rbnz

  • NZD/USD is scaling towards 0.6450 as the USD Index has retreated after a short-lived pullback.
  • Federal Reserve is widely anticipated to announce a 25 bps interest rate hike to 4.50-4.75%.
  • Reserve Bank of New Zealand might continue its hawkish stance despite weak Employment data.
  • NZD/USD is testing the consolidation breakdown and is likely to display a fresh downside ahead.

NZD/USD has stretched its recovery above the critical resistance of 0.6440 in the early European session. The Kiwi asset displayed a recovery move after testing Tuesday’s low around 0.6415 due to subdued performance by the US Dollar Index (DXY). The USD Index is demonstrating topsy-turvy moves in a 101.70-101.80 range and is likely to display a downside break due to less anxiety among investors than usual ahead of the interest rate decision by the Federal Reserve (Fed).

Chart of the Week - Gold Miners vs Energy Producers - 20.04.2022

NAS100, SPX, EuroStoxx 50, Gold (XAUUSD), US Treasuries And More - "Financial Markets Today: Quick Take" – April 13, 2022

Saxo Strategy Team Saxo Strategy Team 13.04.2022 11:07
Macro 2022-04-13 08:25 6 minutes to read Summary:  Markets are waking up about where they left off yesterday, as a US equity market rally in the wake of slightly softer than expected core US inflation in March was reversed back to its starting point. Overnight, the New Zealand central bank hiked more than expected, but guided less hawkish, so NZD fell. The Bank of Canada is expected to beat the Fed to the punch today by hiking by 50 basis points for the first time since 2000.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) - US equities tried to shift back to a positive stance yesterday in the wake of a slightly softer core CPI reading for March, but the rally was erased by the close, as attention is set to shift to earnings season which kicks off today in earnest. The Nasdaq 100 index has yet to break down through the 61.8% Fibonacci retracement level at 13,831, a break of which could usher in a full test of the 12,942.5 low. The less yield-sensitive S&P 500 index is farther above its respective 61.8% retracement level (4,299) but posted a weak session to new local lows yesterday, even as sentiment has recovered again overnight. Hong Kong’s Hang Seng (HSI.I) and China’s CSI300 (000300.I) were little changed.  Energy and mining stocks outperformed.  China’s Ministry of Transport has issued a notice to local governments to urge the latter to keep highways in operation in areas affected by lockdowns.  China is also piloting in eight cities to reduce the number of days required for quarantine from 14 days to 10 days.  China reported better than expected March export data (+14.7% YoY in USD terms) while imports declined (-0.1% YoY in USD terms). Trade surplus increased to USD47.4 billion (vs consensus $21.7bln, Feb $30.6bln). Stoxx 50 (EU50.I) – the Stoxx 50 index snapped back from new local lows yesterday –emphasizing the importance of the 3,800 area support – and is fairly sideways overnight in the futures, a somewhat better performance than the major US averages, where a rally attempt yesterday was fully wiped out.  A weak euro certainly helps exporters, but energy/power prices continue to weigh on Europe’s economic outlook. EURUSD and EUR pairs  – the euro continues to trade heavily and EURUDS has nearly touched the lows for the cycle around near 1.0800. It was rather disappointing for bulls that the pair failed to get more support from a consolidation lower in US yields yesterday in the wake of the slightly cooler than expected core inflation reading (more below). The ongoing unease as Russia looks set to widen its offensive in eastern Ukraine and concerns that the ECB will remain dovish tomorrow perhaps weighing. The next major level lower is the 1.0636 level posted during the pandemic outbreak panic. USDCAD is at pivotal levels in the 1.2650 area, ... ...about the half-way point of the recent  price range and near the 200-day moving average ahead of today’s Bank of Canada meeting, which is expected to bring a 50-basis point rate hike (to take the policy rate to 1.00%), which would be the first rate hike of more than 25 bps since 2000. But with the Fed seen likely matching the Bank of Canada’s pace of tightening by year-end, the BoC may need to guide hawkish, or CAD may need to find more support from rising oil prices and improving risk sentiment broadly if it is to stage a rally against the US dollar. The technical situation certainly looks pivotal. Gold (XAUUSD) The advance in gold prices was a bit more impressive yesterday as the move higher above the key 1,966 area stuck, though the real challenge remains a bid to retake the psychologically important 2,000 level. The dip in treasury yields yesterday and weak risk sentiment in equities provided some of the boost. Crude oil (OILUKJUN22 & OILUSMAY22)  A solid comeback for oil prices yesterday, as WTI crude joined Brent in trading back above 100/bbl ahead of weekly US crude oil and product inventories from the DoE today. China moving to ease some of the Shanghai covid lockdowns may have boosted sentiment on the demand side. And longer-term supply concerns are in clear evidence as long-dated crude for December of 2023, trades within two dollars of the highest daily close for the cycle back in early March. US Treasuries (IEF, TLT) and European Sovereign Debt. Treasury traders took the slightest easing of the pace of core March US inflation as a signal for consolidation yesterday, as yields dropped all along the curve, and more so at the front end as the market perhaps figures that as long as the pace of inflation rises moderates, it can stop the constant upward adjustments to the perceived path of Fed policy tightening this year. A US 10-year treasury auction saw tepid demand yesterday. Today sees a 30-year T-bond auction. EU yields also eased lower yesterday from new cycle- and multi-year highs. What is going on? New Zealand’s RBNZ surprises with 50-basis point hike, but guides less hawkish.  The market was looking for a 25-basis point move to take the Official Cash Rate to 1.25%, but instead got 50 basis points and a 1.50% policy rate. The argument in the statement was that the bank saw it prudent to bring hiking forward to reduce the risks of rising inflation expectations. At the same time, the statement frets the slowing pace of global economic activity. After an initial spike higher on the impact of the larger than expected hike, the NZD traded lower in the wake of the decision as the 2-year NZ rate dropped some 15 basis points. AUDNZD also retains an upward bias given the demand in resource-rich Australian assets. Australia’s business data also continues to hold up for now, while New Zealand is facing deteriorating business sentiment and chronic labor shortage. UK Mar. CPI out this morning – hotter than expected.  UK March CPI hit +1.1% MoM and +7.0% YoY on the headline (vs. +0.8% /+6.7% expected) and +5.7% YoY (vs. +5.3% expected) for the core CPI reading Crowdstrike (CRWD) rose 3.2% on a Goldman Sach upgrade to buy. Crowdstrikeis the world’s biggest cybersecurity company. The analyst community also likes Crowdstrike  with 93% of analysts rating the stock as a buy. Goldman Sachs expects Crowdstrike’s shares to rise to $285 in a year. USDJPY refuses to drop below 125.  USDJPY dropped below 125 following the US CPI release overnight, focusing on the less-than-expected core print and the fall in US treasury yields. This morning, the pair is trading close to the near-20 year high of 125.86. The move was however reversed suggesting sustained weakness in the yen, which will continue until we see stronger action from the Japanese authorities and not just verbal intervention. The prospect of stagflation remains for Germany.  This is the main takeaway from the ZEW index released yesterday. The economic sentiment index decreased to minus 41.0 in April versus prior minus 39.3 while the current conditions index dropped to minus 30.8 versus prior minus 21.4. The ZEW experts are therefore pessimistic about the current economic situation, and they expect that it will continue to deteriorate. The only glimpse of hope is the decline in inflation expectations.  U.S. Inflation is still uncomfortably high.  March CPI hit 8.5 % year-over-year. This is the hottest annual pace since 1981. The pace of Core CPI rises moderated a bit at +0.3% month-on-month and + 6.5% year-on-year. This is still the hottest pace since 1982. On a year-on-year basis, the sharpest increases are : fuel oil (70 %), gas (48 %), used cars (35 %), hotels (29 %), airfare (24 %) and utility gas (22 %). You can find the full list here (scroll to pdf page 9). It is clear that the U.S. Federal Reserve is behind the curve. Expect a 50-basis point interest rate hike at the May FOMC meeting. What are we watching next? Ukraine war developments as new Russian offensive operations are underway in eastern Ukraine and US President Biden promised a new round of $750 million in military aid and said Russian leader Putin is guilty of genocide. Earnings Watch. The Q1 earnings season kicks off in earnest today week with US mega-bank JP Morgan Chase reporting today, but the more Main Street-oriented banks reporting in coming days, including the largest of these, Wells Fargo, tomorrow, will be interesting for a check-up on credit demand. The UK’s largest grocer Tesco is also worth watching for a sense of the impact of inflation on margins and customer behaviour as a cost-of-living crisis has hit a large portion of the UK population. Today: Tesco, JPMorgan Chase & Co, BlackRock, Fastenal Thursday: China Northern Rare Earth Group, Fast Retailing, Ericsson, UnitedHealth, Wells Fargo, Morgan Stanley, Goldman Sachs, Citigroup, US Bancorp, PNC Financial Services, Coinbase, State Street Friday: Hangzhou Hikvision Digital Economic calendar highlights for today (times GMT) 1230 – US Mar. PPI 1400 – Canada Bank of Canada Rate Decision 1430 – US DoE Weekly Crude Oil and Product Inventories 1500 – Canada Bank of Canada’s Macklem press conference 1700 – US 30-year T-bond auction 2301 – UK Mar. RICS House Price Balance 0130 – Australia Mar. Employment Change / Unemployment Rate   Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:    
The SNB Had Reduced Its Foreign Exchange Reserves And CHF Slipped Below The Parity Against The Euro For The First Time

Fears Of A Global Recession Strengthen (EUR/USD), Expectations More Hawkish BoE (EUR/GBP), CHF Was The Best Performing Currency Last Week (EUR/CHF), NZD/USD

Rebecca Duthie Rebecca Duthie 20.06.2022 13:48
Summary: Swiss Franc could be the most appealing safe-haven currency right now. Fears of a high level of striking in the United Kingdom. Russia under-delivers on its gas obligations to some European countries. Read next: Eurozone Inflation Data Offering Euro Support (EUR/USD, EUR/GBP), SNB 0.5% Interest Rate Hike Bombshell (EUR/CHF), BoJ Left Monetary Policy Unchanged (USD/JPY)  EUR/USD The market is reflecting mixed signals for this currency pair. In general there are fears of a global economic recession, this fear is affecting the foreign exchange markets. Russia cut some of its exports in gas to Germany, Italy and France, which foreshadows an increase in gas prices and possibly a complete stop to gas flows. If this occurs, expectations of a euro area recession is likely and will add to further inflation in Europe. All of these factors are driving the price of the EUR/USD currency pair. EUR/USD Price Chart EUR/GBP The market is reflecting bearish signals for this currency pair. Fears of a high level of striking in the United Kingdom is putting the Bank of England (BoE) under pressure to hike interest rates at a rate faster than economists expectations. Expectations of a more hawkish BoE is offering the pound sterling support against the Euro. EUR/GBP Price Chart The SNB’s surprise interest rate hike offered the CHF support The market is reflecting mixed signals for this currency pair. The CHF was the best performing currency during the trading week last week as the Swiss National Bank (SNB) surprised the market with a 50 basis point hike in interest rates. This move was the first of its kind in 15 years and offered the Swiss Franc support, and made the currency the most appealing safe-haven currency. EUR/CHF Price Chart NZD/USD The market is reflecting bearish signals for this currency pair. The New Zealand Dollar has lost momentum as expectations of a hawkish Reserve Bank of New Zealand (RBNZ) fade and Oil prices rise. Global markets continue to struggle amidst rising energy prices and hawkish central banks everywhere. NZD/USD Price Chart Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
Forex: Market Is Dependent On Fed's Shortly Message

ZEW Economic Index Economic Readings (EUR/USD, EUR/GBP), Many Currencies Have Come Under Pressure As The US Dollar Continues To Strengthen

Rebecca Duthie Rebecca Duthie 12.07.2022 17:02
Summary: The Euro expectedly reacted poorly to the ZEW indexes economic readings. EUR/GBP GBP/AUD came in softer on Tuesday. GBP/NZD Read next: EUR/USD Attempts Parity (EUR/USD), Noord Stream Maintenance Is Underway (EUR/GBP), BoC Policy Decision Due Wednesday (GBP/CAD), USD/JPY  US Inflation Data will be released on Wednesday The market is reflecting bearish signals for this currency pair. The Euro expectedly reacted poorly to the ZEW indexes economic readings and is now seeing the EUR/USD currency pair testing parity. The EU region print came in at -53.8, the lowest since November 2011, reiterating the already lowering optimism in the Eurozone. Further events that could negatively affect the Euro further include an increasingly hawkish Federal Reserve, the potential energy crisis lingering over the Eurozone and recessionary fears. Focus during Wednesday's trading day will be on the US Inflation data release which will give the market further guidance around the U.S economy. EUR/USD Price Chart Euro faces more risks The market is reflecting mixed signals for this currency pair. The Pound sterling continues to be weighed down by the market's woes around the Euro. The Euro/US Dollar currency pair is testing parity. The pound was supported by the news of Prime Minister Boris Johnson stepping down in the wake of many government officials resigning. The Euro still faces risks going forward. EUR/GBP Price Chart GBP/AUD Currency pair The pound sterling to Australian Dollar entered the trading week on its front foot with the AUD coming under pressure from numerous other currencies whilst the US Dollar strengthened even against China's Renminbi and risk aversion controlled both the stock and commodity markets. Although the GBP/AUD was softer on Tuesday, it closely resembles the USD pairing against both the GBP and AUD. GBP/AUD Price Chart GBP/NZD The GBP/NZD currency pair has had a volatile start to the trading week and could see the pound sterling strengthen even more in the coming days if the Reserve Bank of New Zealand (RBNZ) surprises the markets and encourages the NZD to outperform other currencies. GBP/NZD Price Chart Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
Trading Signals For The New Zealand Dollar To Swiss Franc Pair (NZD/CHF)

Euro Remains Under Pressure As European Gas Crisis Persists (EUR/USD, EUR/GBP, EUR/CHF), RBNZ Increased Cash Rate (GBP/NZD)

Rebecca Duthie Rebecca Duthie 13.07.2022 17:26
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
Should The EU Borrow Money From The US? | A Significant Role Of Gig Workers In The Future Of Shopping

US Inflation Reaches Nearly 41 Year High, RBNZ & BoC Increase Their Cash Rates

Rebecca Duthie Rebecca Duthie 13.07.2022 16:56
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
Are Stock Markets Endangered? Is The Bear Market Coming?

EUR/USD Falls Below Parity, Eurozone Energy Crisis Concerns Persist (EUR/GBP), Hawkish BoC (USD/CAD), USD/JPY

Rebecca Duthie Rebecca Duthie 14.07.2022 17:34
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
The EUR/USD Pair Could Resume Its Larger Degree Downtrend

ECB Upcoming Policy Rate Decision Offers Euro Support (EUR/USD, EUR/GBP), Higher Than Expected NZ CPI Inflation Data (GBP/NZD), (USD/CAD)

Rebecca Duthie Rebecca Duthie 18.07.2022 16:49
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  
This Week's Tesla Stock Split Could Be The Best Moment To Buy The Stock! Twitter Stock Price Plunged!

