Tag: dollar

4 Global Market Updates- 31 October, 2022

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

AUD/JPY Price Analysis: Reaches weekly low on weaker China PMI

In the Asian session on Monday, the AUD/JPY pares intraday gains while accepting offers around about 94.90. After dismal China PMI data, the cross-currency pair pivots away from the resistance line of the one-week-old symmetrical triangle.

In October, China’s official NBS Manufacturing PMI fell to 49.2 from 50.0 predicted and 50.1 in September. In addition, the Non-Manufacturing PMI fell to 48.7 from 51.9 market expectations and 50.6 earlier readings. Following the release of the statistics, Reuters reported that “China’s manufacturing activity unexpectedly decreased in October, an official survey showed on Monday, knocked down by falling global demand and severe COVID-19 controls, which impacted output.”

However, it should be observed that the RSI (14) is challenging the positive MACD indications, which suggests that there may not be much more opportunity for the quotation to fall.

Having said that, the bottom line of the above triangle, which is close to 94.50, may be the current target for AUD/JPY bearish. The 200-HMA level around 94.40, however, would be a barrier to the pair’s further decline.

GBP/USD Price Analysis: Around 1.1600, the 20-EMA provides support for the cable.

In the Asian session, the GBP/USD pair has above the immediate barrier of 1.1600 despite the US dollar index performing weakly (DXY). Prior to the Federal Reserve’s announcement of its monetary policy, the DXY is performing poorly within a constrained range (Fed).

Meanwhile, despite an increase in 10-year US Treasury rates to 4.05%, the risk-on urge continues to seem strong. After posting 4% weekly gains, S&P500 futures have increased their losses to 0.3%.

Pound bulls have shown a perpendicular rally after a breakout of the symmetrical triangle chart pattern on a four-hour time frame. The chart pattern’s trendlines were produced with the upward trendline starting from the low on October 12 at 1.0924 and the downward trendline starting from the high on October 5 at 1.1496.

After making a rapid upward advance to go close to the 20-period Exponential Moving Average (EMA) around 1.1580, the asset has settled, giving market players a good chance to execute long positions. The 50-period Exponential Moving Average (EMA) at 1.1400 is also moving upward, which strengthens the upward filters.

NZD/USD is struggling at 0.5800 due to unfavorable Chinese PMI data.

In the Tokyo session, the NZD/USD pair saw selling pressure as it tried to pass the crucial threshold of 0.5810. In order to exceed the immediate barrier of 0.5810, the asset faced significant obstacles. Kiwi bulls are negatively impacted by depressing Chinese PMI data as well as a resurgence of risk aversion due to growing concern about the Federal Reserve’s (Fed) monetary policy.

According to the National Bureau of Statistics, China’s official Manufacturing PMI came in lower than expected, at 49.2, compared to 50.0 expectations and the previous release of 50.1. Additionally, the Non-Manufacturing PMI came in substantially lower than expected at 48.7 compared to 51.9 and the previous report of 50.6. It seems that the no-tolerance Covid-19 policy is still in effect, which has put pressure on economic activity.

As yields have stabilized after a rocky start, the risk aversion concept is gaining hold. While the S&P500 futures have increased their losses, the 10-year US Treasury rates have increased to 4.05%.

Additionally, the fourth rate increase by the Fed is anticipated to be 75 basis points (bps).

USD/CNH climbs beyond 7.2800 as China PMIs decline, the Fed acts, and the US NFP is anticipated

As China’s monthly activity report displeases the offshore Chinese yuan (CNH) purchasers, USD/CNH keeps buyers on the table for the third straight day to Monday, gaining 0.23% intraday at 7.2850 by press time. Concerns about the dragon nation’s Covid problems and worries about the aggressive Fed action also give pair buyers optimism.

