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  • USD/CAD is hovering on a daily low, slightly above the mid-1.3300s, as oil prices rise and the USD weakens.

    USD/CAD is hovering on a daily low, slightly above the mid-1.3300s, as oil prices rise and the USD weakens.

    Due to several variables, USD/CAD decreases for the second day. The Loonie is supported by rising Crude Oil prices, which put pressure on the pair as USD selling has resumed. Traders looking for short-term opportunities now anticipate the US PPI and Retail Sales statistics.

    Following an early increase to the 1.3410 range, the USD/CAD pair draws new selling on Wednesday and falls for a second straight day. The continuous intraday decline, supported by several reasons, pushes spot prices to a new weekly low in the middle of the 1.3300s during the first part of the European session.

    CAD

    In anticipation of increased fuel consumption in China due to the relaxation of China’s rigorous COVID-19 regulations, crude oil prices have risen to their highest level since early December. As a result, the commodity-linked Loonie is supported, putting some downward pressure on the USD/CAD pair and developing vigorous intraday selling around the US Dollar.

    In reality, expectations for a more gradual tightening of policy by the Fed cause the USD Index, which measures how the Greenback performs versus a basket of currencies, to lose some of its high intraday gains. The markets have been pricing a lesser 25 bps rate rise in February because they appear to be confident that the Fed would soften its stance.

    The past week’s publication of the US CPI data, which showed indications of lessening inflationary pressure, confirmed the wagers. This caused a further decline in US Treasury bond rates, which is now substantially weighing on the US currency and pushing the USD/CAD pair down toward its lowest level since November 25, which was reached on Friday.

    Market investors are currently focusing on the US data calendar, particularly the later in the early North American session scheduled publication of the Producer Price Index and the monthly Retail Sales. The demand for the USD will be fueled by this, remarks by significant FOMC members, US bond rates, and the general risk mentality of the market.

    cad

    In addition, traders will use the oil price movements to identify short-term trading opportunities in the USD/CAD pair. However, the path of least resistance for spot prices seems negative as the fundamental backdrop favors bears. Any effort at recovery might thus be sold into.

  • 4 Global Market Updates- 18 January, 2023

    4 Global Market Updates- 18 January, 2023

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

    EUR/USD will trade in the 1.12-1.15 range – Citigroup

    FX The EUR/USD pair is anticipated to trade in a range of 1.12-1.15, according to Citigroup strategists, who also justify their positive perspective.

    “China reopens at the same time that US inflation peaks and natural gas prices fall.”

    Represents a significant change in the market narrative and the start of a new FX regime.

    Renewed equity slump that would bolster the US dollar is a risk to consider.

    Technical analysis favors EUR/USD advances targeting a major Fib of 1.0938.

    Dealers should watch out for future option-related headwinds, however.

    AUD/USD will continue to rise toward 0.75, according to SocGen

    The AUD/USD exchange rate has rapidly improved from its October low. According to Société Générale economists, the reopening of China will push the pair rate over 0.70.

    usd

    Only a 25 bps increase is anticipated at the RBA meeting in February.

    “The Chinese reopening continues to be the key macro story in FX, and the performance of the pair is closely related to Chinese stocks. China’s GDP printed at 0.0% QoQ (consensus projected -1.1%) in the fourth quarter of 2012, above expectations. December activity statistics also positively surprised me.

    Only a 25 bps increase is anticipated at the next RBA meeting in February, and the market only anticipates one further increase of that magnitude to reach the terminal rate.

    Australian economy could be one of the least impacted in the G10 by the global tightening cycle, possibly assuring more AUD/USD gains towards 0.75 since the RBA went dovish before other central banks.

    USD/JPY continues to aim towards 126.35 – UOB

    UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang say that the outlook for USD/JPY continues to point to a potential decline to the 126.35 level in the coming weeks.

    In the past day, we anticipated that the US Dollar would “trade between a band of 127.85/129.05.” Before settling at 128.13 (-0.32%), the US Dollar moved between 127.98 and 129.13. The US Dollar will trade between 127.40 and 129.40 since the price actions seem to be consolidating.

    Within the next three weeks: “We don’t have anything to contribute to our Monday report (16 Jan, spot at 128.00). As previously said, the danger for the US Dollar continues to the downside, and 126.35 is the next level to keep an eye on. On the other side, a break of 130.05 (a level that has remained a “strong resistance”) would show that the US Dollar is not losing further ground.

