hawkish central banks

Summary: US inflation at 9.1%. Retreating USD and buoyant commodity prices offered NZD support. UK GDP data beat market expectations. EUR remains under pressure due to gas crisis. Read next: US Inflation Reaches Nearly 41 Year High, RBNZ & BoC Increase Their Cash Rates  EUR/USD The market is reflecting bearish signals for this currency pair. Early on Wednesday the EUR/USD currency pair hit parity, a level not seen in 20 years. US inflation data for June was released on Wednesday and came in at 9.1%, a level that had increased since the May reading of 8.6%. Inflation has risen further despite the Fed’s continuous effort to drive inflation rates down through aggressive interest rate increases. The Euro will continue to remain under pressure amidst the European gas crisis which is far from over. EUR/USD Price Chart UK GDP Data beat expectations The market is reflecting mixed signals for this currency pair. With the UK GDP data coming in surprisingly strong in the mid-trading week has led Goldman Sachs to lower their expectations for a looming recession in the UK economy. All components of the UK economy played their part in contributing to the better than expected data: manufacturing production increased 2.3% in May against a consensus forecast for 0.2%. Industrial production grew 0.9% against expectations for flat output and construction output increased 4.8% against the 4.4% expected. EUR/GBP Price Chart EUR/CHF Currency pair The market is reflecting bearish signals for this currency pair. The Swiss National Bank (SNB) surprised the markets in June with a 50 bps hike in interest rates. The SNB hosts quarterly meetings to discuss monetary policy, the next meeting is due in September whereas the European Central Bank (ECB) will make its decision regarding monetary policy at the end of the month. EUR/CHF Price Chart GBP/NZD pushing downwards The Reserve Bank of New Zealand increased their cash rate by 50 bps on Wednesday in an attempt to reign in persistent inflation. Although the move from the reserve bank was fully priced-in to the financial markets, the retreating US Dollar and buoyant commodity prices allowed room for the NZD to a number of currencies downward, including the pound sterling. GBP/NZD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: The US CPI inflation came in at 9.1%. The RBNZ lifted its cash rate 50 bps from 2% to 2.5%. BoC raised its cash rate 100 bps from 1.5% to 2.5%. US CPI Inflation The US released their Inflation data for June on Wednesday, the reading came in at 9.1%, its highest rate in nearly 41 years. The rate came in higher than the 8.6% reading for May which caused the Federal Reserve to shift to a faster pace of interest rate hikes. Stocks fell in the wake of the news being released and Investors are watching closely for clues about the economic outlook for the US. Reserve Bank Of New Zealand Hawkish The New Zealand Dollar (NZD) edged higher on Wednesday, this change may have more to do with the retreat of the US Dollar rather than the fast monetary policy tightening the Reserve Bank of New Zealand (RBNZ) has chosen to take. The RBNZ lifted its cash rate 50 bps from 2% to 2.5% on Wednesday, reaching its highest level since 2016. Although the latest policy decision was widely expected by economists and thus fully priced-in by the financial markets, there was a limited reaction to the news for the NZD. Bank of Canada The Bank of Canada (BoC) surprised the markets on Wednesday by pushing its interest rates up to their highest level since October 2008, the move has outdone the Federal Reserve in its methods of bringing down local inflation. BoC raised its cash rate 100 bps from 1.5% to 2.5%. Sources: poundsterlinglive.com, wsj.com

Summary: The Eurozone energy crisis persists. Potentially more hawkish BoE could be on the horizon. BoC 1% raise in interest rates offers CAD support. Read next: Platinum Prices Touchine 22-month Lows, RBOB Gasoline, Wheat Consumption Expected To Decrease  Stock Markets weighing an even more aggressive Fed The market is reflecting bearish signals for this currency pair. The Euro to US Dollar exchange rate has fallen below parity in the wake of a surge in US Dollar demand. Looking at the combination of events leading to the fall of the EUR/USD, we observe that the stock markets are in the red as they attempt to anticipate the potential effects from a potential 100 basis point hike from the Federal Reserve. The Euro is still struggling as concerns around the seemingly unwavering energy crisis in the Eurozone persists. EUR/USD Price Chart Potentially more hawkish BoE could be on the horizon The market is reflecting bearish signals for this currency pair. The most recent commentary suggests to the market that the Monetary Policy Committee at the Bank of England (BoE) is only one employment report or one inflation number away from a step change in the pace the Bank Rate is being lifted, and that a change of this sort could come as soon as August. This move could offer the pound support going forward. EUR/GBP Price Chart BoC hawkish moves offering CAD support The market is reflecting bearish signals for this currency pair. The US Dollar had a strong start to Thursday's trading day as investors priced in the growing expectations for a 100 basis point increase in interest rates from the Fed in the wake of the 9.1% US inflation data that was released on Wednesday. On Wednesday the Bank of Canada (BoC) shocked markets with their largest interest rate hike since 1998. The hawkish move from the BoC has offered the Canadian Dollar support and has thrown a curveball at investors, leaving a range of responses from analysts. USD/CAD Price Chart USD/JPY The market is reflecting bearish signals for this currency pair. The US Dollar has reversed yesterday's pullback which occurred in the wake of US inflation data being released. The BoJ continues on their dovish monetary policy path. USD/JPY Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: EUR recovering against the USD. ECB interest rate decision due on Thursday. UK economic data to be released this week. NZ CPI inflation rose 1.7%. Read next: Hawkish Fed Is Driving Gold’s Value Down , Corn Prices At 5-week Lows, Brent Crude Oil Prices Falling  Euro attempting to recover against the USD The market is reflecting bullish signals for this currency pair. The Euro has been attempting to recover against the US Dollar during the Monday trading day and could continue to rise in the coming days if all goes well for Eurozone economies on Thursday after the European Central Bank (ECB) announces their policy decision. In addition there is still market uncertainty around whether Russian gas flows will continue through the Noord Stream 1 after its maintenance ends on July 21st, this remains one of the greatest risks to the Euro. EUR/USD Price Chart Pound sterling could weaken more against the EUR The market is reflecting bullish signals for this currency pair. The EUR/GBP currency pair could strengthen more in the coming days as the market awaits the ECB’s interest rate decision. There is however, some UK economic data that is due to be released which could offer the pound sterling support against the Euro and other currencies. EUR/GBP Price Chart NZ inflation data weakening the NZD. A rise in New Zealand inflation data shocked investors and raised bets for a faster and more hawkish response from the Reserve Bank of New Zealand (RBNZ). However, fears of a ‘hard landing’ for the Kiwi economy have grown as investors are fearing that the combination of rising interest rates and high inflation will negatively impact economic expansion, which may aid in explaining the NDZ’s negative reaction to the data. According to Stats NZ, CPI inflation in NEw Zealand rose 1.7% quarter on quarter, surpassing the markets expectation of a 1.5% increase/ GBP/NZD Price Chart USD/CAD The market is reflecting bearish signals for this currency pair. The Canadian Dollar has continued its rally against the US Dollar after the Bank of Canada (BoC) surprised markets last Wednesday with a 100 basis point hike in interest rates. USD/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com  

Summary: EUR/USD, EUR/GBP currency pairs Netflix earnings report Tesla earnings report Read next: S&P 500 Amongst Major Indexes That Are Rising, Markets Are Waiting For Thursdays ECB Policy Decision  Euro stole headlines on Wednesday The EUR/USD currency pair ended the Wednesday trading day showing mixed market sentiment as the market awaits the European Central Bank’s (ECB) monetary policy decision due on Thursday. The Euro is still facing uncertainty regarding high inflation in the Eurozone and how the ECB plans to tackle it, in addition as the Noord Stream 1 opens after its routine maintenance period, there are still concerns as to whether Russia will open the gas taps. The recovery of the Euro against the dollar could be reflecting a possible market inflection point. The Euro has recovered half of its July losses so far, this could mean a turn around against the Dollar for many other major currencies aswell. The Euro stole the headlines on Wednesday as both Bloomberg News and Reuters reported that the market could see an outsized interest rate yield rise from the European Central Bank on Thursday. EUR/USD Price Chart EUR/GBP currency pair The market is reflecting mixed signals for this currency pair. According to a number of new reports, it is predicted that UK inflation could reach up to 12% by October, the report also showed that the inflation rate was growing at its fastest rate in 40 years. The Euro remains supported ahead of the ECB’s policy decision on Thursday EUR/GBP Price Chart Netflix Earnings Report Netflix's earnings report on Wednesday indicated they lost around 970,000 subscribers, beating the 2 million that was predicted last quarter, thus causing the company's stock price to jump. Its EPS beat market expectations. The company also warned that the rallying US Dollar would have an impact on international revenue. The streaming giant also indicated they had more time to understand and address the issues that have been impacting their streaming, revenue and other major indicators. NFLX Price Chart Tesla earnings report Tesla’s quarter 2 earnings report indicated the company beat market expectations with regards to adjusted EPS. Automotive margins came in at 27.9% down from the 32.9% seen in the first quarter, impacted by inflation, increased competition for battery cells and other components that are required for electric vehicles. In addition the invasion of Russia in the Ukraine and in conjunction with covid-19 lockdown measures in China caused supply chain issues and parts shortages. TSLA Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com, cnbc.com

Summary: Federal reserve interest rate announcement Wednesday. Barclays updated their expectations for the next BOE interest rate hike. NZD was a poor performer on Tuesday. Read next: NGAS Prices Rising, Cotton Demand Falling, Gold Prices Rising As Recession Fears Rise  Euro at risk of weakening The market is reflecting bearish signals for this currency pair. The euro is at risk of falling as prospects of a weaker economic outlook and restricted gas flows through the Noord Stream 1 pipeline. The threat of Russian oil exports through the Noord Stream pipeline being reduced to 20% could contribute even further to the energy crisis in Europe and drive gas prices even higher. The market is awaiting the Federal Reserve's interest rate hike announcement which is due tomorrow. EUR/USD Price Chart EUR/GBP bearish The market is reflecting bearish signals for this currency pair. Barclays bank has increased expectations to 50bps hikes from the Bank of England (BOE). A 50bp increase is now anticipated for August 4th, according to the UK economic team at Barclays after evaluating incoming UK data and signals from the Bank of England. EUR/GBP Price Chart GBP/NZD currency pair The Pound to New Zealand Dollar exchange rate may be at risk of another decline below the 1.92 level due to a full calendar of event risks in the next few days, making it difficult for it to rise. On Tuesday, the U.S. Dollar recovered from 10-day lows vs the majority of its G20 counterparts, causing the GBP/NZD to increase for a third day in a row. The New Zealand Dollar performed worse than the other major currencies and Sterling. GBP/NZD Price Chart Sources: dailyfx.com, finance.yahoo.com, poundsterlinglive.com

Summary: Fed chooses a 75 basis point rate hike. Central Banks all around the world are raising interest rates. Federal Reserves On Wednesday the Federal Reserve made their interest rate decision to raise interest rates on Wednesday, they chose to raise interest rates by 75 basis points. The market expectations were elevated to 100 basis points in the wake of June CPI inflation data that reflected that, despite the Fed’s efforts to reign in and control the soaring inflation, inflation was stubborn in its moves upward. The Feds move is likely to cause the US dollar to rally and strengthen against all its major currency pairs and hopefully will aid in bringing down the already soaring inflation rate. Over the past couple weeks the European Central Bank (ECB), Bank of Canada (BoC) and the Bank of England (BoE) amongst others, have all rasied their interest rates in an attempt tio reign in the soaring inflation rates around the world. The Fed has been periodically raising interest rates at every meeting since May, the first rate hike in may was 50 basis points, which shocked the markets and caused the US Dollar to rally and strengthen across the board. The second interest rate hike by the fed was in June of 75 basis points and was one which shocked the market, thereafter the 75 basis point hike decision today, a further 75 basis points. The market had priced in a 75 basis point hike but experts raised their expectations to a 100 basis point rate hike, as the Fed continued to reiterate to the market their commitment to reigning in the sky high inflation rates, rates that have not been seen since the 1980s. In a unanimous vote, the Federal Open Market Committee raised the policy rate to a range between 2.25 percent and 2.50 percent, noting that "inflation remained elevated, reflecting supply and demand imbalances connected to the pandemic, increased food and energy prices, and broader pricing pressures." The FOMC continued by stating that it is "very sensitive" to inflation risks. Officials observed in the new policy statement that "recent measures of spending and production have weakened," despite the fact that job growth has remained "strong," a pointer to the reality that the substantial rate hikes they have implemented since March are starting to take effect. The Fed has increased its policy rate by 225 basis points in total this year, on top of a 75-basis-point increase last month and smaller increases in May and March, as it fights an inflation breakout on a par with the 1980s with monetary policy modeled after the 1980s. As a result, the epidemic era attempts to promote household and corporate spending with cheap money have effectively come to an end. The policy rate is currently at the level that the majority of Fed officials believe has a neutral economic impact. The rate was also achieved in just four months, matching the peak of the central bank's previous tightening cycle, which lasted from late 2015 to late 2018. Little concrete information about the next actions the Fed might take was provided in its most recent policy statement. The Fed's decision will be greatly influenced by whether or not incoming data indicates that inflation is starting to decline. Investors anticipate the U.S. central bank to increase the policy rate by at least half a percentage point at its September meeting in light of the most recent data showing consumer prices rising at a rate of more than 9% annually. Sources: investing.com, reuters

Summary: The US Dollar made intraday gains on Wednesday. Markets awaiting BOE policy decision. GBP/AUD attempting recovery. Read next: Palladium Prices Touching Two-Week Highs, OPEC+ Increasing Crude Supply Of WTI Crude Oil, Coffee Supply Outlook Seemingly Poor  USD supported by US ISM data The market is reflecting bearish signals for this currency pair. After the Institute for Supply Management (ISM) Services PMI defied market expectations by increasing for the month of July in contrast to the alternative barometer compiled by S&P Global, the U.S. Dollar recovered earlier losses to make intraday gains over various other major currencies. The sharp increases in new orders and overall business activity within the biggest and most significant sector of the U.S. economy's largest and most important sector led to Wednesday's release of the ISM services sector index rising from 55.3 to 56.7 for last month, surprising the currency and bond markets. The Fed will decide in September whether to lower the size of the increments in which it is raising U.S. interest rates. Chairman Jerome Powell indicated last Wednesday that they would take a range of economic indicators into account, causing a significant decline in the value of the dollar. EUR/USD Price Chart BoE Policy rate decision due The market is reflecting mixed signals for this currency pair. The Pound sterling has strengthened ahead of the Bank of England (BoE) interest rate decision. Following the Bank of England report on Thursday, Barclays' foreign exchange analysts predict that the British Pound would likely decline; however, Goldman Sachs is more optimistic about the UK currency's prospects, particularly when compared to the Euro. Before announcing its most recent inflation and economic growth projections, the Monetary Policy Committee of the Bank of England is anticipated to announce another interest rate increase.Through the later part of July and the beginning of August, the Pound strengthened against both the Euro and the U.S. Dollar. The main test for the currency will be the size of the hike announced and the nature of those expectations. EUR/GBP Price Chart GBP/AUD attempting recovery The GBP/AUD currency pair is attempting recovery of the declines experienced in July. In the first few days of August, the Pound to Australian Dollar exchange rate further reversed its July decline, but it may find it difficult to move much further than the nearby 1.76 level in the absence of further support from the Bank of England (BoE) this Thursday. Following the latest Reserve Bank of Australia (RBA) monetary policy announcement on Tuesday, which helped push GBP/AUD to one-month highs, the Australian Dollar was one of the major currencies that underperformed for the week ending on Wednesday. GBP/AUD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundtserlinglive.com

Summary: The euro is battling to mount significant gains against the USD. BoE’s economic downgrades. Market expectations for a hawkish BoC. Read next: Meme Stocks Amongst Monday’s Top Performers  EUR/USD suffered defeats this week The market is reflecting mixed signals for this currency pair. The Euro to Dollar exchange rate suffered defeats this week from both near and distant, but if this Wednesday's U.S. inflation data further incenses a still-hawkish Federal Reserve (Fed), it might send the rate back into its laws from July. In the first session of last week, the Euro got dangerously close to the 1.03 handle versus a declining Dollar, but an attempt at a rebound was again thwarted by what appear to be escalating concerns to energy supplies in Germany and several other European nations. The euro has stabilized versus the U.S. dollar in recent weeks following a large sell-off earlier this year, but has been unable to mount a significant comeback due to a dearth of supportive fundamentals. In this aspect, the common currency has faced challenges that have limited its upward performance versus the dollar, including the oil crisis in Europe, regional economic instability, and the ECB's unwillingness to raise rates fast. EUR/USD Price Chart BoE shocked the market with sharp economic downgrades The market is reflecting bullish signals for this currency pair. The Bank of England (BoE) shocked the market last week with sharp downgrades to its economic forecasts, which put Sterling on the back foot and put it at risk of slipping into a cluster of technical support levels around 1.18 in the coming days. As a result, the Pound to Euro exchange rate was muted. The pound sterling was a little firmer this morning against the U.S. dollar and the euro, respectively. The new leader of the British Conservative Party and the British Prime Minister, both named Sunak and Truss, have been the subject of much discussion (tax cuts). Tax cuts may increase already high inflationary pressures, which could lead to additional interest rate increases from the Bank of England. Tax cuts are intended to promote economic growth inside the UK (BoE). EUR/GBP Price Chart GBP/CAD currency pair Last week, U.S. economic data, the U.S. Dollar, and a strong Loonie combined to drag the Pound to Canadian Dollar rate down toward 1.55 and a level that may continue to exert a gravitational pull in the days to come. This prevented the rate from rising above near 10-year lows. Although the unemployment rate in Canada remained at 4.9 percent and wages continued to grow at an annualized rate of 5.2 percent in July, the economy still lost jobs for a second consecutive month. This may have led the market to believe that the Bank of Canada (BoC) will likely maintain the more aggressive monetary tightening and interest rate policy implemented in recent months. GBP/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: Market awaits US inflation reports on Wednesday. Fed and ECB will continue to hike interest rates. The Bank of Canada may decide to scale down its plans to raise interest rates. Read next: Will Tesla’s (TSLA) Stock-Split Boost Interest In Company Shares?  USD is expected to remain supported The market is reflecting bullish signals for this currency pair. As the market awaits the US inflation report on Wednesday, the Euro has remained stable on Tuesday. So far today, the EUR/USD has fluctuated only slightly, around 1.0190. In the North American session, Treasury rates decreased; today in Asia, they were flat throughout the curve. At about 106.36, the US Dollar (DXY) index is unchanged. However, Analysts at Rabobank, a Dutch-based worldwide lender and investment bank, predict that the Euro to Dollar exchange rate (EUR/USD) will decline down below the 1.0 level during the upcoming weeks. In contrast to some analysts' predictions that the Dollar's multi-month surge is coming to an end, new analysis reveals the currency will likely continue to be well supported long into 2023. EUR/USD Price Chart EUR/GBP Bullish The market is reflecting bullish signals for this currency pair. On August 4, the Bank of England increased interest rates by 50 basis points as it stepped up its campaign against inflation. "Having stepped up the pace of rate hikes, it would look odd to throttle back straight away. The Fed and ECB are likely to continue to hike at a rapid pace, and a desire to support sterling will likely drag the BoE along with them," says Goodwin. "Given the fragile backdrop, this makes rate cuts in 2023 more likely," says Goodwin. They anticipate 75 basis points of rate reductions in 2023 when it becomes apparent that the BoE overreacted. Forecasts for a weaker Pound relative to the Euro reflect this anticipation; Oxford Economics predicts that the Pound to Euro exchange rate will be at 1.16 from the end of the third quarter of 2022 through the end of the first quarter of 2023. EUR/GBP Price Chart Canadian dollar “skewed to the downside” According to foreign exchange strategists at Barclays, the forecast for the Canadian Dollar in the near term is "skewed to the downside." The Bank of Canada may decide to scale down its plans to raise interest rates, according to Barclays in its normal weekly currency strategy briefing paper. The bank also notes that the prolonged decrease in oil prices may have an impact. With a reading of -30.6k in July, according to official figures released last week, Canada experienced its second straight loss in employment, falling short of the average estimate of +15k new positions. Despite this, the unemployment rate stayed close to long-term lows at 4.9 percent, while pay growth held steady at 5.4 percent annually. GBP/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: US Inflation data is expected to be released on Wednesday. EUR/USD & GBP/USD currency pairs. Volatility in the markets. 8.5% consumer inflation. Later today, high volatility is likely to be caused by US inflation data, which is anticipated to show a modest decline in the headline measure (8.7 percent exp vs 9.1 percent prior). The US PPI data is due out on Thursday, but it is unlikely to have a significant impact on the markets given that the Fed would need to observe a significant decline in prices in order to alter its present course of temporary tightening. The US CPI Inflation data for July came in at 8.5%, declining from the 9.1% June high and beating the markets expectations of 8.7%. The fall in inflation was likely aided by a reduction in both food and gasoline prices. The result could indicate to the markets that the Federal Reserve Bank has been successful so far in their interest rate hikes to fight inflation. A stronger result would have likely increased the chances of another interest rate hike of 75 bps in the following months and would have boosted the USD, whilst a weaker result could cause the Fed to drop to a 50 bps interest rate hike next month. EUR/USD The market is reflecting mixed sentiment for this currency pair. The markets have been in a lethargic state recently with a 7-week slide in the VIX volatility index. The current state of lethargy is most likely a result of the medium-term decline in market activity. The seven-week decline in the VIX was mentioned, but there are many other noteworthy episodes from recent history where important events, some with high surprise quotients, failed to significantly move the markets. The PCE deflator, which uses the same data used to calculate the quarterly GDP statistics, is really the Federal Reserve's preferred inflation indicator. Despite this, the markets have consistently shown a strong preference for the CPI, presumably because it is released earlier and has a full week to be incorporated into market views because it is released on a Wednesday. The headline basket's annual inflation growth rate had increased to an astounding 9.1 percent pace at the time of the previous release. That is the highest reading in forty years, and it is not just due to the biggest economy in the world. This reading might meet, miss, or beat the consensus expectation (8.7%), but it is thought that a "beat" would carry the most weight. EUR/USD Price Chart GBP/USD An expert at Société Générale claims that the Pound is "in peril" and that a new decrease in the value of the Dollar is imminent. In the very near future, GBP/USD has a risk of declining below 1.20 once more "Olivier Korber, a Soc Gen strategist, states in a memo dated August 2009. The underlying rationale for the trade, according to Korber, is compelling given the unsettling predictions made by the Bank of England last week, which indicated that UK inflation was expected to peak at "an incredible 13 percent. In addition, according to economists at the Bank of England, a four-quarter recession will begin in this year's fourth quarter. According to Korber, the difference with the forecast for the U.S. economy is currently striking. Last Friday's unexpectedly upbeat US job report stands in stark contrast to the pessimistic UK economic forecast. The likelihood of a second consecutive 75bp Fed rate hike is being discussed as recession fears in the US are gradually subsiding. GBP/USD might retest 1.20 in the very near future if there is potential for more sterling short positions, warns Korber. More than doubling the 250K jobs that the market had anticipated, the U.S. economy added 528K jobs in July, which helped the U.S. dollar recover. GBP/USD Price Chart Sources: poundsterlinglive.com, finance.yahoo.com, dailyfx.com

