In this article, we have covered the highlights of global market news about the EUR/GBP, USD/CAD, AUD/USD – Danske Bank, and USD/CNY – Commerzbank.
EUR/GBP Price Analysis: Crosses Important Obstacle of 0.8460, Eyed Monthly Peak
Early on Thursday morning in Europe, EUR/GBP bulls break over the 0.8460 resistance confluence while continuing the day’s recovery.
That being said, the 0.8460 level is the main roadblock for buyers, as shown by the confluence of the 200-SMA and a downward-sloping trend line from July 1.
The EUR/GBP buyers are expected to maintain control given the bullish MACD signals and lately higher RSI, as well as the persistent trading beyond the monthly horizontal support region around the 0.8400 round figure.
With this, the upward momentum is now headed towards the recent monthly high of 0.8495.
Following that, a possible intermediate stop during the expected run-up towards the July 21 high of 0.8585 might be made around the 61.8% Fibonacci retracement of the July-August downtrend, located around 0.8550.
On the other hand, retreat movements are difficult to make until they go through the previously noted horizontal support around 0.8400.
Even if the EUR/GBP bears break through the 0.8400 support, many levels between 0.8345–40 might thwart the quote’s further decline before pushing the prices toward the 0.8300 round number.
USD/CAD reaches a 1-1/2-week high amid slight USD strength and is set to rise higher.
On Wednesday, the USD/CAD pair gained momentum for the second straight day and reached a one-and-a-half-week high during the early European session. The team has just rebounded from a two-month low set last week and is trading slightly around the mid-1.2900s.
Near the monthly crest, the US dollar maintains its strength and emerges as a significant driver supporting the USD/CAD pair. Investors seem to be confident that the Fed will maintain its program of tightening monetary policy despite signals of slowing US inflation. The wagers were confirmed by the publication of primarily positive US consumer expenditure statistics on Wednesday. Additionally, it was noted in the minutes of the July 26–27 FOMC meeting that the US central bank would not contemplate slowing down interest rate increases until inflation had significantly decreased.
Expectations for a hawkish Fed are favorable for high US Treasury bond rates. In addition, a softer risk tone and rising recession concerns further support the safe-haven dollar. Meanwhile, worries that a worldwide economic slump may hamper fuel consumption caused crude oil prices to drop earlier this week to a six-month low. This further boosts the USD/CAD pair while undermining the loonie’s relationship to commodities. The virtual environment is in favor of optimistic traders and encourages the possibility of further increases.
Even from a technical standpoint, continued support and acceptance above the round number of 1.2900 support the optimistic view. As a result, it currently seems that a further rise towards the monthly swing high, in the 1.2985 area, on the way to the psychological level of 1.3000, is quite likely. For short-term changes, traders are currently anticipating the US economic calendar, which includes the publication of the Philly Fed Manufacturing Index, the regular Weekly Initial Jobless Claims data, and Existing Home Sales data.
According to Danske Bank, the AUD/USD will fall as circumstances tighten and growth slows.
The Australian dollar has recently received some modest support from the recent relaxation in global financial conditions brought on by increased recession fears. Nevertheless, Danske Bank analysts anticipate a decline in the AUD/USD pair over the following months.
“While we still anticipate the Reserve Bank of Australia to raise rates following the 50 basis point increase in the August meeting, the weaker economic growth causes it to move more cautiously. Since the market is already highly priced, we do not anticipate relative rates to provide the AUD/USD any support.
“We think the Fed will have to keep rapidly raising rates, eventually hurting the global economy. We expect AUD/USD with a downward sloping profile due to tighter financial conditions and declining GDP.
USD/CNY: The PBoC will support the yuan to avoid excessive and unwelcome volatility – Commerzbank
Commerzbank economists anticipate a little increase in the USD/CN pair. However, the People’s Bank of China is prepared to stop a significant decline in the yuan.
“A weaker CNY typically results from a pro-growth, laxer monetary and fiscal policy posture. As a result, we continue to favor an increase in the USD/CNY rate and a weaker CNY. But PBoC is also aware of the dangers of a sharp depreciation in CNY. This means that any CNY weaknesses will probably be controlled, and PBoC is still anticipated to retain strict monitoring.
“According to the most recent statistics, China decreased its holdings of US Treasury securities in June for the seventh consecutive month. This might be because China is trying to diversify away from USD assets for political reasons, but it could also be a sign that the PBoC intervened to strengthen the CNY against the background of a strong USD. It should remind the PBoC’s tools at its disposal to help the CNY avoid excessive and undesirable volatility.
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