Forex Today: US Dollar consolidates gains as US-Iran uncertainty persists
Here is what you need to know on Thursday, June 4:
The US Dollar (USD) gathered strength against its rivals midweek, supported by the upbeat macroeconomic data releases from the United States and a lack of progress in the United States (US) - Iran negotiations. On Thursday, the European economic calendar will feature April Retail Sales data. In the second half of the day, weekly Initial Jobless Claims data from the US will be watched closely by market participants ahead of Friday's critical Nonfarm Payrolls (NFP) report for May.
The data from the US showed on Thursday that employment in private sector rose by 122K in May. This reading followed the 105K increase reported in April and came in better than the market expectation of 117K. Additionally, the Institute for Supply Management's (ISM) Services Purchasing Managers' Index (PMI) improved to 54.5 in May from 53.6, highlighting an ongoing expansion in the service sector's business activity at an accelerating pace. The USD Index climbed to its highest level since early April above 99.50 following the strong US data before going into a consolidation phase near that level early Thursday. Meanwhile, US stock index futures trade mixed after Wall Street's main indexes closed deep in negative territory on Wednesday.
Israel and Lebanon on Wednesday agreed to renew a ceasefire but said it would require a "complete cessation" of fire by Iran-backed Hezbollah. The agreement was announced in a joint statement after US-led talks in Washington. In the meantime, Iran’s Foreign Minister Abbas Araghchi said that while contact with the US had not been cut off, he added that negotiations to end the Middle East war had made "no tangible progress,” as reported by Aljazeera.
EUR/USD moves sideways at around 1.1600 in the eary European session after losing about 0.3% on Wednesday.
USD/JPY corrects lower and trades below 160.00 following a four-day rally. Japanese Prime Minister Sanae Takaichi said on Wednesday that the authorities stand ready to respond to exchange-rate moves as needed.
Gold stages a rebound and trades above $4,450 after losing more than 1% on Wednesday.
GBP/USD lost more than 0.3% on Wednesday, pressured by the broad-based USD strength. The pair finds it difficult to stage a rebound and trades within a touching distance of 1.3400 in the European morning on Thursday.
While testifying before the Senate Economics Legislation Committee, Reserve Bank of Australia (RBA) Governor Michele Bullock noted that inflation is too high and reiterated that the the board will do what it considers necessary to achieve their mandate to deliver price stability and full employment. Following Wednesday's sharp decline, AUD/USD stays relatively quiet and fluctuates above 0.7100 early Thursday.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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