    GBP/USD bulls break above 1.2300 despite lower UK inflation, US Retail Sales, and PPI in the focus

    GBP/USD saunters over a five-week high, hitting 1.2320 early on Wednesday morning in London, despite weakening UK inflation statistics. In doing so, Cable also disregards concerns that increased taxes in the next British budget may negatively affect growth after remarks by Chancellor Jeremy Hunt that he would not be decreasing taxes.

    usd

    According to data released early on Wednesday morning, the UK Consumer Price Index (CPI) declined to 10.5% YoY from 10.6% predicted and 10.7% previously. The Retail Sales Index (RPI) fell to 13.4% from 13.9% market forecasts and 14.0% earlier readings. Even though the Core CPI also came in at 6.3% YoY, below market estimates of 6.6%, the GBP/USD exchange rate continued to rise.

    The Guardian published an article speculating on future political drama with the tax cuts. According to the newspaper, “Jeremy Hunt is contemplating a “slimmed down” spring budget without any quick tax cuts as the Conservative party tries to regain economic credibility after the harm caused by the Truss government.

    Please click here for the Market News Updates from 17 January, 2023.

  • GBP/USD falls below 1.2200 as UK employment data disappoints.

    GBP/USD falls below 1.2200 as UK employment data disappoints.

    GBP/USD accepts bids to prolong the week’s beginning drop from a one-month high. UK Claimant Count Change decreased to 19.7K in December, while the unemployment rate has remained steady for the last three months through November. Despite disadvantages related to a labor strike and inflation worries, cable prices rise due to the US dollar’s inability to follow the yields’ recovery. Before the important Wednesday, traders might amuse themselves with second-tier US data and risk triggers.

    GBP/USD records a two-day losing run as it retraces to its intraday low after early-Tuesday UK employment data. Despite this, the GBP/USD pair fell to 1.2169 before rising to 1.2190 at the time of publication.

    Early on Tuesday, the UK’s Office for National Statistics (ONS) issued its monthly employment report. The Claimant Count Change for December and the Unemployment Rate for the three months ending in November were two of the most important statistics. Despite this, the change in the number of claimants was 19.7K rather than 30.5K, and the unemployment rate remained at 3.7%.

    gbp

    In addition to the contradictory statistics, the UK labor strikes and Bank of England (BoE) Governor Andrew Bailey’s pessimistic testimony also impact the GBP/USD exchange rate. In London, BoE’s Bailey testified against the Treasury Select Committee and predicted a sharp decline in inflation this year. However, Bailey of the BoE noted concerns about growth brought on by employee strikes.

    Other factors that affect the risk profile include the market’s doubts about the Chinese growth figures, the absence of significant data or events, and recessionary worries. The same support the rise in US Treasury rates and drags down the S&P 500 Futures as it declines from their one-month high. However, the US Dollar Index (DXY) loses some of the previous day’s gains from the seven-month low.

    According to Reuters, “two-thirds of private and public sector chief economists questioned by the WEF foresee a worldwide recession this year, with around 18% thinking it “very likely”—more than twice as many as in the previous study, which was conducted in September 2022.

    Looking forward, the January NY Empire State Manufacturing Index, which is predicted to be -4.5 as opposed to -11.2 before, may amuse intraday traders when the markets resume being fully stocked. However, the UK Consumer Price Index (CPI) and the US Retail Sales for December will get most of the focus on Wednesday.

    gbp

    Technical Analysis

    Along with the positive MACD signals and higher RSI, the GBP/USD pair’s ability to hold above the 100-day EMA level at 1.1940 gives investors optimism, although the rising momentum is difficult to achieve until it crosses a six-week-old horizontal barrier above 1.2345.

  • 4 Global Market Updates- 17 January, 2023

    4 Global Market Updates- 17 January, 2023

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

    USD/JPY is stable below 129.00, rising slightly on minor USD gains.

    Tuesday sees the USD/JPY pair edging upward for a second straight day after recovering overnight from its lowest point since late May. However, during the first part of the European session, spot prices declined a few ticks from the day high and held below the 129.00 level.

