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4 Global Market Updates- 14 October, 2022

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

AUD/USD falls below 0.6300 on risk aversion, USD buying.

On Friday, the AUD/USD pair draws new sellers at the mid-0.6300s and gives up its small intraday advances to a four-day high. During the first part of the European session, the pair drops under the 0.6300 level, and as some US dollar dip-buying starts to surface, it is now edging closer to the daily low.

After Thursday’s US session, the most recent upward trend in the stock markets swiftly fades away due to concerns over a deepening global economic slowdown. The anti-risk flow puts downward pressure on the AUD/USD pair and aids in reviving demand for the safe-haven dollar. In addition, the odds of the Fed tightening policy more aggressively favor the USD bulls.

The core inflation rate, which excludes the cost of food and energy, has increased by the most since August 1982, according to the US Bureau of Labor Statistics. The spicier CPI data strengthen predictions for the fourth straight 75 bps Fed rate increase in November. This confirms the AUD/USD pair’s short-term pessimistic view and the possible economic effects of other COVID-related lockdowns in China.

Nevertheless, technical indicators on short-term charts are circling the oversold region and should cause bearish traders to exercise some caution. However, the AUD/USD pair is still expected to post losses for the fifth week. Market players are anticipating the publication of the US monthly Retail Sales statistics, scheduled for later during the early North American session.

EUR/USD: Sellers return to the market, with the pair falling to 0.9750.

The Euro (EUR) gives up some of its recent gains against the dollar, which causes EUR/USD to drop to the 0.9750 area by the end of the week.

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Returning risk aversion on the markets helps to strengthen the dollar while also compelling the EUR/USD to give up some of its recent substantial rise to the region just over 0.9800.

The corrective slide in the pair coincides with another decrease in the yields on German 10-year bunds, which this time fell to multi-session lows and lost territory for the fourth day in a row.

So far, no adjustments have been made to the macroeconomic picture, as the US economy’s persistently high inflation did nothing but strengthen the argument for the Fed’s tighter-for-longer attitude and a rate increase of at least 75 basis points in November.

According to the domestic calendar, France’s final inflation rate indicated that the CPI increased 5.6% from a year earlier and decreased 0.6% MoM in September. The EMU Balance of Trade for August will be the next item on the regional agenda.

The publication of retail sales and the preliminary reading of the Michigan Consumer Sentiment for October are anticipated to get all the attention across the pond.

Despite increasing USD demand, GBP/USD is on the defensive below 1.1300.

On the last day of the week, the GBP/USD pair experiences rejection close to a falling trend-line resistance that dates back to late August. Early in the European session, the pair falls to the 1.1255–1.1250 range, and for the time being, it seems that a two-day losing run has been broken.

In response, the GBP/USD pair experiences downward pressure. On Friday, modest dip-buying in the US dollar halts the previous day’s substantial retracement decline from the post-US CPI swing high. Early optimism in the equities markets swiftly wanes as worries about a more profound global economic collapse grow. This aids in reviving demand for the safe-haven greenback and the likelihood of a quicker Fed policy tightening.

In addition, traders decided to scale down their bullish wagers on the British pound due to their apprehension about any unexpected movements on the last day of the Bank of England’s temporary gilt purchase program. However, discussions about rolling back the significant tax cuts the new UK government announced in September help support the pound and keep the GBP/USD pair’s losses to a minimum. Thus, before making strong negative trades, use some care.

USD/CNH: Above 7.2380, a persistent uptrend is anticipated – UOB

When 7.2380 is cleared, UOB Group’s Senior FX Strategist Peter Chia and Markets Strategist Quek Ser Leang anticipate that USD/CNH will increase steadily.

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24-hour perspective: “We were unprepared for the sudden rise in the USD to 7.2379 and the sudden fall from the peak. The significant but brief swings have created a mixed picture, and for the time being, the USD might trade between 7.1600 and 7.2200.

Next 1-3 weeks: “We maintained our stance yesterday that the risk is to the upside but that before the further rise is conceivable, the USD must break decisively above 7.2200. While the USD rose to a high of 7.2379 in NY trading, it fell significantly. Although more USD gain is possible, 7.2380 is now functioning as strong resistance, and before a sustained climb is feasible, USD must break over this level. A break of 7.1400 (the previous day’s “strong support” level was at 7.1250) would suggest that the upward risk has diminished.

Please click here for the Market News Updates from 13 October, 2022

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