May is not a good month for friends of the US dollar. The US dollar index, in general, continues to bottom out. The April employment rate released at the beginning of the month disappointed the market. The growth of non-agricultural vacancy was not as expected. In addition, the U.S. Federal Reserve system has repeatedly emphasized that the rise in inflation is only temporary and has no plans to adjust the current monetary policy. The rebound of the US dollar to around 91.40 is unsustainable. Subsequently, the US released the latest consumer price and production price indexes that reflected the possibility of rising inflation. Other data also showed that the local economy is still recovering. However, the US dollar index failed to reverse the weakness since April. And after rebound in May, it has been restrained at the 10th-day and 20th-day line. It was still struggling near the recent low level, 89.80 at the time of writing. It is not ruled out that the low position 89.18 at the early of January will be tested again. On the other hand, there is no problem with the fundamentals of the United States, and the threat of inflation has not been lifted. Recently, Fed officials have mentioned that it is time to discuss adjustments to the pace of debt purchase. For the time being, the market chooses to ignore this slightly change, but if there are more similar voices, investors may soon be affected. The author believes that the downside of the US dollar might not be too great, 88/89 is still an important supporting area, and it may be considered as a mid-line deployment.

Among the non-US currencies, the strongest is still the Canadian dollar. The strong fundamentals, strong oil prices, and the central bank’s anticipation of interest rate hikes that may occur earlier than 2022 are all positive for the Canadian dollar to rise. At present, the Canadian dollar has risen, 1.2040 Canadian dollars to 1 US dollar, at the highest level in early September 2017. And 1.18 will be the next important threshold. The RSI on the daily chart may deviate from the current price. Friends who already hold Canadian dollars may consider making profits in the new wave of gains.

Many countries have been vaccinated for a while, but the epidemic situation is still reversing. Recently, the reported confirmed cases in Asian countries including India and Japan has rebounded significantly. Even Taiwan, which has been praised for its excellent epidemic prevention work, has broken out in a sudden. With more than 100 cases in the last few days, the government has extended the third level of alert, many bustling areas have become empty. It is estimated that the pandemic will still take a while before the situation is eased. Since there are different variants of the virus, hence, we may still have chances to be infected at any time even we have vaccinated. Epidemic precaution has become the norm. I believe that we must continue to take serious precaution this year and should not treat this lightly. Taiwan is a good example for us.

Patrick Law General Manager of Hantec Group