Euro Remains Supported Ahead Of ECB Policy Decision, Netflix & Tesla Q2 Earnings Reports

Rebecca Duthie Rebecca Duthie 20.07.2022 23:49
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
Fed Interest Rate Announcement Due Wednesday (EUR/USD), 50bp Hike From BOE Expected (EUR/GBP, GBP/NZD)

Fed Interest Rate Announcement Due Wednesday (EUR/USD), 50bp Hike From BOE Expected (EUR/GBP, GBP/NZD)

Rebecca Duthie Rebecca Duthie 26.07.2022 19:37
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
Federal Reserve Raises The Interest Rates By 75bps

Federal Reserve Raises The Interest Rates By 75bps

Rebecca Duthie Rebecca Duthie 27.07.2022 20:04
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
Will The US Dollar Continue To Be Strong And To Keep Growing Or Maybe Situation Will Be Reversed

US ISM Data Defied Market Expectations (EUR/USD), GBP Strengthened Ahead of BOE Policy Decision (EUR/GBP, GBP/AUD),

Rebecca Duthie Rebecca Duthie 04.08.2022 02:09
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
The EUR/USD Pair Maintains The Bullish Sentiment

FOREX: U.S Inflation Data Due Wednesday (EUR/USD), BoE Economic Forecasts Downgrades (EUR/GBP), Potentially Hawkish BoC (GBP/CAD)

Rebecca Duthie Rebecca Duthie 08.08.2022 20:30
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
Fed is expected to hike the rate by 50bp, but weaker greenback and Treasury yields don't play in favour of the bank

The Market Awaits US Inflation Report (EUR/USD), EUR/GBP Bullish, Canadian Dollar “skewed to the downside”

Rebecca Duthie Rebecca Duthie 09.08.2022 17:19
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
Wow! Federal Reserve decision is not everything next week! What's ahead? InstaForex talks many economic events (Monday) - 30/10/22

US CPI Inflation Data For July Was 8.5%, Beating Expectations

Rebecca Duthie Rebecca Duthie 10.08.2022 14:38
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
More effects of FTX crash could show up

Euro Could Be Boosted In Coming Days (EUR/USD), UK Economic Data To Be Released This Week (EUR/GBP), CAD Fell In The Wake Of The PBoC’s Announcement (GBP/CAD)

Rebecca Duthie Rebecca Duthie 15.08.2022 23:52
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
Forex: Possibility Of Sharp Jump In Many Trading Instruments

Euro Under Pressure As A Result Of Events In The Energy Market (EUR/USD, EUR/GBP), RBNZ Due To Announce Policy Update (GBP/NZD)

Rebecca Duthie Rebecca Duthie 16.08.2022 22:29
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
China’s Caixin Manufacturing PMI Data Might Support The New Zealand Dollar (NZD)

The Reserve Bank Of New Zealand Has The Best Main Interest Rate In 7 Years!!! RBNZ Will Be A Savior From Inflation!?

Conotoxia Comments Conotoxia Comments 17.08.2022 11:45
The Reserve Bank of New Zealand today raised its main interest rate by 0.5 percentage points, to 3 percent, a level last seen seven years ago. It was the fourth 50-basis point hike in the current cycle, which may make the RBNZ one of the stronger monetary tightening central banks to bring down inflation.   Today's hike was in line with market expectations. Some policymakers believe that inflation may soon begin to stabilize or even start to decline through lower fuel prices and transportation prices. However, inflation may not return to the New Zealand central bank's target until mid-2024. Thus, further monetary tightening may be required, with its end expected in the first quarter of 2023 - according to a statement issued to today's decision. As a result, the RBNZ may raise the main interest rate by about 3.75 percentage points throughout the cycle, to 4 percent, from the record low of 0.25 percent that occurred in 2021. Inflation in New Zealand rose to 7.3 percent y/y in the second quarter of 2022, up from 6.9 percent in the previous period. This was the highest figure since the second quarter of 1990.   The NZD/USD exchange rate seemed to react relatively calmly to the above decision, as it was in line with the market consensus. At 07:30 GMT+3 on the Conotoxia MT5 platform, the NZD/USD exchange rate rose by 0.25 percent, to 0.6360. As a result, at this hour, of the major currencies against the US dollar, it is the NZD that seems to have gained the most. Since the beginning of the month, the NZD has gained 1.10 percent to the USD, which may make New Zealand's currency the strongest of the world's major currencies.   Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Conotoxia investment service) Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.59% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.   Source: Bank of New Zealand with another rate hike
Forex: GBP/USD - New, Fresh Low. The Next Target For Bulls

Sterling (GBP) And Dollar (USD) Are At The Top Of The World!!! What To Consider Next?

John Hardy John Hardy 17.08.2022 17:04
Summary:  The stronger US dollar is beginning to dominate across FX, and we haven’t even seen risk sentiment roll over badly yet, although this time it could be the US dollar itself that defines and drives financial conditions across markets. Elsewhere, we have seen an interesting fundamental test of sterling over the last couple of sessions, as sterling has begun rolling over today, even as a ripping increase in rate tightening bets in the wake of another hot CPI print out of the UK this morning. FX Trading focus: USD dominating again, GBP rate spike impact fading fast and indicating danger ahead for sterling. RBNZ hawkishness fails to impress the kiwi. The US dollar rally is broadening and intensifying, and US long yields are threatening back higher, which is finally pushing back against the recent melt-up in financial conditions/risk sentiment. The US July Retail Sales report looks solid, given the +0.7% advance in “ex Autos and Gas” sales after the June spike in average nationwide gasoline price to the unprecedented 5 dollar/gallon level. Yes, July gasoline prices were lower than June’s, but there wasn’t a huge delta on the average price for the month, and the impact of lower gas prices will likely be more in the August full month of vastly lower prices – presumably averaging closer to 4/gallon, together with the psychological relief that the spike seems in the rear view mirror, even if we can’t know whether a fresh spike awaits in the fall, after the draw on strategic reserves is halted. A strong US dollar, higher US yields and a fresh unease in risk sentiment are a potential triple whammy in which the US dollar itself is the lead character, as USDJPY has reversed back above 135.00 even before the US data, suggesting a threat back toward the cycle highs. AUDUSD has entirely reversed its upside sprint above 0.7000, refreshing its bearish trend after a squeeze nearly to the 200-day moving average there. Elsewhere, EURUSD and GBPUSD are a bit stuck in the mud, watching 1.0100 and 1.2000 respectively. The most important additional aggravator of this USD volatility in coming sessions would be a significant break higher in USDCNH if China decides it is tiring again of allowing the CNH to track USD direction at these levels. The pressure has to be building there after the PBOC’s rate cut at the start of the week. The UK July CPI release this morning raised eyebrows with another beat of expectations across the board, the day after strong earnings data. The 10.1% headline figure represents a new cycle and the month-on-month figure failed to moderate much, showing +0.6% vs. +0.4% expected. Core inflation also rose more than expected, posting a gain of 6.2% YoY and thus matching the cycle high from  April. The Retail Price Index rose 12.3% vs. 12.1% expected. The market reaction was easily the most interesting, as we have seek UK yields flying higher but failing to impress sterling much after a bit of a surge yesterday and into this morning. Now, sterling is rolling over despite a 40 basis point advance(!) in the 2-year swap rate from yesterday’ open, much of that unfolding in the wake of the CPI release today. Chart: GBPUSD Not that much drama at the moment in the GBPUSD chart, but that is remarkable in and of itself, as the soaring UK yields of yesterday and particularly today in the wake of a higher than expected CPI release are not doing much to support sterling. When rate moves don’t support a currency, it is starting to behave somewhat like an emerging market currency, a dangerous signal for the sterling, where we watch for a break of 1.2000 to usher in a test of the cycle lows below 1.1800, but possibly even the pandemic panic lows closer to 1.1500. The Bank of England hikes will only a accelerate the erosion of demand and slowdown in the UK economy that will lead to a harsh recession that the Bank of England itself knows is coming, but may have to prove slow to react to due to still elevated inflation levels, in part on a weak currency. Source: Saxo Group The RBNZ hiked fifty basis points as expected overnight and raised forward guidance for the Official Cash Rate path to indicate the expectation that the OCR will peak near 4%, a raising and bringing forward of the expected rate peak for the cycle. In the press conference, RBNZ Governor Orr spelled out the specific guidance that he would like to get the rate to 4% and take a significant pause to see if that is enough. “Our view is that sitting around that 4% official cash rate level buys the monetary policy committee right now significant comfort that we would have done enough to see inflation back to our remit.” NZ short rates were volatile, but hardly changed by the end of the day, meaning that NZD direction defaulted to risk sentiment, with a fresh dip in AUDNZD erased despite a weak AUD, and NZDUSD confirming a bearish reversal. Table: FX Board of G10 and CNH trend evolution and strength. Note the big shift in USD momentum, the most notable on the chart, although the absolute value of the SEK negative shift has been even larger over the last few days as EU woes and the growth outlook weigh even more heavily on SEK, which is often leveraged to the EU outlook, also as EURSEK has now failed to progress lower after a notable break below the 200-day moving average. Note the AUD negative shift as well, with sluggish wage growth data overnight for Q2 offering no helping hand. Source: Bloomberg and Saxo Group Table: FX Board Trend Scoreboard for individual pairs. USDJPY looks to flip back to a positive trend on a higher close today or tomorrow, the recent flip negative in GBPUSD looks confirmed on a hold below 1.2000, and AUDUSD looks a matter of time before flipping negative as well, while USDCAD has beaten it to the punch – although a more forceful upside trend signal there would be a close above 1.3000 again. Source: Bloomberg and Saxo Group Upcoming Economic Calendar Highlights (all times GMT) 1800 – US FOMC Minutes 1820 – US Fed’s Bowman (Voter) to speak 2110 – New Zealand RBNZ Governor Orr before parliamentary committee 0130 – Australia Jul. Employment Change (Unemployment Rate)   Source: FX Update: GBP in danger as rate spike fails to support. USD dominating.
Only Ugly US Data Could Reverse Sentiment | Gilt Yields In UK Were Steady To Lower

Disappointing July FOMC Meeting Minutes (EUR/USD), Euro Under Pressure (EUR/GBP), RBNZ Policy Update Caused NZD Sell-off (GBP/NZD)

Rebecca Duthie Rebecca Duthie 17.08.2022 22:02
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
More effects of FTX crash could show up

Dow Jones 0.5% Down On Wednesday, NZD Rose And Fell In The Wake Of RBNZ August Policy Decision

Rebecca Duthie Rebecca Duthie 17.08.2022 22:23
Summary: Dow Jones suffered in the wake of the Fed FOMC. RBNZ interest rates are now at 3%. DJI Closed in the red on Wednesday After the Fed minutes were released, the Dow Jones Industrial Average recovered from its lows. After Elon Musk, CEO of Tesla (TSLA), made a statement, Manchester United (MANU) regained a crucial level. As Bitcoin declined, so did Coinbase (COIN) and Riot Blockchain (RIOT). There weren't many breakouts among the conflict. Denbury (DEN), an energy play, was able to rise above a buy mark as its relative strength line accelerated. Also monitoring its own entrance is Wesco International (WCC). DJI Price Chart RBNZ pushed interest rates to 3% 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. The drop in the value of the Kiwi dollar may indicate that the market foresaw everything the RBNZ did, allowing investors to quickly shift their focus from domestic factors to international events. We observe that sentiment is low in midweek trading, with equities markets down and commodity prices falling. Even more so than the New Zealand Dollar, the Australian Dollar is also falling; in fact, it is the greatest loser of the day. Sources: poundsterlinglive.com, finance.yahoo.com, investors.com
The British Pound Is Showing Signs Of Exhaustion Of The Bullish Force

Euro Fundamentals Unchanged (EUR/USD), Pound Sterling In Trouble In The Wake Of Disappointing Economic Data (EUR/GBP, GBP/USD)

Rebecca Duthie Rebecca Duthie 19.08.2022 16:48
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
The Us Dollar's (USD) Decline Will Not Be More Prolonged

EUR/USD Falls Below Parity, Investor Expectations For BoE Spiked (EUR/GBP), GBP/USD At Risk Of Further Losses

Rebecca Duthie Rebecca Duthie 22.08.2022 17:27
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
Forex: So Could US Dollar (USD) And EUR/USD Become More Resistant To Data?

EUR/USD Expected To Remain Below PArity, UK Economy Grew In August (EUR/GBP, GBP/USD)

Rebecca Duthie Rebecca Duthie 23.08.2022 18:50
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
Euro Remains Below Parity Against The US Dollar (EUR/USD), Risk Of UK Stagflation Continues To Rise (EUR/GBP, GBP/NZD),

Euro Remains Below Parity Against The US Dollar (EUR/USD), Risk Of UK Stagflation Continues To Rise (EUR/GBP, GBP/NZD),

Rebecca Duthie Rebecca Duthie 25.08.2022 21:00
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
The Japanese Yen Has The Worst Performer Among The G-10 Currencies

Euro Under Pressure From Rising Prices (EUR/USD, EUR/GBP), Fed Chair Jerome Powell Address On Friday (USD/JPY)

Rebecca Duthie Rebecca Duthie 26.08.2022 15:44
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
The Main Scenario Of The EUR/USD Pair Is Still A Downtrend

Jackson Hole Economic Symposium Gave Guidance On Future Monetary Policy Decisions From Major Central Banks (EUR/USD, EUR/GBP, GBP/USD)

Rebecca Duthie Rebecca Duthie 29.08.2022 15:00
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
ECB press conference brings more fog than clarity

A Hawkish ECB Is Supporting The Euro (EUR/USD, EUR/GBP), Poor Investor Sentiment Toward The UK (GBP/USD)

Rebecca Duthie Rebecca Duthie 31.08.2022 16:48
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
Forex: Market Is Dependent On Fed's Shortly Message

US Dollar Driven By Hawkish Fed (EUR/USD), Pound Sterling Struggled Throughout August (EUR/GBP, GBP/AUD)

Rebecca Duthie Rebecca Duthie 01.09.2022 17:56
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
Italian industrial production fell again in June, raising doubts over 3Q growth

Euro To US Dollar Index Falls - Touching Levels Not Seen In 20 Years

Rebecca Duthie Rebecca Duthie 06.09.2022 00:01
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
The GBP/USD Pair's Traders Still Use Every Opportunity To Buy

UK Inflation Is The Highest In Decades!!! China Still Closing Factories, Toyota And Apple Are In Danger?

