The global forex market is facing a lot of volatility where the current week will experience a shift of months with the most important event, Non farm payroll. Get more insights for the new trading week with AtoZ Markets’ Forex Weekly Fundamental Forecast.
May 31, 2021, | AtoZ Markets– The US Dollar is facing a weaker momentum due to the fear of inflation. Moreover, the Federal reserves statement and fundamental releases are showing a conflict that made investors remain indecisive regarding the future momentum of the US Dollar.
However, as the monthly shifting is happening this week with the Non Farm Payroll release, there is a possibility of showing a decent momentum in most of the major currency pairs
Forex Weekly Outlook Non Farm Payroll Awaits
Let’s start the forex weekly outlook with the EURUSD:
Last week, EURUSD moved to the new high of 1.2266 in January and closes negative at the 1.2180 level. Moreover, there was a limited number of economic releases that keep the market corrective.
The current market sentiment remains active towards US inflation expectation and their decision about monetary policy. On the other hand, some decent data says that the US economic recovery is underway. The unemployment claims fell to 406K, the lowest since March 2020 with a 6.4% GDP growth, QoQ. Moreover, the core PCE index soared from 2.4% to 3.6% in April, which is a massive milestone.
In Europe, the European central bank is on a different channel. Policymakers repeated that the monetary policy will remain accommodative even if there is low inflation. According to the ECB Governor council member FranFrançois Villeroy de Galhau “Our monetary policy can be patient, as the euro area inflation is well below other jurisdictions.”
Among economic releases, German GDP failed to impress the market while the IFO Survey indicated that May’s Business Climate improved by more than expected, from 96.6 to 99.2.
Like the EURUSD, AUDUSD closes the week with a loss but settled above the 0.7700 level. The market sentiment moved towards the US Dollar on Friday, as soon as the upbeat macroeconomic figure appears on US spending plans.
US President Joe Biden proposed a $6 trillion budget, which is the largest since WWII. within this proposal, there are infrastructure proposals of $2.3 trillion.
Major economies are turning to the positive zone after the Covid-19 pandemic. The developed world initiated vaccination programs, and infection rates started to decline. The coming back to the economic recovery is a sign of better-than-expected economic data and a tighter economic policy.
The Reserve Bank of Australia already showed some sign of economic recovery with good macroeconomic figures that may maintain rates on hold at least until 2024. This week, RBA will have a monetary policy meeting and announce whether they decide to revise their current monetary policy or not. Any hawkish tone from the RBA would create a bullish intervention to the AUDUSD price.
The decision from Fed is liable for the weaker US Dollar while the Sterling is suffering from its own issues. Last week, EURUSD tested the January high but GBPUSD remained calm.
The main drawback of the bullish pressure in the GBPUSD is the rapid spread of a new variant of the COVID-19 virus from India. While some studies said that vaccination works well with this variant but the recent increase in cases is worrying.
However, the UK prime minister Boris Johnson is said that they are concerned about this variant and Germany announced restrictions for travelers coming from Britain. The virus graph is edging higher once again.
The US Non farm payroll is one of the major releases for the GBPUSD where any sign of stronger NFP may initiate a bearish pressure on the GBPUSD price.
Investors witnessed a negative week for Bitcoin due to the crypto ban from China and Iran. However, there are massive crypto adoption and ETF application where Bitcoin plays an important role. Currently, SEC is monitoring the Bitcoin exchange Traded Funds (ETF) application by Fidelity and SkyBridge Capital.
The Bitcoin volatility came as soon as Elon Musk showed concern about the fossil fuel for Bitcoin mining and revealed that Tesla would not accept BTC as a payment method anymore. Later on, China added fuel to the flame by reporting a mining ban that took the BTC price straight to $30,000 level.
However, Bitcoin remained a strong investment opportunity for Hodlers as they hold the investment for a long time. Still, the $30,000 level may work as a significant price level as mentioned by many crypto enthusiastic.
There are fewer economic releases that may affect the Gold this week. The market remained closed on Monday due to the Memorial Day Holiday. On Tuesday, the Consumer Price Index of the Eurozone and ISM Manufacturing PMI of the US will appear.
Any soft reading from the Eurozone will help US Dollars to outperform. Moreover, on Wednesday, the main investment focus will be on the Fed’s Beige Book. On Thursday, the Automatic Data Processing (ADP) Research Institute’s private sector employment report will be featured in the US economic docket.
The main event for gold will be the Non farm payroll. According to the current projection, the Non farm payroll may come at 621K. If the actual result beats the expectation, we may see massive bearish pressure on gold. Currently, Gold is trading above the $1900 significant level. Any failure above this level would attract sellers.
SEC previously asked Magistrate to ask Ripple to provide a legal advice report to justify the XRP’s sale with federal securities laws. This decision bolstered Ripple’s notice based on the argument that SEC failed to warn the company and other market participants.
According to Jeremy Hogan, an attorney closely following the case, the decision of the judge is very important as it is concerned with the relevance of XRP. This move would “block the road the SEC wanted to use to fight the defense.”
In this condition, if investors see an additional positive tone from SEC, XRP may surge higher. Therefore, investors should keep a close eye on decisions to find the price driving point.
Johnson & Johnson [JNJ]
The vaccination program with Johnson & Johnson resumed that put a positive impact on the JNJ stock. The US halted the JNJ vaccine as soon as 6 females got blood clots. Therefore, the vaccination program stopped and resumed later on.
After that, Johnson & Johnson worked to ensure that the reason behind the blood clots came forward to the regulator.
In fiscal Q3, JNJ sales showed a 9.6% gain to $12.2 billion. In particular, revenue from the pharmaceutical company came with a 7.1% growth while medical device sales surged by 10.9% to $6.58 billion.
Overall, the revenue was up by 7.9% to $22.32 billion, with a 12.6% increase in earnings per share to $2.59 a share. Based on the quarterly report, analysts are expecting that the Q2 adjusted profit came at $2.27 a share with a $22.27 billion in sales.
Overall, the major attraction of investors will be Non farm payroll release. The global financial market remained volatile due to the absence of economic changes. Therefore, the Non farm payroll will provide price direction about the US Dollar.
What do you think about the Non farm payroll release? Let us know in the comment section below!