Summary: EUR/USD recently hit 6-week highs. CAD proves its sensitivity to risk appetite. Could UK inflation hit double figures? EUR/USD recently reached 6 week highs. The market is reflecting bearish signals for this currency pair. A stagnant U.S. Dollar and more accommodating Chinese monetary policy may continue to boost the single euro currency in the days ahead. The Euro to Dollar exchange rate recently hit six-week highs. However, its recovery was halted by resistance on the charts. Last week, when a slew of data from the Bureau of Labor Statistics suggested that a significant slowing of U.S. inflation pressures may have started to move through the pipeline last month, the euro rose to its highest level since the first days of July. Furthermore, The unexpected decision to cut interest rates, announced by the People's Bank of China (PBoC), on Monday could help the euro this week if the PBoC permits the managed-floating Renminbi to weaken in order to boost the regional economy. EUR/USD Price Chart UK major economic data to be released this week The market is reflecting bullish signals for this currency pair. The market is unconvinced that the current trading week will aid the pound sterling in recovering against major currencies with major economic data such as the latest jobs, wages, inflation and retail sales all set to be released. Although the labor market is currently strong, there is a good likelihood that headline UK inflation will reach double digits this week. The Bank of England has already issued a warning that this year's inflation could reach 13% while the economy experiences a five-quarter slump. The UK is experiencing drought-inducing heatwaves, sky-high energy prices, and a political void in No. 10, so any more bad economic news will enrage the already irate populace. EUR/GBP Price Chart CAD fell in the wake of PBoC announcement to cut interest rates. The Pound sterling to the Canadian Dollar rallied from August lows, but could climb further if the Loonie is able to build on Monday declines, which is a busy period for both the U.S and Canada regarding economic data. After the People's Bank of China (PBoC) unexpectedly lowered interest rates in reaction to alarming local economic statistics, the Canadian Dollar fell on Monday along with other currencies that are highly sensitive to risk appetite, commodity prices, and changes in the outlook for global growth. But in light of the aforementioned, it's possible, if not likely, that the directional risk for GBP/CAD is now tilting a little more to the upside than it is to the downside. The Loonie and Sterling must now each navigate a series of domestic economic event risks that are lurking along the path ahead. GBP/CAD Price Chart

Summary: Eurozone's common currency depreciated. Euro currency is threatened by economic growth concerns. RBNZ midweek policy update. Euro under pressure amidst rising gas prices The market is reflecting bearish signals for this currency pair. According to economists, recent developments in the energy markets of the Eurozone support the argument for additional euro weakness. Due to events in the energy market, which revealed that European benchmark power costs had risen above €500 for the first time, the Eurozone's common currency depreciated further in comparison to recent highs against the Dollar and the Pound. Over the next months, the developments pose a potential of piling on further pressure on the businesses in the area. According to Ole S. Hansen, Head of Commodity Strategy at Saxo Bank, the gas and power situation in the EU is getting worse, which is hurting the euro. In spite of persisting supply constraints from Russia, European countries kept up the pressure on demand to fill their storage tanks before the winter, driving up gas prices. EUR/USD Price Chart Euro is threatened by economic growth concerns. The market is reflecting bullish signals for this currency pair. The European Central Bank has succeeded so far in preventing further significant downside in the EUR-crosses by maintaining its difficult balancing act of raising interest rates to combat multi-decade highs in price pressures while preventing fragmentation of sovereign bond markets (preventing peripheral debt yields from widening out relative to their core counterparts). But because energy inventories in the Eurozone are still low before the winter months, fears about growth are growing. The likelihood that the ECB will only be able to raise rates a few more times before the emphasis shifts to preventing a serious economic downturn is growing. Although the Euro's flaws have been contained, they nevertheless exist and pose a threat to the single currency. EUR/GBP Price Chart RBNZ midweek policy update Following the Reserve Bank of New Zealand's (RBNZ) midweek policy update, analysts at investment banks Goldman Sachs and HSBC are watching for NZD depreciation. Markets anticipate that the RBNZ will increase interest rates by another 50 basis points to 3.0%, but any significant changes in the currency are more likely to be caused by the RBNZ's tone in its guidance. The meeting, according to Goldman Sachs, is expected to be one of the major developments for the foreign exchange markets this week, and the results are most likely to support their bearish NZ Dollar thesis. GBP/NZD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: NZD Sell-off. July FOMC minutes gave no hawkish surprises. Euro under pressure. FOMC meeting minutes for July The market is reflecting bearish signals for this currency pair. The much awaited release of the minutes from the July FOMC meeting turned out to be somewhat disappointing, at least for the US Dollar (via the DXY Index). The minutes contained no hawkish surprises, with one sentence standing out in particular: “Participants judged that, as the stance of monetary policy tightened further, it likely would become appropriate at some point to slow the pace of policy rate increases while assessing the effects of cumulative policy adjustments on economic activity and inflation.” Recent data indications, like the US economy's growth trajectory and the July US inflation report's reading of 0% m/m, indicating that recent Federal Reserve policy tweaks are certainly having the desired impact on aggregate demand and inflation. Rate expectations for the September Fed meeting were slightly lowered as a result of the July FOMC minutes. The likelihood of a rate increase of 75 basis points decreased from 51% yesterday to 46% today, indicating that market players are seeing the Fed's most recent statement as a confirmation of what was already known: the rate of rate increases is expected to decelerate over the upcoming months. EUR/USD Price Chart EUR/GBP currency pair The market is reflecting mixed signals for this currency pair. The European Central Bank has succeeded so far in preventing further significant downside in the EUR-crosses by maintaining its difficult balancing act of raising interest rates to combat multi-decade highs in price pressures while preventing fragmentation of sovereign bond markets (preventing peripheral debt yields from widening out relative to their core counterparts). But because energy inventories in the Eurozone are still low before the winter months, fears about growth are growing. The likelihood that the ECB will only be able to raise rates a few more times before the emphasis shifts to preventing a serious economic downturn is growing. Although the Euro's flaws have been contained, they nevertheless exist and pose a threat to the single currency. EUR/GBP Price Chart NZD sell-off in the wake of RBNZ policy update The market's reaction to the Reserve Bank of New Zealand's (RBNZ) August policy update and guidance led to a sell-off of the New Zealand Dollar. The Reserve Bank of New Zealand (RBNZ) signaled it will raise interest rates to levels higher than they had previously been expecting. On paper, the RBNZ did everything it could to back NZD bulls: it said that the economy was in good shape, that inflationary pressures were widespread, and that it would continue to raise interest rates. As the RBNZ suggested they will need to raise rates higher than they had previously thought, short-term New Zealand bond yields increased. Two additional rises of 50 basis points are now likely to occur throughout the course of 2022, and a smaller hike may occur in early 2023. The Pound to New Zealand Dollar fell by two thirds of a percent in the 15 minutes following the decision. GBP/NZD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: Euro fundamentals appear to be unchanged. Positive US economic data. Poor U.K economic data. Markets Focused of Fed officials - EUR/USD The market is reflecting bearish signals for this currency pair. Markets focused on a variety of Fed officials as they remain unanimous in the direction of future rate hikes but divided on the terminal rate because the fundamentals of the euro appear to be unaltered for the time being. Isabel Schnabel, a member of the ECB's board, was also questioned by Reuters yesterday. In the interview, she expressed concern over the continued threats to the forecast for long-term inflation and the euro's depreciation. The ECB typically doesn't comment on currency exchange rates, but there are times when a broad trend of appreciation or depreciation can influence monetary policy goals. EUR/USD Price Chart Poor economic news putting pressure on GBP - EUR/GBP The market is reflecting bullish signals for this currency pair. After a run of dismal economic news, the British pound is in trouble: growth is lower, the labor market is slowing down, and inflation is still raging. Rates of GBP/USD have reversed their recent upward trend, while rates of GBP/JPY are sliding below multi-month trendline support and rates of EUR/GBP are rising from multi-month trendline support. Retail trader stance has recently changed, indicating a bullish bias for the EUR/GBP and GBP/JPY rates and a bearish bias for the GBP/USD rates. EUR/GBP Price Chart Positive economic data supporting USD - GBP/USD The market is reflecting bearish signals for this currency pair. Prior to the weekend, the Pound to Dollar exchange rate retreated under the 1.20 handle and was close to its yearly lows after positive U.S. economic data and hawkish remarks from Federal Reserve (Fed) officials were followed by a Dollar rally that sent Sterling and a number of other currencies into freefall. While the U.S. dollar got the better of the Pound late on Thursday and had left it trading as an underperformer by Friday even after July's UK retail sales figures came in stronger than expected by the market, Sterling had better resisted the clutches of a strengthening Dollar throughout much of the week, resulting in a resilient performance against other currencies. EUR/USD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: EUR/USD could be moving toward a potential further fall. EUR/GBP. GBP/USD may see further losses this week. EUR/USD falls below parity The market is reflecting bearish signals for this currency pair. Testing below the parity handle, the EUR/USD is moving toward a potential further fall. Sellers have pushed hard to allow for another move-below since this level came back into play just after the Euro start this morning. Whether it can go on is the key question. Euro bears have returned for another battle at the parity handle of EUR/USD, drawing like moths to a flame. It took almost six months for this price to finally give way when it was last in action, in the second half of 2002. This is a significant psychological level. This really illustrates the influence of psychological factors as well as the significance of emotion in the market. Inflation is rampant in the Eurozone, and the ongoing conflict in Ukraine makes problems of economic policy, notably in the area of energy, more complicated. The question is whether we're approaching an abnormal market climate. EUR/USD Price Chart Pound sterling loses against the Euro The market is reflecting bullish signals for this currency pair. Late last week, despite official data that suggested retail spending held steady in the face of high inflation in the UK and another spike in investor expectations for Bank of England (BoE) interest rates, the pound lost ground against the euro. Friday's losses occurred as a result of the Dollar gaining and investors' declining risk appetite putting significant pressure on Sterling and other currencies. This prevented the Pound from benefiting from a sharp increase in UK government bond yields that was happening in the background. EUR/GBP Price Chart GBP/USD could fall further this week The market is reflecting mixed signals for this currency pair. A busy U.S. economic calendar or comments from Federal Reserve (Fed) officials might cause U.S. bond yields and the Dollar to rise even further on a burgeoning comeback, further damaging the Pound to Dollar exchange rate, which collapsed last week. Better than anticipated UK economic data and a sharp rise in market expectations for interest rates at the Bank of England (BoE) last week did not help the pound sterling, and it frequently appeared to be the most vulnerable among major currencies to rising U.S. bond yields and a rally in the dollar. GBP/USD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com

Summary: ECB may turn more hawkish. The US economic downturn may have increased in August. EUR/USD still below parity The market is reflecting mixed sentiment for this currency pair. Will the European Central Bank (ECB) adopt a more hawkish stance this week given the pressure the Euro is still under and its recent breach of parity with the dollar? For the meeting on September 8th, the market anticipates a 54 bp rate increase. If the ECB wants to support the EUR/USD, may it start talking about the possibility of more drastic rate increases? Joachim Nagel, the head of the Bundesbank said, “Given high inflation, further interest-rate hikes must follow,the past few months have shown that we have to decide on monetary policy from meeting to meeting.” Investment firm Nomura's strategists have increased their confidence in a wager that the Euro to Dollar exchange rate (EUR/USD) is likely to experience a few "large figure" movements below parity. EUR/USD Price Chart EUR/GBP currency pair The market is reflecting bearish signals for this currency pair. In August, the UK economy grew, according to a closely-followed assessment of activity. Although consumers and businesses were struggling with rising inflation levels, the monthly S&P Global PMI series did reveal a slowdown in activity continued. Looking ahead, the trend is consistent with negative growth. The Euro is under pressure from the Eruozone energy crisis as market participants are expecting further interest rate hikes from the ECB. EUR/GBP Price Chart EUR/USD The release of data on Tuesday that suggested that the U.S. economy's downturn may have increased in August caused the Dollar to revert in value relative to the Euro and the British Pound. The service PMI score for the U.S. economy was 44.1, much below the 49.2 markets had projected and the 47.3 from July, according to S&P Global's PMI survey. According to S&P Global, the output decline was the sharpest since May 2020 and was the fastest since the first pandemic outbreak since the series' start almost 13 years ago. The numbers indicate that despite elevated inflation and rising interest rates at the Federal Reserve, the U.S. economy is slowing down. Another indication of a slowdown may dampen investor expectations for the amount of interest rate increases the Fed is prepared to make in the upcoming months, at least from the standpoint of the currency market. Cooling rate hike expectations can cause bond rates to fall, which is negative for the U.S. dollar. EUR/USD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: EUR trading below parity against the USD. UK at risk of energy crisis. Kiwi outperforms on Thursday. EUR/USD trading below parity The market is reflecting mixed signals for this currency pair. Policymakers at the European Central Bank have been relatively silent on the lecture circuit lately, but that may soon change as the summer comes to an end. There was disagreement about the 50-bps rate increase even as inflation pressures in the Eurozone had risen, according to the minutes of the ECB meeting in July. The ECB may ultimately disappoint in the upcoming months as fears turn back to weak growth, even as rates markets are discounting a more aggressive course going forward. Powell might exert pressure on the market to raise expectations for the Fed's September rate hike to 75 basis points because the markets now expect the Fed to deliver approximately 65 basis points of increases. This may provide short-term support for the Dollar and maintain pressure on the Euro into the next month. EUR/USD Price Chart Risk of UK Stagflation rises The market is reflecting bearish signals for this currency pair. The energy crisis in the Eurozone is still putting the Euro under pressure. As the economy slows and inflation pressures increase, the risk of stagflation in the UK is continuing to rise. However, given the developing energy crisis that threatens to drive UK inflation rates further higher into double digit territory over the coming few months, traders feel that the Bank of England is currently focusing on the latter of these two crises. In terms of odds on a BOE raise, markets are currently at their most aggressive levels of the year. EUR/GBP Price Chart GBP/NZD - Kiwi outperforms GBP This week saw the start of the short-lived mid-month recovery in the Pound to New Zealand Dollar exchange rate. If the Kiwi continues to excel and Sterling continues to underperform among the major currencies, the exchange rate is likely to unravel even more in the days to come. After profiting from a general easing of the U.S. Dollar ahead of Friday's visit by Federal Reserve Chairman Jerome Powell at the annual Jackson Hole Symposium for central bankers, the New Zealand Dollar outperformed on Thursday in a booming market for Asia Pacific currencies. GBP/NZD Price Chart Sources: finance.yahoo.com, poundtserlinglive.com, dailyfx.com

Summary: EUR/USD back above parity. Risk of UK stagflation increases as inflation pressures rise. Jerome Powell to address on Friday. EUR/USD trading above parity on Friday The market is reflecting mixed signals for this currency. Yesterday, we learned more about the Governing Council of the European Central Bank (ECB), who voted to raise interest rates by 50 basis points last month despite having talked up the increase by 25 bps in the months before the vote. The inclusion of the anti-fragmentation mechanism known as the "transmission protection instrument," which serves as additional firepower in the case of a jump in sovereign yields of the EU's riskier member states, was supported by a unanimous vote of the Council. However, the decision to raise interest rates by 50 basis points was not unanimously supported. In my opinion, this shouldn't be an issue in future meetings because the risk of embedded inflationary expectations over the medium term is increased by the inflation rate's close proximity to double digits. Following the announcement by Russia's national gas monopoly that it would cut off supplies through a crucial pipeline for three days in September, the already constrained market for gas saw substantial double-digit percentage increases during the past week. In the absence of convincing supply-side responses from European capitals to the ongoing Russian gas diplomacy, the economic difficulties these price increases entail may continue to be a barrier for the single currency. EUR/USD Price Chart EUR/GBP The market is reflecting mixed signals for this currency pair. After slipping back below parity with the dollar during the Monday session, the euro enjoyed some reprieve for the majority of the following week, but European gas prices continued to soar after a week-long stretch of astronomical gains. The soaring energy prices in the Eurozone continue to weigh on the Euro single currency. As the economy slows and inflation pressures increase, the risk of stagflation in the UK is continuing to rise. However, given the developing energy crisis that threatens to drive UK inflation rates further higher into double digit territory over the coming few months, traders feel that the Bank of England is currently focusing on the latter of these two crises. In terms of odds on a BOE raise, markets are currently at their most aggressive levels of the year. EUR/GBP Price Chart USD/JPY The market is reflecting mixed signals for this currency pair. When Tokyo CPI came in above forecasts for August, USD/JPY yawned. Instead of the expected 2.5%, the core CPI increased 2.6% year over year. The national CPI statistic that is due in three weeks can be inferred from the Tokyo CPI number. FX markets have been relatively quiet over the last 48 hours. The reason for this is the lack of summer liquidity, which prevents traders from taking large positions before Friday's address by Fed Chair Jerome Powell at the Jackson Hole Economic Policy Symposium. USD/JPY Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: Fed anticipates that tightening will cause growth to decelerate. ECB indicate a hawkish outlook. Both Fed and ECB holding a hawkish outlook The market is reflecting bullish signals for this currency pair. He made it clear in his speech at the Jackson Hole conference that the Fed anticipates that tightening will cause growth to decelerate and that households would experience some pain as a result. His comments that the present rate is neutral appear to have cleared up any doubt. The Jackson Hole Economic Symposium confirmed what the majority of attendees had anticipated before the event even began: that inflation does not appear to be slowing down, necessitating sustained resolve on the part of the Fed in the form of unrelenting interest rate increases.   Not only the Fed, though; ECB members also contributed to the narrative by speaking about the approaching rate decision with a heightened feeling of urgency and proposing increases of 50 or 75 basis points. After the unexpected 50 bps rate increase in July, the interest rate meeting on September 8th could result in a second rate increase. Villeroy, Schnabel, Kazak, Knot, and Holzmann all agreed that the rate increase in September should have been significant (by ECB criteria). It is action time, according to Oli Rehn, one of the ECB's slightly more dovish members, and the next move will be "important." EUR/USD Price Chart   Euro rallied against the GBP on Monday The market is reflecting bullish signals for this currency pair. Entering the new week, the Euro was supported by the hawkish outlook from the ECB that was indicated at the Jackson Hole Symposium on Friday. Risk of a UK recession still remains high. EUR/GBP Price Chart   Hawkish fed weighs on GBP/USD The market is reflecting mixed signals for this currency pair. The exchange rate between the pound and the dollar initially increased on Friday, but it quickly lost those gains when Federal Reserve Chairman Jerome Powell warned that businesses and individuals would struggle more if the bank raised interest rates in a bid to lower U.S. inflation.    Following last week's hawkish remarks by Fed Chair Powell at the Jackson Hole Economic Symposium, the pound sterling continued to decline this past Monday. Markets had anticipated this outcome in large part, but confirmation revealed the differences between the economies of the US and UK. Goldman Sachs reported the decrease in UK economic data this morning, reiterating the Bank of England (BoEopinion )'s from a few weeks ago that a UK recession is anticipated in the fourth quarter - a significant change from their earlier prediction. GBP/USD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: ECB turns hawkish in the wake of high eurozone inflation. Pound sterling appears poised to test new lows against the euro, the dollar, and other major currencies. Euro supported by hawkish ECB The market is reflecting mixed signals for this currency pair. August saw a new high for inflation in the eurozone, and future months are predicted to see an increase. According to data from Eurostat, the increase in inflation in August was caused by a faster increase in the cost of food, alcohol, and cigarettes, which increased by 10.6% on a yearly basis compared to a 9.8% increase in July. Given the continuing rise in natural gas costs, it is anticipated that inflation in the Eurozone would rise further in the upcoming months, possibly reaching double digits. The reversal of several German subsidies and skyrocketing energy prices even before the start of the heating season indicate that inflation will continue to rise and surpass 10% before peaking around the turn of the year. Since US Federal Reserve Chair Jerome Powell's aggressive address at the Jackson Hole Symposium last Friday, there has been a noticeable change in tone among many European Central Bank (ECB) Members. The figures released today will undoubtedly strengthen arguments in favor of raising jumbo interest rates at the European Central Bank meeting next week. The central bank meeting next week is crucial since markets are heavily pricing in hawkishness; now, 70 bps are put in for September and 160 bps by year's end. EUR/USD Price Chart GBP is quickly becoming the worst performing currency of 2022 The market is reflecting bullish signals for this currency pair. Despite the fact that the money markets have upped their interest rate bets for the September meeting by about 4 basis points since Monday, the Bank of England (BoE) still confronts a difficult struggle as Q4 recession fears build. Since I don't see the BoE acting aggressively over the winter, front-loading now might be essential, thus a 75bps hike is still an option. The hawkish attitude from the ECB offers the Euro support. EUR/GBP Price Chart GBP testing new lows against USD and Euro The market is reflecting bearish signals for this currency pair. In light of the negative investor sentiment toward the UK and the ongoing weakness in the global equity markets, the pound sterling appears poised to test new lows against the euro, the dollar, and other major currencies. The Pound has already lost 1.33% of its value against the Euro this week, and if these declines continue, it will experience its biggest weekly decline against the euro since May. The UK pound is still losing ground versus the US dollar, having dropped another 0.83% since the week's beginning. The current loss for 2022 is 14%. As August draws to a close, it is clear that the British pound had the worst month of any major currency, losing value relative to all of its G10 competitors. Further losses are likely since the drop of the pound indicates a pervasive and unshakeable unfavorable attitude among investors worldwide. The UK currency is on track to become the worst performing major currency of 2022 within a matter of weeks given its present performance and tendencies. GBP/USD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: The USD strengthened by a hawkish Fed. GBP struggled in August. Euro value declined against USD on Thursday The market is reflecting mixed signals for this currency pair. Thursday sees a decline in the value of the Euro as markets are swept by a steadfast US Dollar following additional hawkish remarks from Fed speakers. Despite the market leaning toward a 75 basis-point increase at the European Central Bank (ECB) meeting next week as a result of yesterday's higher than expected CPI, the EUR/USD was unable to gain traction. The US dollar's ascent is unabated, and it appears that it will soon reach highs last seen in 2002 as the preferred safety play. This week, a new wave of risk-off trading sent USD pairings higher and equity markets lower across a number of markets. US Treasury yields have reached multi-year highs as US interest rate expectations continue to rise. EUR/USD Price Chart EUR/GBP touching June lows The market is reflecting bullish signals for this currency pair. One analyst said there is little reason to expect an improvement over the upcoming weeks or months as the value of the pound relative to the euro has dropped substantially over the past few days and is currently at levels last seen in June. The Pound suffered in August, with analysts attributing its poor performance to worries that the UK's debt load will rise as the next administration tries to mitigate the effects of the cost of living problem. This occurs as the Bank of England raises interest rates, driving up the yield paid on gilts, the name for UK government debt. The Bank of England gave historically low interest rates during the Covid crisis and actively purchased government debt as part of its quantitative easing program. As a result, the government was able to increase borrowing without any problems. However, the Bank will now actively sell government debt and may raise rates by an additional 50 basis points in September, significantly restricting the government's ability to borrow money as the nation grapples with yet another crisis. EUR/GBP Price Chart GBP/AUD Despite a great August making the Australian Dollar one of the better performing currencies of 2022, experts at investment bank Goldman Sachs said they remain concerned on the currency on a "tactical basis." The announcement that one of China's major cities has been placed on lockdown as the government of the nation pursues a "zero covid" strategy to combat the coronavirus raises doubts about the near-term prospects for Australia's top export market. GBP/AUD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: Thursday's European Central Bank (ECB) meeting during this crucial week for the euro. Russia cuts off Nord Stream gas supply. A crucial week for the Euro. But is still at risk as energy issues become more apparent. Euro Index suffers in the wake of Russia Turning off the gas taps Monday saw a new 20-year low for the euro as concerns about a worsening energy crisis in the area increased as Russia cut off gas supplies to Europe through its main pipeline. In recent months, there has been an increase in the correlation between the euro and natural gas prices, with the latter declining as energy prices rise. Before the chilly winter months, Europe is frantically trying to wean itself off Russian supply and build up reserves, but many predict a significant economic damage. Invoking an oil leak in a turbine, Russia postponed a Saturday deadline for the Nord Stream pipeline to begin carrying oil. It happened at the same time that the Group of Seven finance ministers announced a limit on Russian oil prices. Early in European trading, the euro fell to $0.9876, its lowest level since 2002, before bouncing back to $0.9939, but down 0.2% on the day. "Gas flows have been curtailed even more than expected and we have already seen evidence of demand destruction weighing on activity," said Michael Cahill, a strategist at Goldman Sachs. "We now expect the Euro to fall further below parity ($0.97) and remain around that level for the next six months," he added. Investors are gearing up for Thursday's European Central Bank (ECB) meeting during this crucial week for the euro, as markets have priced in a nearly 80% possibility of a massive 75 basis point (bp) interest rate hike. The stabilization of the euro, which has lost over 8% of its value over the last three months, will be welcomed by ECB policymakers. That will fuel the desire to tighten policy in an effort to control inflation. EUR/USD Price Chart Sources: finance.yahoo.com, reuters.com