Saxo Strategy Team Saxo Strategy Team 18.08.2022 09:48
Summary:  U.S. equities took a pause from their week-long advance, with S&P 500 retreating before its 200-day moving average. Target’s Q2 results disappointed as the retailer suffered from high inventories and U.S. consumers shifted from discretionary to grocery items. What is happening in markets? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I)  U.S.’s advance higher took a pause yesterday amid higher bond yields and disappointing results from Target (TGT:xnys), -2.7%. Target’s Q2 earnings fell sharply and missed consensus expectations on weaker gross margins due to slower sales in discretionary items and inventory impairments.  Lowe’s (LOW:xnys) reported mixed results, with earnings beating estimates but same-store sales growth weaker than expected. Higher U.S. bond yields triggered by a dramatic rise in U.K. bond yields and reported pension fund rebalancing-related selling added to the equity weakness.  S&P 500 dropped 0.7% and Nasdaq 100 shed 1.2%.  U.S. treasury yields rose from spilling over from a massive rise in U.K. Gilt yields and weak 20-year bond auction U.S. 10-year treasury yields jumped 9bps to 3.05%, taking cues from the sharp move higher in U.K. Gilts and European sovereign bond yields following white-hot UK CPI data. Long-end yields moved further higher on poor results from the 20-year auction.  Short-end yields fell in the late afternoon after the July FOMC minutes signaling that it “would become appropriate at some point to slow the pace of policy rate increases” which reaffirmed the market’s expectation of a 50bps, instead of 75bps on the September FOMC.  Hong Kong’s Hang Seng (HSIQ2) and China’s CSI300 (03188:xhkg) Hang Seng Index bounced modestly by 0.5%; CSI399 gained 9.6%. Meituan (03690:xhkg) rallied 3.3% after a 9% drop yesterday due to a Reuters story suggesting that Tencent (00700:xhkg) plans to divest its 17% stake (USD24 billion) in Meituan. Tencent denied such a divesture plan last night.  Power tools and floor care equipment maker and a supplier to Home Depot (HD:xnys) and Wal Mart (WMT:xnys), Techtronic Industries (00669:xhkg) jumped more than 10% after better-than-expected results from the two U.S. retailers. China Resources Power (00836:xhkg) +5.7% after reporting weak 1H22 results but more wind and solar projects on the pipeline. Other Chinese power producers also outperformed amid power shortages. China Power (02380:xhkg) surged more than 8%. On Tuesday, China’s Premier Li Keqiang visited Shenzhen and held a meeting with provincial chiefs from Jiangsu, Zhejiang, Shandong, Henan, and Sichuan to reiterate the central government’s push for full use of policies to stabilize the economy. Hong Kong Exchanges (00388:xhkg) fell 1.6% after reporting lower revenues, higher costs, and a 22% YoY decline in EPS, worse than market expectations. After the market close, Tencent reported weak but in line with expectations revenues and better-than-feared earnings in Q2. Tencent’s ADR climbed 3.5% overnight from the Hong Kong close. AUDUSD eying the labor market report, GBP will see more pain ahead A mixed session again overnight for the US dollar with FOMC minutes and US retail sales failing to provide any fresh impetus to the markets. AUDUSD was the biggest loser on the G10 board, sliding below 0.7000 to lows of 0.6911 after real wage data for Q2 showed a massive slump. Labor market data due this morning could further weigh on RBA expectations, if it comes out softer than expected. The weakness seen in the commodity markets, especially iron ore and copper, weighed on the antipodeans. GBPUSD stays above 1.2000 despite a 40bps gains in UK 2-year yields after the double-digit UK CPI print. USDJPY tested the resistance at 135.50 but was rejected for now. Crude oil prices (CLU2 & LCOV2) Crude oil prices made a slight recovery overnight, with WTI futures getting back to over $87/barrel and Brent futures close to $94 after data showed US inventories fell sharply. Sentiment was also supported by comments from OPEC’s new Secretary-General, Haitham Al Ghais, who said that world oil demand will rise by almost 3mb/d this year. He also said there is a high chance of a supply squeeze this year, in part because fears of slowing usage in China are exaggerated. This helped to take the focus off the prospects of the Iran nuclear deal for now. What to consider? Stale FOMC minutes hint at sustained restrictive policy Fed’s meeting minutes from the July meeting were released last night, and officials agreed to move to restrictive policy, with some noting that restrictive rates will have to be maintained for some time to bring inflation back to the 2% target. Still, there was also talk of slowing the pace of rate hikes ‘at some point’, despite pushing back against easing expectations for next year. The minutes were broadly in-line with the market’s thinking, and lacked fresh impetus needed to bring up the pricing of Fed’s rate hikes. Chairman Powell’s speech at the Jackson Hole Symposium next week will be keenly watched for further inputs. US retail sales were a mixed bag July US retail sales are a little softer at the headline level than the market expected (0% growth versus the +0.1% consensus) but the ex-auto came in stronger at 0.4% (vs. -0.1% expected). June’s growth was revised down to 0.8% from 1%. The mixed data confirmed that the US consumers are feeling the pinch from higher prices, but have remained resilient so far and that could give the Fed more room to continue with its aggressive rate hikes. Lower pump prices and further improvements in supply chain could further lift up retail spending in August. UK CPI opens the door for another 50bps rate hike UK headline inflation hits 10.1%, the highest in decades and above the 9.8% expected and for the month-on-month reading of +0.6%, higher than the +0.4% expected. Core inflation hit 6.2% vs. 5.9% expected and 5.8% in Jun. That matched the cycle high from back in April. Retail inflation rose +0.9% MoM and +12.3% YoY vs. +0.6%/+12.0% expected, respectively. The Bank of England has forecast that inflation will peak out this fall at above 13%. While the central bank forecasted a recession lasting for five quarters at the last meeting, it will be hard for them to not press ahead with further tightening at the August meeting, and in fact the scope for another 50bps rate hike is getting bigger. Reserve Bank of New Zealand hikes 50 basis points to 3.00%, forecasts 4% policy rate peak The RBNZ both increased and brought forward its peak rate forecast to 4.00%, a move that was actually interpreted rather neutrally – more hawkish for now, but suggesting that the RBNZ would like to pause after achieving 4.00%. RBNZ Governor warned in a press conference that New Zealand home prices will continue to fall. This is actually a desired outcome after a huge spike in housing speculation and prices due to low rates from the pandemic response and massive pressure from a Labor-led government that had promised lower housing costs were behind the RBNZ’s quick pivot and more aggressive hiking cycle in 2021. Australian wages grew at their quickest pace in eight years, but less than expected Australia’s wage-price index gained 0.7% in the second quarter, just shy of estimates further pressuring the Aussie dollar back toward its 50-day moving average against the US dollar. Annual wage growth came in at 2.6% but real wages - adjusted for headline inflation fell 1% QoQ, and was 3.3% lower than a year earlier, eroding consumer spending power. What’s next. All eyes will be on Australia’s Reserve Bank which might be pressured to hike more than expected at its September meeting. Despite Australian wages growing slower than expected, the RBA estimates retail gas and electric prices to rise 10-15% in the second half of the year, so that will be a focus point when they consider their next move in interest rates. Tencent reported weak but in-line Q2 revenues and better-than-feared earnings Tencent reported a revenue decline of 3% YoY in Q2, weak but in line with market expectations.  Non-GAAP operating profit was down 14% YoY to RMB 36.7 billion and EPS fell 17% YoY to RMB2.90 but they beat analyst estimates.  Revenues from advertising, -18% YoY, were better than expected.  In the game segment, weaker mobile game revenues were offset by stronger PC game revenues. Disappointing results from Target and mixed results from Lowe’s Target reported EPS of USD0.39, missing estimates.  The company indicated strength in food and beverage, beauty, and household essentials but weaker in discretionary categories.  Gross margin of 21.5%, down from 30.4% year-ago quarter and below expectations. Lowe’s reported better than expected EPS of USD4.67 (vs consensus USD4.58) but a decline of 0.3% in same-store sales.  Lowe’s inventories grew 11.6% YoY, substantially lower than peer Home Depot.  With a 15% increase in product costs, the inventory volume was in effect down low-single digit. Power crunch in China shut factories Chongqing is limiting power supply to industrial users from yesterday to next Wednesday.  In Sichuan, Foxconn’s Chengdu factory is suspending operations for six days from August 15 to 20 due to a regional power shortage. The suspension is affecting Foxconn’s supply of iPad to Apple.  The company says the impact “has been limited at the moment” but it may affect shipments if the power outage persists.  The Chengdu government is imposing power curbs on industrial users to ensure electricity supply for the city’s residents.  Toyota and CATL are also suspending some operations in Sichuan due to a power shortage. Foxconn has started test production of the Apple watch in Vietnam Foxconn has started test production of the Apple watch in its factories in Vietnam. With the passage of CHIPS and Science Act earlier this month in the U.S., investors are monitoring closely if Taiwanese and Korean chipmakers as well as their customers may be accelerating the building up of production capacity away from China.  World’s biggest Sovereign Wealth fund posts its biggest half-year loss on record   Norway’s oil fund, the world’s biggest owner of public traded companies lost 14.4% in the six months through to June. In currency terms that’s $174 billion. The slump was driven by the fund’s loss in technology stocks with Meta Platforms (owning Facebook and Instagram) and Amazon, leading the decline. However, just like the market, the fund’s energy sector delivered positive share price performance, benefiting from a sharp rise in earnings in the oil, gas, and refined energy product sector. Meanwhile, investments in logistics property helped the fund’s unlisted real estate holdings gain 7.1%, though they account for 3% of its assets. Japan’s inflation will surge further Japan’s nationwide CPI for July is due to be reported at the end of the week. July producer prices came in slightly above expectations at 8.6% y/y (vs. estimates of 8.4% y/y) while the m/m figure was as expected at 0.4%. The continued surge reflects that Japanese businesses are waddling high input price pressures, and these are likely to get passed on to the consumers, suggesting further increases in CPI remain likely. More government relief measures are likely to be announced, while any little hope for a Bank of Japan pivot is fading. Bloomberg consensus estimates are calling for Japan’s CPI to accelerate to 2.6% y/y from 2.4% previously, with the ex-fresh food number seen at 2.4% y/y vs. 2.2% earlier. For a week-ahead look at markets – tune into our Saxo Spotlight. For a global look at markets – tune into our Podcast.   Source: APAC Daily Digest: What is happening in markets and what to consider next – August 18, 2022
EUR/USD Dropped To New Multi-year Lows, Truss Delivers A Convincing Package To Beat The Cost Of Living Crisis (EUR/GBP), RBA Interest Rate Decision (GBP/AUD)

EUR/USD Dropped To New Multi-year Lows, Truss Delivers A Convincing Package To Beat The Cost Of Living Crisis (EUR/GBP), RBA Interest Rate Decision (GBP/AUD)

Rebecca Duthie Rebecca Duthie 06.09.2022 22:12
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
Bank of Canada (BoC) Interest Rate Policy Decision - Met Market Expectations

Bank of Canada (BoC) Interest Rate Policy Decision - Met Market Expectations

Rebecca Duthie Rebecca Duthie 07.09.2022 16:03
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
The Japanese Yen Has The Worst Performer Among The G-10 Currencies

US Dollar’s Unwavering Strength (EUR/USD), EUR/GBP, USD/JPY Falls To Lowest Level Seen Since 1998

Rebecca Duthie Rebecca Duthie 07.09.2022 16:25
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
The Markets Still Hope That The Fed May Consider Softer Decision

The ECB Interest Rate Decision - Met Market Expectations

Rebecca Duthie Rebecca Duthie 08.09.2022 14:25
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
The EUR/USD Pair Is Still In A High Position On The 1H Chart

ECB Interest Rate Decision (EUR/USD), UK Government Plans To Cap Gas Prices (EUR/GBP, GBP/AUD)

Rebecca Duthie Rebecca Duthie 08.09.2022 15:45
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
ECB press conference brings more fog than clarity

Euro Shows Strength On Monday (EUR/USD), UK Inflation Data Ahead (EUR/GBP), USD Gains Against The JPY(USD/JPY)

Rebecca Duthie Rebecca Duthie 12.09.2022 14:25
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  
Analysis Of The US Dollar Currency Index Price Movement

US Dollar Rallies In The Wake Of CPI Inflation Data

Rebecca Duthie Rebecca Duthie 13.09.2022 18:17
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
Thursday's Bank's of England decision may be record-breaking!

UK CPI Inflation Data Reflected The First Drop In 1 Year

Rebecca Duthie Rebecca Duthie 14.09.2022 15:28
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
The British Pound Is Showing Signs Of Exhaustion Of The Bullish Force

US Dollar Rose In The Wake Of US CPI Inflation Reports (EUR/USD), UK CPI Inflation Data Exceeded Market Expectations (EUR/GBP, GBP/AUD)

Rebecca Duthie Rebecca Duthie 14.09.2022 17:11
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
Will The US Dollar Continue To Be Strong And To Keep Growing Or Maybe Situation Will Be Reversed

Strong US Dollar Index Driving EUR/USD Down & USD/JPY Up, economists predict that the Pound will continue to decline (EUR/GBP), USD/JPY

Rebecca Duthie Rebecca Duthie 19.09.2022 18:57
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
The Agressive Rate Hikes By The Fed Did Not Lead To A Deeper Recession

EUR/USD Exposed To Fed Interest Rate Decision Risk, BoE Interest Rate Decision Due This Week (EUR/GBP, GBP/CAD)

Rebecca Duthie Rebecca Duthie 20.09.2022 17:34
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
The Agressive Rate Hikes By The Fed Did Not Lead To A Deeper Recession

The Fed Interest Rate Decision, Stock/Bond Portfolios, ECB’s Determination To Reach Price Stability

8 eightcap 8 eightcap 20.09.2022 21:12
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
The Fed Interest Rate Decision, Stock/Bond Portfolios, ECB’s Determination To Reach Price Stability  - 20.09.2022

The Fed Interest Rate Decision, Stock/Bond Portfolios, ECB’s Determination To Reach Price Stability - 20.09.2022

Rebecca Duthie Rebecca Duthie 20.09.2022 23:00
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
US Dollar Pushed Upwards Ahead Of The Fed’s Interest Rate Decision, Russia Not Showing Signs Of Slowing Down On The War (EUR/GBP), GBP/NZD

US Dollar Pushed Upwards Ahead Of The Fed’s Interest Rate Decision, Russia Not Showing Signs Of Slowing Down On The War (EUR/GBP), GBP/NZD

Rebecca Duthie Rebecca Duthie 21.09.2022 19:03
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
Did The Federal Reserve Beat Market Expectations During Their Wednesday Interest Rate Announcement?!

Did The Federal Reserve Beat Market Expectations During Their Wednesday Interest Rate Announcement?!

Rebecca Duthie Rebecca Duthie 21.09.2022 20:04
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
Did The Bank of England Miss, Meet or Beat Market Expectations?!

Did The Bank of England Miss, Meet or Beat Market Expectations?!

Rebecca Duthie Rebecca Duthie 22.09.2022 13:11
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
EUR/USD Touch 19-year Lows, BoE Interest Rate Decision (EUR/GBP), SNB Signals End Of Its Interest Rate Hiking Cycle (EUR/CHF)

EUR/USD Touch 19-year Lows, BoE Interest Rate Decision (EUR/GBP), SNB Signals End Of Its Interest Rate Hiking Cycle (EUR/CHF)

Rebecca Duthie Rebecca Duthie 22.09.2022 16:16
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
Analysis Of The US Dollar Currency Index Price Movement

US Dollars Momentum Supported By Fed Interest Rate Hiking Road Map (EUR/USD, USD/CAD), UK & Europe Could Already Be In A Recession (EUR/GBP)

Rebecca Duthie Rebecca Duthie 23.09.2022 19:01
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
The GBP/USD Pair Did Not Reach The Nearest Target Level Of 1.2259

US Dollar Dictating Marker Movements (EUR/USD, GBP/USD), BoE Introduce Further Tax Cuts (EUR/GBP)

Rebecca Duthie Rebecca Duthie 26.09.2022 20:17
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
The Agressive Rate Hikes By The Fed Did Not Lead To A Deeper Recession

EUR/USD Close To 20-year Lows, IMF Criticizes The UK Government (EUR/GBP, GBP/USD)

Rebecca Duthie Rebecca Duthie 28.09.2022 19:15
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
US Dollar May Strengthen As A Result Of The US PCE Update (EUR/USD, USD/CAD) GBP Seeks To Strengthen Against The Euro

US Dollar May Strengthen As A Result Of The US PCE Update (EUR/USD, USD/CAD) GBP Seeks To Strengthen Against The Euro

Rebecca Duthie Rebecca Duthie 29.09.2022 19:06
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
Jacinda Ardern Has Resigned As Prime Minister Of New Zealand, Crude Oil Extended Wednesday's Steep Decline

Soaring Hawkish RBNZ Bets Are Strengthening The Kiwi (NZD) Bulls

TeleTrade Comments TeleTrade Comments 04.10.2022 10:10
NZD/USD is eyeing to test the weekly highs at 0.5750 as the RBNZ is expected to sound hawkish. A fifth consecutive 50 bps rate hike is expected by the RBNZ to continue the fight against inflation. The DXY is declining towards 111.00 amid lower projections for the US NFP data. The NZD/USD pair has bounced back sharply after dropping to near 0.5682 in the Tokyo session. The asset is broadly oscillating in a 0.5680-0.5726 range and is expected to deliver an upside break of the same. A north-side explosion will drive the asset towards weekly highs at around 0.5750. Weaker performance from the US dollar index (DXY) and soaring hawkish Reserve Bank of New Zealand (RBNZ) bets are strengthening the kiwi bulls. Wednesday’s monetary policy decision by the RBNZ is going to provide a decisive move to the antipodean. RBNZ Governor Adrian Orr is expected to announce a 50 bps rate hike consecutively for the fifth time. The inflationary pressures in the kiwi region have not cooled down yet, therefore, scaling down the ‘hawkish’ tone won’t be a fruitful option.  An announcement of the fifth 50 bps rate hike will push the Official Cash Rate (OCR) to 3.5%. Meanwhile, the DXY has printed a fresh weekly low at 111.44 in the early European session. The DXY is eyeing more weakness towards 111.00. Investors are dumping the DXY ahead of the US Nonfarm Payrolls (NFP) data. As expected, the US economy created 250k jobs in September, lower than the August reading of 315k. The US economy has been maintaining full employment levels, therefore, space for generating more employment is extremely less. Adding to that, the escalating Federal Reserve (Fed)’s interest rates are also restricting the corporate to continue their hiring programs with sheer pace.
Analysis Of The AUD/JPY Currency Pair Scenarios

RBA Missed Market Expectations With Their Interest Rate Decision

Rebecca Duthie Rebecca Duthie 04.10.2022 12:59
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
USD Falls 3.3% From Wednesday's High (EUR/USD), UK Chancellor Moves Up Fiscal Plan (EUR/GBP), RBA Missed Market Expectations (GBP/AUD)

USD Falls 3.3% From Wednesday's High (EUR/USD), UK Chancellor Moves Up Fiscal Plan (EUR/GBP), RBA Missed Market Expectations (GBP/AUD)

Rebecca Duthie Rebecca Duthie 04.10.2022 20:40
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
Jacinda Ardern Has Resigned As Prime Minister Of New Zealand, Crude Oil Extended Wednesday's Steep Decline

Reserve Bank Of New Zealand Raised Rates By 50bp Yet Again | In Anticipation Of The Next OPEC Meeting

