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Riku Tanaka
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Forex
May 6 19:24

US Dollar inches higher, as week holds hefty event risk

US Dollar Index held steady at 99.925.
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The US dollar inched higher on European Forex markets, Wednesday morning (May 6), with slightly wary undertone considering the data scheduled to be released later this week, including a US central bank meeting and vital US unemployment figures.
At 2:40 AM ET (06:40 GMT), the US Dollar Index, which tracks the currency against a basket of six peers, held steady at 99.925, up 0.2%, while EUR/USD fell 0.2% to 1.0822. GBP/USD edged lower to 1.2432 and USD/JPY fell 0.2% to 106.39.
Traders have been steadily selling off the euro, as it tumbling to a one-week low of US$1.0817, after Germany's highest court made an announcement on Tuesday's (May 5) to give the European Central Bank three months to legitimize buys under its bond-purchasing program.
“While a clear blow to the ECB and not least the European Court of Justice, for now the bond purchases will continue unaffected,” said Danske Bank, in a research note. “We think the primary market concern lies in the potential limitations that this verdict may hold for the ECB in the future amid lack of eurozone fiscal cooperation.”
German industrial orders dropped by a hefty 15.6% in March, their greatest month to month decrease in nearly three decades, as the coronavirus sliced both foreign and domestic product demand from Europe's largest economy.
The British pound has also inched towards the lower end, just ahead of Thursday's (May 7) Bank of England meeting. The UK's national bank has been making great efforts to stem the economic effects since the start of the pandemic, including cutting rates to record lows and increasing its quantitative easing program to £645 billion.
Despite these various measures, a subsequent stimulus package is probably not going to be revealed at Thursday’s (May 7) meeting, however the forex market will continue to keep careful watch for the bank's refreshed macroeconomic projections and remarks with respect to the chance of a further boost in the quantitative easing program in the future, especially as the approaching financial information is expected to be lackluster.
The release of the ADP private sector employment report for April is scheduled for later in the day, which is the first full-month measure of the US spending on lockdown limitations, just ahead of Friday's (Apr 8) non-farm payrolls. This report should provide a taste of how much the US employment spiked during the month and whether government stimulus efforts, like the SME-targeted Paycheck Protection Program, are having any constructive effect in reducing company cutbacks.