Market Wrap – Euro Surges

The EURUSD pair rallied well above the 1.0900 level as the US dollar continued to lose ground on the FX market due to the expectation that another central bank will hike and the FED will not.

Aside the EURUSD pair surging, European equities remained under pressure as the strength in the European weighed on sentiment. A stronger euro currency could slightly hamper demand for eurozone exports.

The gains against the US dollar were broad based, with the GBPUSD pair surging higher above the 1.2750 area to new yearly highs, while antipodean currencies continued to fare well, and the yen pulled higher against the buck.

ECB President Lagarde pulled up the hawkish rhetoric during her scheduled speech and the question and answers session as she boldly said! We’re not thinking about pausing” and “Are we done? No.”

Lagarde added that “We need to be confident that core inflation is heading down” and poring on pressure for a hike in July and “Unless there is a material change, we will hike in July.” The US dollar April and as Retail sales in the US unexpectedly rose 0.3% month-over-month in May of 2023, following a 0.4% increase in April, and beating forecasts of a 0.1% decline.

The data signalled consumer spending remains resilient, despite higher inflation and interest rates. Increases were seen across a number of sectors as US spending improved.

The so-called core retail sales which exclude automobiles, gasoline, building materials and food services, increased 0.2%, following a 0.6% gain in April.

Also, Industrial production in the United States went down 0.2 percent from a month earlier in May 2023, missing market expectations of a 0.1 percent increase.

Mining output slid 0.4 percent driven primarily by decreases in coal mining and support activities, in particular, oil and gas well drilling. On the other hand, manufacturing activity increased 0.1 percent, as expected.