Kamila Szypuła Kamila Szypuła 05.10.2022 09:27
Today there will be a lot of data from all over the world. The most important decisions and reports may affect the situation of the currency or commodities market. Retail Sales (MoM) Australia has published a retail sales report MoM. The reading has reached the expected level of 0.6%. The previous reading was at 1.3%, which means that it fell this time, but it was an expected drop. RBNZ Interest Rate Decision Today at 3:00 CET another decision on interest rates was made. Reserve Bank of New Zealand (RBNZ) raised rates from 3.0% to 3.5%. In 2022. The market expected such a decision. The RBNZ raised rates by 50bp each time. Source: investing.com UK Purchasing Managers' Index reports At 10:30 CET, the UK will publish its Purchasing Managers' Index (PMI) reports. The first one will concern the activity level of purchasing managers in the both sectors. It is expected to drop from 49.6 to 48.4 in September. This year it will be the second time that U.K. Composite Purchasing Managers' Index is below 50. This will mean another contraction in this sector. Another report will be on the activity level of purchasing managers in the services sector. It is expected to drop below 50 for the first time this year and reach 49.2. This means that the compression of this sector will begin as well. OPEC meeting The monthly OPEC meeting will take place at 12:00 CET. Meetings are attended by representatives from 13 oil-rich nations. They discuss a range of topics regarding energy markets and agree on how much oil they will produce. What kind of decisions can we expect? OPEC aims to change the price of oil by adjusting the volume of supply. If its members want to raise the price of oil, they can lower their production quotas to limit supply. In early September, OPEC surprised the markets and announced a slight reduction in oil production. We can expect that also this time the decision will be made to reduce production by OPEC+. The group may announce that it is expanding a general cooperation agreement between OPEC, Russia and other producing countries, which expires in December. Crude Oil Inventories At 16:30 U.S. will published report about the weekly change in the number of barrels of commercial crude oil held by US firms. This number is expected to increase from -0.215M to 2.052M which means it implies weaker demand and is bearish for crude prices. Source: investing.com ADP Nonfarm Employment Change At 14:15 CET, the U.S. report will appear. ADP Nonfarm Employment Change. It is a measure of the monthly change in non-farm, private employment, based on the payroll data of approximately 400,000 U.S. business clients. And this time it is expected to reach 200K. This would be a significant increase from 132K. Such a reading would be positive for the US currency (USD). ISM Non-Manufacturing PMI The Institute of Supply Management (ISM) will publish a report on Business, a composite index is calculated as an indicator of the overall economic condition for the non-manufacturing sector. The reading is expected to be at 56.0. It will be lower than its previous reading of 56.9. Despite expectations of a decline, the situation in this sector is positive, as it is above 50 for the entire period this year. Summary 2:30 CET Retail Sales (MoM) 3:30 CET RBNZ Interest Rate Decision 10:30 CET UK Composite PMI (Sep) 10:30 CET UK Services PMI (Sep) 11:00 CET German Buba Beermann Speaks 12:00 CET OPEC Meeting 14:15 CET ADP Nonfarm Employment Change (Sep) 16:00 CET ISM Non-Manufacturing PMI (Sep) 16:30 CET Crude Oil Inventories Source: https://www.investing.com/economic-calendar/
U.S Dollar Remains Supported (EUR/USD), High Inflation Could Drive UK Economy Into A Recession (EUR/GBP, AUD/GBP)

U.S Dollar Remains Supported (EUR/USD), High Inflation Could Drive UK Economy Into A Recession (EUR/GBP, AUD/GBP)

Rebecca Duthie Rebecca Duthie 06.10.2022 18:55
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
The Agressive Rate Hikes By The Fed Did Not Lead To A Deeper Recession

Eurozone Confidence Declining (EUR/USD), GBP Under Pressure (EUR/GBP)

Rebecca Duthie Rebecca Duthie 11.10.2022 16:38
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
Chart of the Week - Gold Miners vs Energy Producers - 20.04.2022

German CPI Inflation Data Met The Markets Expectations

Rebecca Duthie Rebecca Duthie 13.10.2022 08:15
Summary: German CPY (YoY) CPI inflation data met market expectations. Looming european energy crisis. Initial market reactions. German CPI inflation data comes in at 10% Preliminary estimates showed that in September 2022, Germany's consumer price inflation spiked to 10 percent year-over-year, the highest level ever and significantly more than the 9.4 percent market projection. Following a worsening energy crisis in the biggest economy in Europe and ongoing supply chain disruptions, consumer prices have been rising. The German CPI inflation data was forecasted at 10% and came in at 10%, in addition the German CPI (MoM) data also met market expectations and remained equal to the previous months at 1.9%, this indicates that the largest European economy has not worsened despite fears. With the war in the Ukraine continuing, and the sanctions placed on Russia by the European Union, it is no secret that the European economies are facing problems, driven by a looming energy crisis. With winter approaching and a shortage of gas forecasted, prices have been rising. The European Central Bank’s (ECB) interest rate hawkish interest rate hiking cycle is showing no signs of slowing down, Inflation data from Europe's largest economy tends to be a clear indication of the performance of the rest of the European Economies. In the wake of the previous German CPI inflation data release, separate statistics revealed that previously, consumer and business expectations for greater inflation and a worsening financial situation caused the euro zone's economic mood to decline significantly and more than anticipated. The effect of the CPI Inflation Data on the Markets As CPI inflation continues to rise, consumer confidence continues to fall, the actual figures set up a strong case for the European Central Bank to continue on their interest rate hiking cycle path. The initial effect of the released data caused the EUR/USD to strengthen slightly, the EUR/GBP had the same effect, strengthening as the German Inflation rate remained high, yet stable. Sources: investing.com, reuters.com, dailyfx.com
Both The US CPI & Core CPI Inflation Beat Market’s Forecasted Figures

Both The US CPI & Core CPI Inflation Beat Market’s Forecasted Figures

Rebecca Duthie Rebecca Duthie 13.10.2022 15:19
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
Federal Reserve Remains Hawkish (EUR/USD), Political Uncertainty In Westminster Circus (EUR/GBP, GBP/USD)

Federal Reserve Remains Hawkish (EUR/USD), Political Uncertainty In Westminster Circus (EUR/GBP, GBP/USD)

Rebecca Duthie Rebecca Duthie 17.10.2022 20:24
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
The Swedish Real Estate Market Will See Significant Price Drops

The US Housing Market Is Experiencing Severe Price Drops | The Market Is Now Leaning Towards A RBNZ Rate Hike By 75 bp

Saxo Bank Saxo Bank 18.10.2022 11:38
Summary:  A huge squeeze across equity markets developed yesterday on no readily identifiable catalyst, with yields easing a bit lower and the US dollar dropped falling sharply, as most markets posted a sudden reversal of the Friday melt-down in sentiment. One possible driver for the fresh thaw in sentiment was a report that the Bank of England may delay its quantitative tightening programme, perhaps raising hopes that other central banks will eventually do the same.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) Strong equity session yesterday with S&P 500 futures closing at their highest level since 7 October as the index futures rebounded 2.6%. The momentum is continuing this morning with S&P 500 futures trading around the 3,742 level with the 3,800 as the next major resistance level on the upside. Nasdaq 100 futures are trading around the 11,295 level this morning with 11,494 as the next upside level to watch. The US 10-year yield is still hovering around the 4% level and US financial conditions remain around their average historical level. As we scan across different markets there are no obvious reasons for the major rebound so our best guess is short coverings and technical flows. Our medium-term outlook is still negative on equities. Hong Kong’s Hang Seng (HSIV2) and China’s CSI300 (03188:xhkg) Stocks traded in Hong Kong bounced the second day in a row with the benchmark Hang Sang Index rising nearly 1.5%. Heavy weight HSBC (00005:xhkg) gained 2.6% and China Internet names surged from 3% to 7%. BYD (01211:xhkg) surged 6.4% after the leading EV maker said its Q3 profit may soar up to 365%. CSI300 was bouncing around small gains and losses. China’s National Development and Reform Commission said China’s economic growth “rebounded significantly” in Q3 while the National Bureau of Statistics delayed the release of Q3 GDP, September industrial production, retail sales, and fixed asset investment data that were scheduled to come today without providing a reason or a new schedule. A document from the European Action Service advises EU’s finance ministers that EU must take a tougher line in its dealing with China and see the latter as an all-out competitor. USD drops as risk sentiment jolts back higher...BoE to drop QT for now? Yesterday was the third consecutive session in which risk sentiment posted a sharp U-turn, as equities rallied sharply and the US dollar sold off steeply, led initially by a drop versus a hard rallying sterling yesterday on hopes that newly minted Chancellor Jeremy Hunt’s elimination of most of PM Liz Truss’ initiatives will stabilize the currency and the country’s bond market. An additional report from the FT that the Bank of England would look to delay its original quantitative tightening (QT) plan may be at the root of some of the broad risk-on, as hopes that other central banks will slow the tightening pressure could bring some relief to deteriorating liquidity across markets. Crude oil (CLX2 & LCOZ2) Crude oil prices stabilized in early Asian hours on Tuesday after a slight decline yesterday. WTI futures rose towards $86/barrel while Brent was above $91. Chinese demand concerns however weighed on the commodities complex coming out of the weekend CCP announcements on Zero Covid. On the OPEC front, Algeria's Energy Minister echoed familiar rhetoric from the group that the decision to reduce output is a purely technical response to the world economic circumstances. US treasuries (TLT, IEF) US treasury yields fell slightly, and the curve steepened in a session marked by far less volatility than the gyrations elsewhere, as the US dollar sold off and risk sentiment squeezed sharply higher. At stake for the longer end of the curve is whether yields remain sticky near the key 4.00% level and head higher still. Data this week is generally second tier stuff. If treasuries rally, the downside focus would be on the 3.84% pivot low in yields. What is going on? Hot Q3 CPI in New Zealand data jolts RBNZ rate expectations The Q3 CPI report came in far above expectations, with the headline printing at 2.2% q/q and +7.2% YoY, far above the 1.5/6.5% expected. This took RBNZ rate expectations sharply higher, and the NZD snapped higher as well. The market is now leaning for the RBNZ to hike by 75 basis points (about 70 bps priced in) at the November 23 meeting, which would be the first time the bank has hiked by more than 50 basis points for this cycle. NZDUSD rose to 0.5700 and AUDNZD punched lower to near 2-month lows after breaking below 1.11 with RBA minutes continuing to highlight concerns of rapid tightening for housing market and household budgets. Q3 earnings recap Bank of America beat estimates yesterday with stronger earnings on disciplined cost controls and robust client activity across both the commercial banking and investment banking activities. Q3 EPS was down 5% y/y, which is much better than its peers, and up q/q to $0.81 from $0.79 in Q2. The US bank is seeing a little slowdown in consumer spending, but it is still minimal supporting the view that the US consumer remains strong and with confidence in the future despite the tighter financial conditions this year. S&P 500 Q3 EPS is down 1.9% q/q but given the weakness among US banks q/q it is too early to say whether this will end up being the conclusion when the entire S&P 500 has reported earnings. Japanese yen paying no heed to jawboning efforts The US dollar moved lower on Monday, but that was no respite for the Japanese yen, which was the only G10 currency that weakened further on Monday, continuing to test the intervention limits of the authorities. USDJPY rose to 149.08, printing fresh 32-year highs. Bank of Japan Governor Kuroda was out overnight noting that the BoJ is watching the market and that JPY weakening drives inflation, but that inflation would eventually fall. He was also defiant when a lawmaker suggested he should resign, saying he had no plans to quit. While intervention expectations rose, the yen remains weak, with EURJPY, for example, hitting new cycle highs and the highest level in nearly eight years. Natural gas prices continue to fall in Europe … with the Netherlands 1-month forward contract falling more than 10% yesterday and at its lowest level since late June as EU storage is essentially fully and weather has been mild thus far this fall. Germany announced that it would keep its three remaining nuclear plants in operation until at least mid-April, cancelling their planned mothballing for now, although there are still no strong signs of a strategic rethink from Germany on the future of nuclear power. NY Fed manufacturing headline lower on mixed components The NY Fed manufacturing survey for October fell to -9.1, contracting for a third consecutive month and coming in below the expected -4.0 and the prior -1.5. While survey data remains hard to trust to decipher economic trends, given a small sample size and questioning techniques impacting results, it is worth noting that more factories are turning downbeat about future business conditions which fell 10 points to -1.8 and was the second weakest since 2009. Also, the prices paid measure rose for the first time since June, echoing similar results as seen from the University of Michigan survey. The U.S. housing market bubble is deflating According to the latest data released by the real estate company Redfin, the U.S. housing market is going through a severe drop in prices in several major cities. From May 2022 to October 2022, the drop in sale prices is the most pronounced in Oakland (minus 16 %), San Jose (minus 14 %), Austin (minus 14 %), Ogden in Utah (minus 11 %) and San Francisco (minus 9 %). The decrease is the most important in California and Texas where home prices jumped sharply in the aftermath of the Covid outbreak. So far, the decrease in prices is positive news for inflation and for home buyers, as the affordability index was at historical levels a few months ago. But this could seriously increase the ongoing economic slowdown. Note that we will see important indicators on the US housing market this week – more below. What are we watching next? US Housing Market Data Housing markets are very interest rate sensitive and thus generally a leading indicator on the direction of the economy. Financing for US house purchases is mostly done on a 30-year fixed mortgage basis, meaning that most of the impact from rising rates, a global phenomenon, is on new purchases in the US. (This contrasts with the floating rates that are popular elsewhere – note the Australian RBA’s and Bank of England’s concerns on housing impact from sharp rate rises). Today we get the Oct. NAHB Housing Market survey, one of the more leading US indicators on housing demand and a survey that has been in freefall in recent months – dropping from 83 in January to 46 last month and expected Earnings to watch Today’s earnings focus is Netflix, Johnson & Johnson, and Lockheed Martin. Headwinds have been building for Netflix since the pandemic growth sprint and analysts expect revenue growth to have slowed down to 5% y/y in Q3 and EPS of $2.22 down 23% y/y and down 12% q/q. Johnson & Johnson is expected to see flat revenue growth in Q3 which given other consumer staples companies might be a bit too pessimistic and we believe there is a good chance that Johnson & Johnson can surprise to the upside given what we know about the US consumer. Today: Charles Schwab, Johnson & Johnson, Goldman Sachs, Intuitive Surgical, Lockheed Martin, Truist Financial, Netflix Wednesday: ASML, Elevance Health, Tesla, IBM, Lam Research, P&G, Abbott Laboratories, Atlas Copco Thursday: China Mobile, China Telecom, ABB, Danaher, Investor, Philip Morris, Union Pacific, CSX, AT&T, Blackstone, Marsh & McLennan, Yara International, Nordea, Volvo, Ericsson, Freeport-McMoRan, Dow, Snap Friday: CATL, American Express, Schlumberger, Verizon Communications, HCA Healthcare, Sika Economic calendar highlights for today (times GMT) 0900 – Germany Oct. ZEW Survey 1215 – Canada Sep. Housing Starts 1315 – US Sep. Industrial Production 1400 – US Oct. NAHB Housing Market Index 1600 – ECB's Schnabel to speak 2130 – US Fed’s Kashkari (voter 2023) to speak Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher   Source: https://www.home.saxo/content/articles/macro/market-quick-take-oct-18-2022-18102022
Saxo Bank And JP Morgan's Negative Views On The Outlook For British Economic Growth

ECB Seems To Have Limited Options (EUR/USD), Concerns In UK Bond Market (EUR/GBP), JPY Drops To 1990 Lows (USD/JPY)

Rebecca Duthie Rebecca Duthie 18.10.2022 15:31
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
The GBP/USD Pair Did Not Reach The Nearest Target Level Of 1.2259

GBP CPI Inflation (YoY) Came In Hotter Than Expectations

8 eightcap 8 eightcap 19.10.2022 08:25
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
TEST

Dow Jones Increased Overnight, GBP Could Rally If UK Leadership Changed

Rebecca Duthie Rebecca Duthie 19.10.2022 11:27
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.
ECB Likely To Remain Hawkish (EUR/USD), U.K CPI Inflation Returns To Double Digits (EUR/GBP), BoJ Unbothered By Weak Yen (USD/JPY)

ECB Likely To Remain Hawkish (EUR/USD), U.K CPI Inflation Returns To Double Digits (EUR/GBP), BoJ Unbothered By Weak Yen (USD/JPY)