    Speculation that the Bank of Japan (BoJ) may make another adjustment to the yield control policy at its meeting on Wednesday continues to strengthen the Japanese Yen. A milder risk tone also supports the JPY’s standing as a relative haven and helps to limit the upward potential for the USD/JPY pair. However, due to some continued US Dollar purchasing, the fall is still muted, at least temporarily.

    The USD is helped to build on the previous day’s rebound from a seven-month low by a goodish intraday increase in US Treasury bond rates, giving some support to the USD/JPY pair. However, the likelihood of a more gradual tightening of monetary policy by the Fed might drag US bond rates and the dollar. Investors are confident that, despite reducing inflationary pressures, the Fed will moderate its aggressive position.

    EUR/USD rises at 1.0830 ahead of essential data.

    The euro seeks to recover from recent losses, encouraging EUR/USD to rise mildly and return to the 1.0830 area on Tuesday.

    usd

    Around 1.0800 EUR/USD continues to have strong support. As the risk complex has improved, the EUR/USD has so far managed to withstand two daily pullbacks in a row, particularly in light of the encouraging findings of the Chinese fundamental data that were revealed during the opening hours of trading.

    In addition, the dollar’s recent rebound has been slightly restrained, which has caused the USD Index (DXY) to give up some of its recent gains as US market activity has resumed.

    Data-wise, the ECOFIN Meeting will likely draw all the focus to the economic sentiment readings for Germany and Euroland. Final inflation data for Germany earlier in the day showed that the CPI decreased 0.8% MoM in December and increased 8.6% over the previous twelve months.

    The NY Empire State Index, short-term bill auctions, and J. Williams’ address by the FOMC will all be in the spotlight across the Atlantic.

    USD/CAD: Weak Canadian inflation puts the Loonie under strain – Commerzbank

    The Canadian Consumer Price Index (CPI) data will be the focus of today. According to Commerzbank experts, weak numbers might hurt the Canadian dollar, but losses should be kept to a minimum.

    The last component of the puzzle? The Bank of Canada (BoC) will decide next week whether to raise its benchmark rate and, if so, by how much based on today’s Canadian inflation figures for December. Although the market anticipates a 25 bps increase, key interest rates might remain steady.

    “If today’s inflation report is unexpectedly poor, the market may drop its rate rise expectations even more, which might put pressure on the Canadian currency’s exchange rate versus the US dollar. However, as the US currency is not in high demand either, CAD losses should be kept to a minimum.

    NZD/USD: More gains are possible, according to UOB

    Additional increases in the NZD/USD are likely shortly, according to UOB Group economists Lee Sue Ann and Quek Ser Leang.

    usd

    24-hour view: “We said yesterday that the New Zealand dollar is expected to fluctuate sideways between 0.6415 and 0.6340. NZD, on the other hand, climbed to a high of 0.6426 before falling to 0.6363 and ending barely changed at 0.6382 (-0.05%). The NZD may touch 0.6430 first before the possibility of a more significant reversal rises as upward momentum has somewhat improved. It is not anticipated that the key barrier at 0.6470 will become visible. 0.6370 and 0.6350 provide support.

    In the next 1-3 weeks: “Last Friday (13 January, spot at 0.6390), we underlined that although the bias for NZD is on the upward, weak momentum implies the possibility of a breach of the significant resistance around 0.6475 is not great. NZD climbed to a high of 0.6426 yesterday before declining. The momentum has not changed much, and we still have the same opinion. A break of 0.6325 (the previous 0.6305 “strong support” level) would suggest that the upward tilt has diminished.

    Please click here for the Market News Updates from 17 January, 2023.

  • USD/CHF falls to 0.9260 on weak USD.

    USD/CHF falls to 0.9260 on weak USD.

    After a daily high of 0.9316, USD/CHF reversed previous gains. Positive US economic indicators hurt the dollar because the US Dollar is losing value.

    Price analysis for the USD/CHF: The pair would be exposed to more selling pressure on a break or daily closure below 0.9300.

    Although positive US statistics passed newswires, the USD/CHF is now trading below its initial price and has failed to break above the 20-day EMA and hold to 0.9300. Therefore, at the time of writing, the USD/CHF is trading at 0.9265.

