Market Expectations For ECB To Hike Interest Rates Grow (EUR/USD), Sunak’s Move To Stimulate The UK Economy Offers GBP Support(EUR/GBP), Weaker USD boosts AUD (AUD/USD), USD/JPY)

JPY: Assessing the FX Intervention Zone and Market Conditions

Summary:

  • Euro strengthening against the USD as market expectations for rising interest rates grow.
  • GBP strengthened on Friday.
  • Too soon to assume bearish USD sentiment.

Read next: FTSE 100 Index Rises Thanks To Shell and BP Stocks, British Pound (GBP) Weakens After Thursday Morning Strengthen 

ECB interest rate expectations offer EUR support

The market is reflecting bullish signals for this currency pair. The Euro has been strengthening recently due to growing expectations of the European Central Bank rising the interest rates. The market is now anticipating a 100bp hike in the rates starting in July.

At this point in time it is difficult to assume that the US Dollar will remain weak. The market has seen expectations of Fed interest rate hikes decrease, however, the increasing inflation seems to be keeping the Fed on track whilst tensions in China and between Russia and the Ukraine continue.

Market Expectations For ECB To Hike Interest Rates Grow (EUR/USD), Sunak’s Move To Stimulate The UK Economy Offers GBP Support(EUR/GBP), Weaker USD boosts AUD (AUD/USD), USD/JPY) - 1 EUR/USD Price Chart

Sunak’s giveaway offers support to GBP

The market is reflecting mixed market sentiment for this currency pair. On Thursday Rishi Sunak announced that the UK government would be giving GBP15 billion to UK households in an attempt to boost consumer attitudes. On Friday the Pound Sterling strengthened against the euro as the move offered GBP support, in addition UK consumers are instilled with more confidence in spending.

In addition, the windfall tax that was implemented against oil companies has also offered GBP support.

Market Expectations For ECB To Hike Interest Rates Grow (EUR/USD), Sunak’s Move To Stimulate The UK Economy Offers GBP Support(EUR/GBP), Weaker USD boosts AUD (AUD/USD), USD/JPY) - 2 EUR/GBP Price Chart

AUD is boosted by weaker USD

Market sentiment for this currency pair is reflecting bullish signals. Investor confidence in the Australian Dollar comes from a combination of a recovery in risk assets and weaker US Dollar in the wake of a Fed member hinting that there could be a pause in tightening monetary policy in September.

Market Expectations For ECB To Hike Interest Rates Grow (EUR/USD), Sunak’s Move To Stimulate The UK Economy Offers GBP Support(EUR/GBP), Weaker USD boosts AUD (AUD/USD), USD/JPY) - 3 AUD/USD Price Chart

JPY underperforms

The market sentiment for this currency pair is reflecting bullish signals. Both the US Dollar and Japanese Yen were market underperformers during the Asian session. The US Dollar is, however, outperforming the Yen.

Market Expectations For ECB To Hike Interest Rates Grow (EUR/USD), Sunak’s Move To Stimulate The UK Economy Offers GBP Support(EUR/GBP), Weaker USD boosts AUD (AUD/USD), USD/JPY) - 4 USD/JPY Price Chart

Read next: FOMC Meeting Minutes Offer Support To The US Dollar (EUR/USD), Improved Market Attitude Favoured The GBP On Thursday (EUR/GBP, GBP/USD), Market Awaits RBA Monetary Policy 

Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com

JPY: Assessing the FX Intervention Zone and Market Conditions

Rebecca Duthie

Remote Editor and writer Intern
FXMAG.COM

Rebecca has a bachelors degree in Investment Management, a Post Graduate Diploma in Financial Planning and is currently enrolled in a Masters program in International Management with a Specialization in International Finance.