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4 Global Market Updates- 20 September, 2022

In this article, we have covered the highlights of global market news about the USD/IDR, USD/JPY, USD/CAD and AUD/USD.

USD/IDR Price News: Indonesian rupiah buyers struggle below $15,000 as BI and Fed rulings loom

During Tuesday’s Asian session, the USD/IDR pares intraday losses at $14,980, consolidating the two days’ losses that reached their biggest levels since late July. In doing so, the coupling between the US Federal Reserve (Fed) and the Bank Indonesia’s monetary policy meetings and the Indonesian rupiah (IDR) explains the market’s apprehension (BI).

The recent decline in the IDR may be related to the pessimistic remarks made by the international credit rating firm Fitch, which said that “profits of Indonesia’s contemporary food stores are anticipated to come under pressure from reduced consumption owing to increasing inflation.” The bulletin also said that the BI recorded much higher inflation in August 2022, coming in at 4.69% from 1.59% in August 2021 and 2.18% in January 2022.

In light of this, a Reuters poll indicates that Bank Indonesia will raise interest rates again by 25 basis points at its meeting on Thursday, continuing to move more cautiously than most of its peers in an effort to reduce inflation.

In contrast, the FedWatch tool from the CME suggests that there is an 82% likelihood that the Fed will raise rates by 75 basis points at its monetary policy meeting on Wednesday. Additionally, the tool indicates that there are around 18% chances in favor of the Fed raising rates by the whole 1%.

USD/JPY is slightly bought over 143.00 as Japan inflation and slow yields test BOJ doves.

Despite a recent increase in price around early Tuesday AM in Europe, USD/JPY still struggles to hold 143.00. The yen pair illustrates the market’s uncertainty ahead of the important monetary policy decision from the US Federal Reserve (Fed) and the Bank of Japan by doing this (BOJ).

It’s important to keep in mind that even if the doves are firmly gripping the reins, the Bank of Japan (BOJ) may adjust its monetary policy as a result of the eight-year high inflation statistics for Japan, as reported by the National CPI YoY for August. Strong rates on Japanese government bonds (JGBs) support the BOJ’s aggressive stance.

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Nevertheless, according to Reuters, the Bank of Japan is likely to retain its ultra-low interest rates and its dovish policy stance on Thursday. This decision comes hours after its US counterpart’s anticipated significant rate rise and may result in more currency selling. The BOJ preview also said that the BOJ would keep its short-term rate goal at -0.1% and its aim for 10-year government bond rates at about 0% during a two-day policy meeting that would finish on Thursday. Following the meeting, Kuroda will address the media.

The USD/CAD is expected to fall to about 1.3200 ahead of Canada’s inflation and Fed policy announcements.

After a less certain recovery from 1.3227 in the Tokyo session, the USD/CAD pair has since been range-bound around 1.3250. The asset saw a sharp decline on Monday after failing to maintain above the significant barrier of 1.3300. After investors ignored the unpredictability surrounding the Federal Reserve’s (Fed) statement of monetary policy on Wednesday, the major fell dramatically.

A continuation of the Fed’s previously announced big rate rise announcement cannot be ruled out since price pressures remain too far from the intended rate of 2%. Estimates predict that the Fed will keep things as they are and announce a third rate increase of 75 basis points (bps).

However, the rate of inflation is not reacting as effectively as intended to the present rate of interest rate increases. Additionally, because of the strong retail demand and the tight job market, Fed Chair Jerome Powell has flexibility to pick up the pace even more. Investors should thus be ready for a higher-than-average figure.

Investors in Canadian dollars are now concentrating on the Consumer Price Index (CPI) statistics. Compared to the earlier report of 7.6%, the headline CPI number is now believed to be lower at 7.3%. Price pressures seem to be starting to react now that the Bank of Canada’s (BOC) restrictive monetary policies have intensified. Additionally, it is anticipated that the core CPI, which excludes the cost of food and oil, would fall by 10 basis points (bps) to 6%.

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AUD/USD Price Analysis: Bulls must reach 0.6770 with absolute certainty.

The AUD/USD pair has significantly recovered after falling to a low of around 0.6713 during the Tokyo session. The asset is strengthening as a result of a stronger foundation above the round-level barrier of 0.6700. The major is aiming to maintain above the 0.6732 immediate resistance after breaking over it.

On an hourly basis, the commodity-sensitive currency has recovered significantly after reaching the 0.6680 two-year low. As the Double Bottom chart pattern developed, there was less selling pressure as the price tested the lows once again, and dry selling led to a vertical upward advance. The Australian has a difficult path ahead and will encounter obstacles around the horizontal resistance set from the low on September 1 at about 0.6780.

Please click here for the Market News Updates from 19 September 2022.

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