[b]Date: 28th April 2025.[/b]
[b]Can a Busy Week For the USD Revive The Dollar?[/b]
The first week of May for the US Dollar is likely to be the most important within the whole month. During this week, the US will confirm its NFP employment data, job openings, PCE Inflation, US company earnings and the Gross Domestic Product. The US Dollar has been the worst performing currency in 2025, but can this week’s releases change its performance?
Currency Market
In April, the best performing currencies are the Swiss Franc, Euro and Japanese due to their safe haven nature and a known alternative to the Dollar. The worst-performing currencies have been both the US Dollar and Australian Dollar. However, the US Dollar had slightly improved during the previous week meaning traders need to be cautious as to if the USD may retrace slightly higher.
AUDUSD
The performance of the US Dollar is likely to continue to depend primarily on the US trade policy. According to experts, over the past week, investor sentiment has improved but for this to continue the news will need to provide a positive tone.
Lastly, the Japanese Yen could see volatility in either direction as the Bank of Japan is due to announce its rate decision later this week. Analysts expect the rate to remain unchanged but Governor Ueda is likely to provide indications of future rate hikes.
Australian Dollar and Australian Elections
The main developments which will influence the dynamics of the Australian Dollar is the Consumer Price Index (inflation) on Wednesday, Retail Sales and the elections over the weekend. The Australian Dollar Index is trading 1.85% higher over the past month. However, the AUD is still underperforming compared to other currencies. The AUDUSD has struggled to cross above the 0.64069 resistance level over the past month.
The Australian Dollar has been struggling over the past month as economists believe the inflation rate will continue to fall close to the 2.0% target. Current expectations are that the inflation rate will fall from 2.4% to 2.3%. Economists say the likelihood of an interest rate cut in May is diminishing but was previously the main expectation. The Australian Dollar has recovered from the sharp decline that had triggered urgent calls for action from the Reserve Bank.
However, if the US Dollar is to increase in value traders may take into consideration two opinions. The first is to trade the AUDUSD as the Australian Dollar is the worst-performing currency or the USDCHF as the Swiss Franc is the best-performing currency and can more easily give up recent gains.
US Dollar and Upcoming Releases
The US Dollar was 1.65% after starting the previous week on a negative price gap. However, even with the upward price movement, the US Dollar Index remains relatively cheap and still trades at its lowest since July 2024. Gold also declines during Monday’s Asian Session which is another positive sign for the USD. The US will release the following data in the upcoming days:
JOLTS Job Opening - Tomorrow
ADP Non-Farm Employment Change - Wednesday
US GDP - Wednesday
Employment Cost Index - Wednesday
Core PCE Price Index - Wednesday
Weekly Unemployment Claims - Thursday
ISM Manufacturing PMI - Thursday
NFP Employment Change and Unemployment Rate - Friday
A big factor this week will continue to be the US Trade Negotiations. Yesterday, US President Donald Trump announced that negotiations between Washington and Beijing had already begun. However, Chinese officials denied that any talks were underway, fueling traders' uncertainty and dampening appetite for riskier assets. Nonetheless, the tone has been positive as both Trump and China advise they can make a trade agreement. China has already advised some goods will see tariffs lowered as a show of good faith.
Meanwhile, Trump signed an executive order to start a deep-sea mining initiative aimed at countering China’s dominance in certain commodities. The US plans to boost domestic production of nickel, copper, and rare earth elements.
Currently, the Federal Reserve is reluctant to cut interest rates but this can quickly change if employment data deteriorates. If the data this week beats expectations, the Fed is likely to stick to this tone and the US Dollar can gain bullish momentum. However, if this data reads weaker than the projections, the confidence in the Dollar can deteriorate and the Fed may be pressured to cut interest rates further pressuring the currency.
Key Takeaway Points:
This week’s major US data releases could decide whether the US Dollar rebounds or continues to lag.
Safe-haven currencies like the Swiss Franc and Yen remain stronger, but risks of losing momentum increase.
The Australian Dollar faces pressure from slowing inflation, soft retail sales, and upcoming elections.
Stronger US data and positive trade negotiations could fuel a Dollar recovery; weak data may trigger Fed rate cut fears.
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[b]Michalis Efthymiou
HFMarkets[/b]
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