In this article, we have covered the highlights of global market news about the EUR/USD, NZD/USD, USD/CNH and USD/JPY.
The EUR/USD is hovering over 1.0900 ahead of major US data.
The single currency is still processing Thursday’s sharp fall after the ECB, encouraging the EUR/USD to trade in a constrained range near the low-1.0900s on Friday.
The emphasis of EUR/USD is data. Due to increased caution among market players in anticipation of the impending US Nonfarm Payrolls for January, price movement around the EUR/USD has been quiet thus far in the European morning (185K exp).
As new remarks from rate-setters are made, markets are still adjusting to the most recent ECB event. In this regard, Board member Simkus stated that the March meeting may have yet to see the final rate increase of 50 basis points, even if he left the door open to another increase in May without specifying its possible amount.
The final Services PMIs for Germany and the euro area for January were 50.7 and 50.8, respectively, according to the domestic calendar. Additionally, the ECB released its Survey of Professional Forecasters, which anticipates more significant inflation in 2023 and 2024 as measured by the HICP, with relatively unchanged accurate GDP growth estimates.
The US Nonfarm Payrolls will take center stage later in the NA session, followed by the unemployment rate and the ISM Non-Manufacturing.
NZD/USD trades with minor losses but remains above the mid-0.6400s ahead of the US NFP.
On Friday, the NZD/USD pair declined for the second day and retreated from the previous day’s high, which was its highest point since June 2022. Throughout the first part of the European session, the pair remained defensively positioned and is now barely above the mid-0.6400s.
On the last day of the week, the US Dollar gets some follow-through impetus after recovering overnight from a nine-month low, which is regarded as putting pressure on the NZD/USD pair. The little increase in the US dollar may have been caused by some traders adjusting their positions in anticipation of positive US monthly employment data that would be released later in the early North American session.
Unexpectedly low US Weekly Initial Jobless Claims indicated the job market’s resilience and increased the likelihood that the US NFP data would come as a pleasant surprise. Additionally, the favorable statistics made investors rethink their predictions of the Fed’s rate-hike trajectory, which led to some short-covering around the dollar.
A generally lower tone in the stock markets indicates worry ahead of the critical US macro data. This puts pressure on the risk-averse Kiwi and provides extra support to the safe-haven dollar. Nevertheless, falling US Treasury bond rates restrain US Dollar bulls from making risky wagers and temporarily help limit the downside for the NZD/USD pair.
USD/CNH is still under pressure and may fall to 6.6750, according to UOB
In the following weeks, USD/CNH may continue its downward trend and retest the level of 6.6750, according to economist Lee Sue Ann and market strategist Quek Ser Leang of UOB Group.
24-hour view: “Yesterday, we maintained that US Dollar might decline under the January low of 6.6980. Since the US Dollar recovered to a high of 6.7442, our assessment was erroneous. The swift recovery is getting ahead of itself, and it seems doubtful that the US Dollar will rise much more. The US Dollar is more likely to move in a narrow range today, between 6.7200 and 6.7500.
Within the next three weeks: “We indicated Yesterday (02 February, spot at 6.7120) that the US Dollar is expected to decline below last month’s low around 6.6980 due to the quickening negative trend. Our opinion has stayed the same. Our hypothesis would be refuted by a breach of 6.7550 (the level at which strong resistance has not changed).
USD/JPY: Risks currently point to a near-term drop in value – UOB
The short-term outlook for the USD/JPY suggests that the 127.20 level may be revisited, according to UOB Group economists Lee Sue Ann and Quek Ser Leang.
“Our assumption for ‘more USD weakening’ did not come to pass as it sank to 128.07 before recovering,” the 24-hour view said. The USD is in a period of stabilization and is expected to trade between 128.20 and 129.20 today.
Within three weeks, “We remain committed to yesterday’s position” (02 February, at 128.40). As was said, the downside risk for the USD has moved around 127.20. As long as the firm resistance’ level at 129.90 (no change in level) is not broken, the downside risk is still there.
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