Summary: U.S. economy is doing well despite tighter monetary policy. Truss - The new UK prime minister as of Tuesday. RBA interest rate decision. EUR/USD hits multi-year lows on Tuesday The market is reflecting mixed signals for this currency pair. On Tuesday due to negative sentiment, the EUR/USD dropped to new multi-year lows, briefly touching 0.9865 in choppy trading after U.S. markets resumed trading after the Labor Day holiday on Monday. Even while the euro was able to somewhat recoup some of its losses during the day, broad U.S. dollar rise in the early afternoon hampered the currency's sentiment. As a result of a rise in U.S. Treasury rates, which drove both short-term and particularly long-dated yields considerably higher, DXY rose as much as 0.85% at one point. Bond prices rose in part as a result of better-than-expected statistics from the U.S. services sector. The non-manufacturing PMI for August rose to 56.9 versus 55.1 predicted, according to the Institute for Supply Management, which indicates that the economy is still very robust. The fact that the U.S. economy is doing well despite tighter monetary policy suggests that the central bank will likely move forward with its plans to raise interest rates a few more times in the upcoming months, keeping them there for longer than initially anticipated to reduce inflation, which would be bullish for the dollar. However, for the time being, a dovish pivot will not materialize. EUR/USD Price Chart GBP supported by Truss’ policies The market is reflecting mixed signals for this currency pair. The British pound has had a terrible year, but if the incoming prime minister can present a convincing package of policies to address the cost of living crisis, the pound may recover in the remaining months of the year. According to a number of media publications, Truss, who became prime minister on Tuesday, may implement a plan to cap energy costs at £130 billion. She's also expected to make a major tax cut announcement as part of one of her major campaign promises. According to sources, the UK's incoming Prime Minister is thinking about freezing energy prices for millions of homes this winter, a move that may reduce the country's inflation rates by as much as four percentage points. According to Capital Economics, an independent research firm, core inflation would nevertheless continue to be stubbornly high and attract additional Bank of England interest rate increases. EUR/GBP Price Chart RBA decided on 50bps interest rate hike The Reserve Bank of Australia (RBA), which raised interest rates by another 50 basis points, together with indications that the central bank is reaching the conclusion of its tightening cycle, left the Australian Dollar floundering. By raising rates by 50 basis points, the RBA satisfied market expectations and promised additional rate increases in its outlook. Sterling pounds According to Live's RBA preview, the currency would be more affected by the direction of future raises than by a 50 basis point increase, which would provide little support to the Australian dollar. We warned that the Australian dollar might suffer from a "dovish" hike, in which the Bank sought to curb expectations for additional assertive action. The RBA brings Australia's basic lending rate into a range of 2-3% that it views as the "neutral" position by raising the Cash Rate to 2.35%. As a result, it holds that interest rates are neither restrictive nor stimulatory, which lends support to the idea that the RBA may start to contemplate easing back. GBP/AUD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com

Summary: Bank of Canada interest rate decision. BoC met market expectations. Bank of Canada meets market expectations The Bank of Canada (BoC) met the market expectations on Wednesday by hiking their interest rates by 75bps up to 3.25% from 2.5%. Their Ivey PMI beat market expectations which were set at 48.3, but came in at an actual value of 60.9. Bank of Canada increases policy interest rate by 75 basis points, continues quantitative tighteninghttps://t.co/YXW4npzhVA#economy #cdnecon — Bank of Canada (@bankofcanada) September 7, 2022 Bank of Canada In order to safeguard the economy by limiting the amount that interest rates might need to increase over the medium term, the BoC increased its cash rate from 1.75% to 2.5% in July. This was done as part of a strategy to move monetary policy to an economically restrictive level sooner rather than later. Despite the fact that interest rate derivative market pricing implies that investors already expect the benchmark to climb further and as far as 3.75% by year's end, the BoC considers that restrictive threshold to involve a cash rate that is a place above the 3% level. “The Bank's commitment to front-loading rate hikes in the face of red-hot inflation means an even bigger 100 bps increase (matching July's hike) can't be ruled out. Canadian employment (Friday) is expected to rise 5K in August following two consecutive monthly declines. The unemployment rate is expected to increase to 5.0%, which is still very low,” says Alvin Tan, head of Asia FX strategy at RBC Capital Markets. With the approaching Bank of Canada rate decision expected today and the European Central Bank meeting on Thursday, we will undoubtedly use expectations to our advantage. Expectations play a significant part in the market impact of major event risk. In this meeting, both are expected to raise their respective benchmark rates by 75 basis points, but the former is doing so based on a 100-basis-point increase at its last meeting and the discount of a hawkish central bank. Sources: dailyfx.com, poundsterlinglive.com, investing.com

Summary USD/JPY hitting lowest levels in 24 years. USD still strong. Expectations of the next interest rate hike from BoE fell. EUR/USD currency pair The market is reflecting bearish signals for this currency pair. Since the US Dollar continues to rise and shows little sign of slowing, it has been a wrecking ball for the foreign exchange markets. I would exercise caution in pursuing this upside, though, given that the most recent US CPI is right around the horizon. The inclination would be to downplay US dollar declines. The 0.99 handle serves as support for the euro, and although there has been a breach below it, there hasn't yet been a close below it. The language used, such as expressing a willingness to enter restrictive territory as opposed to merely front-loading policy to play catch-up, will be crucial in determining whether the Euro can find a floor, even though the ECB is preparing to raise interest rates by 75 basis points at its meeting tomorrow. EUR/USD Price Chart GBP declines The market is reflecting mixed signals for this currency pair. The Bank of England enters the scene and hits the already weak pound just as the market was concentrating on the new prime minister, Liz Truss. Following comments made by members of the Bank's Monetary Policy Committee (MPC), markets quickly reduced their expectations for a 75 basis point interest rate hike at next week's policy decision, causing a steep decline in the value of the pound. The panel's comments show that the Bank is still hesitant to hike interest rates in order to combat inflation and instead is betting that prices would decline as the economy weakens. EUR/GBP Price Chart USD continues to strengthen Today, the Japanese Yen's value against the US Dollar fell to its lowest level since 1998. In order to keep bond yields low, the Bank of Japan (BoJ) reaffirmed its yield curve control (YCC) program on Wednesday, despite the Fed's unambiguous indication that rates will rise. Today, the 10-year Japanese government bond (JGB) traded close to the 0.25% upper limit set by the central bank. The bank then declared that they would increase their bond buying as part of their planned operations. The 2-year note currently trades at 3.75%, with Treasury rates continuing to fly higher. Everywhere it has increased, the US dollar has. USD/JPY Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: ECB policy rate decision. ECB met interest rate expectations. ECB Decision Met Expectations The ECB on Thursday hiked interest rates by 75bps - meeting market expectations. Deposit Facility rate of the ECB exceeded market expectations, by 25bps, coming in at a 75bps rate hike. ECB Interest rate Decision The European Central Bank (ECB) policy announcement on Thursday may have some potential effects on the foreign exchange market, according to a "crib sheet" published by ING Bank. The market is anticipating a 75 basis point increase as the ECB looks to take swift action against inflation before the Eurozone's growth slows and a recession takes hold. However, ING economists believe that the market is mistaken in using 75 basis points, which might be the day's first significant source of volatility for the Euro. "Policymakers in Frankfurt will likely have to choose between a 50bp or 75bp rate hike this week. We think that a 75bp move would be too hard to digest for the dovish front within the Governing Council, and our call is for a 50bp move," says Francesco Pesole, a foreign exchange strategist at ING. According to ING's base case scenario, a 50bp would fall short of market expectations, causing the Euro to Dollar exchange rate (EUR/USD) to decline. In this base scenario, the ECB also projects weaker growth rates for the Eurozone, anticipating a wintertime recession. While high inflation will continue, it will start to decline over the outlook horizon, according to ECB predictions. If the ECB took an even more "dovish" posture, they would raise interest rates by 25 basis points as they assessed the severity of the impending economic slowdown, which would be reflected in their revised GDP projections. Inflation forecasts that indicate prices drop down to the 2.0% target over the forecast horizon would also be part of this dovish scenario. According to this call, the EUR/USD is expected to trade close to 0.96. However, the ECB will be keenly aware of the effects their decisions will have on the Euro because a weak Euro itself is an inflationary phenomenon because it drives up the price of importing commodities. This is especially detrimental during a crisis brought on by high gas and oil import prices. Sources: investing.com, poundtserlinglive.com

Summary: ECB raised all 3 major interest rates by 75bps. UK Government capping gas prices for next 2 years. RBA nearing the end of its interest rate hiking cycle. ECB interest rate hikes The market is reflecting bullish signals for this currency pair. To combat record-high inflation in the Euro Area, the ECB increased each of the three major interest rates by 75 basis points. Markets and experts had generally anticipated the decision to raise interest rates by 75 basis points, thus the first impact on the Euro has been muted so far. The ECB also noted that the governing council anticipates raising rates during the coming sessions, which is consistent with money market pricing, which projects a further 92 basis points of tightening by year's end. Looking ahead, attention will primarily be on ECB President Lagarde's news conference, where she is expected to discuss the necessity to raise interest rates into restrictive territory (above neutral rates) in order to support the euro in the short term. The energy crisis, which continues to put pressure on the Euro through parity, is the major story, though. EUR/USD Price Chart UK Government to cap gas prices The market is reflecting mixed signals for this currency pair. Following the announcement that the UK government would cap annual UK gas prices at £2500 for the next two years, the likelihood of a stronger finish to 2022 for the British Pound moved closer. An influential economist claims that the action effectively keeps UK inflation at current levels and averts the possibility of a recession. Investors have dumped sterling in recent months due to concerns that the UK would be among the nations worst affected by a confluence of rising inflation and slowing economic growth. Therefore, Truss' intervention refutes this claim, stating that the changes will probably reduce inflation's predicted peak by 5 percentage points. EUR/GBP Price Chart RBA nearing the end of their interest rate hiking cycle The Reserve Bank of Australia (RBA) is reaching the conclusion of its interest rate hike cycle, according to Governor Philip Lowe, which will cause the Australian Dollar to weaken. In the meantime, data indicating the nation's outstanding trade surplus shrank in July put additional pressure on the Australian dollar. According to Lowe, disparities between Australian and American pay setting practices allow the RBA to afford to slow pace. GBP/AUD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com

Summary: Ukrainian resistance in the country's east boosted the Euro. EUR/GBP may struggle in the wake of UK inflation data release. USD had a rough start to the week against the euro. Euro strengthened during Monday’s session The market is reflecting bullish signals for this currency pair. The news of Ukrainian resistance in the country's east as Ukrainian soldiers launched a counteroffensive caused the euro to rally by a significant 1.4% this morning. Bringing our attention back to the ECB, there was evident unhappiness among the board members after the significant 75 basis point increase was fully anticipated by the markets and had little to no impact on them. The infamous ECB "sources" said shortly after President Lagarde's address that rate increases could reach 2% (restrictive territory) to fight inflation and hinted in some way that the 2023 growth prediction was a bit on the "rosy" side. Finally, sources claimed that QT was imminent, with negotiations set to begin in October and a likely announcement to be made at the October ECB meeting. EUR/USD Price Chart EUR/GBP risk could increase The market is reflecting mixed signals for this currency pair. In the days ahead, when the market will likely be most interested in UK inflation data that could further increase the already elevated risk of aggressive interest rate action from the Bank of England (BoE) next week, the Pound to Euro exchange rate may struggle to get off the ground after falling last week. When the Bank of England (BoE) announces its interest rate decision for September on September 22 after delaying it to accommodate the nation's day of mourning for Her Majesty Queen Elizabeth II, the new fiscal package might have a substantial impact on the BoE's monetary policy. EUR/GBP Price Chart USD/JPY currency pair The market is reflecting bearish signals for this currency pair. The US Dollar had a mixed week to start, falling versus the Euro but rising once more against the Japanese Yen. The EUR/JPY moved closer to Friday's 8-year high as a result. Other currency combinations were generally quiet. Despite further browbeating from Japanese officials—this time from Deputy Chief Cabinet Secretary Seiji Kihara—the Yen weakened. He mentioned that excessively one-sided currency movements are being watched. In order to take advantage of the depreciating Yen and stimulate the economy, Japan recently announced a relaxation of travel regulations for visitors traveling domestically. USD/JPY Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com  

Summary: U.S. inflation is running hotter than markets anticipated. Core inflation reading is the one that concerns the Fed the most. Core CPI increased by 0.6% in Augus US CPI Inflation Missed Market Expectations Data that showed U.S. inflation is running hotter than markets anticipated caused the Dollar to rise dramatically, giving the Federal Reserve more confidence to hike interest rates. After U.S. headline CPI inflation rose 8.3% year-over-year in August, defying expectations for a reading of 8.1%, stocks dropped and the safe-haven high-yielding Dollar surged, though it was still lower than July's 8.5%. But contrary to forecasts for a decline, the month-over-month metric increased by 0.1%, the BLS reported, up from July's reading of 0%. The core inflation reading will be the one that concerns the Fed the most. Core CPI increased by 0.6% in August, exceeding both the 0.3% market expectation and the 0.3% result in July. Core CPI inflation is the form of inflation that the Fed may be able to control through higher interest rates because it is domestically based and therefore excludes external factors like energy prices. Core CPI inflation increased by 6.3% on an annual basis, exceeding both July's 5.9% and the market's expectations of 6.1%. LISTEN NOW: Inflation rose 8.3% year-over-year — we discuss the hotter-than-expected CPI number. Listen and follow the @SquawkStreet podcast here or on your favorite podcast platform: https://t.co/BoklbeW3jy pic.twitter.com/v2SxAuQfsh — CNBC (@CNBC) September 13, 2022 With a 1.40% increase against the New Zealand Dollar and a 0.84% increase against the Euro, the dollar advanced versus all the major currencies. "In response to the data, all G10 currencies weakened against the US dollar, with the largest losses seen in currencies that had recently benefited from the improvement in risk conditions. The pound, euro, yen, Kiwi dollar, Aussie dollar, and Swedish krona have now recorded losses in excess of one percent against the greenback, while the Norwegian krone posted the largest decline as it is down 2% on the day," says Jay Zhao-Murray, Market Analyst at Monex Canada. Even though gasoline prices were down significantly, the U.S. inflation surprise still occurred, suggesting that the energy shock is still having an impact. However, everyone is still surprised by the lag. In the event that workers seek greater wage agreements and businesses increase their prices, the Fed will be eager to boost rates. Sources: poundsterlinglive.com

Summary: UK CPI inflation beat market expectations. UK CPI Inflation fell from its 40-year high reached in July. UK CPI Inflation Data Beat Market Expectations In August, the Bank of England and households experienced an unexpected - and presumably transitory - decrease in consumer price inflation for the first time in almost a year. Following a 40-year high of 10.1% in July, annual consumer price rise fell to 9.9% on Wednesday, according to the Office for National Statistics. This was the first decline since September 2021 and fell short of the 10.2% increase predicted by a Reuters poll. However, experts cautioned that inflation was anticipated to peak at approximately 11% in October, when a new home energy tariff cap begins, and that it might be difficult to decline because of underlying pressures and a new fiscal stimulus from the government. ⚠️BREAKING:*UK CPI INFLATION RISES 9.9% IN AUGUST, DOWN FROM 40-YEAR HIGH OF 10.1% 🇬🇧🇬🇧 pic.twitter.com/Lc5in4fnrW — Investing.com (@Investingcom) September 14, 2022 Following the passing of Queen Elizabeth, the British central bank decided to postpone raising interest rates until next Thursday. On September 22, the BoE is expected to increase rates by 0.75 percentage points to 2.5%, according to financial markets. With the exception of a temporary attempt to support sterling during a 1992 exchange rate crisis, this would be its largest rate increase since 1989. Despite a slowing economy at risk of recession, the majority of economists surveyed by Reuters believe a half-point increase is more plausible, and they also anticipate the BoE to keep raising rates into next year. A severe pressure on living standards has been brought about in Britain by the rise in European natural gas prices brought on by Russia's invasion of Ukraine, which has been compounded by post-COVID labor shortages and supply-chain bottlenecks. Inflation is lowest in several European nations, notably Spain and the Netherlands, but it is the highest among the G7's major advanced economies in the UK. Prime Minister Liz Truss's capping household energy costs The incoming Prime Minister Liz Truss's decision to cap household energy costs, which will increase by 25% rather than 80% in October, has made it marginally easier for the BoE to achieve its goal of returning inflation to its 2% objective, at least in the short term. Before the cap, analysts predicted that inflation may reach 15% or higher early the following year. In addition to promising other help and tax cuts, the government is anticipated to employ public borrowing to make up for the lower rates charged by energy providers. This is anticipated to cost approximately 100 billion pounds ($116 billion). According to experts, this additional stimulus for an economy that is nearly at full employment and experiencing the lowest unemployment rate since 1974 would prolong domestic inflation pressures and force the BoE to raise rates further in order to bring inflation back to its 2% objective. Sources: Reuters.com

Summary: Money market pricing indicates that the Fed will raise rates by 75 basis points. UK CPI inflation rate was lower in August than it was in July. According to economists, the Australian Dollar will fare better than any other major currency in 2022. USD rose, gold futures fell & stocks dropped sharply The market is reflecting mixed signals for this currency pair. The US Dollar rose, gold prices fell, and US stocks dropped sharply on Tuesday as a result of the August US CPI report's substantial effect on the financial markets. Headline Inflation in the US gained +0.1% m/m and +8.3% y/y, above expectations of no gain m/m and an increase of +8.1% y/y. Also hotter than anticipated, the core reading came in at +0.6% m/m versus a projection of +0.3%, while the y/y stood at +6.3% versus +6.1% anticipated. Money market pricing indicates that the Fed will raise rates by 75 basis points, but the tail-risk surprise has changed from a 50 to a 100 basis point increase. This reveals where the momentum is: more rate increases will result in the Fed Funds rate peak being higher than anticipated before the inflation report. EUR/USD Price Chart Has UK Inflation hit its peak? The market is reflecting mixed signals for this currency pair. Pound Sterling increased the day after the news broke. The UK CPI inflation rate was lower in August than it was in July, indicating that the price increase's peak may have already passed. This would be a favorable development for the outlook of the UK economy and, consequently, the Pound. However, the Bank of England's decision on September 22 looms large, and the final position of Sterling at the end of September may depend on whether they choose to raise interest rates by 75 or 50 basis points. According to analysts at certain large investment institutions, the market is expecting a 75 basis point increase from the Bank, which it must provide to maintain stable Pound exchange rates. The pound would decline if the Bank of England disappointed markets with a modest increase. EUR/GBP Price Chart GBP/AUD currency pair According to recent research from BMO Capital Markets, the Australian Dollar is a "quality" currency that is expected to increase in value against the U.S. Dollar and all other major currencies in the upcoming months. According to a BMO analysis of the Aussie Dollar, it is one of the best-performing currencies in 2022 because of a strong set of underlying reasons that support it. According to economists, the Australian Dollar will fare better than any other major currency in 2022 thanks to the nation's strong export market and sound domestic fundamentals. Australia's foreign exchange revenues have increased due to rising commodity prices, which has supported its currency. GBP/AUD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: Early trading saw the EUR/USD falling below parity once more. The British Pound dropped to its lowest level against the Dollar on Friday and hit lows against the Euro that haven't been seen since February 2021. Strong US Dollar index driving USD/JPY down. EUR/USD falls below parity once more The market is reflecting bearish signals for this currency pair. Early trading saw the EUR/USD falling below parity once more while failing to surpass Friday's peak. While markets look apprehensive after US President Joe Biden said the US military would defend Taiwan in the case of an invasion by China, we witnessed the USD index open higher and push on, supporting a +/-60 pip loss on EUR/USD and other currency pairs. The downward movement in the EUR/USD rate this morning appears to be driven by the dollar index. Despite numerous investment banks and the World Bank reducing their growth projections for the US economy and issuing a global recession warning, the index kept moving higher. EUR/USD Price Chart Economists predict that the Pound will continue to decline. The market is reflecting mixed signals for this currency pair. Although there is a remote chance the currency would recover by the end of the upcoming week when a Bank of England rate hike and the "mini budget" are announced, economists predict that the Pound will continue to decline. The British Pound dropped to its lowest level against the Dollar on Friday and hit lows against the Euro that haven't been seen since February 2021 before the monetary and fiscal double-header. Following the publication of poor UK retail sales statistics that led economists to warn that the country is already in recession, the pound's losses for 2022 increased. Contrary to estimates, retail sales declined 1.6% in the month of August instead of a somewhat smaller -0.5%. EUR/GBP Price Chart USD/JPY The market is reflecting bearish signals for this currency pair. After failing to break over 145, USD/JPY is still in an ascending trend channel. 144.95 may continue to act as resistance because it is the 161.8% Fibonacci Extension of the late-July decline from 139.39 to 130.39. It has recently been tested, reaching peaks of 144.97 and 144.99, the latter of which is a 24-year high. This region might be crucial for the next significant USD/JPY movement. The Bank of Japan called banks in Tokyo last week as 145 approached, requesting a rate review. The market has interpreted this to mean that the central bank may be considering intervening should the price rise above 145. Of course, if the price trades over that level and they do not act, an aggressive move might be observed. The following potential resistance level to watch could be the ascending trend line that now splits around 145.90. USD/JPY Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com