However, the official NBS Manufacturing PMI for China for October fell to 49.2 from 50.0 anticipated and 50.1 previous. In addition, the Non-Manufacturing PMI fell to 48.7 from 51.9 market expectations and 50.6 earlier readings. Following the release of the statistics, Reuters reported that “China’s manufacturing activity unexpectedly decreased in October, an official survey showed on Monday, knocked down by falling global demand and severe COVID-19 controls, which impacted output.”

Due to the safe-haven character of the US dollar, the news of Macau’s closure of a casino resort and worries coming from Russia further support the rise in the USD/CNH. Following an attack on its Black Sea fleet, Russia, which invaded Ukraine on February 24, halted its participation in the Black Sea agreement on Saturday for a “indefinite term,” according to Reuters. As a result, Russia could no longer “guarantee the safety of civilian ships” travelling under the agreement.

Please click here for the Market News Updates from 28 October, 2022.

October 31, 2022
A Trader’s Guide to Stock Valuation: How to Value a Stock?
Trading professionals may find and seize chances in the stock market by understanding how to appropriately assess a company. The foundation for traders to determine whether a company is reasonably cheap or costly is provided by stock valuation, often known as “equity valuation” Traders have the potential to profit from the discrepancy between a stock’s market value and intrinsic value.

WHY SHOULD YOU VALUE A STOCK?

By valuing a stock, traders may get a thorough grasp of a share’s worth and determine if its price is reasonable. Once the share’s worth is understood, it may be contrasted with the share’s stock market quoted price.

Traders will try to short/sell the stock if the quoted share price exceeds the estimated value because they perceive it to be overvalued and anticipate the price returning to its intrinsic value.

It is considered cheap if the listed price is less than the calculated price, and traders would try to purchase or go long the stock in the hope that the price will eventually return to its intrinsic value.

The following details sum up this relationship:

Market value > intrinsic value = Overvalued (short signal)

Market value < intrinsic value = Undervalued (long signal)

It is important to note that even if a stock may be overpriced or undervalued, it may stay that way for a while if the imbalance’s underlying reason continues.

THE VARIOUS TYPES OF STOCK VALUE

What establishes a stock’s value? The easiest approach to respond to this is to discuss the idea of worth. Value: What is it? Is it the price that one buyer is willing to accept from another (market value) or is it an inherent worth that can be determined objectively based on a set of publically accessible data?

The following definitions of these two ideas:

1) Market value: The share price quoted on the stock market. The latest traded price is what it is. A willing buyer and a willing seller will trade goods at a price known as market value.

2) Intrinsic value: A more measured evaluation of worth based on data that is readily accessible to the public. Since there is no established formula for valuing stocks, experts often arrive at various intrinsic values, yet, these values often only vary a little.

Share prices very often diverge from their fundamental worth. A situation with a lot of anticipation about a new share or one that is expanding swiftly and investors looking to buy it soon would be an illustration of this. Growing FOMO would logically extend this mismatch until there is a significant decline in the share price.

Traders may expect a move down near $300, for instance, if Tesla Inc. is presently trading at $331 and has an intrinsic value of $300.

An example of a stock trading above its intrinsic value is Tesla Inc.

The opposite is also true when investors buy shares of a company when they are trading below their intrinsic value in the hopes that the price would rise to reflect the inherent worth. Value stocks often operate in this manner. In the scenario below, Aviva PLC is trading below its intrinsic value.

Aviva PLC is a good illustration of a company selling below its actual value.

THE TOP 3 WAYS TO DETERMINE A STOCK’S VALUE

Leading financial institutions and hedge fund managers undertake stock valuation using extremely complex variants of the procedures below. This article aims to provide investors with a thorough starting point for stock valuation for the following stock valuation methods:

P/E Ratio

PEG Ratio

Dividend Discount Model (DDM)
- The P/E Ratio
One of the most often used methods of valuing a share is the price-to-earnings ratio, or P/E ratio, widely used by investing experts.

Instead of providing an intrinsic value, the ratio compares the company’s P/E ratio to a benchmark, such as other businesses in the same industry, to see if the stock is comparatively overpriced or undervalued.

