In this article, we have covered the highlights of global market news about the EUR/USD, USD/CAD, GBP/USD and USD/IDR.
EUR/USD reclaims 1.0740 as market sentiment surges and investors absorb the Fed’s harsh comments.
After a rebound move from about 1.0710, the EUR/USD posted a range expansion over 1.0730 in the early European session. The main currency pair has gained momentum as markets have digested the hawkish instructions from Federal Reserve (Fed) officials, which has caused the risk aversion theme to recede.
The US Dollar Index (DXY) has been under tremendous pressure as US Treasury yields have decreased due to investors rushing to acquire US government bonds despite skyrocketing anticipation that the Federal Reserve would raise interest rates to a record high. The USD Index seeks to retake the resistance around 103.00, although the downside looks more favorable. The 10-year US Treasury rates have fallen below 3.62% in the meanwhile.
After a sell-off on Wednesday due to the meltdown in tech stocks, S&P500 futures have steadily risen in the Asian session. After Google Chatbot Brad Artificial Intelligence (AI) responded improperly to internet advertising, market investors severely discounted Alphabet Inc.
USD/CAD Price analysis: Third attempt at breaking out of the Falling Channel.
After failing to regain a weekly high at 1.3476 in the early European session, the USD/CAD pair has sharply fallen to close to 1.3435. The Canadian Dollar’s asset is moving in the same direction as the US dollar index (DXY), which gave up its 103.00 cushions despite a sharp comeback in the risk-on impulse.
As investors’ risk appetite increased due to the market digesting the Federal Reserve’s aggressive interest rate stance, S&P500 futures have solidly extended their gains (Fed). The price of oil is still striving to extend its upward movement beyond $78.50. It’s important to remember that Canada is a significant oil supplier to the US, and rising oil prices will help the Canadian Dollar.
For the third time after two unsuccessful attempts owing to the weakness of the US Dollar bulls, USD/CAD is trying to produce a breakthrough of the Falling channel chart pattern over two hours. The strength of the breakout is being tested by the Loonie around 1.3432.
The bulls of the US dollar are receiving strong support from the 1.3423 positions of the 20-period Exponential Moving Average (EMA).
The Relative Strength Index (RSI) (14) is now having difficulty crossing the 40.00 mark. Upward momentum will start if there is a breach into the positive area of 60.00-40.00.
GBP/USD is marching towards 1.2100 as the US dollar falls amid aggressive Fed discussions; attention is focused on BoE’s Bailey and UK GDP.
Bulls in the GBP/USD pair maintain control for the third day as the Cable resumes efforts to retest its intraday high around 1.2085 ahead of Thursday’s London opening. The quotation disregards concerns about the UK’s political and economic borders amid the widespread US Dollar weakening. Given that the British Gross Domestic Product (GDP) for the fourth quarter (Q4) is scheduled for release on Friday, the pre-data consolidation may also be to blame.
The US Dollar Index (DXY), now down 0.11% intraday around 103.35, follows down Treasury bond yields to undo the previous day’s rebound advances. Despite this, the US 10-year Treasury note rates retreated on Wednesday from a one-month high to stop a three-day advance, hovering at about 3.61% at press time.
The cautious optimism in the market contributes to the downward trend in the greenback’s index against the six major currencies. However, the easing tensions between the US and China after the balloon shooting, with expectations for rate reduction by the People’s Bank of China (PBOC) and the resumption of Chinese businesses listing on US markets, seem to favour risk-taking in Asia.
USD/INR Price News: Indian Rupee sustains post-RBI gains as US Dollar falls amid aggressive Fed discussions
As Indian Rupee buyers applaud cautious optimism in Asia and a weaker US Dollar early on Thursday, the USD/INR fades its recovery from the intraday low. By doing this, the pair sellers increased the losses caused by the Reserve Bank of India (RBI) to around 82.60 at the time of publication.
The risk-positive news about China is helping to lift the market mood in Asia. However, the easing tensions between the US and China after the US shooting down a Chinese balloon combined with expectations for rate reduction by the People’s Bank of China (PBOC) and a resumption of China-based firms’ listing on US markets to encourage a risk-taking attitude in the region.
The easing economic problems in China and the US is also helping the attitude. While US Treasury Secretary Janet Yellen and President Joe Biden recently raised chances of growth in the current year, global rating giant Fitch on Wednesday exaggerated China’s growth projections.
The RBI seems to be putting pressure on the USD/INR values by rejecting the market’s dovish rise forecasts and citing intense inflation worries. Analysts at ING and Citibank anticipate an additional rate increase of 25 basis points after the RBI’s 0.25% hawkish stance.
Please click here for the Market News Updates from 8 February, 2023.