In this article, we have covered the highlights of global market news about the EUR/USD, USD/JPY, USD/CAD and USD/CNH.
The EUR/USD will challenge the 0.9540 lows during the next phase of dollar appreciation, according to ING.
After the rise from 0.9700, the EUR/USD stabilized around the 0.98-0.99 range. According to ING analysts, the pair is expected to test the level of 0.9540 as the dollar continues to rise.
“Dollar strength continues to be the biggest obstacle to the pair’s rebound, but the domestic situation is still far from promising to investors. The ZEW expectations index declined less than anticipated, while the present situation survey sharply declined to -72.2 in October. These levels were only last seen in 2020 and 2009.
Although the drop in gas prices probably prevents a return to the 0.9540 lows, we believe the next wave of dollar appreciation will put a lot of pressure on that support.
USD/JPY might sometimes trade as high as 160 – Nordea
The inevitable decline of the Japanese yen has continued. According to Nordea economists, the USD/JPY exchange rate might rise as high as 160.
Even with the Japanese government’s assistance, we sometimes see the USD/JPY trading as high as 160 due to the rate differentials’ ongoing deterioration.
“A change in monetary policy from the Bank of Japan or a 180-degree turn from the other G10 central banks would halt the JPY from depreciating. When current BoJ Governor Kuroda retires in April 2023, the BoJ might change.
USD/CAD: Loonie risks look to be somewhat weighted to the upside today – ING
Before the Canadian inflation data is released, USD/CAD rises beyond 1.3750. ING economists anticipate modest gains for the loonie today.
We nonetheless want to emphasize how Canada’s minimal exposure to the two main geopolitical and economic risk poles—Russia and China—puts it in a solid position to profit from any revival in risk sentiment (even if that may only happen to start in 1Q23). However, rising skepticism over the nature of global demand may further delay any significant loonie recovery.
“Today’s release of the September CPI data is expected to show a reduction in headline inflation from 7.0% to 6.7%. Markets are now pricing in 60 bps for the meeting next week, so any surprise to the upside or downside might quickly shift expectations for rates to 50 bps or 75 bps and cause CAD volatility in both directions.
“The balance of risks for the Canadian dollar today seems somewhat tilted to the positive, but there is still opportunity for USD/CAD gain (1.38-1.40) until the end of the year.”
USD/CNH: 7.2670 is the next point of resistance – UOB
The next resistance level, around 7.2670, is where UOB Group economist Lee Sue Ann and market strategist Quek Ser Leang expect the USD/CNH to encounter short-term resistance.
“Our assumption for US Dollar to ‘trade sideways within a range of 7.1850/7.2200’ was erroneous as it spiked to a high of 7.2332 before closing of a solid note at 7.2250 (+0.25%),” according to the 24-hour outlook. The upward momentum has somewhat increased. The US Dollar will probably trade with an upward bias, but any gains will likely run into stiff resistance above 7.2380. Support is located at 7.2100, then 7.2000.
Within the next three weeks: “Last Friday (14 October, spot at 7.1880), we underlined that more US Dollar strength is not ruled out, but that 7.2380 is functioning as a strong barrier right now and that US Dollar must break this level before a prolonged climb is feasible. The US Dollar reached a high of 7.2332 yesterday before ending the day at 7.2250 (+0.25%). The possibility of the US Dollar breaching through 7.2380 is growing. The Sep high around 7.2670 would come into focus if this level were broken. Overall, a break of 7.1800 (a strong support’ level yesterday was around 7.1500) would signal a reduction in the upward risk.
Please click here for the Market News Updates from 18 October, 2022.