In this article, we have covered the highlights of global market news about the USD/CAD, AUD/USD, EUR/USD and NZD/USD.
USD/CAD: Positive Canadian employment growth is unlikely to prevent a revisit of 1.3830 highs – ING
Canadian job statistics will be released, but according to analysts at ING, the consequences for the Bank of Canada (BoC) policy should be minimal. The risks are tilted to the upside since US Nonfarm Payrolls are expected to impact USD/CAD significantly.
“Governor of the Bank of Canada, Tiff Macklem, made some hawkish comments, claiming that the bank is not prepared for a more delicately balanced policy, that there is still much to be done to control inflation given lingering excess demand, and that most people are largely resigned to the possibility of a challenging economic recovery. In this regard, yesterday’s remarks could have served as a “hedge” against today’s probable release of more disappointing employment numbers.
“We anticipate USD/CAD upside risks today even if Canada’s results come in positive,” the report said. “We expect the US payrolls effect on USD to be higher than Canada’s employment data impact on CAD.”
AUD/USD recovers from a multi-day low, although upward potential seems limited ahead of the NFP.
On Friday, the AUD/USD pair hit a low of almost a week but rose to the 0.6400 level in the early European session. However, a significant rebound still looks unlikely, given the generally positive outlook for the US currency.
In fact, with hawkish Fed forecasts, the USD Index, which gauges the dollar’s performance against a basket of currencies, rises to the upper end of its weekly range. Investors have priced in a further massive 75 bps rate rise in November because they seem confident that the US central bank would adhere to its aggressive policy tightening course to control inflation. Several FOMC members reiterated their wagers, emphasizing their commitment to controlling inflation.
As a result, rising US Treasury bond rates continue to be favorable, which supports the safe-haven dollar combined with concerns of a more profound global economic collapse. Earlier this week, the Reserve Bank of Australia’s (RBA) decision to moderate the tempo of policy tightening and boost interest rates by 25 basis points negatively impacted the Australian currency. The AUD/USD pair’s downward movement seems to be the route of least resistance as a result, which benefits bearish traders.
EUR/USD: Near-term downtrend is expected to reach the 0.95-0.96 range.
EUR/USD has once again fallen under 0.9800. Shortly, ING economists predict that the most traded currency pair will continue to fall, eventually reaching a range between 0.95 and 0.96.
“Our base case is for another leg down in the EUR/USD today as we anticipate upside risks for the currency after the publication of the payrolls.”
“At this time, we anticipate that the pair’s decline will reach the 0.95-0.96 range in the very near future and the 0.90-0.94 area by year’s end.”
NZD/USD is trading around a multi-day low in the mid-0.5600s as traders await the US NFP news.
On Friday, the NZD/USD pair continued the substantial overnight decline from a nearly two-week high and stayed under moderate selling pressure for the second consecutive day. The pair struggled during the early European session and is trading close to a multi-day low, in the vicinity of the 0.5630 to 0.5635 range.
On the last day of the week, the purchasing of US dollars continues unabated despite a growing understanding that the Fed would continue to tighten its monetary policy at a quicker rate to reduce inflation. The markets have already factored in a further massive 75 bps rate rise at the November FOMC meeting. The recent hawkish remarks by numerous Fed members, which continue to support rising US Treasury bond rates and serve as a tailwind for the greenback, confirmed the bets.
In addition, the pervasive risk-off atmosphere pushes the safe-haven dollar back toward its weekly high and encourages flows away from the risk-sensitive new Zealand dollar. The market’s mood is still shaky due to worries about economic headwinds brought by quickly increasing borrowing prices. Fears of a recession have been heightened by the possibility of a further escalation in the Russia-Ukraine war. In turn, this keeps investors’ desire for riskier investments in check.
Please click here for the Market News Updates from 6 October, 2022.