Dollar rises after US inks a deal with Mexico on immigration
The US dollar strengthened after Donald Trump made a deal with Mexico. On Friday, the President announced that the United States and Mexico had reached an agreement on illegal immigration. In the deal, Mexico pledged to send more National Guard troops to the Southern border. The country also agreed to accept more migrants as they waited for their trials in the United States. As a result of the deal, Trump announced that the tariffs planned earlier will not be implemented.
The Japanese yen weakened in the Asian session after mixed economic data. In the first quarter, Japan’s economy expanded by an annualized rate of 2.2%. This was higher than the expected 2.1%. On a QoQ basis, the economy expanded by 0.6%, higher than the expected 0.5%. In April, the current account declined to Y1.707 trillion, which was better than the expected Y1.51 trillion. On the negative side, the GDP price index declined to 0.1% from the previous 0.2% while the GDP capital expenditure rose by 0.3%, which was lower than the expected 0.5%.
In China for May, exports returned to growth, increasing by an annualized rate of 1.1%. This was higher than the expected decline of -3.8%. The trade surplus increased to more than $41.6 billion. Later today, investors will receive the final reading of the first quarter GDP numbers from the UK. The data is expected to show that the economy expanded by 1.8%. The industrial production is expected to increase by 1.0%, lower than the expected 1.3%. The manufacturing production is expected to have increased by 2.1%, lower than the expected 2.6%. On trade, the deficit is expected to decrease to 12.96 billion pounds.
The EUR/USD pair fell from Friday’s high of 1.1347 to a low of 1.1310. On the hourly chart, the price is along the middle line of the Bollinger Bands. It is also higher than the 50-day moving average. The RSI has declined from a high of 77 to the current 55. The signal line and the histogram of the MACD too has started moving downwards. Today, the pair could continue moving lower, to test the important support of 1.1300.
The GBP/USD pair was relatively unmoved ahead of the today’s economic data. The pair is now trading at 1.2725, which is slightly higher than Friday’s close of 1.2710. On the hourly chart below, the price is on an upward trend that started on May 31. It is also above the 50-day and 25-day moving averages while the RSI remains along the neutral level of 50. The money flow index has declined from above 80 to the current 37. The pair will likely move in either direction depending on the released data.
The XAU/USD pair decline sharply after trade issues eased a bit. It is now trading at 1330, which is lower than Friday’s close of 1350. On the hourly chart, the price is below the 50-day and 25-day moving averages while the relative strength index has declined from a high of 70 to the current 37. The commodity channel index has also declined sharply. The pair is likely to continue moving lower to test the 1300 support level.