The US dollar was the winner on the forex markets on Friday after traders decided to back it over positive interest rate news.
The day was a positive one for dollar traders, with many seeing the decision earlier this week by the Federal Reserve to avoid an interest rate cut as a positive move.
The dollar index, which tracks the currency relative to a number of other major ones across the globe, went up to 97.834 from its previous low of 97.149.
The next big test for the dollar looks set to be jobs data which is due out later in the day. This is often used as a barometer for working out the performance of the American economy, so it will be closely watched.
In the USD/JPY pair, the dollar was stuck at 111.46 – suggesting some early jitters about the decision. Across the Atlantic, the euro was also stuck. In the EUR/USD pair, for example, the single currency held a position of $1.1174, following news that the manufacturing industry in the Eurozone was stagnating.
Today is the last day of the foreign exchange trading week, but there’s still plenty to keep your eyes peeled for.
Remember that Japanese banks are closed today (Friday) due to the Constitution Day holiday, meaning that currency pairs involving the Japanese yen may see a slowdown in trading.
The first major item on the economic calendar today will be a preliminary consumer price index out of Europe, which is due at 9am GMT. This is expected to show a rise from 1.4% to 1.6%.
Elsewhere, the US labour force participation rate covering April is expected out at 12.30pm GMT. This was last recorded at 63%.
The US goods trade balance information for April will be out at 12.30pm GMT.
There’ll also be an ISM non-manufacturing purchasing managers’ index release for April out of the US at 2pm GMT. This is expected to show a change from 56.1 to 57.2.
Over the weekend, there’ll be another Japanese bank holiday on Saturday for Greenery Day.
Looking ahead to next week, the early May bank holiday in Britain will mean a potential slowdown in pound trading. The same will apply again for Japan, which celebrates Children’s Day.
There’ll be a retail sales release out of Europe coming out on Monday at 9am GMT, covering March. Year on year, this was last recorded at 2.8%.
Looking to Tuesday, there are two major central bank monetary policy decisions for forex traders to be aware of. The first is the Reserve Bank of Australia’s interest rate decision, which is due at 4.30am GMT. This currently stands at 1.5%. According to some analysts, there is a possibility that the Bank will actually cut interest rates – although the outcome is not yet certain.
The Reserve Bank of New Zealand is also due to make its decision this week, with the two decisions close together. The New Zealand dollar currently rests slightly higher than its counterpart in Australia at 1.75%.