Summary: EUR/USD exposed to risks related to the Fed interest rate decision on Wednesday. The BoE interest rate decision on Thursday will be crucial. GBP/CAD may now be on the verge of lurching toward all-time lows. Euro is still stronger than some other currencies The market is reflecting mixed market signals for this currency pair. The EUR/USD has been able to maintain its stability recently by simply remaining stable, which isn't really saying much for it. The Euro to Dollar exchange rate began the new week near parity and exposed to risks related to the Federal Reserve's (Fed) interest rate decision on Wednesday, however there is an admittedly remote chance that the latter could spark a firecracker surge by the single currency later this week. The Euro is still stronger than some of the other currencies, but it is expected to keep falling against the Dollar and reach new cycle lows. EUR/USD Price Chart BoE interest rate on Thursday The market is reflecting bullish signals for this currency pair. The exchange rate between the pound and the euro has fallen for seven straight weeks, but it might go considerably further this week and possibly to record lows if the market panics about a probable Bank of England (BoE) decision to sharply raise Bank Rate on Thursday. With the scale of the most recent Bank Rate increase and any hints or guidance regarding the outlook for the benchmark, the BoE interest rate decision on Thursday will be crucial, yet there is a risk that the bank will feel pressured to literally knock the Bank Rate ball out of the park. EUR/GBP Price Chart GBP/CAD How the market could be likely to react to any particularly substantial interest rate rise from the Bank of England (BoE) this Thursday, the Pound to Canadian Dollar exchange rate may now be on the verge of lurching toward all-time lows. Although there is a chance it might fall further if the BoE smashes the Bank Rate ball out of the park on Thursday, sterling crept higher versus the Canadian Dollar to start a holiday-shortened week and remained safely above the 12-year lows reached over a fortnight earlier. A recent increase in core inflation, the BoE's most recent Inflation Attitudes Survey, and the new UK Prime Minister's proposal to freeze or cap household energy costs through public subsidy are reasons to believe it might as well. These factors could influence policymakers to view this as a medium-term inflation risk. GBP/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

On Wednesday the Fed is due to make their interest rate decision. A US portfolio that is split 60/40 between stocks and bonds is headed for its worst year since 1937. ECB is determined to deliver price stability through rising interest rates.   In this article: The Fed’s Interest rate hike tomorrow. US Stock/Bond portfolio down. The ECB is determined to fight inflation through rising interest rates. The Fed due to make their interest rate decision on Wednesday The SwissQuote tweeted about the expectations the market has ahead of the Fed’s interest rate hike decision on Wednesday. Fed will likely hike by 75bp ; SNB will likely follow! ▶️ Discover today's market highlights on our #MarketTalk with @IpekOzkardeskay: https://t.co/Lzfate1wod pic.twitter.com/ZnOfnyHVvM — Swissquote (in English) (@Swissquote) September 20, 2022 On Wednesday the Fed is due to make their interest rate decision, this interest rate decision came in the wake of the US CPI inflation results which were released during last weeks trading week. US Stock/Bond portfolio is suffering According to Charlie Bilello a US Stock/Bond portfolio is likely to experience its worse financial performance in 86 years. A 60/40 Portfolio of US Stocks/Bonds is down 16.2% in 2022, on pace for its worst calendar year since 1937. pic.twitter.com/d6gnbohRLw — Charlie Bilello (@charliebilello) September 20, 2022   A US portfolio that is split 60/40 between stocks and bonds is headed for its worst year since 1937. European central bank (ecb) determined to fight inflation The president of the ECB Christine Lagarde makes it clear that the ECB is determined to fight inflation through rising interest rates. We are determined to deliver price stability, and expect to raise interest rates further to achieve 2% inflation, says President @Lagarde. We must settle at a rate that ensures inflation returns durably to our target, as the economic environment evolves https://t.co/d5HvwVEiR0 pic.twitter.com/mCXxS1yk1f — European Central Bank (@ecb) September 20, 2022   The ECB is determined to deliver price stability through rising interest rates. The ECB is willing to settle the rate of inflation at its target.    Sources: twitter.com

On Wednesday the Fed is due to make their interest rate decision. A US portfolio that is split 60/40 between stocks and bonds is headed for its worst year since 1937. ECB is determined to deliver price stability through rising interest rates. In this article: The Fed’s Interest rate hike tomorrow. US Stock/Bond portfolio down. The ECB is determined to fight inflation through rising interest rates. The Fed due to make their interest rate decision on Wednesday The SwissQuote tweeted about the expectations the market has ahead of the Fed’s interest rate hike decision on Wednesday. Fed will likely hike by 75bp ; SNB will likely follow! â–¶ï¸Â Discover today's market highlights on our #MarketTalk with @IpekOzkardeskay: https://t.co/Lzfate1wod pic.twitter.com/ZnOfnyHVvM — Swissquote (in English) (@Swissquote) September 20, 2022   On Wednesday the Fed is due to make their interest rate decision, this interest rate decision came in the wake of the US CPI inflation results which were released during last weeks trading week. US Stock/Bond portfolio is suffering According to Charlie Bilello a US Stock/Bond portfolio is likely to experience its worse financial performance in 86 years. A 60/40 Portfolio of US Stocks/Bonds is down 16.2% in 2022, on pace for its worst calendar year since 1937. pic.twitter.com/d6gnbohRLw — Charlie Bilello (@charliebilello) September 20, 2022   A US portfolio that is split 60/40 between stocks and bonds is headed for its worst year since 1937. European central bank (ecb) determined to fight inflation The president of the ECB Christine Lagarde makes it clear that the ECB is determined to fight inflation through rising interest rates. We are determined to deliver price stability, and expect to raise interest rates further to achieve 2% inflation, says President @Lagarde. We must settle at a rate that ensures inflation returns durably to our target, as the economic environment evolves https://t.co/d5HvwVEiR0 pic.twitter.com/mCXxS1yk1f — European Central Bank (@ecb) September 20, 2022   The ECB is determined to deliver price stability through rising interest rates. The ECB is willing to settle the rate of inflation at its target. Sources: twitter.com

Summary: Euro fell back to its lows from early September below parity with the US Dollar. ECB hawkish tone. Thursday may cause the GBP/NZD to drop to some of its lowest points since the months immediately following the Brexit referendum. Euro weakens as Putin dashed hope for an end to the Russia/Ukraine conflict The market is reflecting bearish signals for this currency pair. On Wednesday, the Euro fell back to its lows from early September below parity with the US Dollar as Russian President Vladimir Putin appeared to dash any remaining hope for a quick resolution to the war in Ukraine. Markets anticipate additional rate increases even if there is optimism that, at least in the US, inflation may finally be under control. The Fed is projected to increase rates by a full percentage point. The war in Ukraine is continuing to drive up the cost of energy and raw materials on a continent that is still recovering economically from the Covid epidemic, so the European Union cannot resort to such solace. EUR/USD Price Chart BoE interest rate decision due on Wednesday The market is reflecting mixed signals for this currency pair. Although the European Central Bank has recently adopted a more hawkish tone, the Fed continues to have significantly more monetary firepower and flexibility to use it, according to the market. This opinion can only be strengthened by indications that the Ukrainian conflict will continue to rage. Great hopes: The markets are anticipating the Bank of England to raise interest rates twice in a row by 75 basis points, which might lead to a massive letdown for the British pound. As of right now, money markets are pricing in 200 basis point increases over the next three decisions, which means the Bank will need to raise rates by 75 basis points at two of those sessions. This is more than any other developed market central bank has requested. EUR/GBP Price Chart GBP/NZD currency pair During the midweek session, the New Zealand Dollar extended a 15-month downtrend against the U.S. Dollar and appeared to be headed for March 2020 lows. However, it may have better chances against Sterling, which could experience significant losses in the wake of Thursday's Bank of England (BoE) policy decision. If the author is correct in believing the BoE will actually raise rates much farther than all forecasts anticipate on Thursday, sterling's historically unfavorable reaction to Bank Rate rises could be doubly relevant for GBP/NZD this week. If this obviously improbable prediction comes true, then the BoE's decision on Thursday may cause the GBP/NZD to drop to some of its lowest points since the months immediately following the Brexit referendum. The decision on Thursday will be made just over a week after the Office for National Statistics reported a new increase in core inflation for August, and shortly after the Bank of England's Inflation Attitudes survey indicated that households' expectations for medium-term inflation remained at potentially alarming levels in July. GBP/NZD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: The markets expected a 75bps hike from the Fed. Fed met expectations with a 75 bps rate hike. Chances of an economic recession persists. The Federal Reserve chose to hike their interest rates The Fed met market expectations by hiking interest rates by 75bps on Wednesday. In the wake of the August US CPI inflation numbers, the market priced in a 75bps rate hike from the Fed. As the Federal Reserve continues on its rate hiking cycle, the markets become increasingly concerned around the likelihood of a global economic recession. The effect of the interest rate hike on the US Dollar and the economy On the strength of another significant Federal Reserve rate hike this Wednesday, the Dollar is anticipated to remain sustained. The August inflation report reaffirmed expectations for another 75 basis point raise and language indicating the Fed will retain a solid commitment to bringing prices down, convincing investors that the Fed cannot yet wind down its rate-hiking cycle. The next "big moment" for the currency markets, and really all financial assets, will be when the Fed finally changes course and indicates the cycle of rate hikes is about to come to an end. The recent trends of Dollar strength and equity market downturn are anticipated to continue up until that point. When members of the Federal Open Market Committee (FOMC) present their forecasts for where they believe interest rates will go in the future, there won't likely be any indications of a pivot (the infamous Dot Plot chart). However, the idea of general resilience in the US economy should continue to be the baseline scenario. Revisions to other economic estimates are anticipated to indicate some signals of a worsening economic outlook. Investors discounting a drop in future corporate earnings and fearing a deeper global recession through the latter part of 2022 and into 2023 would certainly put pressure on global stock markets. Sources: poundsterlinglive.com, investing.com

Summary: BoE interest rate decision. Any post-decision gains are expected to be sold into and prove fleeting. The BoE missed market expectations on Thursday regarding their interest rate hike decision. The BoE Missed market expectations The Bank of England (BoE) announced they would raise their central bank interest rate 50bps, missing the market's expectation of 75bps. The effect of the BoE interest rate hiking decision It is unclear what the effect of the BoE rising interest rates will have on the pound sterling currency. The exchange rate might increase if the Bank increases interest rates by 75 basis points, which would be the greatest increase since 1989, and shifts its prognosis for the economy. But for a central bank that has a history of falling short of market expectations and emphasizing the downside risks to the economy, this is a huge ask. The most plausible worst-case scenario would involve the Bank raising rates by less than anticipated (say, 50 bps) and cautioning that the economic outlook is still uncertain and subject to downside risks. The odds favor a downside reaction, according to currency market observers, and any post-decision gains are expected to be sold into and prove fleeting. A worldwide energy crisis, deteriorating domestic balance of payments, declining stock markets, an unrelentingly strong dollar, and an uncooperative Bank of England have all contributed to the Pound's bad year. The Bank of England's monetary policy is the one area where decision-makers have the power to provide the Pound with some short-term comfort, despite the fact that many of these challenges are medium- to long-term concerns and global in scope. Some of the pessimism and negative positioning may be challenged if the Bank shocks the markets with a more "hawkish" tone, allowing for a short-term leg upward. A rate increase of 75 basis points plus any improved commentary from the Bank may help the pound that day. Sources: poundsterlinglive.com

Summary: The SNB increased its interest rate for a second time on Thursday. BoE increased interest rates on Thursday by 50 basis points. Fed 75bps interest rate hike. EUR/USD touching 19 year lows The market is reflecting bearish signals for this currency pair. In the wake of the Federal Reserve's 75bps interest rate hike the falling wedge, which was keeping the door open for bullish reversal possibilities, is invalidated as the EUR/USD has dropped to a new 19-year bottom and is currently clinging to the swing-low from earlier in September, which is located between.9862 and.9876. As a result, the bearish side of the coin is once again in focus for the EUR/USD pair. Resistance is possible around the previous support level of.9950 as well as at parity if bulls can produce a stronger pullback. EUR/USD Price Chart GBP plummeted in the minutes after BoE interest rate announcement The market is reflecting bearish signals for this currency pair. The Bank of England increased interest rates on Thursday by 50 basis points, which was less than the 75 basis points the market was anticipating, and the British Pound plummeted in the minutes that followed. The pound had a sell-off in response to the boost that was lower than expected, and economists predict greater losses for the UK currency. The exchange rate between the pound and the euro dropped by 0.5 percent to 1.1434 in the 15 minutes after the decision, but it had recovered to 1.1470 by the time the U.S. stock market opened, bringing bank transfer rates to roughly 1.1240 and payment specialist rates to roughly 1.1440. EUR/GBP Price Chart SNB signals the end of their interest rate hiking cycle The market is reflecting bullish signals for this currency pair. The Swiss National Bank (SNB) increased its interest rate for a second time on Thursday, which caused the Swiss Franc to weaken. However, the SNB also warned against expecting future rate hikes through its inflation projections. After the SNB hiked its cash rate from -0.25% to 0.5% in a monetary policy move that echoed the Federal Reserve's on Wednesday, the Swiss Franc fell against a number of other currencies. Even while the Swiss central bank did not rule out future interest rate hikes, September's updated predictions suggested that, given the two increases in borrowing costs announced to date, the Swiss inflation rate will likely return to, if not fall below, 2% at the end of the forecast horizon. This suggests that Swiss authorities may already have done enough to bring inflation back in line with their concept of price stability. EUR/CHF Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: EUR/USD is close to 20 years lows. The UK and the Eurozone may have already entered recession in the third quarter of the year. Canadian Dollar plunged to its lowest level against the U.S. Dollar since July 2020. US Dollar remains supported The market is reflecting bearish signals for this currency pair. A day after the Federal Reserve approved another sizable hike and promised to keep tightening monetary policy firmly in order to control inflation, the EUR/USD lacked confidence on Thursday, fluctuating between tiny gains and losses. This is probably due to rising U.S. Treasury yields. The exchange rate is very close to one of its lowest points in more than 20 years, having fallen dramatically from the overnight session high of 0.9907 and trading mostly flat on the day at 0.9843. The Fed's hawkish roadmap, which anticipates 150 basis points of additional tightening up to the terminal rate of 4.6% in 2023, as well as its commitment to maintaining a restrictive stance for an extended period of time, should keep U.S. rates biased to the upside and support the dollar's momentum in the FX market. EUR/USD Price Chart Europe & the UK may have already entered recession The market is reflecting bullish signals for this currency pair. According to analyst and economist readings of the data, the latest round of S&P Global PMI Surveys of the manufacturing and services sectors revealed on Friday that the economies of the UK and the Eurozone may have already entered recession in the third quarter of the year. Energy markets and developments in Ukraine, where Russian occupation troops are anticipated to be strengthened following substantial recent setbacks for the invading army at the hands of Ukrainian forces, also attracted attention in Europe. EUR/GBP Price Chart USD/CAD The market is reflecting bullish signals for this currency pair. This week, during another turbulent time for risky assets, the Canadian Dollar plunged to its lowest level against the U.S. Dollar since July 2020; however, updated BMO Capital Markets forecasts suggest that it may be due for one of the most significant recoveries if and when the dollar reaches its peak. The Canadian Dollar lost ground to the Swiss Franc on Friday as it dropped close to 73 cents versus the U.S. Dollar, but it still made significant gains over other currencies, several of which hit new multi-decade lows against the U.S. unit. USD/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: The Euro remains a weak currency and appears to be headed for additional declines. GBP attempted to stabilize and recover the majority of its losses from the flash crash. BoE current monetary policy will probably lead to escalating inflation pressures. EUR/USD at lowest level in more than 20 years The market is reflecting mixed signals for this currency pair. According to their most recent research, the German Ifo institute is the latest organization to issue a warning that the nation is likely to experience a recession in the upcoming quarters due to businesses' elevated level of pessimism for those months. The figures released today fell short of forecasts and numbers from the previous month. The Ifo report is the first of many German publications scheduled for this week that will provide a clearer picture of the status of the German economy. Earlier in the session, the US dollar's strength led to the Euro falling to its lowest level versus the US dollar in more than 20 years. The Euro remains a weak currency and appears to be headed for additional declines, while market movements are being dictated by the dollar across the board. EUR/USD Price Chart EUR/GBP bearish The market is reflecting bearish signals for this currency pair. According to a top economic research agency, the Bank of England must take the initiative and raise UK interest rates significantly if the collapse of the British Pound is to be stopped. The Pound has declined in value relative to every other currency in the globe, with the Pound to Euro exchange rate falling below 1.10. The British pound is currently stabilizing and recovering the majority of its losses from the flash crash. The projections for the British pound have been drastically cut by investment firm Goldman Sachs, indicating that additional losses against the Euro and a revisit of recent lows against the Dollar are possible. EUR/GBP Price Chart GBP lost 4.8% The market is reflecting bullish signals for this currency pair. This morning's Asian trading, which is often characterized by low transaction volume and little price volatility, saw an unusually steep decline in the British pound of over 4.8%. The big price change may have been influenced by the low transaction volume (reduced liquidity), but the main driver was the UK's new Chancellor Kwasi Kwarteng's announcement of more tax cuts, the largest in 50 years! Looking at the Bank of England's (BoE) current monetary policy, it is clear that the institution wants to raise interest rates to combat the inflation issue; however, a lax fiscal policy, such as energy price caps, which may benefit consumers in the short term, will probably lead to escalating inflation pressures in the medium and long terms once the fiscal support is removed. The local currency's decline, which makes inflation prone to increases, is a further contributor to the issue. GBP/USD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: The Euro is looking down at a 20-year low against the US Dollar. A BoE statement said that it would interfere in the bond markets. Federal Reserve could be obliged to speed up the rate at which it raises interest rates. US Treasury 10-year note exceeds 4% The market is reflecting mixed signals for this currency pair. As a result of a mix of Fed and White House rhetoric that puts the brakes on a shift in market conditions, the Euro is looking down a 20-year low against the US Dollar. Overnight, St. Louis Federal Reserve President James Bullard reiterated the determination of the Fed to stare down price pressures when he said, “There’s a lot of tightening in the pipeline,” and “we have a serious inflation problem in the US.” Evans and Kashkari, two additional Fed board members, backed up his aggressive remarks. Treasury rates in some areas of the curve have increased to levels unseen in decades as a result of all this talk. For the first time since 2008, the yield on the 10-year note exceeded 4%. Government bond yields in developed markets around the world are escalating. The probable disruption of three Russian gas pipelines has made the situation in the Euro worse and driven up prices. EUR/USD Price Chart British pound to dropped quickly on Wednesday The market is reflecting mixed signals for this currency pair. The UK government's fiscal stimulus program, which was revealed last Friday and over the weekend, has received harsh criticism from the International Monetary Fund. Huw Pill, the chief economist at the Bank of England, said that the monetary policy should react appropriately to the fiscal policy. The Bank of England's statement that it would interfere in the bond markets caused the British pound to drop quickly, but a recovery later in the day indicated that markets are generally supportive of the central bank's decision to settle the bond markets. The Bank said unexpectedly that it would purchase long-dated UK assets in order to limit their yields. EUR/GBP Price Chart Pound has a strong inverse relationship with risk The market is reflecting mixed signals for this currency pair. The publication of better-than-expected statistics out of the U.S. overnight caused a decline in global markets, which in turn led investors to wager that the Federal Reserve could be obliged to speed up the rate at which it raises interest rates. Stock markets were affected by expectations of rising rates, which also helped the dollar and put pressure on other weaker currencies like the pound. The Pound has a strong inverse relationship with risk and tends to decline as the world markets decline. The announcement of new orders for durable goods data, which showed a dip of 0.2% in August but was better than the average expectation for a decline of 0.3%, was what first caused the decline in Sterling and other risk-sensitive assets. GBP/USD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com

Summary: Consumer confidence figures from the Eurozone decreased by 3.8 points. GBP seeks to continue strengthening against the Euro. Eurozone forecast looks dismal The market is reflecting bullish signals for this currency pair. The final consumer confidence figures from the Eurozone decreased by 3.8 points to -28.8 in September 2022, which was in line with initial projections and the lowest reading since the series' inception in 1985. The majority of factors, such as householders' appraisals of their past financial situations, outlooks on their future financial situations, plans to make significant purchases, and expectations regarding the state of the economy as a whole, all had a role in the sharp fall. A minor improvement in industrial mood could be fleeting given the future energy issues. The eurozone's forecast for the remaining months of the year is still dismal. The geopolitical tension surrounding the alleged sabotage of Nord Stream has made matters worse, and the eurozone is currently debating its ninth round of penalties as a result. However, restrictions on Russian gas continue to be a divisive matter inside the EU, with the commission advising countries that a combination of measures is needed rather than merely market intervention. The eurozone would have wanted to avoid this additional anxiety as it gets ready for an uncertain winter. EUR/USD Price Chart Markets awaiting German inflation release The market is reflecting bearish signals for this currency pair. In spite of easing pressures on UK bond markets and ongoing weakness in the Euro-Dollar exchange rate, the British Pound seeks to continue strengthening against the Euro. The inflation rate in North Rhine Westphalia, the most populated state in Germany, increased by 10.1% year over year in September, marking the highest increase since the early 1950s. This caused a decline in the value of the euro. The information raised concerns that German inflation data, which would be released later in the day, would confirm that the UK's stagflationary crisis is gripping Europe's largest economy as well. Separately, Germany’s network authority said gas use was well above average last week and urged homes and companies to make greater savings to avert a shortage this winter. EUR/GBP Price Chart US PCE update due The market is reflecting bullish signals for this currency pair. As the Relative Strength Index (RSI) retreats from an extreme reading, the recent rally in USD/CAD appears to be coming to an end after clearing the high of July 2020 (1.3646). The core reading, the Fed's preferred measure of inflation, is forecast to increase to 4.7% in August from 4.6% per year in July, and signs of persistent price growth may force the Federal Open Market Committee (FOMC) to maintain its approach to combating inflation as the central bank pursues a restrictive policy. This could cause the US dollar to strengthen as a result of the US PCE update. As a result, the US Dollar may continue to perform better than its Canadian counterpart because the Summary of Economic Projections (SEP) show a steeper path for the Fed Funds rate, and USD/CAD may show a bullish trend for the rest of the year because the Bank of Canada (BoC) appears to be on track to implement smaller rate hikes in the upcoming months. USD/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: AUD declines in the wake of the RBA interest rate decision. 25bps interest rate hike from the RBA. AUD weaker. RBA 25bps interest rate decision The Australian Dollar fell when the Reserve Bank of Australia (RBA) announced a 25 basis point increase in interest rates, indicating that the peak in Australian interest rates was approaching. Markets anticipated another 50bp increase, but the action caught them off guard. The RBA stated in a statement that additional interest rate hikes were still necessary to reduce inflation, although economists now believe only one more increase is now expected. The 'dovish' outcome resulted in a weaker Australian Dollar relative to the bulk of G10 currencies. The Pound to Australian Dollar rose by a third of a percent to 1.7480, its highest level since early August. "AUD is a significant underperformer after the RBA hiked 25bp against a consensus for a 50bp move," says Adam Cole, Chief Currency Strategist at RBC Capital Markets. Effect of interest rate hiking on the AUD The cash rate has now increased six times in a row by the RBA, reaching 2.60%, which Governor Philip Lowe described as a "substantial" rate of tightening. The Australian Dollar may no longer receive rate support as a result of the RBA's rate hike cycle, but one expert claims that the prognosis for the currency is actually positive. According to ANZ, in order to guarantee that inflation does reach its goal level, the cash rate will need to increase to obviously restrictive territory above 3%. "The slower pace of rate hikes now points to the tightening cycle extending into 2023," says Plank. Plank observes that the 25bp decision and overall tone of the statement have significantly reduced market expectations for future interest rate increases. In the wake of the decision, three-year ACGB futures are trading at an implied yield of 3.3%, which is over 40 bps lower than Monday's closing. Sources: investing.com, poundsterlinglive.com