Rebecca Duthie Rebecca Duthie 19.10.2022 18:54
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
The Fed’s Likely Downshift To 25bps Rate Hikes Makes The Most Sense

Rising Fed Fund Rates Offer US Dollar Support (EUR/USD), UK Retail Sales Data Came In Hotter Than Expected (EUR/GBP, GBP/JPY)

Rebecca Duthie Rebecca Duthie 21.10.2022 19:30
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
The Markets Still Hope That The Fed May Consider Softer Decision

ECB Expected To Raise Interest Rates By 75bps On Thursday (EUR/USD, EUR/GBP), UK & US Have Conflicting Economic Outlooks (GBP/USD)

Rebecca Duthie Rebecca Duthie 24.10.2022 18:55
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
In The Coming Days Will Be The Final Consolidation Of Bitcoin

Chinese Renminbi Hits Lowest Level In 15 Years, Transfer Of UK PM Status, EU Stocks Supported By Potentially Dovish Fed, Bitcoin Forecast

Rebecca Duthie Rebecca Duthie 25.10.2022 13:00
Summary: The value of China's currency has decreased 13% so far this year.  U.S. economy shrank for a fourth consecutive month.   Chancellor Rishi Sunak was named the next prime minister. Bitcoins new price objective set at $30,000. The Renminbi is crashing The value of the Chinese yuan against the dollar has fallen to its lowest level since 2007 as worries over President Xi Jinping's choice of a more hardline leadership team and the weakening economy moved from stock markets to currency markets. A growing interest rate disparity with the US has already hurt the renminbi this year; on Tuesday, it dropped as much as 0.6% to Rmb7.3084 per dollar. The People's Bank of China lowered the midpoint of the currency's trading band to its lowest level since the world financial crisis, which caused the decline.  The value of China's currency has decreased 13% so far this year. The decline on Tuesday came after a sell-off in Chinese stocks that affected markets around the world this week, with the Hang Seng China Enterprises index falling more than 7% on Monday and the Nasdaq Golden Dragons index of major technology stocks falling more than 14%. China’s renminbi has hit its weakest level against the dollar since 2007 following concerns over President Xi Jinping’s appointment of a harder line leadership team and a struggling economy https://t.co/F96TYsSrcE pic.twitter.com/8niDscsIu5 — Financial Times (@FinancialTimes) October 25, 2022 Rishi Sunak takes over from Truss 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.  Follow the latest developments as Rishi Sunak takes over from Liz Truss as UK prime minister https://t.co/pEjylJrgRO — Bloomberg (@business) October 25, 2022 EU Stocks supported by potentially dovish fed While anxiety over China's economy continued to weigh on Asian markets, European stocks climbed in early trade on Tuesday as investors took heart from indications that the U.S. Federal Reserve could scale back its rate increases. Data released on Monday revealed that the U.S. economy shrank for a fourth consecutive month. This suggests that the Fed's rate hikes have weakened the economy, which in turn has fueled optimism that the central bank may start to moderate the pace of the increases.  The projected Fed rate peak has decreased slightly from over 5% early last week to around 4.93%. The European stock market's mood was also helped by certain profit results that exceeded forecasts, with Swiss bank UBS (UBSG.S) among those that did so. However, the biggest bank in Europe, HSBC, announced a 42% decline in third-quarter profit, which caused a 4% decline in its share price (.HSBA.L). European stocks up as investors see signs Fed could slow rate rises https://t.co/a5VwuwKWFZ pic.twitter.com/ONhjztqvLs — Reuters (@Reuters) October 25, 2022 Bitcoin Forecast revised upwards to $30,000 In the coming month, Bitcoin "will break out dramatically," with a price objective of $30,000.  Michal van de Poppe, the founder and CEO of the trading company Eight, made that most recent forecast. On October 25, Van de Poppe tweeted his support for the analysts who are predicting a rise in the price of bitcoin. BTC/USD is now characterized by a notable lack of volatility, but there are growing indications that the sideways trend is about to undergo a significant change.  Popular analyst TechDev and others have confirmed that Bitcoin's Bollinger Bands versus the Nasdaq are the tightest in history, which all but guarantees an explosive move to come. “Market looking good for a last leg up. Higher highs and higher lows on ltf and demand being moved up,” he tweeted.   Analyst puts Bitcoin price at $30K next month with breakout due - https://t.co/IKtVBdXcef — Investing.com News (@newsinvesting) October 25, 2022 Sources: twitter.com, cointelegraph.com, reuters.com, ft.com, investing.com, poundsterlinglive.com
Saxo Bank And JP Morgan's Negative Views On The Outlook For British Economic Growth

ECB Expected To Raise Interest Rates By 75bps (EUR/USD), Rishi Sunak Becomes Next U.K Prime Minister (GBP/AUD, EUR/GBP)

Rebecca Duthie Rebecca Duthie 25.10.2022 18:44
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
The EUR/GBP Pair Is Displaying A Sideways Auction Profile

ECB Interest Rate Decision Due Tomorrow (EUR/USD, EUR/GBP), BoC Cash Rate Boost Missed Market Expectations (GBP/CAD)

Rebecca Duthie Rebecca Duthie 26.10.2022 18:00
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
The EUR/USD Pair Maintains The Bullish Sentiment

ECB Interest Rate Decision Met Market Expectations At 75 Bps

Rebecca Duthie Rebecca Duthie 27.10.2022 14:31
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
Representatives Of The ECB Claim That By The End Of 2023, Inflation Should Have Reached The Target Level

USD GDP (QoQ) (Q3) Beat The Markets Expectations by 0.2%

Rebecca Duthie Rebecca Duthie 27.10.2022 14:38
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,
The Agressive Rate Hikes By The Fed Did Not Lead To A Deeper Recession

European Economy Likely To Be Under Pressure In The Wake Of ECB’s Interest Rate Decision (EUR/USD, EUR/GBP), CAD Suffered Losses This Week (GBP/CAD)

Rebecca Duthie Rebecca Duthie 27.10.2022 17:14
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
The Euro May Attempt To Resume An Upward Movement

Dovish Comments From ECB President Christine Lagarde Sparked Speculation (EUR/USD, EUR/GBP), PCE Missed Market Expectations (GBP/USD)

Rebecca Duthie Rebecca Duthie 28.10.2022 16:48
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
The Bank Of England Can Tighten Monetary Policy Considerably More Gradually Than It Is Now Doing

Eurozone Inflation Touched Record Highs (EUR/USD, EUR/GBP), RBA Interest Rate Decision Due On Tuesday (GBP/AUD)

Rebecca Duthie Rebecca Duthie 31.10.2022 17:39
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
The British Pound Is Showing Signs Of Exhaustion Of The Bullish Force

Fed Fully Expected To Raise Interest Rates By 75bps (EUR/USD, EUR/GBP), BoE Interest Rate Decision Due On Thursday (GBP/CAD)

Rebecca Duthie Rebecca Duthie 01.11.2022 16:41
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
Saxo Bank Podcast: Natural Gas On Colder Weather, Wheat And Coffee Under Pressure, JPY Weaker And More

Platinum Futures, Efforts To Slow Gas Prices Continue, Wheat Futures Down 6%

Rebecca Duthie Rebecca Duthie 02.11.2022 16:34
Summary: Platinum futures are down 1.11% during 2022. Russia declared that, once its requests have been satisfied by Ukrainian counterparts, it is willing to continue the trade agreement that ensures a safe passageway for grain-carrying vessels. EU efforts to lower high energy prices are slowing down the adoption of renewable energy. Platinum Futures According to trading on a contract for difference (CFD) that monitors the benchmark market for this commodity, platinum has dropped 10.67 USD/t oz. or 1.11% since the start of 2022. Platinum Jan ‘23 Futures Price Chart Wheat futures fell 6% on Wednesday Following news that trade for ships transporting grain out of Ukrainian Black Sea ports may resume operations, Chicago wheat futures plunged more than 6% to $8.5 per bushel on Wednesday, dropping considerably from the three-week high of $9 reached the prior session. Russia declared that, once its requests have been satisfied by Ukrainian counterparts, it is willing to continue the trade agreement that ensures a safe passageway for grain-carrying vessels. The action was taken after Moscow abruptly chose to terminate the agreement's participation at the end of October, citing security concerns that Kyiv refuted. The continuance of shipments from Ukraine will boost global supplies in addition to freeing up essential storage space for the upcoming harvest, increasing concerns about a global food crisis that drove wheat prices to a record-high $12.8 in May. Prior to February's Russian invasion of Ukraine, sales from both nations made up about 30% of all exports. Wheat Futures Price Chart RBOB Gasoline futures The CEO of one of the biggest wind turbine manufacturers in the world cautioned that EU efforts to lower high energy prices are slowing down the adoption of renewable energy just as the area wants to boost it up. “Every indication is that the EU and governments have spent more time in finding taxation methods or trying to limit energy prices, which has actually slowed the process and project accruals,” Henrik Andersen, chief executive of Danish wind turbine manufacturer Vestas, told the Financial Times. In an effort to slow the growth in energy costs across Europe brought on by high gas prices, European energy ministers decided in September to set a $180 per megawatt-hour cap on earnings from the production of wind, solar, and nuclear energy. RBOB Gasoline Dec ‘22 Futures Price Chart Sources: finance.yahoo.com, ft.com, tradingeconomics.com
ADP Non-farm payrolls jobs market data show a growth of 127K, much less than the previous print

FOMC Interest Rate Decision In The Spotlight (EUR/USD), HSBC Claims GBP Is Close To Long-term Base (EUR/GBP, GBP/ZAR)

Rebecca Duthie Rebecca Duthie 02.11.2022 16:34
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
The GBP/USD Pair Did Not Reach The Nearest Target Level Of 1.2259

USD Continued On Its Strengthening Path (EUR/USD), BoE Hiked Interest Rates By 75bps (EUR/GBP, GBP/AUD)

Rebecca Duthie Rebecca Duthie 03.11.2022 16:28
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
The Idea Of A Probable Pivot In The Fed’s Policy Keeps The Price Action Around The DXY Depressed

Dollar lost ground to the Euro & GBP on Friday, US Jobs report missed expectations

Rebecca Duthie Rebecca Duthie 04.11.2022 15:42
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
According to ING, US Producer Price Index may mean that inflation could decrease earlier

The US dollar index decreased on Monday, BoE November interest rate decision caused significant losses for the GBP

Rebecca Duthie Rebecca Duthie 07.11.2022 17:48
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
InstaForex expects risky assets to regain demand if the US CPI declines

US Dollar rally seems to be coming to an end, GBP rebounded on Monday

Rebecca Duthie Rebecca Duthie 08.11.2022 18:18
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
UK recession could deteriorate with tighter monetary and fiscal policy, the US dollar suffered another setback

UK recession could deteriorate with tighter monetary and fiscal policy, the US dollar suffered another setback

Rebecca Duthie Rebecca Duthie 09.11.2022 17:00
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
The World's Leading Economies Not Doing Well And This Is Keeping High Demand For USD

US dollar index touching new monthly lows, pound sterling is reacting well to increase in market sentiment

Rebecca Duthie Rebecca Duthie 10.11.2022 18:54
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
EUR/USD Pair May Have A Potential For The Further Rally

Eurozone’s entry into a recession may be delayed, the GBP and NZD - high beta currencies

Rebecca Duthie Rebecca Duthie 14.11.2022 17:20
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
The GBP/USD Pair Was Trading Calmly But The Volatility Still Remained Very High

The US dollars surrender to the Euro continues, GBP/USD touching 3-month highs, BoJ may continue its loose monetary policy

Rebecca Duthie Rebecca Duthie 15.11.2022 18:54
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
Growth Of The USD/JPY Pair Is Hampered By Resistance

Euro has remained resilient to currency counterparts despite Tuesdays events in Poland, Yen supported by USD decline

Rebecca Duthie Rebecca Duthie 16.11.2022 17:29
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
The SNB Had Reduced Its Foreign Exchange Reserves And CHF Slipped Below The Parity Against The Euro For The First Time

Eurozone headline inflation reached a record high in October, The UK’s future prospects for future economic development, CHF is the second best performing currency for 2022

Rebecca Duthie Rebecca Duthie 17.11.2022 16:10
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
Technical Outlook: The EUR/USD Bear Trend Will Be Confirmed And The GBP/USD Has Not Managed To Close Above

The Fed may begin slowing their interest rate hiking cycle, UK promising to return to fiscal credibility

Rebecca Duthie Rebecca Duthie 18.11.2022 16:34
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
The Movement Of The NZD/USD Pair On The 4-hour Chart

China’s COVID-19 regulations causing U.S Stocks to decline, Inflation in the UK could be pushed up by 1% in April

Rebecca Duthie Rebecca Duthie 21.11.2022 18:44
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
The EUR/USD Pair Maintains The Bullish Sentiment

Rising NGAS costs may pose downside danger to the Euro, UK economic outlook looks bleak

Rebecca Duthie Rebecca Duthie 22.11.2022 17:04
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
The Reserve Bank Of New Zeeland Is Likely To Deliver 50bps Rate Hike

RBNZ Interest Rate Reached 4.25% | Singapore CPI Drop | US Reports Ahead

Kamila Szypuła Kamila Szypuła 23.11.2022 11:39
Today is full of important statistics from the USA. The first will be a report on durable goods orders, which will reflect the state of the industrial sector and consumer demand. In addition, there will be PMI reports from the European Union and the UK. RBNZ Interest Rate Decision Undoubtedly, Wednesday is a very busy day. The first important information came from Noerj Zealand. As expected, Reserved Bank Of New Zealand raised rates by 75bp. Thus, interest rates are the highest since 2008. RBNZ Interest Rate reached 4.25%. CPI data Singapore At the beginning of the day, information about the level of inflation in Singapore also appeared. CPI and Core CPI reached lower than expected levels. CPI for October will amount to 6.7% against the last reading of 7.5%. Core CPI decreased by 0.2% and reached 5.1%. This may mean that inflation is heading to decline and reach a stable 2% level. South Africa The opposite movement of inflation took place in South Africa. CPI Y/Y increased to 7.6% and Core CPI Y/Y reached 5.0% PMI data French Manufacturing PMI (Nov) rose from 47.2 to 49.1. Services PMI (Nov) fell to 49.4. German A similar situation took place in Germany. The Manufacturing PMI (Nov) rose to 46.7 and the Services PMI (Nov) fell 0.1 to 46.4. Both readings were greater than expected. EU PMI In the European Union, PMIs were higher than expected. The Services PMI (Nov) held its previous level of 48.6 against expectations of a decline to 48.0, and the Manufacturing PMI rose from 47.3. In Europe, the manufacturing PMI improved while services declined or remained flat. UK PMI In the UK, declines were expected, but the Manufacturing PMI And Services PMI remained at its previous level. The Manufacturing PMI remained at 46.2 and the Services PMI at 48.8. US PMI In the US, PMI reports will appear at 16:45 CET. The manufacturing PMI is expected to decline while the services PMI is expected to increase slightly. US Reports Ahead of Thanksgiving, the US will release a broad package of reports. Weekly reports as well as reports from the real estate sector may have an impact on the situation in this and other economies. Read more: Important US Reports Ahead, The Services And Manufacturing Projected Under 50| FXMAG.COM Speeches There will also be a lot of speeches today, especially from the Bank of England. At 11:45 CET, David Ramsden, Deputy Governor of the Bank of England took the floor. His public engagements are often used to drop subtle clues regarding future monetary policy. At 12:30 the Bank of England Monetary Policy Committee (MPC) Member Pill took the floor. Dr Catherine L Mann serves as a member of the Monetary Policy Committee (MPC) of the Bank of England to speak at 15:45 CET. The last speeches from the islands will be at 5:30 pm CET and Huw Pill will speak again. Representatives of the German bank will also take the floor. Two speeches are scheduled for 14:30 CET, Prof. Dr. Johannes Beermann and Professor Joachim Wuermeling are set to speak. At 16:00 CET Prof. Dr. Johannes Beermann will be speak again. FOMC Meeting Minutes The minutes are arrived today. The minutes offer detailed insights regarding the FOMC's stance on monetary policy, so currency traders carefully examine them for clues regarding the outcome of future interest rate decisions. Summary: 3:00 CET RBNZ Interest Rate Decision 7:00 CET Singapore CPI (YoY) 10:00 CET South Africa CPI (MoM) (Oct) 10:15 CET French PMI (Nov) 10:30 CET German PMI 11:00 CET EU PMI 11:30 CET UK PMI 11:45 CET MPC Member Ramsden Speaks 12:30 CET BoE MPC Member Pill Speaks 14:30 CET German Buba Beermann Speaks 14:30 CET German Buba Wuermeling Speaks 15:00 CET US Building Permits 15:30 CET US Core Durable Goods Orders 15:30 CET US Initial Jobless Claims 15:45 CET BoE MPC Member Mann 16:00 CET German Buba Beermann Speaks 16:45 CET US PMI 17:00 CET US New Home Sales 17:00 CET US Crude Oil Inventories 21:00 CET BoE MPC Member Pill Speaks 21:00 CET FOMC Meeting Minutes Source: https://www.investing.com/economic-calendar/
The Modest Strength Of The US Dollar Acts As A Headwind For The NZD/USD Pair