The stock price per share is subtracted from the earnings per share to arrive at the P/E ratio.

Think about, for instance, the three following businesses and their different P/E ratios:

Being below the industry average of 11, Companies A and B seem appealing. This serves as the foundation for stock valuation since there can be a very solid reason why these businesses seem to be undervalued. It’s conceivable that the business has taken on too much debt, and the share price appropriately represents the debt-ridden company’s market worth.

Company C, which has a P/E ratio that is well above average, requires the same amount of research. While it seems pricey, likely, the market has already factored in higher future profits growth, and investors are thus prepared to pay more for these higher earnings.
- The PEG Ratio
Traders can determine the value of a company by extending the P/E ratio and factoring in the Earnings Per Share growth rate (EPS). This is more accurate since profits are seldom static, and by including EPS growth in the equation, a more dynamic stock value model is produced.

A historical earnings number may be used to get a “Trailing PEG” or an anticipated figure can be used to calculate a “Forward PEG.”

This is how the PEG ratio is determined:

The formula for valuing stocks:

Take the same illustration but add information about profits growth:

Generally, a PEG ratio of less than one indicates a solid investment. In contrast, ratios greater than one indicate that the stock’s current price is too expensive compared to its expected profit growth and, as a result, is not a good bargain.

The PEG ratios show that Company A is OK, Company C is quite alluring despite its high price, and Company B does not seem flattering.

It’s important to reiterate that investing selections shouldn’t be based just on PEG ratios and that further research into the company’s financial statements should be done.
- DIVIDEND DISCOUNT MODEL (DDM)
As it considers future dividends (profits) to shareholders, the dividend discount model is comparable to the earlier stock valuation techniques. To determine what those dividends would be worth in today’s value, sometimes known as the present value, the DDM model, however, looks at future payouts and discounts them (PV).

This is justified by the idea that the value of the share today should correspond to the number of dividends the shareholder would ultimately receive, discounted to the present.

Assume a dividend payment is made once per year to make the computation easier. Furthermore, it is common to anticipate that dividends would rise over time as the company expands and as a consequence of inflationary impacts. Larger profitability and, thus, increased dividend payments result from higher input costs that are passed down to consumers.

Assuming constant growth, the dividend growth is shown below by the letter “g.” Future cash flows are discounted to today’s value using the needed rate of return, or r.

The formula for stock valuation:
- PV = Stock’s present value
- DIV1 = Dividend expected one year from now
- r = Discount rate
- g = Constant dividend growth
Dividends paid out in the future have less worth in terms of today’s value, which lowers their contribution to the stock’s current value. The stock value determined by the dividend discount model is the answer at PV after future dividends have been discounted.

KEY TAKEAWAYS FROM DETERMINING THE VALUE OF A STOCK

Valuing stocks may be simple when using the P/E ratio and PEG ratio, or it can be more difficult when utilizing the DDM approach. Traders may determine whether there is a significant gap between a share’s market price and its intrinsic or relative value by comparing them after choosing an appropriate approach.

If there is a discrepancy between the two numbers, traders may choose to short overvalued stocks or buy long oversold stocks, but they should always use intelligent risk management.
October 30, 2022
4 Global Market Updates- 28 October, 2022

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

NZD/USD Price Analysis: Thursday’s Doji teases sellers beyond 0.5800

Following a fall from the monthly peak, NZD/USD remains protective above 0.5800, moving to 0.5830 during the Asian session on Friday. As a result, the Kiwi pair finds it challenging to explain the previous day’s bearish Doji candlestick and its inability to break over the 50-DMA barrier.

Though it should be observed that the RSI (14) is rising steadily without approaching the overbought zone, the sellers are in for a difficult battle.

But around 0.5720 and 0.5700, a two-week-old rising trend line and the prior resistance level from August 12 can provide a problem for short-term NZD/USD bearish.

The buyers’ final line of defense might then be the 21-DMA level of 0.5682, a breach of which could not be afraid to target the annual low established earlier in the month at 0.5510.