Summary: The US dollar has fallen by as much as 3.3%. GBP supported in the wake of Kwarteng plans to move up the publishing of his fiscal plan. RBA interest rate announcement. Investors wonder if the USD has peaked The market is reflecting bullish signals for this currency pair. Since the high of last Wednesday, the US dollar has fallen by as much as 3.3%, and many are wondering if the USD has peaked. Given how severely overbought the dollar had been, this retreat appears to be a trend correction without any indication of anything bigger. Price is getting close to some important support, though, and how it performs around those levels will be crucial for deciding on a short-term course of action. EUR/USD Price Chart GBP supported on Tuesday In an effort to restore market confidence, Chancellor of the Exchequer Kwasi Kwarteng announced he was moving up the publishing of his fiscal plan, which gave the British Pound another lift. Originally slated for distribution on November 23, the plan will instead be given later this month, according to a story published late Monday. Importantly, a complete set of estimates from the Office for Budget Responsibility will be included with the proposal (OBR). The developments ensured a late-session rise in the pound sterling on Monday, resulting in a 1.15% increase in the pound's value relative to the euro. The improvements coincide with the pound's larger resurgence as markets restore their faith in UK assets after a turbulent time. EUR/GBP Price Chart RBA weaker in the wake of interest rate announcement The Australian Dollar fell when the Reserve Bank of Australia (RBA) announced a 25 basis point increase in interest rates, indicating that the peak in Australian interest rates was approaching. Markets anticipated another 50bp increase, but the action caught them off guard. The RBA stated in a statement that additional interest rate hikes were still necessary to reduce inflation, although economists now believe only one more increase is now expected. GBP/AUD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com

Summary: Ongoing devaluation of other currencies by the U.S. Dollar. Decreased predictions for UK economic growth. Australia's trade surplus decreased in August despite an increase in imports. U.S Dollar remains in high demand The market is reflecting mixed signals for this currency pair. According to International Monetary Fund (IMF) data, the ongoing devaluation of other currencies by the U.S. Dollar consumed more than $500BN of official reserves in the second quarter, and it can be inferred reasonably from this that the reserve cost of the Dollar rally exceeded $1 trillion in September. The dollar was again in demand throughout the trading afternoon on Wednesday, but noticeably more so after the Institute for Supply Management (ISM) Services PMI for September tended to portray the key sector of the American economy as being more resilient than forecasts had predicted. EUR/USD Price Chart Predictions for UK economy looks poor The market is reflecting mixed signals for this currency pair. According to economists, a worse recession would result in larger losses for the pound. They are also decreasing their predictions for UK economic growth. Economic experts predict that high inflation will cause the UK economy to enter a recession, but rising interest rates due to external reasons and the market's response to the "mini budget" will widen the extent of the slump. "The cost of living crisis will be exacerbated by a cost of borrowing crisis," explains Capital Economics in a new note in which they say they now expect a deeper recession than previously forecast. EUR/GBP Price Chart Australian Trade Surplus decreased Another data release confirming Australia's continued trade surplus helped the Australian dollar gain strength, but analysts warn that a peak in commodity prices and challenges to the global economy raise the possibility of underperformance. According to the ABS, Australia's trade surplus decreased in August despite an increase in imports. A positive trade surplus suggests that a nation is generating more foreign currency than it is spending, which provides a fundamental source of support for a currency. Australia's trade surplus has increased over the past few months as the value of its commodities exports has soared and amid a fall in demand for imports brought on by the Covid-induced economic slowdown. However, the trade surplus is shrinking due to indications that commodity prices have peaked, a continued post-covid recovery, the increase in the price of other significant imports, and these factors together. AUD/GBP Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: The Euro continues its battle with the US Dollar. UK's trillion-pound debt markets are buckling under the weight of further Bank of England interventions. Sterling found support early in the new week against the CAD. Euro on the decline as recession fears persist The market is reflecting bearish signals for this currency pair. The Euro's battle with the dollar continued into the new week as a risk-off mindset and increasing yields put the dollar in the lead. We witnessed a spike in geopolitical tensions between Russia and Ukraine as a result of a number of missile attacks that Russian President Vladimir Putin said were in response for the bombing of a bridge that connects Russia to the Crimean Peninsula. As recession fears persist, confidence in the Eurozone keeps declining. Another 75bp increase from the European Central Bank (ECB) is still anticipated later this month, which is necessary given the most recent double-digit inflation reading. Regarding the rate hike path required to control inflation, US Fed policymakers last week seemed to be singing from the same hymn book. Lael Brainard and Charles Evans, two well-known doves, yesterday broke with the rhetoric and used a tad more dovish language. EUR/USD Price Chart GBP is under pressure The market is reflecting mixed signals for this currency pair. The British pound is under pressure amid indications that the UK's trillion-pound debt markets are buckling under the weight of further Bank of England interventions. The Bank of England said on Tuesday that index-linked gilts will now be a part of its expanded gilt purchasing program. Given that UK RPI inflation was 12.3% in August, these gilts (UK government bonds) are understandably becoming more expensive for the government. But considering that the new administration decided to spend a lot of money on subsidizing family energy costs while simultaneously lowering taxes, the UK's bond market has suffered more than others. EUR/GBP Price Chart GBP supported against the CAD The rise in the Pound to Canadian Dollar exchange rate that began in the month of October has since experienced a corrective decline, but Sterling found support early in the new week just above the 1.51 handle and may now be expected to temporarily consolidate its recovery. If Sterling continues to accept the most recent developments in the UK government bond market, where the Bank of England (BoE) has been providing emergency liquidity to address issues related with some pension funds, it may find more support this week around the latter level. GBP/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: US CPI inflation beat market expectations. US Core CPI inflation beat market expectations. Initial market reaction. US CPI & Core CPI Inflation beat market expectations After breaking out last week, the US dollar is maintaining its recent highs. The primary US catalyst for this week is the release of CPI data today. According to economists surveyed by Reuters, the CPI is anticipated to have risen by 8.1% in September compared to the same month a year prior, which is only slightly less than the 8.3% annual increase seen in August. The actual US CPI inflation (YoY) came in at 8.2%, beating market expectations. For the White House and legislative Democrats, the continued high inflation has been a major political concern, overshadowing the coronavirus pandemic's quick recovery and the creation of millions of jobs since Joe Biden took office. The Core CPI is anticipated to rise for a second consecutive month, with the rate rising to 6.5% in September from 6.3% in August. Additionally, the Summary of Economic Projections (SEP) shows a higher path for US interest rates, which could fuel anticipation for another 75bp Fed rate hike. The actual US Core CPI inflation (MoM) came in at 6.6%, also beating market expectations. Effect on the markets The market will probably jerk in either direction after the September CPI report is released. The bar remains very high to change the perception surrounding a 75 basis point rate hike from the FOMC in November, despite the possibility of volatility across asset classes. The Federal Reserve may face pressure to maintain its approach to battling inflation if the core CPI increases once again, according to the minutes from the September meeting that revealed “many participants emphasized that the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action.” The initial reaction from the EUR/USD was bearish, USD/JPY was bullish as the dollar strengthened in the wake of the news, the S&P500 also jumped and Bitcoin remained on a downward trend. Sources: investing.com, financialtimes.com, finance.yahoo.com, dailyfx.com

Summary: Fedspeak is back in the spotlight this week. EUR/GBP reached one-month highs last week. Fedspeak is back in the spotlight after strong CPI inflation The market is reflecting bearish signals for this currency pair. As markets process the strong CPI number from last week, Fedspeak is back in the spotlight this week. Given the lack of significant new data this week, market players will probably give Fed speech and corporate earnings more weight. Recent Federal Reserve speakers have kept up the "hawkish drum," with the majority seeing the lack of inflation progress as justification for continuing with aggressive rate hikes. Since recent remarks suggest the Fed is seeking some pain in both housing and employment in order to reduce inflation, the persistent tightness in the domestic labor market continues to be a talking topic for Federal Reserve officials. Chair Jerome Powell's hawkish comments at Jackson Hole, when Powell threw a warning shot across the financial markets' bow, abruptly shifted the atmosphere surrounding a soft landing. Market investors are still firm in their desire to price in a Fed policy reversal, but with inflation where it is, such a turnabout for the central bank is all but unthinkable. EUR/USD Price Chart EUR/GBP reached one month highs The market is reflecting bearish signals for this currency pair. The exchange rate between the pound and the euro reached one-month highs last week, but it may now find it difficult to rise much further in the days to come and even be at risk of new selling as the Westminster Circus once again devolves into the type of farce most typical of one of those vintage Carry On movies. With political instability and uncertainty once again at the top of the agenda, the pound surged strongly last week amid rumors that HM Treasury would withdraw some of the spending commitments made in the late-September budget. EUR/GBP Price Chart GBP/USD recovered slightly The market is reflecting bullish signals for this currency pair. The Pound to Dollar exchange rate has recently recovered significantly, but it may take a setback for the Dollar to advance further this week, in part because Sterling faces dangers related to the possibility of another Prime Minister in the Banana Republic of Westminster being booted from power. The news that HM Treasury would be able to postpone some of the spending promises made public in the late-September budget statement helped the value of the pound last week. However, political instability and uncertainty are once again at the forefront of this week's events. GBP/USD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: Markets are betting on a 90% chance that ECB will enforce another 75bp hike. GBP's impressive run came to an abrupt end. JPY dropped to lows last seen in August 1990. ECB seems limited in their options The market is reflecting bullish signals for this currency pair. The European Central Bank (ECB)'s are limited in their options in light of the most recent CPI reading. The ECB's case for continuing to raise rates in pursuit of its 2% target may be strengthened by today's stronger ZEW statistics. The concern is that by doing this, the central bank could risk sending the economy back into a recession, which would be indicated by the dropping ZEW current conditions print. On the other hand, if the central bank does nothing, the euro may lose further ground to the dollar. The final CPI report on Wednesday and today's data print will be crucial as the ECB begins its pre-meeting blackout period on Thursday. As the central bank works to achieve its 2% target, markets are putting in a 90% chance that there will be another 75bp increase at the meeting next week. We will hear from ECB policymaker Isabel Schnabel later in the day. She is anticipated to maintain the rhetoric of rate increases despite the fragility of the Eurozone economies. EUR/USD Price Chart Concerns in UK bond markets The market is reflecting mixed sentiment for this currency pair. Following some fresh concern in the UK bond markets on Tuesday, the British Pound's impressive run came to an abrupt end. Following the Bank of England's forced denial that it would further delay its program of quantitative tightening, UK gilts declined and the yield they offered increased. After the recent instability in the bond market, The Financial Times reported on Tuesday that the Bank was prepared to postpone the program. After reaching a high of 1.1576 earlier in the day, the exchange rate between the British pound and the euro dropped to 1.1490. This brings the rates for bank transfers to around 1.1260 and the prices provided by payment specialists to around 1.1450. EUR/GBP Price Chart JPY continues to lose against the USD The market is reflecting bullish signals for this currency pair. Earlier in the session, the Japanese Yen dropped to lows last seen in August 1990 as it continues to lose value against the US dollar. Little has changed for the Yen as Japanese authorities appear ready to allow the currency to continue to decline by controlling bond yields. The yield on 10-year JGBs is restricted to 0.25%. In contrast, as the Fed keeps raising interest rates, US Treasury yields continue to trade at or close to multi-year highs. The benchmark 10-year UST is quoted with a yield of 4.00%, which is approximately 375 basis points higher than the comparable JGB. The rate-sensitive 2-year UST trades with a yield of about 4.45%. USD/JPY Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com

Summary: GBP September 2022 YoY inflation, beat market expectations. Affect on the GBP. GBP CPI Inflation The market has predicted a CPI YoY inflation figure of 10%, the actual data came in at 10.1%, which was hotter than expected by the market. The inflation reading is likely to set off expectations on the future interest rate hiking path of the Bank of England (BoE). The higher than expected inflation reading is likely to set investor confidence in the direction of a continuing hawkish BoE interest rate hiking cycle, causing investor confidence in the GBP to increase and therefore strengthening the pound sterling currency. Following some fresh concern in the UK bond markets on Tuesday, the British Pound's impressive run came to an abrupt end. Following the Bank of England's forced denial that it would further delay its program of quantitative tightening, UK gilts declined and the yield they offered increased.  This is the procedure through which it sells the gilts it acquired as part of its quantitative easing strategy back to the market. A crucial element of the Bank's strategy for normalizing monetary policy as it battles inflation is quantitative tightening. After the recent instability in the bond market, The Financial Times reported on Tuesday that the Bank was prepared to postpone the program. Effect of the CPI reading on the GBP It is no secret that the pound sterling has had a tough year on the forex markets. The near-term outlook for the pound has significantly improved, according to foreign exchange strategists at BMO Capital, and more gains are possible if the UK leadership is changed in the next two weeks. The Kwarteng catastrophic "mini-budget" in September, which offered the largest tax cuts in 50 years at a time when the U.K. economy is already experiencing significant inflation, is blamed by the government for the turmoil the pound sterling is currently experiencing. The Bank of England had to step in to prevent the collapse of a significant portion of the U.K. pension system after Kwarteng's actions drove the pound to an all-time low against the dollar and set off a sell-off in government bonds. The initial market reaction showed a weakening in the GBP/USD currency pair, and a strengthening in the EUR/GBP currency pair as investors weigh GBP prospects. Sources: poundsterlinglive.com, investing.com

Summary: Dow Jones futures all increased overnight as investors focused on Netflix (NFLX). The near-term outlook for the pound has significantly improved. Dow Jones Index Rally The S&P 500, Nasdaq, and Dow Jones futures all increased overnight as investors focused on Netflix (NFLX) subscriber growth and anticipated Tesla earnings. The effort at a stock market rally extended advances on Tuesday, but the session ended well below highs. Although the market rise is still going strong, nothing yet has been proven. Investors should exercise caution and pay great attention. In Q3, Netflix's subscriber growth was substantially stronger than anticipated, and the leader in streaming TV is optimistic about Q4 subscribers. Earnings also exceeded expectations. The rise in Netflix's shares suggested a breakout. Overnight, Roku (ROKU) and Disney (DIS) both increased. In comparison to fair value, Dow Jones futures gained 0.6%, with DIS stock contributing a slight gain. Futures for the S&P 500 rose 0.7%. Futures for the Nasdaq 100 rose 1.4%. United Airlines and NFLX stock both make up the S&P 500 and Nasdaq 100. DJI Price Chart GBP could rally in the wake of UK leadership change The near-term outlook for the pound has significantly improved, according to foreign exchange strategists at BMO Capital, and more gains are possible if the UK leadership is changed in the next two weeks. They claim that such a development is very plausible. The call follows the dramatic about-face in UK fiscal policy that newly-installed Chancellor Jeremy Hunt revealed. In order to fully restore market confidence in the UK government and finances, Hunt undid all of his predecessor's tax cuts. This was followed by a decline in UK gilt yields and a rise in the value of the pound. The reversal was unavoidable given that the world markets recoiled at the generosity of the new prime minister Liz Truss' economic plans, which called for large tax cuts that would be paid for by borrowing.

Summary: Eurozone CPI inflation missed double digits. UK inflation increased from 9.9% to 10.1%. USD/JPY has positive carry. Eurozone inflation beat market expectations The market is reflecting mixed signals for this currency pair. The data, which narrowly avoided the 10% inflation mark as compared to September of last year, would undoubtedly support the recent hawkish stance taken by senior ECB members. Centeno and Visco, two ECB members, will get the chance to comment on the most recent inflation data later today as ECB talk is expected to slow down before the required blackout period prior to Thursday's rate decision. There is a new significant market driver in town as the US is currently in earnings season. This will highlight a variety of subjective factors because what US company executives say can start to shape expectations for future quarters' results. The key question at this time is how the sudden and sharp spike in rates has affected businesses. EUR/USD Price Chart EUR/GBP limped temporarily The market is reflecting bullish signals for this currency pair. After Office for National Statistics data indicated that inflation increased more than anticipated in September, the Pound Sterling temporarily limped against the Dollar and the Euro. However, this outcome does little to deter the Bank of England (BoE) from raising interest rates aggressively in November. In September, UK inflation increased from 9.9% to 10.1%, defying the expectation of economists who had expected the annual rate of price growth to exceed 10% for the previous month. EUR/GBP Price Chart USD/JPY remains positive The market is reflecting mixed signals for this currency pair. The carry is still positive for the USD/JPY currency pair, and it will continue to be so as long as US interest rates are still rising and Japanese monetary policy is as it is. A weak Yen isn't all that awful for Japan, and it doesn't seem to be causing much concern at the central bank, according to BoJ Governor Kuroda. However, since the intervention was requested by the Ministry of Finance late last month, the same cannot be stated there. There is a new significant market driver in town as the US is currently in earnings season. This will highlight a variety of subjective factors because what US company executives say can start to shape expectations for future quarters' results. USD/JPY Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: Rising Fed funds rate estimates have benefited the dollar. U.K retail sales data. JPY rallied on Friday. USD supported by hawkish fed The market is reflecting bullish signals for this currency pair. Throughout the past week, the EUR/USD pair has struggled to find any definitive direction, and this morning was no exception. As bulls and bears continue their conflict, the pair has stayed largely range bound because next week will bring a number of important data events. Since last week's US CPI reading, the pair had experienced a rally, but this week's return of the dollar bulls has stopped any effort at an upward rise. Rising Fed funds rate estimates have benefited the dollar, with markets now projecting a peak rate of roughly 5%, up from 4.75% last week. As a result of this as well as rising Treasury yields, investors have continued to view the dollar as their favorite haven, keeping it strong. EUR/USD Price Chart GBP struggles as UK Retail Data misses market expectations The market is reflecting bullish signals for this currency pair. After Office for National Statistics (ONS) statistics revealed that UK retail sales collapsed in September, the pound fell into the week's final session, effectively wiping out more than two years of gains made since the first coronavirus-inspired closure of the economy in 2020. When measured by the number of products purchased, retail expenditure declined by 1.4% in September. This was a far worse decline than the -0.5% consensus estimate and came along with a downward revision to the ONS estimate for August sales growth, which was restated as -1.7%. EUR/GBP Price Chart JPY rally supporting GBP The market is reflecting bullish signals for this currency pair. A stunning Japanese Yen surge that seemed to be the catalyst for a market-wide decline in Dollar exchange rates, which was then followed by rumors of direct involvement from the Tokyo government and Bank of Japan (BoJ). The Yen appreciated by over five huge figures versus the dollar, which had previously run roughshod over all other currencies, while the Pound Sterling, which had been mired in the red, saw a notable rally against it late on Friday. GBP/JPY Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: The ECB interest rate decision is unlikely to have much impact on the Euro. The markets Reaction to the ECB interest rate decision on Thursday, could be positive for the GBP. Sterling increased significantly from the market's opening. Global Eurozone PMI Composite Output Index decreased The market is reflecting bullish signals for this currency pair. According to the 'flash' figure, the seasonally adjusted S&P Global Eurozone PMI Composite Output Index decreased from 48.1 in September to 47.1 in October. The indicator indicated that business activity in the eurozone has fallen for a fourth time in a row. The most recent result was the lowest since April 2013 when pandemic numbers were excluded. A 75bp increase is already anticipated by the market for the meeting on Thursday, although it is unlikely to have much of an impact on the euro. The Eurozone's generally dismal outlook is unlikely to change as today's data strengthen recessionary fears. It is highly challenging to argue for a halt in rate increases as long as inflation stays high, with ECB Chief Economist Phillip Lane saying the bank views the neutral rate as being just above the 1-2% range. If Lane is right, more rate increases would be coming for the zone, which theoretically might hasten a recession. EUR/USD Price Chart GBP supported by Boris Johnson being turned away from PM The market is reflecting bullish signals for this currency pair. The Pound to Euro exchange rate started the new week on a positive note, but it might find it difficult to maintain Monday's gains far beyond the 1.15 level unless this Thursday's European Central Bank (ECB) decision causes the market to turn even further away from the euro. On Monday, the pound gained significantly from the opening price after a faction of the ruling Conservative Party was successful in preventing former Prime Minister Boris Johnson from taking part in the most recent process for choosing a new Prime Minister. The market's reaction to the European Central Bank's interest rate decision on Thursday, which is widely anticipated to increase its benchmark interest rate by three quarters of a percentage point for a second consecutive time, will likely have a significant impact on the Pound's performance this week. EUR/GBP Price Chart UK & US contrasting economic outlook The market is reflecting bearish signals for this currency pair. The pound to dollar exchange rate has experienced a recent surge and may increase further in the near future, but it runs the risk of falling as the week progresses and attention shifts back to the increasingly contrasting economic outlooks of the UK and the US. After some members of the governing Conservative Party were successful in preventing former Prime Minister Boris Johnson from taking part in the most recent selection process for the position of Prime Minister, sterling increased significantly from the market's opening, including versus the dollar. GBP/USD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: The European Central Bank is predicted to boost rates by 75 basis points. Rishi Sunak warns of a difficult economic outlook ahead. USD retreated on Tuesday The market is reflecting bullish signals for this currency pair. In order to control the high inflation that was shown to be 9.9% year-over-year last week, the European Central Bank is predicted to boost rates by 75 basis points. A channel that dates back to February is putting a major barrier in the way of the EUR/USD. Since its creation, it has proven to be a very trustworthy structure, and until it is no longer useful, it will be the major reference. After the dollar reached its peak, equities appear to have bottomed out on the basis of CPI, and now bonds appear to have reached the end of their capitulation phase. This should temporarily deflate the dollar and place some of its energy into other assets. Since it is just being used as a recovery trade, there is a chance that it could collapse suddenly. EUR/USD Price Chart GBP lost early gains in wake of new prime minster The market is reflecting bearish signals for this currency pair. This week saw a solid start for the pound, but it was unable to continue its upward trend when former chancellor Rishi Sunak was named the next prime minister-designate after the Conservative Party leadership contest, which will have a major impact on the pound and the UK economy going forward. After former Prime Minister Boris Johnson withdrew from the race for the position of Prime Minister, leaving former Chancellor Rishi Sunak on course for a coronation that is expected to produce the UK's fifth Prime Minister in the past six years on Tuesday, sterling increased against most major currencies to start the new week. The Pound, however, quickly lost its early gains as newly-elected Prime Minister Rishi Sunak warned of impending economic hardship and difficult choices involving the public finances in a speech to parliament. The S&P Global PMI surveys that indicated a deepening recession in the UK's manufacturing and services sectors in October followed closely behind all of this. EUR/GBP Price Chart Tuesdays market was favorable for riskier assets A thicket of technical resistances that could keep Sterling contained below roughly the 1.8000 level in the coming days has slowed the recovery from the post-referendum lows plumbed in late September, despite the Pound to Australian Dollar exchange rate remaining close to six-month highs in recent trade. Tuesday's market was favorable for riskier assets, as sterling outperformed all other major currencies. However, the Pound to Australian Dollar rate was unable to move through a Fibonacci retracement level at 1.7962 on the charts and its 100-week moving average at 1.8047. GBP/AUD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com