    Wall Street has resumed its upward momentum after a minor glitch that saw the S&P 500 and Nasdaq turn red. The US Dollar (USD) declined due to Thursday’s announcement of lower US inflation, which raised prospects for a less interventionist US Federal Reserve (Fed). According to a University of Michigan (UoM) study, consumer sentiment has increased, surpassing expectations of 60.5 and reaching 64.6.

    CHF

    According to the same survey, estimates for inflation over the next year were reduced from 4.4% in December to 4%, while estimates for inflation over the next five years increased from 2.9% to 3%.

    Meanwhile, the US Dollar Index (DXY), which compares the dollar’s value to a basket of six competitors, loses some of its early gains and is now down 0.04% at 102.201.

    The USD/CHF cleared the 20-day EMA at 0.9293 and the 0.9300 level throughout the session. However, when the dollar dropped, the major gave up those gains and is now falling to new two-day lows under 0.9255.

    Technical analysis of the USD/CHF exchange rate

    Source: FX Street

    Technically, the USD/CHF would likely continue its downward trend, but it’s fair to say that it had momentum and hit the 50-day EMA around 0.9405 if the US CPI data had met expectations. In addition, oscillators like the Rate of Change (RoC) and the Relative Strength Index (RSI) indicate that sellers are still in control. Therefore, the current week’s low of 0.9167, followed by the 2022 low of 0.9091, would be the critical support levels for the USD/CHF.

  • AUD/USD Price Analysis: Retreats from the multi-month peak, downside potential restricted

    AUD/USD Price Analysis: Retreats from the multi-month peak, downside potential restricted

    The AUD/USD currency pair falls before the 0.7000 level and declines from a multi-month high achieved on Friday. Several variables work together to increase USD demand and provide downward pressure on the pair. Bulls are favored by the technical setup, which also offers opportunities for some dip-buying to arise.

    The AUD/USD pair dropped during the early North American session after reaching the psychological barrier of 0.7000, which was also its highest point since August 26. In the past hour, the pair has fallen to a new daily low in the vicinity of 0.6935, wiping out some of the previous day’s post-US CPI gains and ending a two-day winning run.

    The US Dollar can halt its current drop to a seven-month low thanks to a minor increase in US Treasury bond rates. In addition, the risk-off impulse, shown by a rapid decline in the equities markets, strengthens the US dollar’s relative safe-haven position and burdens the risk-averse Australian. Nevertheless, increasing expectations for lesser Fed rate rises may temporarily maintain a lid on the dollar’s advances and prevent the major from suffering more losses.

    aud

    Technically speaking, the AUD/USD pair has been moving upward along an ascending channel for around three months, which suggests that an uptrend is well-established. Additionally favoring optimistic traders is the recent break-out through the crucial 200-day SMA and the overnight strength above the 50% Fibonacci retracement level of the April–October 2022 decline. This indicates the possibility of some dip-buying emerging, combined with bullish oscillators on the daily chart.

    Therefore, any future decline is more likely to encounter solid resistance at the 0.6900 level than the horizontal range of 0.6870-0.6865. Support then comes in the vicinity of the 200-DMA around 0.6830, which should now serve as a turning point for the AUD/USD pair. A solid breach for the downside might accelerate the decline toward the 0.6800 level and the trend-channel support. This one is estimated to be in the mid-0.6700s and is getting close to the 38.2% Fibo level, which should stop any further slide.

    On the other hand, bulls could hold off on putting new bets until a prolonged strength is above the 0.7000 level. The AUD/USD pair may overcome a stepping stone between the price ranges of 0.7030-0.7035 and 0.7070-0.7075 before advancing to the round number of 0.7100.

    Daily chart for AUD/USD

    aud
    Source: FX Street
  • 4 Global Market Updates- 13 January, 2023

    4 Global Market Updates- 13 January, 2023

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

    USD/CNH: A sustained decline below 6.7000 is improbable, according to UOB

    A convincing break of 6.7000 in the USD/CNH remains improbable, according to economist Lee Sue Ann and market strategist Quek Ser Leang at UOB Group.

    “Yesterday, we indicated that USD ‘may break the main support at 6.7500,” according to the 24-hour outlook. We continued the next support at 6.7000 is unlikely to come into view. Our assessment was accurate since the USD fell to a low of 6.7250. Even if there has been a sizable decrease, the downward trend has not changed much. While the USD can fall below 7.0000, it is doubtful that it will do so consistently. Overall, the only way to tell whether the USD’s weakness has steadied is if it breaches 6.7620 (a minor resistance level at 6.7480).