For the NZD/USD buyer to return, a daily close above the 50-DMA barrier at 0.5870 is required.

The 0.5900 barriers and the 0.6000 psychological magnets will be significant obstacles in the next run-up.

The USD/JPY consolidates ahead of the Bank of Japan’s policy announcement.

As the Asian Pacific session gets underway, the USDJPY slightly declines after a trading day in which the Japanese Yen stuck to gains, albeit modest, as seen by the USDJPY dropping 0.04%. This was due to a strong US Dollar supported by favorable US statistics. The Bank of Japan’s (BoJ) impending monetary policy announcement also supported the JPY. The USDJPY is now down 0.05% at 146.20.

US statistics supported the USD, but not when compared to the JPY.

During the New York session, the US Department of Commerce stated that the US economy expanded more quickly than anticipated. The third quarter’s Gross Domestic Product (GDP) increased by 2.6%, above expectations of 2.6%. It highlights the economy’s durability but wouldn’t stop the Federal Reserve from raising interest rates.

In the same report, consumer spending declined, which Fed officials applauded as a sign that they were succeeding in their goal of slowing the economy. Data showed that consumer expenditure had slowed from Q2’s 2% to Q4’s 1.4%.

GBP/USD sellers are skeptical below 1.1600, and US PCE inflation is being considered.

After welcoming bears from a monthly peak the day before, GBP/USD fails to protect them as it rounds to 1.1570 on Friday during Asian trading.

A lack of positive British stories combined with the broad rebound of the US dollar served to remind pair sellers. The US Core PCE Price Index for September, the Fed’s favored inflation indicator, is due out soon, and the current movement of the quotation seems constrained by the prevailing cautious attitude.

After the third-quarter Gross Domestic Product (GDP) increased 2.6% on an annualized basis, more than anticipated, on Thursday, the US Dollar Index (DXY) rebounded from a five-week low (Q3). However, it should be noted that the details indicating a fifth straight decline in private consumption confounded the Fed’s hawks because they demonstrated that policymakers are gradually moving toward their goal of slowing down private domestic demand, which might favor the easy rate hike discussions for December at the Federal Open Market Committee (FOMC) meeting the following week.

The USD/CHF oscillates over 0.9900 as the DXY strengthens, and attention switches to Fed policy.

Early in the Asian session, the USD/CHF entered a rangebound structure above the pivotal level of 0.9900 as investors turned their attention to the Federal Reserve’s monetary policy announcement (Fed). The asset made a strong comeback from around 0.9840 as investors returned to the risk-aversion theme and the US dollar index (DXY) surged substantially higher.

Following a collapse in Meta Platforms Inc. (META) on Thursday, the S&P500 lost two days of gains. The IT titan plummeted to a five-year low in the wake of a poor earnings report. This sparked the risk associated with holding cash in assets with a high perceived risk.

Following a positive Gross Domestic Product (GDP) report, the DXY saw unprecedented liquidity. Against expectations of 2.4%, the US GDP increased to 2.6% for the third quarter. Two consecutive quarters of CY2022’s recession from January to June were broken by a positive growth rate figure.

US Treasury yields are the instrument that have been influenced since the announcement of the GDP data. After the Commerce Department reported a dip in consumer spending, which makes up 70% of US economic activity, the yield on the 10-year US Treasury fell to 3.93%. 1.4% rise in consumer expenditure is still less than the 2% growth seen in the second quarter. Consumer spending is slowing down, suggesting that the inflationary pressures are really becoming too great.

Please click here for the Market News Updates from 27 October, 2022.

October 28, 2022
What Do Forex Spreads Indicate to Traders?

Since FX spreads are the main expense associated with trading currencies, traders must be knowledgeable about them. To increase your trading performance, read this article to learn how forex spreads operate, how to calculate expenses, and how to monitor changes in the spread.

WHAT IS A FOREX SPREAD?

A spread exists in every market, including forex. The price difference between two possible locations for a trader to buy or sell an underlying asset is known as a spread. Equities-experienced traders will refer to this as the “Bid”: Ask spread.