Summary: The euro has been steadily strengthening against the dollar over the past few weeks. The Pound has recovered from all of its post-budget losses. Pound to Canadian Dollar exchange rate rose to a four-month high. EUR/USD back above parity The market is reflecting bullish signals for this currency pair. The euro has been steadily strengthening against the dollar over the past few weeks as dovish wagers against the Fed have increased, supported by weaker natural gas prices and U.S. economic statistics. The ECB meeting tomorrow, when they will release their interest rate, will be the main event for the EUR this week. Although a 75 bps rate hike is presently priced in by the financial markets with about 93% certainty, the post-announcement press conference will be crucial for determining the short-term directional bias. Any hawkish slant that may be there in the ruling could put parity to another test. The euro increased by more than 5.3% from its yearly low, and a breach of the 2022 downtrend now raises the possibility of a greater rise in the coming days. However, the advance is now getting close to the first significant resistance barrier, which will be the first true test of the bulls' tenacity in this rebound from multi-decade lows. Prior to the European Central Bank's (ECB) interest rate announcement, these updated objectives and invalidation levels are what matter on the technical price charts for the EUR/USD. EUR/USD Price Chart Pound sterling slightly recovered The market is reflecting mixed market signals for this currency pair. The Pound has recovered from all of its post-budget losses, but some strategists believe it could still fall apart before the year is out. They have advised clients to sell Sterling against the Dollar after it rises back above 1.15 because there is potential for it to drop as low as 1.08 in the coming months. Following the parliamentary installation of former chancellor Rishi Sunak as prime minister, which ended the Conservative Party's leadership election, and as risk appetite seemed to increase on global markets, the pound gained versus a number of other currencies throughout the first half of the week. The problem for the pound is that none of this does anything to change the bleak picture for the UK economy, and risk appetite would quickly decline if the Fed confirmed next Wednesday that its hawkish policy position will not change. EUR/GBP Price Chart BoC boosted cash rate The Bank of Canada (BoC) boosted its cash rate less than economists and markets had anticipated for October, but it nonetheless issued a warning that additional interest rate hikes are likely in the months ahead. As a result, the Pound to Canadian Dollar exchange rate rose to a four-month high. In light of downgrades from prior expectations of 3.5% and 1.75%, respectively, the BoC revised its forecasts for Canadian GDP growth, which is now estimated to come in around 3.25% this year before slipping below 1% next year. The projection for 2024 remained at 2%. The annual consumer price index inflation rate is anticipated to decline back to 3% by the end of next year before reverting to the 2% objective by the end of 2024, according to the BoC's inflation estimates, which have remained virtually unaltered. GBP/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: Markets expected a 75bps increase from the ECB. ECB continues to follow hawkish rhetoric. Initial effect of the decision on the market. ECB interest rate decision re-instils market confidence The ECB decision was released today, and another 75bps increase was anticipated. The widely anticipated increase in the ECB's once-negative deposit rate to 1.25% on Thursday may favor the Euro at the expense of the Pound, the Dollar, and other currencies, according to some analysts. Although these statements and the ECB's other recent interest rate increases have not directly benefited the Euro, policymakers have emphasized in recent appearances that interest rates will need to rise further in the months ahead as double-digit inflation rates become more prevalent in the Eurozone. The ECB met market expectations by rising their interest rates by 75 basis points to 2.00% on Thursday. The ECB have reiterated their intentions to gain control over the soaring inflation rate. Effect of the decision on the market In recent trade, the Pound to Euro exchange rate defied gravity and reached levels close to one month highs. However, this week's recovery will be difficult unless the European Central Bank (ECB) interest rate decision on Thursday convinces the market to abandon its recently increased appetite for the single currency. They cited the UK economy's worsening outlook and risks related to Bank of England (BoE) interest rate policy, despite the fact that ECB policy is also relevant and the bank's interest rate guidance, balance sheet, and prospects for the Eurozone's economy will be more crucial for the pound sterling ahead of the weekend. The EUR/USD pair has already risen over parity and the downtrend from 2022, doing so with a respectable rally. The initial market reaction in the wake of the release of the ECB interest rate decision showed the EUR/USD strengthening and continuing the bullish market sentiment, the EUR/GBP weakened slightly followed by signs of strengthening, The FTSE 100 showed signs of declining. Sources: poundsterlinglive.com, dailyfx.com

Summary: Markets expected a 2.4% US Q3 GDP. Will the Fed continue its hawkish rhetoric? Market reactions in the wake of the GDP figure. US GDP hit its first positive figure in two quarters The market is expecting US GDP in the third quarter to rise from -0.6% (September release) to 2.4% in the October release. This is the first positive number in two quarters. The actual US Q3 GDP data came in at 2.6%, beating market expectations by 0.2%. The US GDP has beaten the 2.4% GDP value that was forecasted, thus the USD should be supported by this figure. With GDP being the broadest indicator of the economy and the primary indicator of the economy’s health, the US Dollar would benefit from beating the forecasted figure. The market will learn how recent rate hikes have affected the US economy in the third quarter from today's advanced look at US Q3 GDP. Any miss or beat of estimates will change the Fed's narrative regarding future rate hikes. A dismal Meta Platforms forecast is expected to weigh heavily on the tech-heavy Nasdaq as U.S. equities began in a mixed manner on Thursday, ahead of earnings from Apple (AAPL) and Amazon (AMZN) and the first estimate of third-quarter GDP domestic product. Effect on the markets The figures on weekly unemployment claims are also due at the same time and are anticipated to increase slightly from last week as the labor market begins to experience pressure. Hence, the initial market reaction in the wake of the release of the US GDP data is likely to be as a result of the combination of information being released by the United States on Thursday. A GDP figure that beats market expectations is bullish for the currency in question.The initial market reaction showed the movement of the EUR/USD decline, the NASDAQ rose slightly and GBP/USD currency pair weakened as the USD showed signs of strengthening. Sources: investing.com, dailyfx.com,

Summary: Fed representative speaks regarding the hazards of potential overtightening. EUR/GBP rose in the wake of ECB interest rate decision. On Thursday, the Canadian Dollar was still the second-best performing currency. European economy likely to experience pressure The market is reflecting mixed signals for this currency pair. The European economy will experience extra pressure from the ECB's interest rate decisions once they rise above this point because firms and families are already feeling the effects of the excessive increases in energy prices. The dollar index (DXY) also formed a double top as a result of comments made by Mary Daly of the Fed regarding the hazards of potential overtightening and the likely transition from 75 bps raises to 50 or 25 boosts in the future. As a result, the index is currently trading approximately 3.5% lower. EUR/USD Price Chart EUR/GBP rose in the wake of ECB interest rate decision The market is reflecting mixed signals for this currency pair. Thursday saw a rise in the exchange rate between the pound and the euro as the European Central Bank (ECB) announced another unusually substantial increase in interest rates and warned that the changing monetary policy settings could soon start to hurt the Eurozone economy. After the ECB increased all of its key interest rates by three quarters of a percentage point for the second time in a row and issued a warning that additional hikes would still be required in the months to come, the euro moved lower against other major peers, notably the pound. EUR/USD Price Chart CAD suffered significant losses Following the Bank of Canada (BoC) decision to decrease the rate at which it raises interest rates in October, which stunned the market and caused many forecasters to reevaluate their prognosis for the Loonie, the Canadian Dollar fell behind other major currencies during the following week. On Thursday, the Canadian Dollar was still the second-best performing currency in the G10 group for the year, but it had suffered significant losses this week against all other currencies save the U.S. Dollar as a result of Wednesday's interest rate decision. GBP/CAD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com

Summary: USD's decline has been substantially exaggerated. Weak UK economic fundamentals once again take center stage. The Pound to Dollar exchange rate stayed robust near the week's highs. EUR left weak against USD The market is reflecting mixed signals for this currency pair. Italian inflation for October topped forecasts, while Spanish GDP underperformed on all YoY and QoQ indicators, leaving the euro weak against the USD. Italy and France started the morning. German GDP came in at 1.2% and 0.3%, respectively (see economic calendar below), giving the euro a modest boost. The country's strong performance, according to the GDP report, was primarily ascribed to private consumption spending, although I think decreasing energy prices may have had some positive impact on the final result. Following the decision, ECB President Christine Lagarde's comments sparked speculation that future large rate increases from the bank would not be final. According to her, the rate change will be decided "meeting by meeting." This is true even while inflation is quite high. If the past 24 hours give any indication, the US Dollar's decline has been substantially exaggerated. During the Asian session, there has been a minor easing. EUR/USD Price Chart Euro heavily sold in the wake of ECB announcement The market is reflecting bearish signals for this currency pair. Although the Pound to Euro exchange rate has recovered from September's losses, Rabobank estimates indicate that as weak UK economic fundamentals once again take center stage in the months to come, recent gains may be partially reversed. The euro was heavily sold after the European Central Bank's policy announcement on Thursday, but the pound sterling held close to its October high against the euro on Friday. However, the most recent forecast review from Rabobank implies that this rebound may already be on borrowed time. EUR/GBP Price Chart GBP/USD remained near weeks highs The market is reflecting mixed signals for this currency pair. After the Federal Reserve's (Fed) preferred gauge of inflation fell short of expectations and did nothing to convince the market to start bidding again for the greenback ahead of next Wednesday's interest rate decision, the Pound to Dollar exchange rate stayed robust near the week's highs. Since the Fed prefers PCE price indices as an indicator of inflation, it might be significant to Federal Open Market Committee members next week since the Core PCE price index increased at an annualized rate of 5.1% last month rather than the 5.2% experts had predicted. GBP/USD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: Eurostat stated that prices rose by a record 10.7% in October. Uncertainty around BoE interest rate decision. RBA raised interest rates by 25 basis points, and the market is expecting a similar action on November 1. ECB under pressure to raise interest rates further The market is reflecting bearish signals for this currency pair. Eurostat stated that prices rose by a record 10.7% in October, setting a new record for inflation in the Eurozone. Separate figures also revealed that the bloc's economy expanded more quickly than anticipated in the third quarter. The European Central Bank (ECB) is under more pressure to raise interest rates as the inflation data was higher than the market's expectation of 10.3%, despite predictions from some economists that the ECB will soon slow the rate at which it does so. With the energy component of fuel costs rising by an alarming 41.9% year-over-year, rising fuel prices continue to be the main source of inflationary pressures. The EUR/USD is still in a significant macrodowntrend, and even while this picture might not change much in the short term, there may yet be some upside before selling resumes. The euro broke out of a channel it had been trapped in since the beginning of the year last week. EUR/USD Price Chart Markets awaiting BoE interest rate decision The market is reflecting mixed market signals for this currency pair. Due to the uncertainty surrounding the Bank of England's decision on Thursday and the possibility that the BoE will raise interest rates less than markets anticipate, the Pound to Euro exchange rate has continued its recovery from September's lows to reach two-month highs in recent trade. However, this week's gains may be vulnerable to profit-taking. The U.S. dollar weakened last week, which benefitted riskier currencies, and financial markets cheered the appointment of former chancellor Rishi Sunak as prime minister. However, market focus soon shifted to Thursday's interest rate decision and the release of October inflation data from the Eurozone on Monday. Economists and the financial markets anticipate that the BoE will increase the Bank Rate by three quarters of a percentage point to 3%. If delivered, this would be the biggest interest rate increase the BoE has ever made, however it may not be as certain or as done as many people think. EUR/GBP Price Chart RBA expected to remain dovish On Tuesday, the Reserve Bank of Australia is expected to increase interest rates once more, but the size of the increase is uncertain, with potential consequences for the Australian Dollar. On October 4, the RBA raised interest rates by 25 basis points, and the market is expecting a similar action on November 1. However, as inflation picks up speed, the central bank may be compelled to make a U-turn According to the ABS, Australian CPI increased 7.3% in the twelve months leading up to the September 2022 quarter. The announcement occurred just a few days after the Reserve Bank of Australia stunned the markets by raising interest rates by 25 basis points; the Australian Dollar fell as a result. GBP/AUD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: The Fed’s Wednesday's anticipated 75 basis point hike may be the last of its sort. The likelihood of a recession in the Euro Area has grown. The BoE decision on Thursday is the most significant event of the week for the Pound. Markets anticipate the Fed’s policy rate decision The market is reflecting bearish signals for this currency pair. With the Federal Reserve's policy announcement on Wednesday and the crucial U.S. jobs data on Friday, this is a crucial week for global FX. Therefore, the Dollar side of the equation will be the driving force behind the Euro to Dollar exchange rate (EUR/USD), especially now that the European Central Bank's October policy meeting is over. The possibility of a "pivot" by the Federal Reserve, whereby they signal that Wednesday's anticipated 75 basis point hike will be the last of its sort and that hikes will proceed at a slower rate starting in December, is particularly exciting for investors in the financial markets. According to some analysts, this could support the idea that the U.S. Dollar has reached its top, or the "pivot," as it is known in the financial community. EUR/USD Price Chart Likelihood of Eurozone recession has increased The market is reflecting mixed signals for this currency pair. According to a new report, the decline in UK home prices has just started. Capital Economics researchers predict falls of about 12% by 2024 on the same day Nationwide announces the first drop in home values in 15 months. The likelihood of a recession in the Euro Area has grown, according to ECB President Christine Lagarde, who also stated that while uncertainty is still high, "a central bank has to focus on its duty." The destination is clear, but we are not there yet', said President Lagarde. EUR/GBP Price Chart GBP at risk due to UK economy The Pound to Canadian Dollar exchange rate recently hit four-month highs, but numerous technical barriers are standing in the way of its ascent on the charts, and Thursday's Bank of England (BoE) interest rate decision carries risks that could further thwart its recovery in the days and weeks to come. Since hitting record lows near 1.40 in late September, the value of the pound has increased by more than 10% against the Canadian dollar. Last Friday, it reached a high of 1.5811, but it has been unable to hold that level due to a number of technical resistances that are scattered across the chart around the 1.57 handle. The BoE decision on Thursday is the most significant event of the week for the Pound and comes before Friday's release of Canada's September employment report. However, Sterling is at risk due to the UK economy's deteriorating performance and prospects, which are at odds with widely held beliefs about the outlook for bank rates. GBP/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: A big increase in monetary policy is unlikely to assure a rise in the value of the US dollar. Markets already struggling with the UK's long-standing and well-known structural problems. BoE interest rate decision due Thursday. Fed interest rate decision in the spotlight The market is reflecting bearish signals for this currency pair. At 18:00 GMT, the biggest central bank in the world is expected to make a controversial monetary policy announcement, and the markets are certainly focused on it. The market's reaction may be biased because speculation through Fed Fund futures and other channels has made a further 75 basis point rate hike from the group almost certain. It's crucial to remember that no single aspect of this well-publicized incident should be seen as a firm indication for speculation. A big increase in monetary policy, such as a rate hike of 75 basis points, is therefore unlikely to assure a rise in the value of the US dollar and send US indices into a downward spiral. EUR/USD Price Chart GBP appears to be finding some balance The market is reflecting bearish signals for this currency pair. The largest bank in the UK, HSBC, claims that the British pound is close to a long-term base. HSBC analysts state that "after showing signs of vertigo, GBP appears to be finding some balance" in a briefing on foreign exchange research. Declines followed the market's reaction to tax cut proposals made by the former prime minister Liz Truss that were to be paid for by further borrowing, alarmed investors who questioned whether the UK's debt condition would prove to be sustainable. Markets were already struggling with the UK's long-standing and well-known structural problems, especially the budget deficit and the current account deficit, when the "mini budget" fiasco broke out. EUR/GBP Price Chart ZAR almost worst performing currency in G20 The Pound to Rand rate has more than made up for its September losses in a recovery that has most recently plateaued near 2022 highs, but if the Dollar stays weak or if Sterling is hurt by Thursday's Bank of England (BoE) decision, it will be at risk of a corrective setback later this week. The total result was an almost 12% comeback from a late September low, which saw GBP/ZAR erase much of the year's previous losses in the process. South Africa's Rand was nearly the worst performing currency in the G20 grouping for October while the Pound was among the strongest. The Rand's underperformance occurred during yet another strong month for the Dollar and a stretch of unusually marked weakness for China's Renminbi. Local data that showed the manufacturing sector as virtually the only bright spot in an otherwise cooling South African economy may also have contributed to the Rand's underperformance. GBP/ZAR Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: The US Dollar continued to strengthen overall on Thursday. Another action by the Bank of England has the Pound taking a beating. Sterling dropped significantly, including against the Australian Dollar. Euro is lacking monetary backing The market is reflecting bearish signals for this currency pair. On Thursday, the US Dollar continued to strengthen overall as a result of the US Federal Reserve's decision to change its monetary policy earlier in the day. This made the Euro continue to struggle against the US Dollar. In terms of interest rates, the markets received the well-predicted three-quarter point hike that was punctually provided. However, there were a lot of people hoping that Fed Chair Jerome Powell would formally reverse his aggressive monetary tightening policy. In the end, he refrained from doing so and instead warned the markets that if inflation is to be contained, borrowing prices may still need to increase significantly. This weakness was forewarned by Christine Lagarde, president of the European Central Bank, that interest rates in the Eurozone must also continue to rise. Well, may she do so, with the currency bloc's consumer price inflation hitting historic highs. The Euro lacks monetary backing in the global market because markets anticipate more of the same. It lacks fundamental support as well, with a cost-of-living issue that is eroding consumer confidence throughout the Eurozone. Of course, Germany is the center of the currency zone. As the conflict in Ukraine drags on, it is now struggling with the necessity to wean itself off of its dependency on Russian gas. As a result, the third quarter of this year saw a significant slowdown in Eurozone growth. EUR/USD Price Chart GBP declines in the wake of BoE interest rate decision The market is reflecting bullish signals for this currency pair. Another action by the Bank of England has the Pound taking a beating. The Bank of England increased the Bank Rate by 75 basis points to 3.0%, but it made it apparent that a jump to 5.0% or above was not likely, sending the Pound into a reflexive sell-off. According to a statement issued by the Bank, the Monetary Policy Committee (MPC) decisively voted 7-2 to raise interest rates by 75 basis points, but this exceptionally significant increase appears to be an outlier. However, significantly for the foreign exchange markets, the Bank won't be delivering as many rate increases as investors anticipate. The Bank's decision and financial calculations are based on market expectations that the Bank Rate will increase to a top of 5.25% in 2023, which is why the Pound has reacted in this way. In such a case, the Bank's economists predict that inflation will return to zero in three years, significantly below the target of two percent. EUR/GBP Price Chart AUD beating the GBP The Bank of England (BoE) appeared to rule out the possibility of indulging in derivative market pricing, hinting that Bank Rate could reach five percent in the months ahead, which hampered the Pound to Australian Dollar rate and put it at risk of further losses in the last session of the week. The Bank of England announced its largest increase in the Bank Rate in decades on Thursday, but said financial markets were barking up the wrong tree when they bet that borrowing costs could still rise significantly further down the road. As a result, sterling dropped significantly, including against the Australian Dollar. GBP/AUD Price Chart Sources: dailyfx.com, poundsterlinglive.com, finance.yahoo.com

Summary: The US Dollar weakens in the wake of the US jobs report. The British Pound may be headed for significant losses this November against the Dollar, the Euro. USD/JPY wedge continues to grow. USD loses ground against the EUR The market is reflecting mixed signals for this currency pair. Following the release of U.S. labor market data that, while still positive, reaffirmed a pattern of decreasing employment gains and pay growth, the Dollar dropped 1% against the Pound and 1.20% against the Euro. In October, the economy added 261K jobs, much exceeding the consensus estimate of 193K, while September's number was impressively raised up to 315K. Overachieving forecasts of 0.3%, average hourly earnings increased by 0.4%, suggesting persistent wage pressures that will support future domestic inflationary pressures. This information supports the Federal Reserve's statement from mid-week that it is too early to think about stopping its rate hike cycle, which raised exchange rates for the Dollar globally. Since the data do not indicate that the themes of previous months are likely to abruptly change, the Dollar's decline could instead be the result of profit-taking after Wednesday's gains. EUR/USD Price Chart BoE predict a UK economic slump The market is reflecting bullish signals for this currency pair. As investors respond to the Bank of England's most recent gloomy economic forecasts, the British Pound may be headed for significant losses this November against the Dollar, the Euro, and a variety of other major currencies. The Bank hinted that the UK economic slump, which it has been anticipating for some time, may now be considerably severe than initially anticipated in its November Monetary Policy Report. EUR/GBP Price Chart The wedge between the USD & JPY The market is reflecting mixed signals for this currency pair. Due to recent currency interventions, USD/JPY has been an interesting pair, with downmoves unable to gather significant organic impetus. However, a dollar bid continues to put the majority of currencies under pressure, making it challenging to dismiss gains as durable given the wider technical context. The rising wedge that had developed over the previous few months indicated that at some point we would either have a breakdown that would lead to an unwinding that would cause USD/JPY to plummet by a significant amount or a shot higher that would conclude the run upward. EUR/GBP Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com

Summary: The US data released on Friday was mostly encouraging as job growth exceeded expectations. Friday's release of UK GDP statistics, it might go even further and return to lows from early October. EU economy produced 0.2% growth The market is reflecting bullish signals for this currency pair. In Q3, the EU economy demonstrated that it could produce growth of 0.2% Q/Q. The tiny gain in Q3 depicts the same larger picture, which is that growth has slowed and a recession is still in effect, despite the fact that it appears to be rather hopeful. One of the key indications from a nationwide survey demonstrates how manufacturing has been under tremendous strain as a result of the crisis of rising energy prices. The US data released on Friday was mostly encouraging as job growth exceeded expectations. The decrease in the dollar index, which has persisted into today's European session, was not justified by the minor increase in unemployment statistics. The market's forecast of a 50 bp increase from the Federal Reserve's December meeting is the only thing that has changed. EUR/USD Price Chart BoE November interest rate decision resulted in losses for the GBP The market is reflecting mixed signals for this currency pair. The Bank of England (BoE) interest rate decision in November resulted in significant losses for the Pound to Euro exchange rate, but if the market is still wary of Sterling going into Friday's release of UK GDP statistics, it might go even further and return to lows from early October. After the BoE stated, based on its most recent forecasts, that it believes it has likely already done enough with interest rates to ensure that inflation returns to the 2% target in the coming years, sterling suffered significant losses against most major currencies last week and fell almost 2% against the Euro. In an open conflict with market bets that borrowing costs could climb to 4.7% or more in the coming months, the BoE additionally stated that investors would be foolish to anticipate Bank Rate to rise from November's recently boosted level of 3%. EUR/GBP Price Chart AUD is weaker on monday The Australian Dollar is weaker at the beginning of a new week that may focus on events in China, where officials are showing a willingness to fight rumors that they are likely to reevaluate their zero-Covid policy. The National Health Commission (NHC) of China reaffirmed its commitment to eradicating Covid-19 during a news conference on Saturday, cautioning that the situation was likely to worsen and become "more complex" as the nation entered the winter flu season. The Australian lagged behind. The GBP/AUD currency rate experienced its biggest weekly decrease since the week of February 28 as investors bet on a Chinese economic revival, falling 2.83% for the week. GBP/AUD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com

