Weekly Forex Market Recap: May 17 – 21 - Kakiforex | Forex markets for the smart money. Weekly Forex Market Recap: May 17 – 21 Weekly Forex Market Recap: May 17 – 21

May 22, 2021

Weekly Forex Market Recap: May 17 – 21

 The British pound takes the top spot this week on positive data from the U.K. and as lockdowns ease, while the Kiwi dollar fell on broad risk aversion sentiment.

Notable News & Economic Updates:

  • Gold scales 3-1/2 month peak on subdued stocks, U.S. yields
  • ECB’s Villeroy plays down inflation risks, says ECB policy should stay very accommodative
  • Yellen pushes higher taxes, stronger unions, more global competition to U.S. Chamber
  • Fed minutes show taper talk may arise at ‘upcoming meets’
  • Oil prices dive $2 on Tuesday on fears of Asian pandemic, possible U.S. rate hikes
  • Bitcoin whipsaws investors with same-day plunge, rally of 30%
  • Australian economy lost 30.6K jobs in April vs. projected 17.5K gain
  • U.S. proposes global minimum corporate tax rate of 15%, with an eye on something even higher
  • US crypto investors to report transactions over $10k to the IRS
  • Oil falls 2% on Thursday on possible return of Iranian supply
  • ECB’s Lagarde says too early to discuss life after emergency support
  • Big European states warm to U.S. proposal for minimum corporate tax rate of at least 15%
  • White House says it has pared down infrastructure proposal to $1.7 trillion
  • S&P 500 ends Friday flat, posts its first back-to-back weekly losses since February

Risk-Off vibes

It was a risk-off kinda week in the financial markets, sparked by mixed economic data from China and crypto market dips thanks to Elon Musk sparking fears of Tesla unloading its bitcoin holdings. Gold continued it’s recent upward move on these vibes, and the equity markets moved lower as well.

The rest of the week was a lot of the same as the negative news flow seemed to outweigh the news of improving covid conditions (e.g., India’s virus cases decline, Fauci says Covid infections are decreasing in all 50 states) and better-than-expected economic updates.

Traders seemed to be focused more on the rising inflation fears narrative that’s been driving the markets for weeks, as well as fresh headlines from governments signaling potential tax hikes, including comments from U.S. Treasury Secretary Janet Yellen on higher taxes, stronger unions, and more competition that sent markets lower on Tuesday.

On Wednesday, risk-on traders got a big kick in the pants, first driven by the massive sell-off / liquidation in the crypto markets sparked by “China’s cryptocurrency warning,” with additional fuel for the fire coming from the FOMC meeting minutes that signaled the Fed may take taper in their upcoming meetings.

The currency markets was relatively tame compared to the equity and crypto markets, with volatility staying low and most major pairs trading under a 1% range. The big winner of the week was the British pound, benefiting from the trifecta of improving economic updates, reduced lockdown protocols and counter currency weakness.

As for the biggest loser, that crown goes to the Kiwi dollar despite no major headlines from New Zealand. It’s likely that the Kiwi was a victim of the bears, partly due to weakness in broad risk sentiment (it’s generally viewed as the higher “risk” currency among the majors), and possibly on the weakness we saw from Australia’s economic calendar, a typical behavior scenario given the close relationship between the two countries.

USD Pairs

  • U.S. homebuilder confidence steady in May, survey shows
  • Fed’s Clarida says not yet time to start taper talk
  • New York factories expand at solid pace, price gauges at record
  • Fed’s Kaplan Says He Still Expects First Rate Hike Could Happen in 2022
  • Yellen pushes higher taxes, stronger unions, more global competition to U.S. Chamber
  • Fed’s Quarles says strong economic recovery underway, but not yet complete
  • Fed minutes show taper talk may arise at ‘upcoming meets’
  • Fed’s Bostic says not yet at bar for any QE taper
  • Manufacturing Activity in Philly Fed’s District Eases in May
  • Jobless claims drop more than expected for a new pandemic low
  • U.S. output growth hits all-time highs, but cost pressures mount – IHS Markit
  • U.S. existing home sales extend decline; house prices race to record high

GBP Pairs

  • UK property records continue as house prices hit new high
  • UK jobless rate falls again, hiring up as lockdown eases
  • BoE’s Bailey sees no clear sign input prices are raising inflation
  • U.K. inflation doubles as post-lockdown spending splurge starts
  • UK consumers regain pre-COVID confidence level – GfK
  • UK PMI business survey hits record high as lockdowns ease, prices jump too

EUR Pairs

  • Portugal, Netherlands latest EU countries to ease travel restrictions
  • European Central Bank warns of insolvencies when pandemic stimulus measures are lifted
  • Euro area international trade in goods surplus €15.8 bn in March 2021
  • GDP down by 0.6% and employment down by 0.3% inthe euro area
  • Annual inflation up to 1.6% in the euro area; Up to 2.0% in the EU in April 2021
  • Eurozone economy revives as demand surges at fastest rate for 15 years
  • German services growth buoys overall activity, but manufacturing sees supply disruption
  • Bundesbank sees temporary German inflation surge toward 4%

CHF Pairs

  • The Swiss Producer and Import Price Index increased in April 2021 by 0.7% m/m

CAD Pairs

  • Consumer sentiment reaches record in Canada on vaccine progress
  • International transactions in securities generated a net outflow of funds of $18.0 billion from the Canadian economy in March 2021
  • Canada annual inflation rises at fastest pace in a decade in April
  • ADP Canada National Employment Report: Employment in Canada Increased by 351,300 Jobs in April 2021
  • Canadian New home prices increased 1.9% in April at the national level
  • Bank of Canada Warns Home Buyers Rates Will Eventually Rise
  • Canada retail sales seen plunging in April as restrictions tightened

NZD Pairs

  • Overseas visitor arrivals were down by 170,900 to 4,600 in March 2021 vs. March 2020
  • The Business NZ Performance of Services Index in New Zealand increased to 61.2 in April of 2021
  • Global Dairy Prices fall -0.2%
  • New Zealand PPI outputs rise 1.2% in Q1 2021
  • New Zealand annual budget anticipates lower employment
  • AUD Pairs
  • Overlay of AUD Pairs: 1-Hour Forex ChartOverlay of AUD Pairs: 1-Hour Forex Chart
  • RBA minutes: Australia transitioned from recovery to expansion earlier and with more momentum than previously anticipated
  • Australia’s consumer sentiment pulls back from an eleven year high

  • Australia Q1 wage growth dragged by public sector
  • Australian economy lost 30.6K jobs in April vs. projected 17.5K gain
  • Australia’s jobless rate fell from 5.7% to 5.5% but participation rate down
  • Australia manufacturing PMI improves to 59.9 in May – Markit
  • Australia retailers boast solid April sales – preliminary data

JPY Pairs

  • Japan producer prices up 3.6% in April
  • Japan preliminary GDP price index down 0.2% vs. projected 0.1% dip
  • Japanese economy contracted 1.3% in Q1 2021 vs. consensus of -1.1%
  • Japan’s tertiary industry activity up 1.1% vs. 0.8% forecast
  • BOJ’s Kuroda signals readiness to extend pandemic-aid scheme
  • Japanese core machinery orders recover by 3.7% vs. projected 5.1% increase
  • Japan’s April exports reveal largest jump since 2010, trade surplus at 0.07T JPY
  • Japan’s consumer prices extend falls as pandemic hit to demand persists
  • Japan approves Moderna, AstraZeneca vaccines
  • Japan’s flash composite output index falls to 48.1 in May vs. 51.0 in April