In this article, we have covered the highlights of global market news about the GBP/USD, GBP/JPY, EUR/USD and USD/CAD.
GBP/USD fails to get momentum, remaining on the defensive around 1.1500.
The GBP/USD pair oscillates in a range on Thursday as it fails to build on the previous day’s recovery from the area of 1.1400, or the lowest level since 1985. Early in the European session, the pair is observed trading at the 1.1500 level, and it seems susceptible to continuing its roughly one-month-old bearish trend.
Concerns about the UK debt market are increased by the incoming British Prime Minister Liz Truss’s planned £30 billion in tax savings and a ceiling on family energy costs. Additionally, during their Wednesday testimony before the Treasury Committee of Parliament, Bank of England officials did not support the case for a more aggressive rate rise. This is seen as a significant element that keeps the British pound in the red and works against the GBP/USD pair.
On the other hand, the US dollar is anticipated stabilizing after a steep retracement decline from a two-decade peak the day before. The safe-haven dollar seems to be weakening as the financial markets show signs of stability, but this does nothing to excite optimistic traders or give the GBP/USD pair any real momentum. Additionally, the notion that the Fed will keep tightening its monetary policy in an effort to control inflation gives the dollar some support.
GBP/JPY Price Analysis: Extends drop from seven-week-old barrier towards 165.00
As it extends the day-start drop from a short-term significant obstacle during the first European session on Thursday, GBP/JPY is still in the red at 165.30.
Nevertheless, the cross-currency pair’s reversal from a horizontal region that includes peaks set since late July, around 166.25-35, gets cues from the RSI (14) drop from the overbought zone. Even yet, the RSI line and the higher low of the prices represent the bullish case.
As a result, the quote’s continuing decline toward the 165.00 level becomes more reasonable. The August 04 top, at 164.00, may then tempt the GBP/JPY bearish.
However, it should be highlighted that the pair’s buyers will not lose faith until the 200-SMA is clearly broken on the downside, or at the at least, around 162.40.
Meanwhile, to delight GBP/JPY bulls, recovery advances must deliver a successful upward breach of 166.35.
EUR/USD will fall back near 0.99 when ECB only raises rates by 50 basis points – ING
The European Central Bank (ECB) meeting will be the focal point of today’s FX session. The EUR/USD exchange rate may theoretically go lower if ING economists predict a 50 bps rate increase that is below consensus.
Will the ECB provide more forthright remarks on the euro?
“In contrast to the consensus of 75 bps and the 67 bps priced by money markets, our base case is that the ECB only increases rates by 50 bps. Theoretically, it ought to be bad for the euro, and our basic scenario is for the EUR/USD to revert to 0.9900.
It would be fascinating to observe how President Christine Lagarde responds to any inquiries on the euro’s depreciation. A temporary counter-trend bounce in the EUR/USD might be sparked by statements to the effect that the ECB is “monitoring FX attentively.” However, the EUR/USD is now trading down for sound macroeconomic reasons, and any intraday gains are unlikely to sustain.
USD/CAD: The Loonie will continue to suffer as recession concerns grow – Commerzbank
With a 75 bps increase, the Bank of Canada (BoC) proceeded on its sharpest rate-hike path in decades. The increase brings the overnight rate to 3.25% and was in line with forecasts. The change in CAD was quite minor in contrast. The loonie is anticipated to stay under pressure in the foreseeable future, according to Commerzbank economists.
“The 75 bps rate increase to the current 3.25% was widely anticipated, and a hawkish announcement had obviously been factored in to a great extent. The loonie couldn’t particularly profit.
“Due to deteriorating economic statistics and the likelihood of a somewhat active BoC, CAD will likely continue to struggle versus USD in particular if growing (global) recession worries influence market sentiment,” says the report.
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