Summary: Many ECB policymakers have reiterated the central bank's stance on interest rates and inflation. The British Pound is weaker on Tuesday after making a good rebound on Monday. ECB remaining hawkish The market is reflecting bullish signals for this currency pair. Many ECB policymakers have reiterated the central bank's stance on interest rates and inflation, contending that higher rates must be maintained for a longer period of time in order to contain double-digit price pressures. The financial wires are awash in hawkish ECB language in what appears to be a coordinated effort to reassert the central bank's authority and will on the rates market. At the end of October, the ECB raised interest rates by 75 basis points to 1.50%, its third straight increase and the highest level since 2009. At its meeting on December 15, the central bank is anticipated to increase rates by an additional 50 basis points. The US dollar is under pressure as speculators start to look past rising US rate predictions and instead focus on when the Fed may pause its tightening cycle, while the Euro has benefited from expectations of higher rates. The fact that the markets are already anticipating a turnaround, even though this may be months away, is putting pressure on the dollar. EUR/USD Price Chart GBP supported by general market uptrend The market is expecting bullish signals for this currency pair. The British Pound is weaker on Tuesday after making a good rebound on Monday, and price movement suggests that the UK currency is following global trends during a week with few domestic events. Analysts note that the UK's domestic situation is still difficult and that any gains are likely to be fleeting. Despite this, the Pound had the best performance among the major currencies on Monday as global markets continued their recent uptrend, helping the UK currency to somewhat recoup its losses following last Thursday's Bank of England report. The Pound's recovery may continue over the next several days if the mood music is generally cheerful. GBP/USD Price Chart US dollar is believed to be nearing the end of its uptrend The market is expecting bullish signals for this currency pair. Capital Economics experts believe that the Dollar may be nearing the end of a multi-month uptrend, but they caution that it is still too early to start preparing for a rollover and trend change. The Federal Reserve is reaching the conclusion of its tightening cycle, according to analysis by the independent financial and economics research source, and as a result, there is little room for a further widening of predicted interest rate differentials in favor of the Dollar. The war in Ukraine, anticipation of Fed interest rate increases, and a post-pandemic decline in equity markets have all worked together to strengthen the Dollar. GBP/USD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: Experts foresee more short-term weakness for the Canadian Dollar against the Pound The bullish trend in the USD suffered yet another setback on Tuesday. The UK recession will deteriorate with tighter monetary and fiscal policy. Euro recovery may be strong The market is reflecting bullish signals for this currency pair. After a support bounce failed, the bullish trend in the USD suffered yet another setback yesterday. The currency was driven lower by sellers to make a new monthly bottom, but support quickly appeared around the same level that had been in play a few weeks before and served as a target for a double top formation at 109.62. There are a number of levels close below that swing as well, which may allow for a support bounce before the release of the CPI data tomorrow. From some perspectives, the major question is whether a stronger recovery can be seen in the Euro. Over the past nine months, the euro has been battered and bruised, but as of my initial inspection in October, the pain was beginning to subside and a deeper downturn was beginning. EUR/USD Price Chart GBP down against its peers The market is reflecting bullish signals for this currency pair. The UK recession will deteriorate with tighter monetary and fiscal policy, according to Derek Halpenny, Head of Research Global Markets for EMEA at MUFG. The recent Bank of England policy update has strengthened the foreign exchange strategists' belief in this trade, according to a new note. They are selling pound sterling against the euro. On Thursday, November 3, the Bank of England raised interest rates by 75 basis points, but warned that if it followed market expectations and pushed through even more increases, the UK economy would enter a recession that would last eight quarters. As a result, the Pound dropped against all of its peers. The market interpreted this as a message from the Bank that it would not hike rates as much as anticipated going into the policy update, which caused expectations to be reassessed and caused the Pound to fall on the day. EUR/GBP Price Chart CAD weakness foreseen National Bank of Canada (NBC) experts foresee more short-term weakness for the Canadian Dollar against the Pound, Dollar, and Euro but a robust recovery through 2023. Up until the second half of the year, when oil prices began to decline from their post-invasion levels and the Bank of Canada slowed down its rate-hiking acceleration, the Canadian Dollar was one of the best-performing currencies in 2022. GBP/CAD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com

Summary: Prices in DXY are currently driving down to new monthly lows. The British pound is responding to an overall increase in risk sentiment. The New Zealand Dollar is proving to be an apparent bet for a Chinese economic resurgence. USD feeling the effect of the CPI inflation data release The market is reflecting mixed signals for this currency pair. Prices in DXY are currently driving down to new monthly lows after posing a support rebound yesterday. Along the way, they are passing a significant area of confluent support. Sellers have struck. The daily candle for today will be crucial because it is presently forming a bearish engulfing pattern. And if that holds true, with price closing below those supports, then bearish continuation possibilities will still be possible. The daily bar close today will be crucial because, at this point, we're still feeling the effects of the CPI print, and how market players react today will reveal how they'll assimilate this new information. As market investors altered their expectations for higher policy rates, as shown by increased sovereign debt yields in the euro area, euro assets remained volatile across the review period. Since then, rates have somewhat decreased as the economic implications of aggressive tightening start to accumulate and systemic risk originating in the UK has largely been isolated as a result of the Bank of England's retaliatory actions and UK government policy reversals. EUR/USD Price Chart GBP supported by positive investor sentiment The market is reflecting bearish signals for this currency pair. The British pound is responding to an overall increase in risk sentiment, so Thursday's moves will likely be influenced by how the global equity markets perform, which are now suffering losses after a series of occurrences midweek. After suffering significant losses the day before, market morale has since improved, and the value of the pound is rising at the start of the day. In sync with the upbeat investor sentiment evident in global equities markets on Monday, the pound rose. However, these gains were erased on Wednesday amid a wider market selloff focused on China and disruptions in the cryptocurrency area. EUR/GBP Price Chart Chinese economic resurgence allows NZD to be an apparent bet Markets are adjusting to the possibility that China won't abandon its zero-Covid policy until the spring, which will result in a change in fortunes for the New Zealand Dollar and other like "commodity currencies." Analysts caution that the recent enthusiasm seen over the previous ten days is unwarranted and that the Chinese economy's reopening is likely to be a gradual and rocky process. Nevertheless, the New Zealand Dollar is proving to be an apparent bet for a Chinese economic resurgence. GBP/NZD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com

Summary: Analysts predict that the EUR/USD exchange rate will continue to improve. Eurozone entry into a recession may be delayed. Neither the British pound nor the New Zealand dollar seem to be winning out. Fed still determined to bring down inflation The market is reflecting mixed signals for this currency pair. Analysts predict that the EUR/USD exchange rate will continue to improve over the course of the upcoming week, however many still believe that the market is merely clearing out technical positions rather than the beginning of a long-term recovery. The Federal Reserve Governor Christopher Waller's remarks that the Fed was not yet prepared to cease its cycle of rate hikes helped the Dollar at the beginning of the new week. Investors' reactions to an unexpected drop in U.S. inflation caused the Dollar index, a gauge of the dollar's performance more broadly, to plummet by 4% last week. The statistics indicated that the U.S. inflation peak is near, and the Federal Reserve should therefore think about reducing the rate of raises. Most investors are now expecting a downshift to a 50 basis point boost in December. But Waller said investors risk getting carried away with a belief the end of rate hikes is close. EUR/USD Price Chart Eurozones entry into a recession expected to be delayed The market is reflecting bullish signals for this currency pair. Following a 0.9% month-over-month and 4.9% year-over-year increase in September industrial production for the Eurozone, the currency received a lift on Monday. The numbers are far better than the anticipated +0.1% m/m and 2.8% y/y, indicating that the European Union's entry into recession may be postponed. The current recovery could turn out to be mostly technical in character, which would increase the dollar's strength as investors pay attention to the Fed's warnings that the cycle of interest rate hikes is far from over. This would be a risk for those looking for a stronger Euro. The British pound is a "high beta" currency, which means that it tends to rise along with rising stock markets around the world, as was undoubtedly the case after the inflation figure. EUR/GBP Price Chart GBP/NZD currency pair A busy UK calendar could mean that this pair finally offers up some excitement this week. The Pound to New Zealand Dollar exchange rate (GBP/NZD) has been consolidating around 1.93 for nearly seven days now, and the near-term price activity is beginning to resemble the coiling of a spring. With two "high beta" currencies that are responsive to global conditions, the GBP/NZD pair has seen its price action in November mostly driven by world events. As a result, both currencies have benefited from the U.S. inflation surprise from last week. But when compared with one another, neither the British pound nor the New Zealand dollar seem to be winning out. GBP/NZD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: The USD continues its surrender to the Euro. The Pound has risen to a new three-month high versus the Dollar. The figures from today may indicate that the BoJ will keep its monetary policy loose. Euro performs well against the USD The market is reflecting mixed signals for this currency pair. The Euro to Dollar exchange rate (EUR/USD) hit a high of 1.0477 on Tuesday as a result of the continued dollar surrender that was brought on by the publication of weaker-than-anticipated U.S. inflation data last Thursday. The advances have already brought the pair close to the 1.05 level, which was predicted to be a potential objective in the near future by our week ahead projection. Investors' assumption that the Federal Reserve will slow down its interest rate hike cycle as U.S. inflation shows symptoms of peaking has sent the EUR/USD up 3.7% last week and another 1.10% this week. The sudden increase in the Euro's value relative to the Dollar is most likely due to a sizable liquidation of "long" dollar positions taken by investors hoping to profit from the Dollar's multi-month advance. EUR/USD Price Chart US dollars downfall in the wake of economic data The market is reflecting bullish signals for this currency pair. The Pound has risen to a new three-month high versus the Dollar as another inflation report fueled the U.S. currency's significant devaluation that was initially started by last week's U.S. inflation data. At 13:30 GMT, the Dollar's drop increased with the announcement of the U.S. The PPI inflation data was less than anticipated, confirming the CPI inflation from last week that the trend of rising prices has peaked. The strong market response to last week's U.S. inflation reading, which saw CPI come in below market expectations and indicated a turning point for both inflation and the Federal Reserve rate hike cycle might have been reached, is extended by the GBP/three-month USD's high. GBP/USD Price Chart USD/JPY currency pair The market is reflecting mixed signals for this currency pair. The Japanese Yen initially ignored the dismal GDP numbers because the USD/JPY was comfortably over 140.00. After 30 minutes, it surged past 140.50. The Japanese seasonally adjusted 3Q quarter-to-quarter GDP was down 0.3% from the previous quarter's 0.9%, falling short of predictions of 0.3%. In contrast to expectations of 1.2% and 3.5%, seasonally adjusted annualized quarter-to-quarter GDP as of the end of September was -1.2%. Prior to the release of today's data, the USD/JPY had been lagging in the wake of last Thursday's release of the US CPI, which the market had deemed to be rather benign. This sparked suspicion that the Federal Reserve would not need to raise rates as aggressively as previously believed. The graphic below illustrates the connection between Treasury yields, Japan-US bond spreads, and USD/JPY. With the Bank of Japan's yield curve control program, changes in Treasury yield mostly dictate the bond spread. The figures from today may indicate that the central bank will keep its monetary policy loose. USD/JPY Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: The EUR/USD has displayed remarkable resilience to trade higher. The British Pound plummeted against the Euro. The JPY has clearly benefited from the decline in the value of the USD. Financial markets are on high alert The market is reflecting bullish signals for this currency pair. According to the most recent 30-day Fed Fund futures price information, the Federal Reserve is anticipated to increase interest rates by a further 100 basis points over the upcoming months, to 475–500bps, and then suspend their tightening cycle. Despite yesterday's concern following reports of a missile landing in Poland, the EUR/USD has displayed remarkable resilience to trade higher this morning. According to Joe Biden's remarks, it seems improbable that Russia fired the missile based on its trajectory. Due to the possibility of a wider conflict now that a NATO ally has been negatively impacted by the Russia/Ukraine crisis, the missile has put Europe, NATO, and financial markets on high alert. At 9:00 GMT, NATO has called an emergency meeting to review yesterday's events and the alliance's response. EUR/USD price chart UK inflation figures caused GBP to decline The market is reflecting mixed signals for this currency pair. Following some hotter-than-expected UK inflation figures that suggested the Bank of England could not yet afford to stop its interest rate hike cycle, the British Pound plummeted against the Euro, the Dollar, and other major currencies. However, we cautioned in our week-ahead forecast that the market might now consider stronger-than-expected inflation as a negative, as rising prices and interest rates would snuff out the UK's prospects for economic development. Normally, such a result would help the Pound. EUR/GBP price chart JPY supported by weak USD The market is reflecting mixed signals for this currency pair. The Japanese Yen has clearly benefited from the decline in the value of the US dollar in November, outperforming all other major currencies. However, analysts at MUFG believe the Japanese Yen could rise even more in the future, especially against the British pound. They advise clients to bet against the GBP/JPY pair and look for a fall to 158. After official data revealed that U.S. inflation softened in October, the Yen surged substantially against all equivalents in the G10 group of major currencies, but analysts at Japan's largest banking MUFG claim that this was just the start of a longer-lasting rebound. GBP/JPY price chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com

Summary: Final headline inflation in the Euro Area reached a record high. Tax increases and spending reductions in the UK. CHF becomes the second best performer of 2022. EUR/USD constrained by interest rate disparity The market is reflecting mixed signals for this currency pair. Final headline inflation in the Euro Area reached a record high of 10.6% in October, just under the earlier estimate of 10.7%. Data from Eurostat show that the highest annual rate in October was for energy, which was at 41.5 percent (up from 40.7 percent in September), followed by food, alcohol, and tobacco, which had a rate of 13.1 percent (down from 11.8 percent in September), and non-energy industrial goods, which had a rate of 6.1 percent (compared to 5.5 percent in September). As the post-CPI surge slows, the current gain in the EUR/USD has come to an end. The prices in the ultra-short end of the US bond market are stable even as market forecasts of a reduction in rate increases rise. The yield on a one-year US Treasury bill is approximately 4.66 percent, which is more than 250 basis points higher than the yield on a one-year German bond. Any short-term increase in the EUR/USD currency will continue to be constrained by this interest rate disparity. EUR/USD Price Chart GBP relying on Hunts credibility The market is reflecting bullish signals for this currency pair. The UK's prospects for future economic development will be diminished by the tax increases and spending reductions, but a convincing autumn statement from Chancellor Jeremy Hunt might boost the value of the pound sterling. This is due to the fact that reputation will determine how the market responds to the fiscal event on Thursday. Hunt is expected to present a budget that will hinder development; however, the Pound's response will ultimately depend on how the market reacts to the credibility issue. Some analysts caution that while the Pound might gain from renewed confidence, its value could still drop if Hunt is overly bold and his recommended level of austerity becomes overwhelming. EUR/GBP Price Chart CHF could continue to strengthen According to analysts at Nomura, the Swiss Franc has flipped the major currency league table on its head to become the second best performer of 2022. However, it could rise even further against the Pound and even have the potential to bring the GBP/CHF rate back to 1.0555 in the coming months. In the early months of the year, the Swiss Franc had given the Japanese Yen a tough fight for the bottom spot in the performance rankings of the major currencies, but a hawkish stance by the Swiss National Bank (SNB) and a supportive foreign exchange policy have reversed the previous order of performances. The SNB has become open to buying back its own currency whenever market circumstances cause the Franc to weaken, even though it is still prepared to suppress the Franc if it appreciates too much for its tastes. This is because doing otherwise would raise Switzerland's inflation rate further. GBP/CHF Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: EUR/USD currency pair has risen 4% over the past 2 weeks. GBPs response to investor sentiment globally to determine near term credibility. The CAD was outperforming many other major currencies this year, but recently started to lag behind them. EUR/USD has risen by 4% over the past 2 weeks The market is reflecting bullish signals for this currency pair. The Euro will decline against the Dollar in the coming months, comfortably falling below parity, according to Danske Bank's unwavering forecast. The rate of exchange between the Euro and the Dollar (EUR/USD) has increased by 4.0 percent over the last two weeks as a result of signs that U.S. inflation is slowing down as well as market analysts' conviction that the Federal Reserve will reduce the pace of its rate hikes, giving investors more confidence to price the peak in interest rates. Data released on Wednesday showed that American consumers were still in good shape, with retail sales increasing by 1.3 percent in October, an acceleration from the 0 percent recorded in September and higher than the market's forecast of 1.0 percent growth. Therefore, the Fed may slow down its rate rise cycle but lengthen it, providing a series of 25 basis point rate adjustments over the ensuing months that may still provide support for the Dollar. EUR/USD Price Chart EUR/GBP on track to end the week slightly higher The market is reflecting mixed signals for this currency pair. The UK's Autumn Statement, which promised a return to fiscal credibility, was well received by the financial markets, but the direction of the near term should be determined by how the British Pound responds to investor sentiment globally. As part of his effort to tighten fiscal policy and ensure that the nation's finances remained on a sustainable footing, Chancellor Jeremy Hunt proposed savings totaling £55BN, or roughly 2.0 percent of GDP. The Pound-Euro rate appears to be on track to conclude the week slightly higher, and the Pound-Dollar rate is also slightly higher than it was at this time last week, consolidating the huge gains from the previous week. EUR/GBP Price Chart CAD emerging as a top option for speculative short-selling The Canadian Dollar has outperformed many other major currencies this year, but recently started to lag behind them. As a result, the Canadian Dollar is quickly emerging as a top candidate for speculative short-selling by Spectra Markets in advance of an anticipated economic slowdown caused by rising mortgage rates. By Friday, Canada's Dollar had dropped to third place in the ranking of the G10 currencies for the year after suffering significant losses against all significant rivals other than the US. Over the period of November, the dollar has generally corrected lower. The main thesis is that a large rise in Bank of Canada (BoC) interest rates this year will eventually affect Canadian homeowners' monthly mortgage payments. Higher borrowing costs are anticipated to reduce household earnings and have negative second-round impacts on a number of economic sectors. GBP/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: The Dollar was bid and stocks declined on Monday. The most recent budget from HM Treasury will push up inflation by a percentage point. AUD gave ground to most of its major currency counterparts to start the new week. Investor confidence improved in China The market is reflecting bearish signals for this currency pair. In spite of indications, the Dollar was bid and stocks declined. China is enforcing stricter regulations to combat a Covid-19 outbreak that is spreading. Three Covid deaths were reported by authorities over the weekend in Beijing, the first in more than six months. Just days after the nation said it was loosening some restrictions, there are reportedly early signs that some authorities are returning to a zero-Covid policy. In recent weeks, speculation that China would be willing to abandon its zero-Covid policy has intensified, boosting investor confidence amid speculation that the world's second-largest economy could spark a resurgence in global economic activity. This favorable environment proved to be a barrier for the dollar, which often gains when market anxieties are mounting and forecasts for global growth are weakening. EUR/USD Price Chart UK inflation expected to increase The market is reflecting mixed signals for this currency pair. Without changing the Bank of England (BoE) interest rate policy, own goals in c starting in April and force taxpayers to fork over an additional £5 billion or more to cover the increase in debt interest costs that results. The decision to reduce the household energy price guarantee and increase fuel taxes starting in April 2023 will result in higher inflation as measured by the consumer and retail price indices, which will automatically affect future government spending, particularly costs associated with debt servicing. Sterling pounds Live calculations indicate that these two factors will cause consumer price inflation to increase by an additional 1% in April and retail price index inflation to increase by 1.3%, both of which will raise the cost of servicing borrowings with inflation-linked interest rates by approximately £5BN. EUR/GBP Price Chart AUD gave ground to most of its major currency counterparts The Reserve Bank of Australia (RBA), the Federal Reserve (Fed), and the Bank of England will all be providing monetary policy commentary this week, so the Pound to Australian Dollar exchange rate has benefited from a corrective setback in AUD/USD that may keep Sterling buoyant above 1.7750 this week. The risk of new coronavirus-related economic closures in China weighed on asset prices throughout the Asia Pacific region as well as on the currencies of those countries exporting into the second-largest economy in the world, and Australia's dollar gave ground to most of its major currency counterparts to start the new week. AUD/GBP Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: Euro held steady throughout Asian trading. Energy Bills Support Scheme's concurrent expiration, may have a greater negative impact on household earnings. NZD has had the best performance among major currencies over the past month. Euro faces downside risk The market is reflecting mixed signals for this currency pair. Following the turbulent start to the week on Monday, when the EUR/USD fell, the Euro held steady throughout Asian trading. The Fed speakers' continued hawkish posture, which also hurt markets, helped the US dollar increase. Risk assets were also hurt by a rise of Covid-19 cases in China because of concerns that harsh lock downs would continue there. Even while experts at one European bank claim there is "less pain in the pipeline" for the region and its single currency, rising natural gas costs in the Eurozone are recognized by foreign exchange strategists as a downside danger to the Euro. According to analysts, the little increase in gas prices coincides with a drop in temperatures across Europe after an abnormally warm autumn that allowed nations to stockpile gas supplies and use less gas than is customary at this time of year. EUR/USD Price Chart GBP under pressure from poor UK economic outlook The market is reflecting bearish signals for this currency pair. Early in the new week, the Pound to Euro exchange rate continued to rise after last Friday's advance, but after three straight days of gains, Sterling is now rapidly approaching a crowded area of technical resistances near and above the 1.16 level on the charts, suggesting that the rally may soon come to an end. The problem for families, the economy, and the pound is that, as a result of reforms outlined by Chancellor Jeremy Hunt in last Thursday's budget, energy costs are expected to grow dramatically once more starting in April 2023, when the average annual tariff would rise by another 20% to £3,000. Due to the Energy Bills Support Scheme's concurrent expiration, this will have a greater negative impact on household earnings. However, it will also have a positive impact on UK inflation rates and have additional effects on the state finances. EUR/GBP Price Chart NZD supported by improved investor sentiment Although the New Zealand Dollar has had the best performance among major currencies over the past month, one analyst claims that it is beginning to seem "stretched" in front of the Reserve Bank of New Zealand's upcoming interest rate announcement. The Kiwi has risen against all of its G10 counterparts over the past four weeks, helped by a noticeable improvement in investor sentiment worldwide and as investors raised their expectations for the amount of interest rate hiking to come from the RBNZ in response to a series of domestic data releases that exceeded expectations. Following New Zealand's October Q3 CPI inflation announcement, which exceeded estimates and bolstered expectations for a 75bp hike, the market increased its expectations. Data on the labor market and quarterly wages also confirmed these predictions. However, an analyst questions if the RBNZ will want to speed up rate increases given that it was among the first to act and has consistently moved rates by 50 basis points, and has no need to play catch-up given that it is one of the G10 rate leaders. GBP/NZD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: The Eurozone PMIs showed that the bloc's economy contracted in November. Despite the UK economy contracting in November, the GBP extended a short-term recovery. CAD fared better than Sterling during the first sessions of the week Eurozone PMI data didn’t beat expectations by enough The market is reflecting mixed signals for this currency pair. The Eurozone PMIs showed that the bloc's economy contracted in November, but the magnitude of the decline was less severe than anticipated by the markets. The S&P Global Purchasing Managers Index (PMI) for manufacturing registered at 47.3, exceeding the consensus estimate of 46.0 and up from the previous month's reading of 46.4. Unfortunately for the euro, the positive data was insufficient to quell the bearish sentiment surrounding the currency, including recessionary risks and the ECB hawks' unwillingness to support a 75 basis point interest rate hike at the upcoming meeting. The day ahead should see increased volatility for the EUR/USD due to the prominence of US data. EUR/USD Price Chart UK economic outlook looks bleak The market is reflecting bearish signals for this currency pair. Following the release of statistics showing that, despite the UK economy contracting in November, corporate forecasts for the coming year increased from a 30-month low, the British pound extended a short-term recovery. The most recent S&P Global PMI readings indicated that economic activity continued to decline for another month, but the data was better than anticipated, so this would be a generally favorable development for markets. However, this downturn was predicted, and as economist at Berenberg Kallum Pickering puts it, "the recession is terrible, but not becoming worse." This remark is critical for the Pound given the dire economic prognosis for the UK. EUR/GBP Price Chart GBP/CAD outlook improved According to technical analysis from Scotiabank, the outlook for the Pound to Canadian Dollar exchange rate has improved further in recent trading. Sterling may now be able to hit some of its best levels since the end of the first quarter after gaining ground over the 1.57 mark last week. Although some believe this is likely merely a temporary setback for the Pound, the Canadian Dollar fared better than Sterling during the first sessions of the week after an over two month surge in GBP/CAD stopped following a run-in with technical support on the charts late last week. GBP/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: Eurozone flash PMIs remain in the contractionary range. The GBP has just moved higher thanks to demand for UK government bonds. The value of the CAD has fallen as a result of falling oil prices. Eurozone economy still remains in contractionary range The market is reflecting bearish signals for this currency pair. The most recent flash PMIs for the Euro Area outperformed expectations this morning, but they are still firmly in the contractionary range. Although November's numbers were better than anticipated, the data point to the Euro Area's economy contracting by about 0.2% in Q4. A recession appears probable, but, as data provider S&P notes, the latest data provide hope that the severity of the slump may not be as severe as originally feared. The US dollar data and the most recent FOMC minutes will likely drive the pair into the weekend due to holidays in the rest of the day. EUR/USD Price Chart GBP supported by UK government bond demand The market is reflecting bearish signals for this currency pair. The British pound has just moved considerably higher thanks to demand for UK government bonds, and since the rest of the week will be quiet due to the U.S. Thanksgiving holiday, gains may hold. In tandem with a strong increase in the price of UK government debt, the Pound rose sharply versus the Euro, the Dollar, and other major currencies through Wednesday and into Thursday. The cost of funding mortgages and other financial products in the UK has decreased as a result of the increase in bond prices and the associated decline in their yields across different time tenors in the bond market. Bond yields are declining, which indicates a loosening of UK financial conditions and is positive for future economic growth. EUR/GBP Price Chart CAD weighed down by falling oil prices The value of the Canadian Dollar has fallen as a result of falling oil prices, and one industry analyst has predicted that a planned cap on Russian oil could have a disproportionately large effect on Canada. In the last 24 hours, the Canadian Dollar has fallen 1.5% against the British Pound due to a decline in oil prices. Canadian benchmarks are impacted by the decline in global oil prices, which reduces the possibility for the country to generate foreign money. Since the Canadian Dollar and oil market dynamics frequently correlate, the GBP/CAD exchange rate may soon be dependent on changes in the energy market. This linkage previously appeared to have disappeared. GBP/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: The EUR/USD exchange rate has benefited from the final quarter's risk asset rally. The GBP made gains this week in a market that was favorable to riskier assets. Euro opened weaker on Monday, weighed down by the Chinese economy The market is reflecting mixed signals for this currency pair. Although technical resistances near 1.04 on the charts have recently held back the recovery of the Euro to Dollar exchange rate, it could succumb to losses this week that push the single currency back toward 1.0303 or lower in the coming days. The Euro to Dollar exchange rate has benefited significantly from the final quarter's risk asset rally. Since financial markets adopted an upbeat perspective on the outlook for China in its ongoing fight against the coronavirus and for the U.S. as the Federal Reserve (Fed) attempts to get the better of inflation, the single currency of Europe has almost completely reversed this year's losses against the Dollar. The world's second-largest economy is currently experiencing restrictions due to the coronavirus, and there have been public demonstrations against these limits in several parts of China. This has put the euro on the back foot on Monday. The Chinese economy is also, in some respects, Europe's second-largest export market, which contributed to the weak start for the Euro on Monday, and the ongoing economic unrest in China further clouds the future for the Eurozone. EUR/USD Price Chart GBP’s future depends on external variables The market is reflecting mixed signals for this currency pair. The technical resistance for the Pound to Euro exchange rate is placed near 1.1667, and it started the new week close to November highs. The pound made some gains this week in a market that was favorable to riskier assets and unfavorable to the dollar, but it was unable to go over 1.1667 versus the euro, which is quite close to the 78.6% Fibonacci retracement of the late-August downturn in GBP/EUR. Technical resistance at that level previously prevented the Pound's October recovery from the lows it reached after the budget event in September, and it may do so again this week as a light UK economic calendar puts external variables in charge of Sterling's direction. EUR/GBP Price Chart GBP may struggle to move forward in the coming days The market is reflecting mixed signals for this currency pair. The GBP/USD exchange rate has more than partially recovered this year's decline, but it now faces the possibility of a corrective setback that could push it back around 1.20 or possibly below it during the next several days. Last week, sterling increased in a market that was favorable for riskier assets and unfavorable for the U.S. dollar, but it was unable to overcome a double-barreled layer of technical resistance and may now find it difficult to move forward in the coming days. This is partially due to events that occurred over the weekend in China, where new discontent over the most recent round of restrictions connected to the coronavirus is likely to keep financial markets focused on the significant financial consequences of the government's ongoing efforts to contain COVID. That might reduce risk appetite on the global markets and put the pound to dollar exchange rate on the defensive from the start of this week. GBP/USD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com