An illustration of how the forex spread for the EUR/USD is computed is shown below. We will first determine the purchase price, 1.13398, and then deduct the sale price, which is 1.3404. Following this procedure, we are left with a reading of.00006. Traders should remember that the pip value is then indicated on the EUR/USD as the fourth digit after the decimal, resulting in a total spread of 0.6 pips.

Let’s look at the actual expense experienced by traders now that we understand how to compute the spread in pips.

HOW TO CALCULATE FOREX SPREAD AND COSTS?

Remember that the spread is just the asking price of a currency pair less (minus) the bid price before we compute the cost of a spread. Therefore, 1.13404-1.13398 = 0.00006 or 0.6 pip in the case above.

We may purchase the EUR/USD at the moment’s price of 1.13404 and complete the transaction at a selling price of 1.13398 using the quotations from above. That implies that a trader would pay 0.6 pip in the spread as soon as our transaction opens.

We must now multiply this amount by the pip cost while considering the total number of traded lots to get the overall spread cost. You would spend a total of 0.00006 (0.6 pip) X 10,000 (10k lot) = $0.6 when trading a 10k EUR/USD lot. The spread cost for a normal lot (100,000 units of currency) would be 0.00006pips (0.6pips) multiplied by 100,000 (1 standard lot) to equal $6.

You will need to convert your account’s currency, such as GBP, if it is not US dollars.

UNDERSTANDING HIGH AND LOW SPREAD

It’s crucial to remember that the FX spread might change during the day, ranging from a “high spread” to a “low spread.”

This is so because a variety of variables, such as volatility or liquidity, may have an impact on the spread. You’ll see that specific currency pairing, such as those of developing markets, have wider spreads than those of major currencies. Compared to emerging market currencies, your leading currency pairs trade in more significant quantities, and under normal circumstances, higher transaction volumes tend to result in narrower spreads.

Furthermore, it is generally known that spreads may widen, and liquidity can decrease before significant news events and in the intervals between trading sessions.

High spread:

A wide gap between the bid and ask prices is a high spread. Unlike significant currency pairings, emerging market currency pairs often have a higher spread.

A spread greater than usual often indicates one of two things: either the market is very volatile, or there is a lack of liquidity because of after-hours trading. Spreads may dramatically increase before news events or following major shocks (Brexit, US Elections).

Low spread:

A modest price gap between the bid and ask is a low spread. Trading is best done when spreads are minimal, such as during the main forex sessions. A low spread often denotes minimal volatility and excellent liquidity.

WATCHING FOR CHANGES IN THE SPREAD

The market is notoriously sure when there is news. Releases on the economic calendar are irregular and may cause prices to change drastically depending on whether or not expectations are satisfied. Significant liquidity sources, including retail traders, must be aware of news events’ outcomes before they are reported! They want to widen spreads to reduce part of their risk.

Spreads might result in margin calls.

If you have an open trade and the spread suddenly expands, you can be forced to close it or face a margin call. Limiting the leverage in your account is the best method to safeguard yourself while spreads are growing. When the gap increases, it might be advantageous to stick to trade until the spread narrows.

October 27, 2022
USD/CAD holds above mid-1.3500s, but upside remains restricted.

On Thursday, USD/CAD moved a little higher, but there is no sustained purchasing to support the advance. The weaker oil prices and less hawkish BoC decision weaken the Canadian dollar. Ahead of the US GDP, the USD lingers close to the monthly low and creates a headwind.

On Thursday, there is some buying interest in the USD/CAD pair, which maintains its small intraday gains during the early European session. Although the pair is now hovering slightly above the mid-1.3500s, the upswing is not strongly positive.

The US dollar is a drag on the USD/CAD pair as it hovers at its lowest point since September 20, which was hit the day before. Market hopes for a more aggressive Federal Reserve policy tightening were dampened by indications of a downturn in the US economy. This has been a major contributing cause to the recent significant decline in US Treasury bond rates, which keeps the dollar under pressure.

