In this article, we have covered the highlights of global market news about the EUR/USD, GBP/USD, USD/JPY and USD/CAD.

EUR/USD: Parity increasingly challenging to achieve – ING

On Wednesday, the EUR/USD displayed resistance near the 1.0000 level before reversing course. ING economists predict the pair to continue to trade below parity.

“Given the hesitation to become more bullish on the euro into what should be a difficult winter for the eurozone, a sustained recovery to levels above parity in EUR/USD might now only be driven by markets buying more aggressively into the Fed pivot story and/or other drivers offering sustained support to risk assets,” the report said.

For the time being, we feel confident in confirming our projection for EUR/USD to remain under pressure in the last months of the year in the range of 0.90-0.95.

“While markets wait for further information on the planned oil price ceiling, the fresh package of EU penalties probably point to a protracted standoff with Russia.”

GBP/USD clings to gains in the mid-1.1300s, although the upward potential is restricted.

The GBP/USD pair rose on Thursday, building on the overnight surge from the 1.1225 area, but there is no sustained increase. Through the early European session, the pair maintains a somewhat upbeat tenor; it is now trading in the mid-1.1300s, up 0.20% on the day.

The US dollar finds it challenging to build on the previous day’s strong recovery from a two-week low and runs into new supply, giving the GBP/USD pair some support. However, several variables prevent optimistic traders from making risky wagers, hurting the major.

The US Dollar decline is still relatively modest despite increasing consensus that the Fed would tighten monetary policy more quickly to combat rising inflation. The markets have already factored in a second massive 75 bps Fed rate rise in November. The recent hawkish remarks made by numerous Fed members confirmed the wagers.

As a result, rising US Treasury bond rates continue to be favorable, which supports the safe-haven dollar combined with worries of a worsening global economic collapse. However, given imminent economic threats, worries about the incoming UK government’s fiscal stance are undermining the value of the British pound.

At the Conservative Party conference on Wednesday, UK Prime Minister Liz Truss supported the tax-cut proposal and said that doing so is ethically and fiscally appropriate. This may thwart the Bank of England’s attempts to keep inflation under control, pushing it to become more hawkish and causing more significant economic difficulties.

USD/JPY may climb despite recent stability – Commerzbank

USD/JPY has been fluctuating within a small range between 144 and 145. Nevertheless, Commerzbank analysts anticipate that the pair will continue its ascent.

“The recent stability of the USD/JPY exchange rate is less favorable than it seems, however, as the US currency has weakened against most industrialized country currencies since last week, which is not reflected in the exchange rate against the yen as it has depreciated almost to the same extent,” says the author.

“Upside pressure on USD/JPY is expected to increase if the dollar is allowed to appreciate again, which we anticipate to happen shortly.”

USD/CAD: Loonie unlikely to find support amid obstacles – Halifax Bank

According to Scotiabank economists, the Canadian currency may face a variety of further difficulties. The loonie is so programmed to maintain a defensive posture.

“Yield differentials that were CAD-positive earlier this year at the short end of the curve have vanished and are now solidly in the US Dollar’s favor. Even if it may not continue, the CAD is now being hindered by this.

Since the middle of the year, commodity prices have been declining as global growth forecasts have weakened. Although the CAD has separated from oil prices this year, the CAD is still less supported by generally lower commodity prices and poorer terms of trade.

“While we believe that short-term CAD developments are driven mainly by equities market patterns, our correlation screens do now detect a strengthening in the CAD’s association with spreads and commodities. If the relationship between the equities market and the CAD fades, these variables may start to have a bigger impact on its performance.

Please click here for the Market News Updates from 5 October, 2022.