The RBNZ Accelerated Its Pace Of Tightening This Morning

Craig Erlam Craig Erlam 23.11.2022 12:09
Equity markets appear to be treading water on Wednesday as we await the latest batch of FOMC minutes later in the day. Asia played a bit of catchup overnight after Europe and the US posted decent gains on Tuesday that built throughout the session. But futures on both sides of the pond are barely changed from yesterday’s close which may change as the day progresses, of course. I’m not sure whether it’s the FOMC minutes release, the Thanksgiving bank holiday, or just the lack of major catalysts that are driving the inactivity in futures markets. There’s also a huge amount of data on the calendar today which could get things moving including flash PMIs, as well as US durable goods, home sales, consumer sentiment, and jobless claims. That should keep us entertained throughout the day. The minutes are obviously the standout here, although as always I do wonder what exactly we’re going to learn from them that isn’t already evident from the decision, statement, press conference, and flurry of central bank commentary since the event took place. Often it’s not the substance of the minutes but the subtle changes that investors get carried away with. The dovish pivot that may or may not have actually been has been the focus in recent weeks, with Fed commentary since not exactly clearing anything up. Investors may be on the hunt for clues that they’ve acted prematurely, or that there’s actually more support for such a slowdown in tightening and less for a higher terminal rate than they previously thought. Either way, the potential for a big response may be what’s creating this paralysis in the markets this morning. And as can often be the case, it may all be for nothing if the minutes do in fact tell us nothing we already don’t know, leaving us none-the-wiser about the terminal rate but perhaps more assured that 0.5% is more likely in December than not. Of course, the inflation data shortly before the meeting could change that. RBNZ accelerates its tightening The RBNZ accelerated its pace of tightening this morning with a record 75-basis point hike which was in line with expectations. There was plenty of volatility in the New Zealand dollar around the release though as the central bank set a much higher terminal rate and forecast a recession starting next year. A more aggressive approach, in its view, is needed to get inflation back to the target range of 1-3% as the labour market is too tight and inflation is at risk of becoming increasingly embedded. Is the case for $10,000 greater than that for $20,000? Bitcoin is in the green for a second day, up more than 2% in early trade and desperately trying to establish a bottom in the market. That may be easier said than done at a time when the headlines are far from favourable due to the fallout from the FTX collapse. Everyone is wondering who the next victim will be and whether this debacle will uncover similar practices in other areas of the market. Against that backdrop, it’s hard to imagine bitcoin managing any kind of significant, sustainable recovery. The next area of resistance falls around $17,500, a break of which could make things more interesting. But that could be very difficult to overcome. There’s arguably a greater case for the price to fall to $10,000 at the moment, than rising to $20,000. ​ For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Jacinda Ardern Has Resigned As Prime Minister Of New Zealand, Crude Oil Extended Wednesday's Steep Decline

The RBNZ Statement Forecasted That The Economy Will Tip Into Recession In June 2023

Kenny Fisher Kenny Fisher 23.11.2022 12:18
The New Zealand dollar has extended its rally on Wednesday. In the European session, NZD/USD is trading at 0.6181, up 0.47%. RBNZ delivers record hike The Reserve Bank of New Zealand pushed the rate pedal to the floor today, with a supersize rate hike of 75 basis points, a record high. This raised the cash rate to 4.25%, up from 3.5% and the highest level since 2008. The move was widely expected, but nonetheless, it sent bond yields and the New Zealand dollar higher. The RBNZ is forecasting that the cash rate will peak at 5.5% in 2023, which means there’s plenty of life left in the current rate-tightening cycle, with the RBNZ currently boasting the highest cash rates among the major central banks. The bank has designated inflation as public enemy number one, but despite a series of oversize hikes, there are no signs that inflation has peaked. In the third quarter, CPI was almost unchanged in Q3, nudging lower to 7.2%, following a 7.3% gain in Q2. This figure caught the RBNZ off guard, as the bank projected that CPI in Q3 would slow to 6.4%. The Monetary Policy Statement was decidedly hawkish, noting that “core consumer price inflation is too high” and “near-term inflation expectations have risen.” How will New Zealand’s economy fare after the latest rate hike? The labour market remains tight, with unemployment at a near-record low of 3.3%, and the economy has recovered impressively from the Covid pandemic. Still, the RBNZ statement forecasted that the economy will tip into recession in June 2023 and that inflation would accelerate to 7.5% in the fourth quarter and would not fall back to the midpoint of the 1%-3% target until 2025. The RBNZ has taken off the gloves, but the prolonged battle against inflation will not end anytime soon. The US will release the FOMC minutes later today, which could impact on the movement of NZD/USD. Investors will be looking for hints about what the Fed has planned at the December 12th meeting. The markets have priced in a 50-basis point hike, although there is an outside chance of a 75 bp increase.   NZD/USD Technical There is resistance at 0.6217 and 06283 0.6139 is providing support, followed by 0.6095, a monthly support line This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
The EUR/USD Price Failed To Exhibit A Strong Trending Movement

Eurozone economy seems to be falling into a recession, UK economic outlook seems poor

Rebecca Duthie Rebecca Duthie 23.11.2022 18:08
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
The New Zealand Dollar (NZD) Remained Extremely Volatile

Hawkish Interest Rate Guidance Is Likely To Strengthen The Kiwi Dollar (NZD/USD) Further

TeleTrade Comments TeleTrade Comments 24.11.2022 09:16
NZD/USD has surpassed the crucial hurdle of 0.6250 amid solid risk-on impulse. Federal Reserve policymakers are supporting the interest rate hike slowdown regime to reduce financial risks. The Reserve Bank of New Zealand sees the interest rate peak at 5.5%. NZD/USD is aiming to smash the round-level resistance of 0.6300 as RBNZ-Fed policy divergence has widened. NZD/USD is advancing firmly after overstepping the critical resistance of 0.6250 in the Asian session. The Kiwi Dollar has gained significant traction as the extent of optimism is skyrocketing in the currency market. The asset has continued its two-day winning streak and has refreshed its three-month high at 0.6270. The major is exposed to kiss the round-level resistance of 0.6300 amid no signs of amelioration in the positive market sentiment. A significant jump in investors’ risk appetite has weakened demand for the US Dollar. The US Dollar Index (DXY) is falling like a house of cards and has surrendered the cushion of 106.00. The mighty US Dollar is looking to test three month low at 105.34. Meanwhile, S&P500 futures are displaying strength ahead of the US holiday on account of Thanksgiving Day. The 10-year US Treasury yields have slipped below 3.69% as investors see no continuation of 75 basis points (bps) rate hike spell for the fifth time by the Federal Reserve (Fed). Federal Reserve policymakers vouched for decelerating interest rate hike pace A satisfactory October inflation report has eased some troubles for the Federal Reserve policymakers. Fed chair Jerome Powell and his mates are continuously making efforts to bring price stability. A decline in the headline Consumer Price Index (CPI) has delighted the Federal Reserve, which is visible in Federal Open Market Committee (FOMC) minutes. The majority of Federal Reserve policymakers have vouched for a slowdown in the interest rate hike pace to reduce financial risks and to observe the progress of efforts yet made in the form of restrictive policy measures. This has resulted in a significant fall in the US Dollar. Considering the persistent nature of inflation in the United States economy, Fed chair Jerome Powell will shift to a half-percent rate hike extent for December’s monetary policy meeting. Upbeat United States Durable Goods Orders failed to cushion the US Dollar Market participants always await indicators that depict demand by the households to make projections for Consumer Price Index (CPI) figures. The United States Durable Goods Orders data that display consumer demand for durables improved by 1% in October vs. the expectation and the prior release of 0.4%. This indicates that the consumer demand is robust and core CPI could display stagnancy ahead. This may end the plan of decelerating interest rates by the Federal Reserve. It is worth noting that households in the United States are addressing expenses with lower real income. Also, higher interest rates will result in higher interest obligations on purchases of durable goods, which could result in accelerating delinquency costs for credit providers. Reserve Bank of New Zealand sees interest rate peak at 5.5% On Wednesday, Reserve Bank of New Zealand Governor Adrian Orr hiked its Official Cash Rate (OCR) by 75 bps. This has widened the Reserve Bank of New Zealand-Federal Reserve policy divergence. In order to tighten its fight against a historic surge in inflation, the Reserve Bank of New Zealand ditched its 50 bps rate hike regime and went for a bigger rate hike. Earlier, the RBNZ hikes its OCR 50 bps consecutively five times. Price pressure in the New Zealand economy has not displayed signs of exhaustion and a peak yet, therefore, policy tightening will continue to accelerate further. The Reserve Bank of New Zealand has also provided an interest rate peak of 5.5%. Widened Reserve Bank of New Zealand-Federal Reserve policy divergence and hawkish interest rate guidance is likely to strengthen the Kiwi Dollar further and NZD/USD may smash 0.6300 sooner. NZD/USD technical outlook NZD/USD is marching towards the horizontal resistance placed from August 12 high at 0.6469 on a daily scale. The asset has comfortably established above the 61.8% Fibonacci retracement (placed from August 12 high at 0.6469 to October 13 low at 0.5560) at 0.6103. The pair has crossed the 200-period Exponential Moving Average (EMA) at 0.6233 for the first time in the past seven months. Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in a bullish range of 60.00-80.00, which indicates more upside for the Kiwi Dollar.  
The Bank Of England Has Warned That Negative Growth Will Extend All The Way

Eurozone recession may not be as bad as previously anticipated, demand for UK government bonds driving the GBP

Rebecca Duthie Rebecca Duthie 24.11.2022 15:34
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
The Modest Strength Of The US Dollar Acts As A Headwind For The NZD/USD Pair

The RBNZ Has Signalled That Household Spending Will Have To Drop

Kenny Fisher Kenny Fisher 25.11.2022 11:06
The New Zealand dollar has edged lower on Friday. In the European session, NZD/USD is trading at 0.6244, down 0.33%. Retail sales post modest gain It wasn’t a spectacular rebound by any means, but New Zealand’s retail sales showed a gain in Q3. Headline and core retail sales both rose a modest 0.4% QoQ. This follows a soft Q2, when headline retail sales came in at -2.2% and the core release at -1.5%. The reaction of NZD/USD was subdued, likely a result of the Thanksgiving holiday, with US markets open for limited hours today. Retail sales data may not be as positive in Q4, with the Reserve Bank of New Zealand hiking rates by a massive 0.75% this week. The RBNZ has signalled that household spending will have to drop in order to curb inflation, and with more rate hikes still to come, it’s clear that household spending will come down during the current rate-hike cycle. The Federal Reserve has telegraphed to the markets that it will continue to raise rates, despite the last inflation report, which was softer than expected. The Fed’s message, reiterated in this week’s minutes, remains somewhat mixed. On the one hand, the Fed has signalled that the pace of rates will be easing, and the markets have priced in a ‘modest’ 50 bp hike in December after four consecutive 75-bp increases. At the same time, some Fed members are projecting that the terminal rate will be higher than previously expected. There is uncertainty as to whether this “lower for longer” stance is bullish or bearish for the US dollar, a question we’ll have to wait for market participants to answer.   NZD/USD Technical NZD/USD faces resistance at 0.6283 and 0.6361 There is support at 0.6217 and 0.6139 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
The Australian Jobs Report In December Had A Negative Impact On The Australian Dollar (AUD)

The Further Decline Of The AUD/NZD Cross-Pair Is Expected

InstaForex Analysis InstaForex Analysis 26.11.2022 15:45
This week, the New Zealand dollar received substantial support from the Reserve Bank of New Zealand: the central bank fully justified the hawkish hopes of most experts by raising the interest rate by 75 basis points. And although the central bank implemented the base scenario, the kiwi still showed increased volatility. For instance, the NZD/USD pair updated its multi-week high to 0.6282. But in this case we cannot be sure about the success of the uptrend - the "dark horse" here is the greenback, which can significantly strengthen its positions ahead of the December FOMC meeting. That's why it is best to "monetize" the results of the RBNZ's November meeting with the help of cross-pairs that have the kiwi in it. And, in my opinion, the best option here is the AUD/NZD cross. Take a look at the weekly chart of this pair. The price has been falling steadily and consistently (though with corrective pullbacks) for the second month in a row, since early October. This means that we are dealing with a noticeable downtrend, which has a rather strong fundamental basis. It is expressed primarily (and mostly) in how the rates of the RBNZ and Reserve Bank of Australia are uncorrelated. The RBA slowed the pace of tightening back in September, complaining about the side effects of aggressive policy. And recently the RBA has been giving signals about a possible pause in the first half of next year. And although these signals are only heard in the list of hypothetical options, the market is still cautious. In my opinion, it is quite reasonable. Let's look back on the minutes of the last RBA meeting. The text of this document indicates that the central bank has no predetermined trajectory for the rate hike. Members of the central bank do not exclude two options: 1) a return to a 50 bps hike (the central bank is currently raising the rate in 25 bps); and 2) a suspension of monetary policy tightening. In my opinion, the Australian central bank will continue to raise the rate by 25 bps at the next meetings, but will end the current cycle of monetary tightening at a lower level relative to the RBNZ. The OCR rate is currently at a 14-year high (4.25%, RBA at 2.85%), with the New Zealand central bank still stating that "there is still a lot to do" as inflation remains at unacceptably high levels. At the previous (October) RBNZ meeting, the central bank raised the rate by 50 bps, as it did at the previous four meetings. However, at the final press conference, RBNZ Governor Adrian Orr admitted that 75 bps was among the options under consideration. At that time, the central bank was hesitant to accelerate monetary tightening, but the inflation data released a little later gave the RBNZ members determination in November. As a reminder, inflation in New Zealand soared again in the third quarter, well above forecast levels. The consumer price index rose 2.2% in quarterly terms (against a forecast of 1.5%) and jumped to 7.2% year over year, against a forecast of a slowdown to 6.5%. Given the inflation trends, as well as Orr's hawkish rhetoric, we can assume that the monetary policy tightening will continue to slow down next year. For example, currency strategists at the UOB have revised their earlier forecasts and moved the current cycle ceiling to 5.5%. In their view, the RBNZ will reach this target in the third quarter of 2023, after which the process of monetary policy tightening will be paused, followed by a rate cut in 2024. The RBA, for its part, is relaying softer language, while not ruling out dovish decisions. For example, at the end of its last meeting, RBA Governor Philip Lowe said that members of the central bank "considered it appropriate to raise rates at a slower pace." At the same time, he noted that the members discussed the implications and costs of not raising rates, since the central bank "takes into account the pressures of higher rates and inflation on household budgets." Thus, Lowe allowed a pause in the process of tightening monetary policy. Thus, the current fundamental background contributes to the further decline of the AUD/NZD cross-pair. The bearish scenario is also evidenced by the technical picture: the pair is between the middle and bottom lines of the Bollinger Bands indicator on the daily chart, as well as under all the lines of the Ichimoku indicator, which shows a bearish Parade of Lines signal. It is better to use any corrective surges to open short positions to the first support level of 1.0750 (the bottom line of the Bollinger Bands indicator on the daily chart). The main bearish target is 1.0700 (lower limit of the Kumo cloud on the one-week timeframe).       Relevance up to 01:00 2022-11-27 UTC+1 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade. Read more: https://www.instaforex.eu/forex_analysis/328219
The New Zealand Dollar (NZD) Remained Extremely Volatile

The Reserve Bank of New Zealand's (RBNZ) Decision Supports Prospects For The Emergence Of Some Dip-Buying Around The NZD/USD Pair