A bullish outlook for the stock markets also helps to limit the safe-haven dollar’s potential rise. However, the Bank of Canada’s less aggressive decision to hike rates by 50 basis points on Wednesday rather than the expected 75 basis points restricts the downside for the USD/CAD pair. Furthermore, the commodity-linked loonie is undermined, and the major is supported by a slight decline in crude oil prices.

Aggressive traders should use some care given the conflicting fundamental background while preparing for a clear intraday direction. Currently, the market is anticipating the publication of the Advance US Q3 GDP data, which is scheduled for later in the early North American session. Durable Goods Orders and the customary Weekly Initial Jobless Claims are also on Thursday’s US economic calendar and might impact the USD.

To seize short-term possibilities around the USD/CAD pair, traders will also draw cues from the oil price dynamics and the market’s overall risk attitude. Nevertheless, next week’s FOMC policy meeting continues to dominate attention. The next leg of the greenback and the major’s directional move will be heavily influenced by this and the much-expected US monthly employment data (NFP).

USD/CAD will hit 1.40 before the year is over, according to Rabobank

50 basis points raised the policy rate to 3.75% the Bank of Canada (BoC). CAD/USD spiked to 1.3650 before falling to below 1.36. However, Rabobank’s experts predict that the pair will continue to rise, eventually reaching 1.40.

USD strength is expected to return in the following weeks. In contrast to market-implied pricing, which suggested a 75 bps increase, the BoC stunned the market with a 50 bps increase to 3.75%.

In contrast to market-implied pricing, which suggested a 75 bps increase, the BoC stunned the market with a 50 bps increase to 3.75%.

The growth predictions were lowered by 1 percentage point to 1.0% in 2023 and -0.5 percentage points to 2% in 2024. Forecasts for inflation decreased somewhat, by 0.5% to 4% in 2023 and 0.1% to 2.2%.

Even though today’s 50 bps increase was less than anticipated, “we still predict another 50 bps boost in December, 25 bps in January, and a holding pattern after that till 2024.”

October 27, 2022
4 Global Market Updates- 27 October, 2022

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

USD/CHF falls near 0.9840 as DXY’s pre-event consolidation erupts.

After failing to overcome the primary barrier of 0.9870 in the early European session, the USD/CHF pair has decreased. Pressure on the major has increased due to an outburst of pre-event consolidation in the US dollar index (DXY).

The DXY has re-established its day’s low at 109.54 and is anticipated to be on edge as market players’ risk appetite has significantly increased. As the corrective move ended and investors poured money into risky assets, S&P500 futures mostly recovered from Wednesday’s losses.

Meanwhile, as investors await the publication of crucial economic data from the US economy, the 10-year US Treasury rates have been more depressed. Starting the US Gross Domestic Product (GDP) data, which is anticipated to increase by 2.4%, might result in a significant change in the DXY.

The Durable Goods Orders data, predicted to increase by 0.6% versus a decline of 0.2%, is now available on the US economic calendar. The core Consumer Price Index (CPI) no longer seems to show weariness, which now makes sense.

AUD/USD breaks 0.6500, a three-week high, on weak USD demand.

On Thursday, the AUD/USD pair experienced some dip buying at the 0.6470 level and reached a brand-new three-week high ahead of the European session. The pair continues to be psychologically supported and is now trading above the 0.6500 level.

The better consumer inflation data from Wednesday have revived betting for a more aggressive policy tightening by the Reserve Bank of Australia, which supports the Australian currency. The headline CPI increased by 1.8% in the September quarter, and the annual rate accelerated to 7.3%, the highest level since 1990, according to the Australian Bureau of Statistics (ABS). The AUD/USD pair is further supported by the US dollar, hovering around its lowest point since September 20.

