Europe this week and it is likely that focus will shift to the Greece negotiations. Last week, it was reported that Greece would strike a deal by Sunday and the markets took this news in their stride. However, a lot is left to be seen and the Euro is likely to be influenced by these factors the coming week.

UK Election Week: Economic data this week from the UK is light, but the major focus will be the UK general elections due to be held on May 7^th. The British Pound after rallying last week started losing ground since Friday’s session and is likely to remain very subdued into this week as well until the election results are posted. Consensus is expecting to see a coalition government being formed with a lot of unsaid variables coming into play.

Data heavy week for the US: After a relatively quiet week or weeks, the US Dollar will head into an important data week with the monthly non-farm payrolls data and a speech by Janet Yellen. It is expected that the unemployment rate will dip a point lower from 5.5% to 5.4% and the job gains are expected to see a number around 231k after March’s dismal report. Will the data help revive the US Dollar or will investors continue to extend their selling pressure on the Greenback?

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