In this article, we have covered the highlights of global market news about the EURUSD, AUDUSD, NZDUSD and GBPUSD.
EURUSD may be nearing its recent top, according to ING.
Currently, the EURUSD is just a tale about the dollar and risk sentiment. According to ING economists, the pair is anticipated to reach parity in the near future.
We find it challenging to interpret recent developments as the start of a wide and protracted dollar slump; as a result, the EURUSD may be approaching its short-term top.
Before the latest upward reversal, there were already a few signs indicating the euro was highly oversold; today, we are looking at an even more balanced situation. We see the potential for a quick return to parity between the EUR and US Dollar.
AUDUSD nears the highest level since September, lacking follow-through.
In the early European session on Friday, the AUDUSD pair saw some buying at the 0.6580-0.6575 area, reaching its highest level since September 22. The pair is now trading around the mid-0.6600s and continues to be well supported by the pervasive US Dollar selling bias.
In fact, amid anticipation that the Fed would decrease the pace of its policy tightening, the US Dollar Index, which gauges the dollar’s performance against a basket of currencies, falls to its lowest level in two and a half months. Bets for lesser rate increases by the US central bank were reinforced by the weaker US consumer inflation statistics reported on Thursday. The markets now expect a 50 bps hike at the December FOMC meeting with a probability above 80%.
The US Treasury bond yields continued to plummet, which is evidence that estimates for peak US interest rates also fell below 5%. In addition, a dramatic increase in equities markets is expected to weaken the safe-haven dollar and provide extra support for the risk-averse Australian dollar. However, concerns about the adverse effects of China’s economically disruptive zero-COVID policy should temper the most recent optimism.
This necessitates considerable caution before initiating new bullish wagers around the AUDUSD pair and preparing for any additional gains, at least for the time being, combined with the absence of any follow-through purchasing. Traders are currently focusing on the US economic calendar, particularly the Preliminary Michigan US Consumer Sentiment Index report. This will affect the dollar and give the AUDUSD pair some momentum, coupled with the US bond rates and the general risk mood.
NZDUSD: Consolidation over days/weeks – ANZ
Following weaker US Consumer Price Index (CPI) data, which caused Kiwi to rise substantially, the US Dollar fell. According to ANZ Bank economists, the NZDUSD is expected to stabilize in the following days or weeks.
Falling local interest rates may impede future NZD growth. “After the publication of far worse than anticipated US CPI statistics, the US Dollar fell precipitously. Markets were undoubtedly relieved by the data, and the repricing we have seen is justified. However, we’re not out of the woods yet, since US markets are still factoring in cuts from June. If they are priced out, the US Dollar’s adjustment may be slowed.
Local interest rates will also decline today, which might moderate the NZD’s further development and put markets in a more consolidative frame of mind for the next days/weeks.
GBPUSD: At the danger of rapid corrections while the local Sterling scenario remains unclear – ING
On the strength of positive UK Gross Domestic Product (GDP) statistics, GBPUSD receives a new bid over 1.1700. According to ING experts, the domestic backdrop is still tricky for Sterling.
Economic downturn not as terrible as first anticipated. “Second-quarter GDP results revealed a smaller-than-expected decrease (-0.2% quarter-on-quarter), although that was primarily because of the upward adjustment in August’s figures. Interestingly, the Queen’s burial bank holiday had a significant negative impact on September’s statistics. However, until 2Q23, our UK economist predicts a decline every quarter. Naturally, much attention will be paid to the Treasury’s measures that will be unveiled the following week.
“The domestic outlook for Sterling is, at best, murky, and we believe it puts GBPUSD at risk of very rapid corrections should the support of a lower US Dollar go away.”
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