The world financial markets are still characterized by low activity. This is mainly due to the fact that, on the one hand, prices for commodities and stock indices are at new highs or reflect annual highs, and there are not enough new strong reasons for further growth, while on the other hand, investors want to understand how things will be with inflation amid a not-so-sharp economic recovery in Western economies led by the United States. This is the main question that will force the Fed and other global central banks to act, raising interest rates to tame high inflation or not.
The sluggishness of the markets remains quite high, but we will most likely see a recovery today on the wave of the publication of employment data from the ADP company. Based on the forecast, the number of new jobs in May increased by 650,000 against the April value of 742,000. We believe that if the numbers turn out to be significantly higher than expected, this may locally warm up the markets and support the dollar exchange rate. However, this will be limited activity, as investors will expect new data on US inflation.
In addition to the ADP report, investors expect the publication of data on the number of initial applications for unemployment benefits for the past week. The indicator is expected to decline from 406,000 to 390,000, while the values of the US non-manufacturing Purchasing Managers' index (ISM) should show an increase to 63.0 points in May from 62.7 points in April.
As for the currency market, the US dollar continues to consolidate in a narrow range around 90 points on the ICE index. Its behavior also clearly fits into the general outline of low activity in all markets. We believe that the financial market may revive, but only locally due to strong changes in the published reports from the United States.
We believe that more noticeable movements can either be after the publication of official data on US employment this Friday, or after the publication of updated figures on inflation, which will be presented later this month. So far, we do not see any other reasons stimulating the activity of investors.
Forecast of the day:
The EUR/USD remains in the range of 1.2160-1.2260. We expect the pair to consolidate here before the release of US employment data.
The GBP/USD is consolidating in the range of 1.4100-1.4235. We believe that the pair will remain in this range today if the published data from ADP will not be much different from the forecasts.