    Next 1-3 weeks: “Since last week, we have anticipated a decline in the USD. A breach of 6.7500 will cause attention to turn to 6.7000, as we predicted in our most recent narrative from Tuesday (10 January, spot at 6.7850) when the USD declined. Yesterday in New York trading, the USD breached 6.7500 and fell as low as 6.7250. Even while there is little chance of a prolonged collapse below 6.7000 after such a steep decrease over so little time, we still anticipate USD weakening. On the other side, a break of 6.7920 (the previous day’s “strong resistance” level was at 6.8250) would suggest that the USD’s weakening has peaked.

    The USD/JPY exchange rate continues to decline, reaching a low point not seen since late May at 128.00.

    Early in the European session, the USD/JPY pair broke down from its intraday consolidative range and plunged to its lowest point since late May. The pair is now trading slightly over the 128.00 level and is susceptible to continuing its downward trend.

    usd

    The USD/JPY pair falls for the second day in a row as the US Dollar fails to benefit from its slight rebound and hovers close to a seven-month low. The US consumer inflation data published on Thursday increased the likelihood that the Fed would tone down its aggressive posture. Additionally, several FOMC members supported the argument for a lesser 25 bps lift-off in February and are still putting pressure on the dollar.

    On the other hand, expectations that the Bank of Japan (BoJ) would end its ultra-loose monetary policy in 2023 strengthen the Japanese Yen. Additionally, according to sources on Thursday, the BoJ will examine the negative impacts of its ultra-loose policy and may take action to rectify yield curve abnormalities. As a result, the 10-year Japanese government bond has risen to its highest level since mid-2015, further strengthening the JPY.

    AUD/USD: A rise over 0.7000 is on the way – UOB

    Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group believe that additional gains might soon push the AUD/USD pair back over the 0.7000 resistance level.

    24-hour view: “We anticipated the Australian dollar would rise yesterday, but we also believed that any advance would be met with strong resistance near 0.6950. However, in NY trading, AUD quickly overcame 0.6950 as it climbed to a high of 0.6984. Despite the progress, the rising momentum has mostly stayed the same. However, AUD may move over 0.7000 if it maintains a position above 0.6920 (a minor support level is around 0.6940). Although AUD may surpass 0.7000, it is not anticipated to test the next significant barrier at 0.7070.

    In the next one to three weeks: “Our most recent narrative was from Tuesday (10 January, spot at 0.6910) when we emphasized that although momentum continues to lead to a higher AUD, it must break and remain above 0.6950 before a rise to 0.7000 is possible. The Australian dollar rose beyond 0.6950 before ending the day at 0.6967 (+0.88%).

    The price movements indicate that AUD is most likely to rise over 0.7000. The next obstacle at 0.7070 is likely to be in sight very soon, as there needs to be a discernible increase in momentum. On the downside, a break of 0.6890 (the previous day’s “strong support” level was at 0.6835) would signal that the Australian dollar is not gaining any further.

    GBP/USD: Continued focus on UOB at 1.2270

    Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group believe that GBP/USD has to break above the 1.2270 level to allow for more gains shortly.

    usd

    View for the next 24 hours: “We noted yesterday that GBP may continue to trade sideways, but a breakthrough of the 1.2200 barriers may lead to a rapid surge to 1.2270′. Although GBP reached 1.2200, the expected rapid surge did not occur as GBP traded choppily in the NY session (the high was 1.2248). Although GBP is expected to trade with an upward tilt today, rising momentum has somewhat improved, and it is doubtful that it will breach 1.2270. Support is found at 1.2175, then 1.2140.

    Within the next three weeks: “On Tuesday (10 January, spot at 1.2180), we emphasized that there are now more chances for GBP to overcome the key barrier. We still share the same opinion even if GBP hasn’t been able to move much in the right direction. However, to maintain the momentum, GBP must break 1.2270 in the next few days; otherwise, the likelihood of additional GBP gains would swiftly fade. In contrast, a break of 1.2100 (the previous day’s “strong support” level was 1.2050) would suggest that GBP is not rising much further. A high resistance level at 1.2305 is seen in the distance above 1.2270.

    Please click here for the Market News Updates from 12 January, 2023.

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