In this article, we have covered the highlights of global market news about the AUD/USD, USD/CAD, GBP/USD and EUR/USD.
AUD/USD: Following RBA Lowe’s remarks, the rally stalls around 0.6450
AUD/USD is holding steady above 0.6400 after the recovery stalled above 0.6450 due to Governor of the Reserve Bank of Australia (RBA) Philip Lowe’s dovish comments. According to the head of the central bank, the “board has considered it reasonable to increase rates at a slower pace,” and “We are taking into consideration pressure from higher rates, inflation on family budgets.”
As was largely anticipated, the central bank increased the policy rate earlier this Tuesday by 25 basis points from 2.60% to 2.85% while lowering its growth forecasts for 2022 and the following two years. Following the RBA comments, the Australian dollar reverted near 0.6400 but soon grabbed a new wave of demand. The US dollar lost further ground amid a risk rally on Chinese indexes.
Unconfirmed allegations that regulators were about to end the strict covid-Zero policy progressively circulated on social media. This sparked a rally in Chinese tech equities, which helped push the broader indexes considerably higher. The risk-averse Australian dollar increased along with the Chinese stock markets. It took advantage of the positive Caixin Manufacturing PMI, which came in at 49.2 in October as opposed to the anticipated 49.0.
Meanwhile, markets are repositioning their long positions in the US dollar ahead of the crucial Fed rate rise decision scheduled for Wednesday. Despite the continued decline, the pair is comfortably floating over 0.6400 thanks to the ensuing dollar weakening.
USD/CAD stays below 1.3600 due to increased oil prices and a weaker USD.
On Tuesday, there was a lot of selling pressure on the USD/CAD pair, which caused it to retreat further from its multi-day high of 1.3685. Several variables support the downward trend that pushes spot prices to a new daily low in the early European session, in the mid-1.3500s.
After OPEC predicted that demand would be greater than first anticipated in the medium to long term, crude oil prices rose again. This supports the commodity-linked loonie and puts downward pressure on the USD/CAD pair as some selling around the US dollar starts to surface.
Following the Chinese Caixin Manufacturing PMI announcement, which increased to 49.2 in October from 48.1 the month before, the global risk perception received a lift. The rosy market sentiment is seen to be putting pressure on the safe-haven greenback, as are rumors that the Fed would tone down its aggressive attitude despite indications of a downturn in the US economy.
GBP/USD maintains its current favorable outlook – UOB
According to Markets Strategist Quek Ser Leang and Economist Lee Sue Ann of UOB Group, the short-term forecast for GBP/USD remains optimistic.
View for the next 24 hours: “We said last Friday that “the price change is likely part of a consolidation” and that we anticipated GBP to “trade within a band of 1.1485/1.1625.” Even though the GBP traded inside a smaller range than anticipated (1.1504/1.1622), our assessment of consolidation was correct. Today’s bias is upward as the underlying tone has considerably firmed. A persistent increase over 1.1645 is improbable, albeit (the next resistance is at 1.1700). A violation of 1.1525 (minor support is at 1.1560) would signal a reduction in the slight upward pressure now present on the downside.
1-3 weeks from now: “We started to be bullish on the pound early last week. The GBP is continuing strong, and the next level to watch is around 1.1760, according to our most recent narrative from last Thursday (27 October, spot at 1.1630). Since then, GBP has struggled to gain any ground to the upside. But for the time being, we are holding onto our bullish GBP outlook, and the only sign that GBP is not rising further would be a breach of 1.1440 (a level that has been a “strong support” level since last Friday). Nevertheless, the likelihood of GBP moving over the significant barrier at 1.1760 has decreased as the rising impetus has slowed.
EUR/USD: Further gain currently seems unlikely – UOB
Markets strategist Quek Ser Leang and economist Lee Sue Ann of the UOB Group believe the likelihood of a further rise in the EUR/USD rate has decreased.
“Last Friday, we had the opinion that EUR ‘is expected to consolidate and trade between 0.9925 and 1.0050,’” the 24-hour outlook reads. While EUR’s consolidation was as anticipated, its trading range (0.9925/0.9997) was less than anticipated, and it ultimately closed essentially unchanged at 0.9963 (+0.01%). We anticipate today’s EUR trading to remain range-bound between 0.9920 and 1.0020 since the price actions still seem to be amid consolidation.
Within the next three weeks: “Our analysis from last Friday (28 October, spot at 0.9970) remains valid. As was said, the abrupt decline on Thursday has led to a swift loss of momentum and reduced the likelihood of additional EUR strength. However, the strength of the EUR that began early last week would only be shown by a breach of 0.9880 (no change in the “strong support” level).
Please click here for the Market News Updates from 31 October, 2022.
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