Market investors now anticipate that the Federal Reserve will decrease the speed of its rate-hiking cycle due to the worsening outlook for the US economy. This has further weighed on the dollar and is confirmed by the recent significant decline in US Treasury bond rates. In addition, the risk-on urge reduces demand for the safe-haven dollar, which benefits the risk-averse Australian dollar. The AUD/USD pair is then given an extra boost; however, the increase lacks bullish conviction.

EUR/USD forecasted to close the year at 0.93 by Nordea

The EUR/USD rate has risen over parity. According to experts at Nordea, the world’s most popular currency pair is expected to reach 0.93 by the end of the year. They anticipate that the dollar’s weakening will only be temporary.

“We need help to believe that will be the case with this week’s statistics, given the US labor market is still quite tight. The Fed must see clear indicators of slowing wage growth before they are happy. Therefore, if the Employment Cost IndexI indicates high(er) wage growth, which should drive rates up and equities down again, the USD weakness we presently see may very well turn out to be short-lived.

“We anticipate the Fed will raise rates by 75 basis points next week and by 50 basis points in December 2022 and February 2023.”

USD/JPY Price Analysis: Surrenders Monday’s knee-jerk response low of 145.50

The USD/JPY pair has fallen to a level not far from the knee-jerk response low of 145.48 on Monday. On Monday, investors saw the Bank of Japan’s (BOJ) covert intervention to support the declining yen as the cause of the knee-jerk response. It is “blindingly evident that the BOJ is interfering,” according to National Australia Bank (NAB) analysts in Sydney on Monday.

Because of the massive recovery in S&P500 futures, the risk-on market sentiment has suddenly returned. Meanwhile, the US dollar index (DXY) has declined to 109.65 as a less specific drop has ended.

The asset has given up crucial support hourly, which was 145.48 on Monday. The death cross that the 50- and 200-period Exponential Moving Averages (EMAs) have produced at 148.5 shows how strong the yen bulls are.

The low filters are further strengthened by the Relative Strength Index (RSI) (14) moving into the bearish 20.00-40.00 zone.

The asset will move closer to the October 4 low at 143.77 and the September 13 low at 141.60 in the future if it drops below the October 7 low at 144.60.

Please click here for the Market News Updates from 26 October, 2022.

October 27, 2022
GBP/USD reaches multi-week high, seeks 1.1600 amid US supply

GBP/USD rises to a brand-new six-week high, helped by several reasons. Sterling continues to be supported by Rishi Sunak’s selection as the next British Prime Minister.

The likelihood of additional aggressive Fed rate increases is declining, which is harmful to the dollar. In the past hour, the GBP/USD pair has seen new bids during the early European session, rising to its highest since September 14 in the 1.1575-1.1580 range.

The selection of Rishi Sunak as the next British prime minister was well-received by investors. This is seen by a continued drop in UK gilt yields, which support the British pound. In addition, the pervasive US dollar selling bias gives the GBP/USD pair an extra boost and keeps the trend going.

In fact, as expectations for a more aggressive tightening by the Fed decline, the USD Index, which gauges the dollar’s performance against a basket of currencies, plunges again closer to the monthly low. The world’s biggest economy is showing symptoms of slowing down, according to Tuesday’s dismal US macro data, which may prompt the Fed to tone down its aggressive approach.

The recent decline in US Treasury bond rates is extended due to the Fed repricing its rate-hiking path, which is perceived as impacting the US dollar. Additionally, indications of market stability lessen the dollar’s reputation as a haven and raise the possibility of future GBP/USD appreciation.

A decisive break in the 1.1480 supply zone and a subsequent advance beyond the psychological level of 1.1500 provide credibility to the optimistic view, even from a technical standpoint. However, concerns over a deepening global economic recession might dampen the excitement and prevent bulls from making risky wagers on the GBP/USD pair.

Market players are now anticipating the publication of US new home sales data. This will push the USD and give the GBP/USD pair some momentum ahead of significant US macro announcements on Thursday, coupled with the US bond rates and the general risk attitude. Next week’s FOMC meeting and NFP data will then come into focus.

October 26, 2022

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