In this article, we have covered the highlights of global market news about the EUR/USD, AUD/USD, GBP/JPY and USD/CAD.
EUR/USD will fall to sub-1.05 levels as a result of Fed rate protest – ING
Over 1.0600, the EUR/USD is stabilizing. On a credible rate protest from the Federal Reserve, according to ING economists, the pair is predicted to revert down below the 1.0500 level. Greater than the Lagarde impact is the Powell effect.
“Today’s FOMC statement will indicate whether the Fed can continue to support the Dollar in some capacity, and tomorrow’s ECB statement might provide information regarding possible balance sheet reduction. However, the Powell impact was far larger and lasted longer than the Lagarde effect on the EUR/USD.
We prefer a correction to sub-1.05 levels instead, driven by a Fed rate protest and rising oil costs, but a dovish Fed today might pave the way for a recovery to 1.0800 before Christmas.
AUD/USD flatlines in the mid-0.6800s, slightly below the multi-month peak ahead of FOMC
On Wednesday, the AUD/USD pair draws some dip-buying and halts the previous day’s little decline from around the 0.6900 level or its highest level since September 13. During the early European session, the pair rises to the upper end of its daily trading range and is presently trading in the mid-0.6800s.
An important reason favoring the risk-averse Australian Dollar is the broad upbeat mood surrounding the equities markets. However, a little increase in the value of the US Dollar might serve as a drag on the AUD/USD pair and prevent any appreciable rise. On the other hand, the USD rise may result from some repositioning trade before the main central bank event risk and faces the danger of dissipating fast due to expectations for a less aggressive Federal Reserve.
The US consumer inflation numbers, which were lower than anticipated and were revealed on Tuesday, confirmed predictions that the US central bank would decrease the pace of its tightening monetary policy. In reality, after a two-day meeting later this Wednesday, the Fed is primarily predicted to announce a modest 50 bps rate increase. Investors will thus carefully examine the accompanying monetary policy statement and the so-called “dot plot” in search of new information on the Fed’s rate-hike trajectory.
GBP/JPY hovers around the weekly low after UK CPI and continues down below mid-167.00s
On Wednesday, the GBP/JPY cross drifted downward for the second consecutive day and pulled back from a peak reached over a month ago at the 169.25 level. In response to weaker UK consumer inflation data, the cross slides closer to the weekly low and stays down around the mid-167.00s during the early European session.
The UK Office for National Statistics (ONS) stated that the headline CPI increased by 0.4% MoM in November instead of the previously reported 2% increase, which caused the British pound to weaken slightly.
In addition, during the reporting month, the annual rate decreased from 11.1% in October to 10.7%. The core inflation rate, which does not include volatile food and energy prices, came in at 6.3% YoY in November as opposed to the expected 6.5% in October. The data helps limit the downside for the GBP/JPY cross but nothing to change market expectations for a 50 bps rate rise by the Bank of England on Thursday.
USD/CAD Price Analysis: Rebounds from the 1.3530 support level amid strong MACD signals
By early Wednesday morning in Europe, bids on USD/CAD had risen to 1.3565, although the pair is still trading sideways in the mid-1.3500s.
In doing so, the pair of loonies defends the rebound from the 1.3530 support confluence, which includes the 21-day EMA and a one-month-old ascending trend line that occurred early in the Asian session. The positive MACD readings also support the upward momentum.
However, the quote’s short-term upside is constrained by a downward-sloping resistance line from October 21, around 1.3650 at the latest.
After that, key resistance at the monthly high of 1.3700 will be a barrier to the USD/CAD pair’s ascent to the previous monthly high of 1.3810.
But it’s important to remember that several obstacles between 1.3810 and 1.3900 might put the bulls to the test.
Meanwhile, the monthly low of 1.3385 will be immediately challenged if the daily closing price falls below the 1.3530 support confluence.
Please click here for the Market News Updates from 13 December, 2022.