Summary: Signs of an industrial slowdown in the Eurozone emerged. Eurozone inflation could have taken a larger step toward its peak. Renminbi weighing on the CAD Worries of a global recession continue The market is reflecting bullish signals for this currency pair. Consumer confidence in the Eurozone for November came in at the expected level, but after actual data came in below expectations, signs of an industrial slowdown emerged. This may be related to concerns about a global recession as well as the effect of China on demand-side issues. After China is said to have deescalated tensions and given the euro a boost, yesterday's hawkish commentary from Fed officials and China's ongoing COVID crisis did not hold. The Eurozone has strong ties to China, which can expose the euro to weakness in the event of negative Chinese news. Yesterday, Christine Lagarde of the ECB noted that interest rates still have a ways to go. EUR/USD Price Chart German CPI inflation missed market expectations. The market is reflecting bearish signals for this currency pair. The Eurozone has strong ties to China, which can expose the euro to weakness in the event of negative Chinese news. Yesterday's hawkish commentary from Fed officials as well as China's ongoing COVID crisis did not hold true today. Interest rates still have a long way to go, according to Christine Lagarde of the ECB, who said that yesterday. According to Destatis, Germany's annual inflation rate for the year ending in November was 10%, down from 10.4% in October and below the consensus estimate of 10.4%. The information was released ahead of Wednesday's CPI inflation report, which currently appears to be on track to fall short of expectations. GBP/CAD Price Chart CAD lost around 2% on Tuesday Early in the new week, the Canadian Dollar dropped significantly against all major currencies due to a rolling underperformance that increased USD/CAD and GBP/CAD despite widespread declines in U.S. Dollar exchange rates, giving the Loonie the appearance that it might be about to roll over. On Tuesday, the Canadian Dollar experienced losses of over two percent against the rising Chinese Renminbi and Korean Won, but what was considerably more dramatic than this price action was the one percent rise in the USD/CAD, which surged swiftly and even as most other U.S. exchange rates sank. GBP/CAD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

Summary: On Wednesday, the dollar gained support as Bureau of Labor Statistics data. The ECB is expected to pause the pace of interest rate hikes. AUD benefited from the Renminbi's latest rally. U.S labor statistics offer USD support The market is reflecting bearish signals for this currency pair. The annual inflation rate for the Euro Area is 10% in November, down from 10.6% in October and marking the first decrease since July 2021. Energy, food, alcohol, and tobacco are not included in core inflation figures, which remained stable and had a 5% reading that was in line with expectations. The figures, together with weaker readings from Belgium, Germany, and Spain, will undoubtedly give the European Central Bank much to think about before its meeting on December 15. The market's concern is if they are prepared for the Fed to slow the pace down to 50bp after raising interest rates by 75bp at its last two sessions (Markets currently pricing in 54bp). A slowdown may not be in the cards, according to recent remarks from ECB President Christine Lagarde, who claimed that inflation has not yet peaked. On Wednesday, the dollar gained support as Bureau of Labor Statistics data suggested that the U.S. economy's recovery from the depths of a previous technical recession in the third quarter was more robust than previously thought. EUR/USD Price Chart ECB expected to slow interest rate hiking cycle The market is reflecting mixed signals for this currency pair. Following the announcement of Eurozone inflation statistics that arrived at a lower-than-anticipated rate, the European Central Bank (ECB) is expected to pause the pace of interest rate hikes with a 50 basis point move the following month. However, considering that core inflation is set at 5%, substantially over the ECB's preferred level of 2.0%, the ECB cannot afford to relax just yet. With prices still relatively high, the British pound is still in a phase of consolidation. EUR/GBP Price Chart AUD one of the best performing G10 currencies Midweek trading saw a further decline in the Pound to Australian Dollar exchange rate from recent highs around 1.80. Going forward, it is probable that the pair will fluctuate between 1.7660 and 1.8046 as a tug-of-war between the strong U.S. Dollar and the strengthening Chinese Renminbi takes place. Australia's Dollar was one of the best-performing currencies in the G10 on Wednesday as the Asian region's currencies benefited from the Renminbi's latest rally and the antipodean currency itself seemed to benefit from official data that revealed a surprising drop in Australian inflation rates for October. Australian inflation decreased in October from an annual rate of 7.3% to 6.9%, whereas the majority of economists had predicted a rise to 7.6%. This downward surprise was caused by lower price increases for the majority of items included in the consumer price index. GBP/AUD Price Chart Sources: dailyfx.com, poundsterlinglive.com, finance.yahoo.com

Rates Spark: The worry about curve inversion Hawkish central banks and low market growth expectations have kept rates in a range. This has largely benefitted risk appetite but is also resulting in a more inverted curve, hardly an encouraging macro signal.   Powell and Schnabel might accelerate the curve inversion trend today We tend to be sceptical of the overall impact central bank comments can have on day-to-day market rate movements. One reason is the abundance of central bank communication. The other is their data-dependent setting (see yesterday’s note) which put economic releases firmly in the driving seat of market moves. Unfortunately, today is, like yesterday, much heavier on central bank communication than on economic data. This means the signal to noise ratio is likely to remain low. Still, today’s headliner, Fed chair Jerome Powell, is probably the world’s most watched central banker, so his testimony will carry weight with investors. Similarly, we think Isabel Schnabel’s interventions are amongst the most listened to out of the European Central Bank (ECB).   This year in rates has been characterised by a tug-of-war between hawkish central banks and pessimistic markets, at least when it comes to growth. A hawkish tone in the face of sticky core inflation makes sense but central banks have hurt their credibility by reinforcing their message with overly upbeat growth forecasts.    This makes sense up to a point, as markets are much more likely to believe a hawkish central bank if economic growth allows it to tighten policy further. However it seems markets collectively disagree with central banks’ forecasts, by pricing subsequent rate cuts. In short, central banks’ sphere of influence doesn’t extend much beyond the front-end of the curve.

The resulting curve inversion has accelerated in countries where economic sentiment is weakest. For instance, in the Eurozone the 2s10s swap curve flattened to its most inverted level on record: -78bp. Looking at the same segment of the German sovereign curve for longer history, this seems to be at its most inverted since the early 1990s. So far this year, the lack of interest rate direction, despite elevated day-to-day volatility, has been a supportive factor for risk appetite. The tug-of-war between hawkish central banks and pessimistic market growth expectations has kept rates in a range but it is also bringing about a more inverted curve, a sure sign of worsening economic expectations. This fragile equilibrium continues, for now.   Falling rates volatility and inverted yield curves send contradictory signals about the health of the economy   Today's events and market view The acceleration in core UK inflation continued in May, to 7.1% annualiased, trumping expectations of cooling price dynamics. Similarly, headline inflation failed to slow, as was widely expected. One day before The Bank of England policy meeting, this ensures odds of a 50bp hike cannot entirely be dismissed. Bond supply will be skewed to the long-end today, from both ends of the sovereign credit spectrum. Greece will sell 20Y debt, and Germany bonds in the 30Y sector. The US Treasury will also auction 20Y T-bonds. Central banks will once again be centre stage, with Powell’s congress testimony the highlight. Peter Kasimir, Isabel Schnabel, and Joachim Nagel make up today’s ECB speaker list. The minutes of the Bank of Canada’s ‘deliberations’ will also be closely scrutinised for more details on what drove the central bank to resume its hiking cycle after a five months hiatus.

European and US stock markets have seen a significant shift in sentiment over the past few days when it comes to the global economy. Rising bond yields, driven by more hawkish central banks, which has prompted investors to reassess the outlook when it comes to valuations and growth.     While European markets saw their biggest weekly loss since March, US markets also took a tumble, albeit the first one in 8 weeks, as a succession of central banks pledged that they had significantly further to go when it comes to raising rates. Bond markets also started to flash warning signs with yield curves becoming more inverted by the day whether they be France, Germany, or the UK. Friday's weak finish hasn't translated into a strongly negative vibe as we start a new week for Asia markets, even allowing for events in Russia at the weekend which aren't likely to have helped the prevailing mood, with the US dollar slightly softer this morning after getting a haven bid at the end of last week.     With economic data continuing to show varying signs of vulnerability, particularly in manufacturing the situation could have got even spicier over the weekend when Wagner Group boss Yevgeny Prigozhin set his troops on the road to Moscow in an insurrection against the Kremlin, and Russian President Vladimir Putin.   As it turns out a crisis was quickly averted when it was announced that Prigozhin would go into exile in Belarus, with any charges against him dropped, and Wagner troops would return to their bases. One can only imagine the reaction if that news had broken if markets had been open at the time, however it only adds to the general uncertainty surrounding the war in Ukraine and how quickly things can start to unravel.   This weekend's events also serve to indicate how fragile Vladimir Putin's position is given that one of his most trusted advisors suddenly went rogue.   As we look ahead to the final week of June and the end of the quarter, as well as the first half of the year we can reflect to some extent that markets have held up rather well when all things are considered. They have been helped in that by the sharp falls in energy prices back to pre-Russian invasion of Ukraine levels, as well as the low levels of unemployment which have served to keep demand reasonably resilient.     The elephant in the room has been the stickiness of core inflation as well as signs that demand is starting to falter, and this week we could get further confirmation of that trend.   Today we get the latest Germany IFO Business Climate survey for June, which if last week's flash PMI numbers are any guide could well show that the confidence amongst German business is faltering, with expectations of a slowdown to 90.6, from 91.7.     We also get flash CPI inflation numbers from Germany, France and the EU where headline prices are likely to show further signs of softening, with core prices set to remain sticky. At around the same time we get the latest PCE inflation numbers from the US for May.   These are likely to be important in the context of the Federal Reserve's stated intention to raise interest rates at least twice more before the end of the year.     In April the core PCE Deflator edged up from 4.6% to 4.7%, an area it has barely deviated from since November last year. You would have thought that even with the long lags seen from recent rate hikes they would start to have an impact on core prices.   This perhaps explains why central banks are being so cautious, even as PPI prices are plunging and CPI appears to be following.       EUR/USD – pushed briefly back above the 1.1000 level yesterday before slipping back, with the main resistance at the April highs at 1.1095. This remains the next target while above the 50-day SMA at 1.0870/80 which should act as support. Below 1.0850 signals a move towards 1.0780.     GBP/USD – currently holding above the lows of last week, and support at the 1.2680/90 area. Below 1.2670 could see a move towards the 50-day SMA. Still on course for a move towards the 1.3000 area but needs to clear 1.2850.      EUR/GBP – failed to rebound above the 0.8630/40 area last week. The main support is at last week's low at the 0.8515/20 area. A move through 0.8640 could see a move towards 0.8680. While below the 0.8630 area the bias remains for a return to the recent lows.     USD/JPY – has finally moved above the 142.50 area, which is 61.8% retracement of the 151.95/127.20 down move, as it looks to close in on the 145.00 area. This now becomes support, with further support at 140.20/30.      FTSE100 is expected to open 6 points higher at 7,468     DAX is expected to open 28 points higher at 15,858     CAC40 is expected to open 8 points higher at 7,171

Slow start following an eventful weekend.    The weekend was eventful with the unexpected rebellion of the Wagner Group against the Kremlin. Yevgeny Prigozhin's men, who fight for Putin in the deadliest battles in Ukraine walked towards Moscow this weekend as Prigozhin accused the Kremlin of not providing enough arms to his troops. But suddenly, Prigozhin called off the attack following an agreement brokered by Belarus and agreed to go into exile. The Kremlin took back control of the situation, but we haven't seen Vladimit Putin, or Prigozhin talk since then. The Wagner incident may have exposed Putin's weakness, and was the most serious threat to his rule in two decades. It could be a turning point in the war in Ukraine. But nothing is more unsure. According to Volodymyr Zelensky, there are no indications that Wagner fighters are retreating from the battlefield.  The first reaction of the financial markets to Wagner's mini coup was relatively calm. Gold for example, which is a good indication of market stress at this kind of moment, remained flat, and even sold into the $1930 level. The dollar-swissy moved little near the 90 cents level. Crude oil was offered into the $70pb level, as nat gas futures jumped more than 2% at the weekly open, and specific stocks like United Co. Rusal International, a Russian aluminum producer that trades in Hong Kong, gapped lower at the open but recovered losses.  Equities in Asia were mostly under pressure from last week's selloff in the US, while US futures ticked higher and are slightly positive at the time of writing.    The Wagner incident will likely remain broadly ignored by investors, unless there are fresh developments that could change the course of the war in Ukraine. Until then, markets will be back to business as usual. There is nothing much on today's economic calendar, but the rest of the week will be busy with a series of inflation reports from Canada, Australia, Europe, the US, and Japan.     Except for Japan, where the Bank of Japan (BoJ) doesn't seem urged to hike the rates, higher-than-expected inflation figures could further fuel the hawkish central bank expectations and add to the weakening appetite in risk assets.     The Federal Reserve (Fed) will carry its annual bank stress test this week, to see how many more rate hikes the baking sector could take in and the potential for changes in capital requirements down the road. The big banks are likely not very vulnerable to higher capital requirements, yet the profitability of the US regional banks could be at jeopardy and that could cause investors to remain skeptical regarding the US banking stocks altogether. Invesco's KBW bank ETF slipped below its 50-DMA, following recovery in May on the back of decidedly aggressive Fed to continue hiking rates, and stricter requirements could further weigh on appetite.    Zooming out, the S&P500 is down by more than 2% since this month's peak, Nasdaq 100 lost more than 3% while Europe's Stoxx 600 dipped 3.70% between mid-June and now on the back of growing signs that the aggressive central bank rate hikes are finally slowing economic activity around the world. A series of PMI data released last Friday showed that activity in euro area's biggest economies fell to a 5-month low as manufacturing contracted faster and services grew slower than expected. The EURUSD tipped a toe below its 50-DMA last Friday but found buyers below this level. Weak data weakens the European Central Bank (ECB) expectations, but that could easily reverse with a strong inflation read given that the ECB is ready to induce more pain on the Eurozone economy to fight inflation.     Across the Channel, the picture isn't necessarily better. Both services and manufacturing came in softer than expected. And despite the positive surprise on the retail sales front, retail sales in Britain slumped more than 2% in May, due to the rising cost of living that led the Brits back from loosening their purse string. One thing though. UK's largest lenders agreed to give borrowers a 12-month grace period if they missed their mortgage payments as a result of whopping costs of keeping their mortgages due to the aggressively rising interest rates. Unless an accident – in real estate for example, the Bank of England (BoE) will continue hiking the rates and reach a peak rate of 6.25% by December.   The only way to slow down the pace of hikes is to find a solution to the sticky inflation problem. And because the BoE has limited influence on prices, Jeremy Hunt will meet industry regulatory this week to discuss how they could prevent companies from taking advantage of inflation and raising prices more than needed, which adds to inflationary pressures through what we call 'greeflation'. But until he finds a solution, the BoE has no choice but to keep hiking and the UK's 2-year gilt yield has further to run higher, whereas the widening gap between the 2 and 10-year yield hints at growing odds of recession in the UK, which should also prevent the pound from gaining strength on the back of hawkish BoE. Cable will more likely end up going back to 1.25, than extending gains to 1.30.       By Ipek Ozkardeskaya, Senior Analyst | Swissquote Bank  

European markets were mostly flat; the Stoxx600 remained close to its 50-DMA, while the FTSE 100 remained offered near its 200-DMA, near the 7544 level. The FTSE has been one of the biggest laggards of the year, as capital flew into the tech stocks. The slow Chinese reopening and the crumbling commodity prices didn't help FTSE extend the last year's outperformance to this year.   Happily, more rate hikes from the Bank of England (BoE) and the darkening economic and political picture for the UK is not a cause for concern for the British blue-chip index. A major part of their revenue comes from outside the UK. Therefore, a rotation from tech to value could throw a floor under the FTSE100's selloff near the 7300 level  if of course we don't see a global selloff due to recession and hawkish central banks-    OPEC meets industry heads  The barrel of oil remains sold near the 50-DMA as OPEC meeting with industry heads is due today. Everything that involves OPEC is an upside risk to oil prices. Yet any OPEC-related rally will attract top sellers and won't let OPEC reach stability around $80pb level. The major medium-term risk is that the unresponsive price action could hide a worsening global glut that could hit suddenly in the H2, and send oil prices higher. Until then, bears will keep selling.    Fed releases minutes  The Federal Reserve (Fed) will release the minutes of its latest policy meeting today, and there will clearly be a couple of hawkish sentences that will hit the headlines, given that the Fed officials paused their rate hikes in their June meeting, but their dot plot showed two more interest rate hikes before a real and a longer pause.   At this point, the Fed expectations went so hawkish that there is a growing chance of correction. Fed funds futures gives near 90% chance for a another 25bp hike in July, and another 25bp after that is more likely than not. No one expects or is positioned for a rate cut from the Fed this year. Unless there is another baking stress or chaos in the housing market, nothing could stop the Fed from pursuing its battle against inflation. And interestingly, Bloomberg research found out that interest rate increases in the US are benefitting savers more than they are costing mortgage payers, because many mortgages are on fixed rates for 30-years and they have yet to expire.