In this article, we have covered the highlights of global market news about the GBP/USD, EUR/USD, USD/CNH and USD/CAD.
GBP/USD is unlikely to rise even if the next Chancellor restores confidence – SocGen
Today’s economic policy announcement will come from the new Chancellor, Jeremy Hunt. Delivering a crystal-clear message to stabilize the gilt market and, ideally, regain confidence, Kit Juckes, Chief Global FX Strategist at Société Générale, believes that sterling volatility should dissipate and gilt rates should decrease.
“The Conservative Party is still in chaos, but market confidence will return if Mr. Hunt receives support from his party for initiatives to address the problem. Although that’s positive for gilts, I doubt it will push sterling much higher than this.
EUR/USD: Bulls reclaim the lead over 0.9700.
The single currency moves beyond Friday’s downward price movement, inspiring EUR/USD to retake the initiative and the region above 0.9700 on Monday.
On Monday, the EUR/USD advanced with modest gains, owing to the revival of selling pressure surrounding the greenback and the general bullish attitude in the risk-related universe.
The euro has received some further support due to rumors that P. Lane, a member of the ECB Board, would call for a 75 basis point rate increase at the next meeting at the end of the month.
Even though he subsequently clarified his remarks by stressing that any recession would not be particularly severe, Vice-President De Guindos, who was present at the ECB, did not completely rule out a technical recession in the euro area.
According to the domestic calendar, Italy’s consumer prices increased by 0.3% MoM and 8.9% from a year earlier in September. The Monthly Budget Statement and the MY Empire State Manufacturing Index will take center stage across the Atlantic, while the ECB’s P. Lane is scheduled to speak later.
The EUR/USD regained some ground it lost after the previous week and turned its attention back to the neighborhood’s recent high of around 0.9800.
USD/CNH: Beyond 7.2380, more gains are anticipated by UOB
According to Quek Ser Leang, a market strategist for UOB Group, and Peter Chia, a senior forex strategist, the USD/CNH might see its gains accelerate on a break over the 7.2380 in the coming weeks.
24-hour view: “We anticipated the USD to ‘trade between 7.1600 and 7.2200’ last Friday. US dollar prices fell to a low of 7.1600, then sharply rose to 7.2284 in London trade before remaining flat for the remaining trading hours. Today’s bias is upward as the underlying tone has considerably firmed. However, any movement forward is unlikely to overcome the significant resistance around 7.2380. Support is located at 7.1930, then 7.1720.
There isn’t much to add to our post from last Friday for the next one to three weeks (14 Oct, spot at 7.1880). As was said, more USD gain is possible, but 7.2380 is now functioning as a strong barrier, and before a prolonged climb is feasible, USD must break through this level. A break of 7.1500 (the previous Friday’s “strong support” level was at 7.1400) would suggest that the upward risk has diminished.
USD/CAD will continue to climb toward 1.40, predicts MUFG
Even though it has been trading on a lower footing over the last month, the Canadian dollar still boasts the second-best year-to-date performance among the G10 currencies. MUFG Bank economists predict the USD/CAD to fluctuate toward the 1.40 mark.
As a result of projections that Canada’s economy would show more sensitivity to rate raises than the US economy, given that household debt is significantly higher in Canada, the BoC is anticipated to put an earlier conclusion to their rate hike cycle than the Fed.
“While the latest move by OPEC+ to deliver bigger production cuts helps to lower negative risks for the price of oil, it will not completely allay fears about a stronger slowdown/recession in Canada that have been weighing harder on CAD.”
Please click here for the Market News Updates from 14 October, 2022.