TeleTrade Comments TeleTrade Comments 28.11.2022 09:52
NZD/USD remains under some selling pressure for the second successive day on Monday. A weaker risk tone benefits the safe-haven greenback and weighs on the risk-sensitive Kiwi. Bets for less aggressive Fed rate hikes cap the USD upside and help limit losses for the pair. The NZD/USD pair opens with a modest bearish gap on Monday and retreats further from its highest level since August 18 touched last week. The pair remains depressed through the early European session and is currently placed around the 0.6200 mark, just a few pips above the daily low. The global risk sentiment took a hit amid a wave of protests in China over the government’s zero-COVID policy, which has been fueling concerns about a deeper economic downturn. The anti-risk flow extends some support to the safe-haven US Dollar and turns out to be a key factor dragging the NZD/USD pair lower for the second straight day. That said, the prospects for a less aggressive policy tightening by the Fed keep a lid on any further gains for the greenback and should help limit losses for the major. It is worth recalling that the minutes of the November FOMC meeting released last Wednesday showed that most policymakers agreed it would soon be appropriate to slow the pace of rate hikes. Furthermore, the markets are now pricing in a greater chance of a relatively smaller 50 bps lift-off at the December FOMC meeting. This is reinforced by the ongoing downfall in the US Treasury bond yields, which should hold back the USD bulls from placing aggressive bets and lend some support to the NZD/USD pair. Apart from this, an unprecedented 75 bps rate hike by the Reserve Bank of New Zealand (RBNZ) last week supports prospects for the emergence of some dip-buying around the NZD/USD pair. This, in turn, makes it prudent to wait for strong follow-through selling before positioning for a deeper pullback. In the absence of any relevant economic data, traders on Monday will take cues from speeches by influential FOMC members - St. Louis Fed President James Bullard and New York Fed President John Williams.  
The GBP/USD Pair Did Not Reach The Nearest Target Level Of 1.2259

Eurozone’s future is clouded by economic unrest in China, GBP’s future for the week lies in the hands of external variables

Rebecca Duthie Rebecca Duthie 28.11.2022 17:10
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
The Latest UK CPI Figure Is Below October’s 11.1% Peak

German CPI inflation missed market expectations, CAD down around 2% on Tuesday

Rebecca Duthie Rebecca Duthie 29.11.2022 19:10
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
Plenty Of Things To Discuss In The Market Insights Podcast By Oanda

Inflation in the Eurozone fell for the first time since July, AUD one of the best performing currencies in the G10

Rebecca Duthie Rebecca Duthie 30.11.2022 19:03
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
China’s Caixin Manufacturing PMI Data Might Support The New Zealand Dollar (NZD)

The New Zealand Dollar (NZD) Has Been Strengthened

TeleTrade Comments TeleTrade Comments 01.12.2022 10:06
NZD/USD has refreshed its three-month high at 0.6335 on upbeat market sentiment. The speech from Jerome Powell confirmed the termination of a 75 bps rate hike spell in December meeting. New Zealand Dollar has picked strength on upbeat Caixin Manufacturing PMI and the reopening of the Chinese economy. NZD/USD is expected to smash 0.6350 as the US Dollar is seeing more downside on policy moderation fears. NZD/USD is marching north firmly after shifting its auction profile above the round-level resistance of 0.6300 in the Asian session. The kiwi asset has refreshed its three-month high at 0.6335 as the New Zealand Dollar has been strengthened by a surprise rise in Caixin Manufacturing PMI data and a significant improvement in investors’ risk appetite post-Federal Reserve (Fed)’s commentary. Fed Powell’s promise to moderate the extreme-tight monetary policy in the December meeting has infused fresh blood into risk-sensitive assets. S&P500 futures are gathering momentum adding more upside to Wednesday’s gains. The US Dollar Index (DXY) has surrendered its short-lived recovery attempt and is on the verge of refreshing its day’s low below 105.50. Meanwhile, the 10-year US Treasury yields have slipped again to 3.60% amid healthy demand for US government bonds by investors. Federal Reserve’s Powell is set to terminate the 75 bps rate hike culture The commentary from Fed chair Jerome Powell has confirmed that the central bank is looking to slow down its interest rate hike pace. Catalysts that have compelled Fed Chair to sound less hawkish while providing interest rate guidance for December’s monetary policy meeting are a slowdown in labor demand, a decline in economic activities, and a soft October inflation report. The Federal Reserve is bound to bring price stability to the United States economy but not at the cost of the economy. Fed Chair in his speech cited that it is not appropriate to ‘Crash the economy and clean it afterward’. This has confirmed that the Federal Reserve (Fed) won’t continue the 75 basis points (bps) rate hike spell now and may shift to a lower rate hike to 50 bps. As per the CME FedWatch tool, the chances of a 50 bps rate hike announcement by the Fed in the December meeting holds around 80%. US Dollar to remain volatile ahead of Nonfarm Payrolls Another critical trigger that is going to keep US Dollar bulls on the tenterhooks in the United States Nonfarm Payrolls (NFP) data, which will release on Friday. As per the consensus, the United States economy added 200K jobs in November, lower than the prior release of 261K. Cues from US Automatic Data Processing (ADP) Employment data indicate that the additional payrolls in November are merely 127K. The Unemployment Rate is seen unchanged at 3.7%. Apart from that, investors will keep an eye on Average Hourly Earnings data. The street is expecting that the next trigger that could create troubles for the Federal Reserve is rising wage prices. Wage inflation carries the capability of driving price inflation higher. Post a slowdown in inflation led by accelerating interest rates, the United States households will remain with higher earnings that could trigger retail demand. Upbeat Caixin Manufacturing PMI drove New Zealand Dollar In early Tokyo, IHS Markit reported a surprise rise in Caixin Manufacturing data. The economic data was released at 49.4 for November month vs. 48.9 as projected and October’s release of 49.2. Despite extreme lockdown measures in November by Chinese authorities to contain the COVID-19 epidemic, the economy has managed to display better-than-projected performance. This has strengthened the kiwi asset significantly as New Zealand is one of the leading trading partners of China. Meanwhile, signs of the gradual opening of the Chinese economy led by relaxations in zero Covid-19 policy to return economic prospects on track have also strengthened the New Zealand Dollar. NZD/USD technical outlook NZD/USD has comfortably established above the 200-period Exponential Moving Average (EMA) at around 0.6200, which indicates that the long-term trend has turned bullish. Also, a bull cross, represented by the 20-and 50-EMAs at 0.5871, indicates a continuation of the upside. Going forward, the ultimate resistance is placed from August 12 high at 0.6470. Apart from that, the Relative Strength Index (RSI) (14) is oscillating in a bullish range of 60.00-80.00, which indicates that the upside momentum is intact.     search   g_translate    
What To Expect From The Coming Week 06.02. – 10/02/2023?

Final PMIs, Revised GDP, CPI And Retail Sales Ahead

Craig Erlam Craig Erlam 04.12.2022 10:16
EU There are a number of economic releases on the calendar next week but it’s almost entirely made up of tier two and three data. That includes final PMIs, revised GDP and retail sales.  The most notable events for the EU over the next week are speeches by ECB policymakers ahead of the last meeting of the year a week later – including President Lagarde on Monday and Thursday – and the final negotiations on the Russian oil price cap as part of a package of sanctions due to come into force on Monday. UK  Compared with the soap opera of the last few months, next week is looking pretty bland from a UK perspective. A couple of tier two and three releases are notable including the final services PMI, BRC retail sales monitor and consumer inflation expectations. I’m not convinced any will be particularly impactful, barring a truly shocking number. Russia The most notable economic release next week is the CPI on Friday which is seen moderating further to 12% from 12.6% in October, potentially allowing for further easing from the CBR a week later. South Africa Politics appears to be dominating the South African markets at the moment as efforts to impeach President Cyril Ramaphosa go into the weekend. The rand has seemingly been very sensitive to developments this week, with the prospect of a resignation appearing to trigger sharp sell-off’s in the currency and the country’s bonds. Under the circumstances, that could bring weekend risk for South African assets depending on how events progress over the coming days.  On the data front, next week brings GDP on Tuesday and manufacturing production on Thursday.  Turkey Ordinarily, especially these days, inflation releases are widely followed but that is less the case for a country and central bank that has such little interest in it. Official inflation is expected to ease slightly, but only to 84.65% from 85.51% in October, hardly something to celebrate. The central bank has indicated that its easing cycle will now pause at 9% so perhaps another reason to disregard the inflation data. Switzerland A quieter week after one of repeated disappointment on the economic data front. Whether that will be enough to push the SNB into a slower pace of tightening isn’t clear, although it has repeatedly stressed the threat of inflation and need to control it. The meeting on 15 December remains this months highlight while next week has only unemployment on Wednesday to offer. China The PBOC announced on 25 November its decision to cut the reserve requirement ratio for banks by 25 basis points, lowering the weighted average ratio for financial institutions to 7.8% and releasing about 500 billion yuan in long-term liquidity to prop up the faltering economy.   In response to the various property crises that have emerged in the real estate sector over the past year or so, i.e. debt defaults by real estate companies, mortgage suspensions leading to unfinished buildings, and real estate-related non-performing loan crises, the Chinese government has issued a new 16-point plan. Focus next week will be on the Caixin services PMI, trade data, CPI release and the protests. China’s strict zero-Covid measures are hammering growth and the public is clearly becoming increasingly frustrated. It will be a fine balance between managing protests and easing Covid-zero measures to support growth in a country not used to the former. India The RBI could potentially bring its tightening cycle to a close next Wednesday with a final 35 basis point hike, taking the repo rate to 6.25%. While the outlook remains cloudy given the global economic outlook, there is some reason to be optimistic. The tightening cycle may soon be at an end, the economy exited recession in the last quarter and Indian stock hit a record high this week, something of an outlier compared with its global peers. Australia & New Zealand Recent figures show that inflation (YoY) in Australia rose to 7.3% in the third quarter, compared to the target range of 2%-3%. The RBA began to weaken their hawkish stance in the past two months, raising rates by just 25 basis points each time to bring the official rate to 2.85%. The market is currently expecting a 25 basis point rate hike next week as well. Also worth noting is Australia’s third quarter GDP trade balance figures. New Zealand inflation (YoY) surged 7.2% in the third quarter, compared to the RBNZ’s inflation target range of 1%-3%. Previously, the RBNZ had been raising rates by 50 basis points but that changed last month as they ramped it up with a 75 basis point hike. The current official rate is now 4.25%. Japan The Japan Tokyo CPI rose by 3.8% year-on-year in November, up from 3.5% in October and the 3.6% expected. Ex-fresh food and energy it increased by 2.5%, up from 2.2% and above the 2.3% expected. Japan’s manufacturing PMI fell to 49.4 in November, the worst in two years, with both new export orders and overall new orders declining and falling below 50 for the fifth consecutive month, which alines with the unexpected 0.3% fall in Japanese GDP in the third quarter. Japan department store sales rose 11.4% year-on-year in October, down from 20.2% in September.    The poor PMI and retail sales data may have reinforced the BOJ’s view that domestic demand is weak and CPI inflation is largely input and cost driven and, therefore, unsustainable. The central bank will likely continue to pursue an accommodative monetary policy, especially in light of the current poor global economic outlook. Final GDP for the third quarter is in focus next week, with the quarterly figure expected to be negative meaning the economy may be in recession. Lots of other releases throughout the week but the majority, if not all, are tier two and three. Singapore Singapore’s CPI for October was 6.7% (YoY), below expectations of 7.1% and the 7.50% reading. GDP for the third quarter (YoY) was 4.1%, below expectations of 4.2% and 4.40% previously. On the quarter, it was 1.1% down from 1.50%. Next week the only release of note is retail sales on Monday. Economic Calendar Saturday, Dec. 3 Economic Events ECB President Lagarde chairs a roundtable on “The Global Dimensions of Policy Normalization” at a Bank of Thailand conference Sunday, Dec. 4 Economic Data/Events Thailand consumer confidence OPEC+ output virtual meeting ECB’s Nagel and Villeroy appear on German television Monday, Dec. 5 Economic Data/Events US factory orders, durable goods orders, ISM services index Eurozone Services PMI Singapore Services PMI Australia Services PMI, inflation gauge, job advertisements, inventories China Caixin services PMI India services PMI Eurozone retail sales Japan PMI New Zealand commodity prices Singapore retail sales Taiwan foreign reserves Turkey CPI European Union sanctions on Russian oil are expected to begin ECB President Lagarde gives a keynote speech on “Transition Towards a Greener Economy: Challenges and Solutions” ECB’s Villeroy speaks at a conference of French banking and finance supervisor ACPR in Paris ECB’s Makhlouf speaks in Dublin EU finance ministers meet in Brussels The US Business Roundtable publishes its CEO Economic Outlook survey Tuesday, Dec. 6 Economic Data/Events US Trade Thailand CPI RBA rate decision: Expected to raise Cash Rate Target by 25bps to 3.10% Australia BoP, net exports of GDP Germany factory orders, Services PMI Japan household spending Mexico international reserves South Africa GDP Georgia’s US Senate runoff The first-ever EU-Western Balkans summit is held in Albania Goldman Sachs Financial Services conference Wednesday, Dec. 7 Economic Data/Events US Trade MBA mortgage applications China reserves, Trade Australia GDP, reserves Eurozone GDP Canada central bank (BOC) rate decision: Expected to raise rates by 25bps to 4.00% India central bank (RBI) rate decision: Expected to raise rates by 25bps to 6.15% Poland central bank rate decision:  Expected to keep rates steady at 6.75% Singapore reserves Germany industrial production Japan leading index BOJ’s Toyoaki Nakamura speaks in Nagano EIA crude oil inventory report Foreign policy forum is held in Moscow with Russian Foreign Minister Lavrov speaks at a foreign policy forum in Moscow. Thursday, Dec. 8 Economic Data/Events US initial jobless claims Australia trade Indonesia consumer confidence Japan GDP, BoP Mexico CPI New Zealand heavy traffic index South Africa current account, manufacturing production ECB President Lagarde speaks at the European Systemic Risk Board’s sixth annual conference SNB’s Maechler participates in a panel discussion ECB’s Villeroy speaks at the Toulouse School of Economics European Defence Agency holds its annual conference in Brussels Friday, Dec. 9 Economic Data/Events US PPI, wholesale inventories, University of Michigan consumer sentiment China CPI Russia CPI  China PPI, aggregate financing, money supply, new yuan loans Japan M2 New Zealand card spending, manufacturing activity Spain industrial production Thailand foreign reserves, forward contracts Portuguese PM Costa, Spain PM Sanchez, and French President Macron attend a meeting in Spain Sovereign Rating Updates United Kingdom (Fitch) EFSF (Moody’s) ESM (Moody’s) Netherlands (Moody’s) Saudi Arabia (Moody’s) This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
Asia Morning Bites - 27.01.2023

A Strong Case For The BoK To Pivot, Zero-Covid Will Play A Substantially Less Important Role In 2023’s Economic Agenda

