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4 Global Market Updates- 13 September, 2022

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

NZD/USD: Technical bounce off 0.60 appears more safe currently – ANZ

NZD/USD is maintaining its mid-0.61 range. According to experts at ANZ Bank, today’s US CPI data and tomorrow’s or Thursday’s NZ data will be key.

“The US Dollar Index has decreased for three straight days and is now 2.2% below 20-year highs reached last week. This correction has occurred at the same time as bond rates have recovered ahead of the US CPI and that market expectations have increased for the Fed Funds rate to reach its cycle-high of 4%. The move seems a little strange from that (USD-centric) angle, but the EUR’s recovery on reports that Ukraine had reclaimed ground and the ECB’s hawkishness are what are now driving the foreign exchange markets. Due to its complexity and potential for volatility, we are cautious.

This week’s NZ C/A and GDP statistics should bring local issues back into prominence for the NZD.  Technical bounce off 0.60 now seems to be more solid.

GBP/USD should be influenced by external factors and may continue to be supported – ING

GBP/USD is now trading little higher. ING economists predict that the pair will continue to be supported on Tuesday.

“Jobs figures revealed the UK jobs market has remained relatively tight and were much in line with consensus predictions. The Bank of England needs to see evidence that wage growth has continued to increase since it may point to more aggressive tightening.

Today, Cable should continue to be influenced by external forces and may continue to be supported, while EUR/GBP may continue to trade in the upper part of the 0.86-0.87 range.

USD/CHF displays a five-day decline at 0.9500, ahead of US inflation.

As traders of the pair wait for important US inflation data early on Tuesday in Europe, USD/CHF maintains its defensive position at a three-week low and has fallen for five days in a row. The market’s cautious optimism as well as conflicting data from Switzerland may both be contributing factors to the recent depreciation of the Swiss currency (CHF) pair.

Swiss Producer and Import Prices revised August -0.1% MoM results lower than market forecasts of 0.6%. The annual statistics, however, decreased to 5.5% YoY vs estimates of 5.7% and prior readouts of 6.3%.

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Other than that, the US Dollar Index (DXY) is under pressure around a 12-day low, down 0.20% intraday at the latest near 108.10, as stronger mood and expectations for a lower US Consumer Price Index (CPI) benefit the sellers of the dollar. In doing so, the dollar bears disregard recent aggressive statements from Fed governors as well as trade and geopolitical concerns about China and Russia.

A decline in US Treasury rates from their multi-day high, expectations of further stimulus, and the absence of remarks from Fed members owing to the fortnight-long blackout before of next week’s monetary policy meeting might all be contributing factors.

Despite this, the US 10-year Treasury rates dropped three basis points (bps) to 3.33%, retreating from a three-month peak. Despite registering modest increases at the time of press, S&P 500 Futures and the equities in the Asia-Pacific region display uneven behavior. As they decline from their greatest levels since late 2007, the US two-year Treasury rates break a three-day uptrend, falling by 0.87% percent to as close to 3.543% as possible.

EUR/USD: At this point, a break over 1.0200 is feasible – ING

The EUR/USD is moving near 1.0200. According to ING experts, there will likely be a break above this level.

“The euro’s parallel recovery is keeping the FX-stocks link very well alive,” according to the author. “Market confidence on Europe is supporting a comeback in European shares.”

“The current swap rate differential does unquestionably point at a stronger EUR/USD, but in order for the pair to reconnect with that differential under current market conditions, we’ll likely need a period of stabilization in European sentiment, something we are seeing now but may prove hardly sustainable in the coming weeks,” the author writes.

A break over 1.0200 is feasible at this point, but a return to the 1.0000 level parity remains our base-case forecast for EUR/USD towards the end of the year. If US CPI swings lower, it might be another potential excellent day for risk assets.

Please click here for the Market News Updates from 10 September 2022.

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