In this article, we have covered the highlights of global market news about the EURUSD, GBPUSD, USDCAD and USDCHF.
EURUSD will fall to 1.01-1.02 on lower Core CPI – TDS
Today’s report on US inflation is scheduled. A worse core reading month over month will worsen positioning, which has lately seen a fast reduction in US Dollar longs, and support risk. According to TD Securities experts, this might result in critical levels for the EURUSD and USDJPY being tested.
“Despite our projection of a slowdown relative to September, we are anticipating core prices to have remained robust on an MoM basis. We expect the core CPI series to increase by a respectable 0.4% MoM. Regarding the headline, we anticipate inflation to rise by 0.6%, which would be its highest MoM increase in the last four months. According to our MoM predictions, headline and core CPI inflation likely slowed in October on a year-over-year basis.
“A weaker monthly core CPI result will probably increase risk-on optimism that a terminal rate may contain the worst inflation in decades at or over 5%. According to our calculations, this will likely increase FX positioning, which has recently rushed to cut US Dollar longs.
“We believe there is a chance that even a positive CPI surprise might result in a positioning squeeze, though the viability of that is debatable.”
If our core CPI report materializes, “We anticipate USDJPY will risk a test of 143.75, while EURUSD would be vulnerable to 1.01-1.02.”
GBPUSD maintains small advances but fails to find support above 1.1400 ahead of US CPI.
On Thursday, the GBPUSD pair draws some dip-buying at the 1.1350 area, making some significant losses from the day before up in smoke. Through the first part of the European day, spot prices maintain intraday increases, but they cannot take advantage of the rise over round number 1.1400.
The safe-haven US Dollar struggles to build on its overnight recovery from a multi-week low despite a slight decline in US Treasury bond rates and an upbeat mood on the equities markets. In addition, the dollar’s advance is limited by some repositioning trading before the critical US consumer inflation numbers, which is regarded as providing some support for the GBPUSD pair.
However, several variables are preventing traders from making risky wagers and acting as a drag on spot prices. The markets are still pricing in the potential of at least a 50 basis point rate rise in December despite forecasts that the Federal Reserve would moderate the pace of its policy tightening. The downward movement of US bond rates and the dollar should be constrained.
USDCAD declines from its weekly peak and hovers below mid-1.3500s before US CPI.
The USDCAD pair soon falls to the 1.3525–1.3530 range in the final hour after fading an early European session rise to a new weekly high. However, the decline seems muted despite falling crude oil prices, which usually erode the Lonnie’s commodity-linked value.
In reality, WTI oil continues this week’s dramatic decline from a two-month high and is down for a third straight day due to worries over China’s gasoline consumption. Numerous negative economic indicators from China indicated that the most significant oil user in the world was experiencing slow development, which is terrible news for the dark liquid. However, any significant upward movement for the USDCAD pair is expected to be constrained by a slight US dollar decline.
Ahead of the publication of the most recent US consumer inflation numbers, traders may abstain from making risky bets and instead stay on the sidelines. The Fed’s policy tightening trajectory will be heavily influenced by the significant US CPI data, which will also impact the dynamics of the USD price. Therefore, it will be wise to wait to declare that the USDCAD pair has established a short-term bottom unless there is substantial follow-through purchasing.
USDCHF is on a five-day slump, with a focus on US inflation data.
In the early hours of Thursday’s European session, USDCHF accepts bids to retest the intraday low at 0.9825. As a result, the Swiss Franc (CHF) pair records a five-day losing run and moves closer to its lowest point since October 6, the day before.
The market’s anticipation of lower US inflation statistics for October and the recent pessimistic remarks from US Federal Reserve (Fed) officials may have contributed to the quote’s most recent weakening.
Neel Kashkari, president of the Minneapolis Federal Reserve (Fed), has noted, “Some factors are beyond of our control on inflation.” Before this, John Williams, the president of the New York Federal Reserve (Fed), said that the relatively stable long-term inflation forecasts were optimistic. Similarly, Richmond Fed President Thomas Barkin said that although the Fed will have to accept the risk, fighting inflation may cause a decline in the US economy.
It should be highlighted that recent statements from the monetary officials of Australia, New Zealand, and Japan favoring the market mood and weighing on the USDCHF prices suggested no need for rapid rate rises. Further downward pressure on the US Dollar was applied by China’s Covid figures’ minor fall and Russia’s withdrawal from Kherson.
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