Franklin Templeton Franklin Templeton 14.01.2023 09:57
Latest thoughts on global central bank policy (continued) Persistent wage pressures make pivot unlikely in 2023 The RBA’s policy moves so far have been in line with our expectations, and we anticipate three more hikes in early 2023 to take the cash rate to 3.85% by the second quarter of 2023. The RBA’s challenge will present itself in the form of persistent inflation (October CPI was at 6.9%) amid a strong labor market and subsequent wage growth of 4%–5%. Growth has been resilient in the face of hikes and slowing property prices, but household consumption data are starting to feel the pinch. Yet, a recession is not our baseline scenario. Inflation will continue to be the prime focus for policymakers, even in 2023. While a slowdown  in price pressures will be evident in 2023 due to base effects and easing supply chains, the outlook  will hinge on wage growth and commodity prices. Elevated wage pressures could see the cash rate move beyond 4% as well, which will add to heightened growth risks. For now, we expect an extended pause from the RBA once the peak rate is reached. A shallow recession as more hikes to come Inflation has consistently exceeded expectations due to rapid wage growth throughout 2022. While goods inflation will likely moderate as supply chain pressures and commodity prices ease, services inflation due to wage growth is turning out to be a lot stickier. While the last available wage data were for the third quarter of 2022, higher frequency wage settlements show wages are still going at full strength. This makes the case for further rate hikes in the first half of 2023, likely taking the terminal rate to 5.50% from the current 4.25%. The magnitude of hikes has also jumped from 50 bps through much of the year to 75 bps at the November 2022 meeting. While the sharp hikes so far will dampen growth including construction activity, business sentiment and consumption patterns, a shallow recession is our base case for 2023. We believe the probability for a deeper slowdown will be dependent on how quickly unemployment rates worsen but given that labor demand remains strong especially in re-opening related sectors like tourism, we think a sharp rise in unemployment levels is unlikely in 2023. Early pivot in sight What started with the chip downturn cycle has turned into a more broad-based slowdown in South Korea. The manufacturing Purchasing Managers’ Index (PMI) has remained in contractionary territory since July 2022, the housing market has slumped, and financial conditions have deteriorated due to the rapid interest-rate hikes since late 2021. Default risks are looming for the country’s non-bank financial companies because they have a higher degree of exposure to the property market and rely on volatile short-term funds. The good news is that inflation is moderating gradually, although it remains at an elevated 5%. This prompts us to believe that the central bank will soon need to prioritize growth over inflation with one final rate hike in the first quarter of 2023 (to 3.50%). We expect inflation to sustainably cool throughout 2022, which will make a strong case for the BoK to pivot, especially as recessionary risks will gather steam. While we do not expect a recession just yet, monetary policy action will be key to determine the balance of this tradeoff. We, therefore, do not rule out an early pivot. Zero-Covid exit to eventually unclog monetary policy transmission channel The PBoC has kept monetary policy accommodative throughout 2022—with a combination of liquidity injections and rate cuts. However, monetary policy transmission channels have remained impaired as  tight COVID-19 control measures and the property sector have weighed on the economy. However, statements from the recently held Central Economic Work Conference (CEWC) show that zero-Covid will  play a substantially less important role in 2023’s economic agenda. Infections have already been on the rise as more than half of China’s zero-Covid measures have been eliminated over the past month. The  real litmus test will be the government’s tolerance for a possible surge around the Lunar New Year  holidays in late January. While we expect economic activity to worsen before it becomes better as China transitions to “living with COVID-19,” the PBoC’s accommodative stance should finally start to yield  more positive results as mobility and the labor market benefit from the economic reopening. As for rates, with major lenders cutting deposit rates across the board earlier in the year, we expect to see a further reduction in Loan Prime Rates (LPR), especially the five-year LPR, to boost demand for mortgage loans. Source: cbw-0123-u.pdf (widen.net)
Inflation Reports In Australia And New Zealand Were Higher Than Expected

Inflation Reports In Australia And New Zealand Were Higher Than Expected

Saxo Bank Saxo Bank 25.01.2023 10:04
Summary:  A double dose of upside surprise in inflation was reported this morning. Australia’s 4Q CPI rose to fresh 33-year highs and New Zealand’s remained firm near its recent three-decade highs as well. This brings potential for some upward re-pricing in RBA’s rate hike path, and also raises concerns on whether China’s reopening and the surge in commodity prices, along with a boost to travel demand, could bring another leg up in price pressures later in 2023. Hot Australia CPI cements RBA’s February rate hike Inflation reports in Australia and New Zealand were released this morning, and both came in higher-than-expected. The bigger upside surprise was in Australia’s CPI report which showed inflation rising to a fresh 33-year high in the fourth quarter. 4Q CPI was up 7.8% YoY from 7.3% YoY in 3Q, coming in above the 7.6% YoY expected. December inflation was an even bigger shock, rising by 8.4% YoY from 7.3% YoY in November. Both weighted median and trimmed mean measures of inflation also rose. Price pressures were mostly underpinned by a rise in electricity prices as well as a pickup in holiday travel during the Christmas period. While some may argue that Australia’s inflation is peaking, given that the headline CPI gain of 7.8% YoY was less than the RBA’s expectation of 8% YoY, it is imperative to look at how close the trimmed mean is getting to the headline CPI. With trimmed mean CPI at 6.9% YoY, less than 100bps below headline, shows that the price pressures are rather broad-based. Today’s inflation print cements another 25bps rate hike by the RBA at the February meeting, while also raising the risk of further tightening if inflation data continues to surprise on the upside. Source: Bloomberg, Saxo Markets Steady NZ CPI suggests RBNZ could surprise Earlier in the day New Zealand CPI came in steady at 7.2% YoY for Q4, the same as previously, but above the 7.1% consensus estimate. The quarter-on-quarter read was 1.4% rather than the 1.3% forecast but a deceleration from the prior print of 2.2%. The YoY read was still below the central bank’s forecast of 7.5%, but still remaining close to the 30-year peak of 7.3% YoY printed in June 2022 This suggests that inflation isn’t cooling yet despite rapid rate increases. Price pressures were underpinned by higher house-building costs and higher wages, along with higher demand for holiday travel just like for Australia. Non-tradable inflation, or domestic price rise rises, were up 6.6% YoY, same as last quarter. Meanwhile, tradable inflation was 8.2% YoY, higher than 8.1% YoY on Q3. While the downside surprise in non-tradable inflation may prompt some calls for the RBNZ to slow down its rapid rate increases, there is also reason to believe that the central bank could continue to deliver hawkish as inflation remains hot. This brings the February RBNZ meeting (decision due 22 Feb) in focus, with market pricing also split between a 50 or a 75bps rate hike. Also worth noting that the new NZ Prime Minister Chris Hipkins is bringing the focus back on economic growth amid forecasts of a recession in 2023, and the administration is highlighting the fall in quarterly CPI from 2.2% in Q3 to 1.4% this quarter as a peak in inflation. Source: Bloomberg, Saxo Markets AUDNZD poised for more gains AUDUSD has been bumped higher recently due to a host of factors, including the faster-than-expected China reopening and the resulting gains in commodities such as iron ore. Meanwhile, reports that China will relax its soft ban on some Australian commodities, including coal, has also underpinned. Today’s CPI data should provide further support for AUD, with AUDUSD making fresh highs above 0.7100. The pair may however remain volatile however with US PCE data on the horizon this week ahead of the FOMC meeting next week. If the USD emerges stronger, resistance at 0.7125 may stick. NZDUSD was a notch weaker, staying below 0.6500 with key hurdle at 0.6535. AUDNZD was up over 1%, jumping past the key 1.0900 to test the cycle highs at 1.0955 and the 0.618 retracement around 1.11. The cross likely has more room on the upside due to the relative scope for upward re-pricing of the RBA path compared to RBNZ. Source: Bloomberg, Saxo Markets Here is the latest technical analysis on AUDUSD and other AUD crosses from our Technical Analyst, Kim Cramer, highlighting the key levels to watch next. Peak inflation narrative getting a reality check A double dose of upside inflation surprises will spark concerns on whether the global inflation has really peaked. We have continued to see tight labor markets for now, which should continue to fuel wage pressures globally. China’s reopening is also further raising prices of commodities, especially crude oil and industrial metals. Meanwhile, a big part of Australia and NZ’s CPI gains in Q4 came from a rebound in travel, which is likely to get a further bump higher with China’s reopening and pent-up demand. In summary, today’s data was a reminder that it is still early to take comfort on inflation, and start thinking about peak rates even as a pause from several central banks looks imminent in Q1. Inflation could come back to haunt global markets in H2, and this would force most central banks, especially the Fed to stay cautious of premature easing.   Source: Macro Insights: Hot Australia and New Zealand CPI to challenge the peak inflation narrative | Saxo Group (home.saxo)
The Modest Strength Of The US Dollar Acts As A Headwind For The NZD/USD Pair

Today’s CPI Release Has Negative Impact On The New Zealand Dollar

Kenny Fisher Kenny Fisher 25.01.2023 14:31
The New Zealand dollar is under pressure on Wednesday. In the European session, NZD/USD is trading at 0.6478, down 0.41%. Markets eye New Zealand CPI The New Zealand dollar reacted negatively to today’s CPI release, falling as much as 0.60% before paring these losses. Fourth-quarter CPI remained unchanged at 7.2%, a notch above the consensus of 7.1%. More importantly, the reading was below the Reserve Bank of New Zealand’s forecast of 7.5%, which could mean that the central bank will ease up on the pace of rate hikes. The central bank has been aggressive, as it raised rates by some 325 basis points in 2022, bringing the cash rate to 4.25%. Similar to the Fed’s experience, the markets aren’t buying into the RBNZ’s hawkish message and are betting that rates will peak at 5.0%, lower than the RBNZ’s projection of 5.5%. The central bank delivered a supersize 75-basis point hike in November, and prior to the inflation release, the market had priced in a 75 bp or 50 bp hike as a 50/50 toss-up. Following the CPI reading, that has changed to 70/30 in favour of a 50-bp move. Inflation has been falling globally while domestically, consumer spending and confidence have fallen due to the rising cost of living. This has raised speculation that the RBNZ could wind up its current rate cycle earlier than it anticipated. The US releases GDP for the fourth quarter on Thursday and we could see some volatility from the US dollar. GDP is expected to slow to 2.8%, down from 3.2% in Q3 but still a respectable pace of growth. On Wednesday, US PMIs pointed to contraction in the manufacturing and services sectors, pointing to cracks in the US economy as high rates continue to take their toll. The US dollar remains under pressure as soft readings have raised hopes that the Fed will ease up on rate policy due to the slowing economy. Read next: The Aussie Pair Is Gaining Strong Positive Traction Agian, USD/JPY Drop Below 130.00| FXMAG.COM NZD/USD Technical 0.6455 is under pressure in support.  The next support line is 0.6379 There is resistance at 0.6547 and 0.6648 This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.  
The New Zealand Dollar (NZD) Remained Extremely Volatile

The Kiwi Asset (NZD/USD) Is Facing Pressure

TeleTrade Comments TeleTrade Comments 30.01.2023 09:52
NZD/USD is facing hurdles in shifting its auction above 0.6500 amid a recovery in the USD Index. Softening consumer spending has bolstered the expectations of a smaller interest rate hike by the Fed. This week, the release of the NZ Employment data will be of utmost importance. The NZD/USD pair is failing in keeping its auction above the psychological resistance of 0.6500 in the early European session. The Kiwi asset is facing pressure as the US Dollar index (DXY) has shown a perpendicular recovery move after a sheer decline to near 101.40. The recovery move in the USD Index is quite strong and is showing signs of vertical decline in the risk appetite of the market participants. S&P500 futures are continuously adding more losses as investors have underpinned the risk-aversion theme amid soaring volatility ahead of the interest rate decision by the Federal Reserve (Fed). While the alpha generated by the US government bonds has trimmed as investors are seeing a lower terminal rate than previously anticipated. The 10-year US Treasury yields have dropped to near 3.50%. Softening consumer spending and Personal Consumption Expenditure (PCE) Price Index have bolstered the expectations of a smaller interest rate hike by the Fed. It is worth noting that Fed chair Jerome Powell has already trimmed the scale of interest rate hikes in its December monetary policy meeting to 50 basis points (bps) after announcing four consecutive 75 bps rate hikes. The Fed is expected to trim the scale of the interest rate hike further by 25 bps. On the New Zealand front, investors are awaiting the release of the Employment data, which is due on Wednesday. The Employment Change (Q4) is expected to drop to 0.7% from the former release of 1.3%. While the Unemployment Rate is seen unchanged at 3.3%. The New Zealand economy is failing to generate significant employment opportunities amid higher interest rates by the Reserve Bank of New Zealand (RBNZ).  
The New Zealand Dollar (NZD) Remained Extremely Volatile

The New Zealand Dollar (NZD) Remained Extremely Volatile

TeleTrade Comments TeleTrade Comments 01.02.2023 09:53
NZD/USD is scaling towards 0.6450 as the USD Index has retreated after a short-lived pullback. Federal Reserve is widely anticipated to announce a 25 bps interest rate hike to 4.50-4.75%. Reserve Bank of New Zealand might continue its hawkish stance despite weak Employment data. NZD/USD is testing the consolidation breakdown and is likely to display a fresh downside ahead. NZD/USD has stretched its recovery above the critical resistance of 0.6440 in the early European session. The Kiwi asset displayed a recovery move after testing Tuesday’s low around 0.6415 due to subdued performance by the US Dollar Index (DXY). The USD Index is demonstrating topsy-turvy moves in a 101.70-101.80 range and is likely to display a downside break due to less anxiety among investors than usual ahead of the interest rate decision by the Federal Reserve (Fed). S&P500 futures are failing to square off their losses that emerged in the Asian session, portraying a caution despite overall optimism in the market mood. Widely anticipated expression of further decline in the policy tightening pace by the Federal Reserve is not compelling the market participants to dump risk-sensitive assets. However, emerging United States recession fears due to the expectation of further stretch in the interest rate have shifted investors to the sidelines. The return generated by 10-year US Treasury bonds is hovering around 3.51% after a mild correction. Lower Labor cost and consumer spending bolsters the case of the less-hawkish Fed’s policy The Employment Cost Index (Q4) released on Tuesday was trimmed to 1.0% vs. the consensus of 1.1% and the prior release of 1.2%. Easing negotiation power for labor costs is music to the ears for the Federal Reserve, which is working hard to achieve price stability in the United States. Also, the Personal Consumption Expenditure (PCE) price index released last week showed that consumer spending contracted in December Christmas celebrations, which claims that the downside trend in the US Consumer Price Index (CPI) will continue further. Economists at Goldman Sachs have come up with expectations for dictations by Federal Reserve chair Jerome Powell in February’s monetary policy meeting. They believe that "Since the FOMC last met in December, incoming data on wage growth and inflation have been encouraging, while signals on activity growth have been mixed and at times concerning. This ended up making the case for slowing the pace of rate hikes to 25bp this week quite easy.” For further guidance, Goldman Sachs expects two additional 25bp hikes in March and May, but fewer might be needed if weak business confidence depresses hiring and investment. US Employment data remains key ahead of Federal Reserve policy The tight US labor market is losing its luster as firms are ditching the recruitment process due to a bleak economic outlook. Higher interest rates and lower retail demand has already forced the firms to suspend their expansion plans for some time. Also, a few firms are not operating at full capacity, which has trimmed the requirement of hiring fresh talent. This has also trimmed the negotiation power of employees to determine talent acquisition costs. As per the consensus, the US Automatic Data Processing (ADP) (Jan) Employment data is seen at 170K, significantly lower than the former release of 235K. The declining scale of job additions due to weaker economic projections is going to delight the Federal Reserve as it will trim inflation projections further. Apart from the Employment data, US ISM Manufacturing PMI (Jan) will be of significant importance. Manufacturing activities are expected to be slowed to 48.0 vs. 48.4 in the prior release as firms are not deploying their entire operating capacity. However, the New Order Index is seen higher at 46.1 vs. the former release of 45.2. An upbeat forward demand might provide some cushion to the USD Index. Read next: AUD/USD Pair Remains Under Strong Selling Pressure, The EUR/USD Pair Has Been Falling But Remains Above 1.08$| FXMAG.COM New Zealand Dollar holds strength despite weak job data The New Zealand Dollar remained extremely volatile in the Asian session due to the release of the Employment data (Q4) and Caixin Manufacturing PMI data. The Employment Change dropped to 0.2% from the expectations of 0.3% and the former release of 1.3%. While the Unemployment Rate has increased to 3.4% from the consensus and the prior release of 3.3%.  Apart from that Quarterly Labor cost index has landed at 1.1% lower than the estimates of 1.3% but similar to the prior release of 1.1%. Steady employment bills and declining labor demand might delight the Reserve Bank of New Zealand (RBNZ), which is working with immense enthusiasm and zeal to achieve price stability. Reserve Bank of New Zealand Governor Adrian Orr might continue hiking interest rates as the inflation rate is still above 7%. The Caixin manufacturing PMI landed at 49.2 lower than the expectations of 49.5 but higher than the former release of 49.0. It is worth noting that New Zealand is one of the leading trading partners of China and an unimpressive PMI has a vital impact on the New Zealand Dollar. NZD/USD technical outlook NZD/USD has sensed selling interest after testing the strength of the consolidation breakdown in the 0.6450-0.6470 range on a four-hour scale. On a broader note, the kiwi asset demonstrated signs of bearish reversal after a Double Top chart pattern around December 13 high at 0.6515. An absence of stellar buying interest while attempting to surpass the 0.6515 resistance triggered selling pressure for the New Zealand Dollar. The 50-period Exponential Moving Average (EMA) at 0.6460 is acting as a major barricade for the New Zealand Dollar. Meanwhile, the Relative Strength Index (RSI) (14) has also slipped into the bearish range of 20.00-40.00, which indicates that the downside momentum is active now

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