Risk Rally Supports FX Correction Ahead of US GDP, PCE Data

G7 currencies have been afforded a moment to recover from recent losses against the dollar but high impact US data could put an end to that. FX intervention watch continues as USD/JPY trades above the 155.00 'line in the sand.

(AI Video Summary)

We are analyzing quarterly U.S. GDP data, which has been moderating but remains well placed when compared to the European Union and the U.K. The U.S. dollar shows some weakness against major currencies, influenced by surprising PMI data which could, however, be transient as interest rate differentials regain importance as we get closer to June and that well-telegraphed June cut from the ECB. The Australian dollar is highlighted for its bullish momentum amid risk-on market sentiment. U.S. equities face potential challenges from Meta's earnings guidance. Attention is drawn to the dollar-yen pair, breaching a critical level, holding out for potential FX intervention, and the Bank of Japan's eventual rate hikes. Gold's position is also discussed, noting a cooling safe-haven bid but maintaining its elevated level, with future direction being contingent on emerging bullish catalysts. The overview encapsulates key financial indicators, currency dynamics, equity market impacts, and commodities outlook, providing a comprehensive financial market analysis.

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