In this article, we have covered the highlights of global market news about the EUR/USD, USD/CAD, USD/BRL and USD/JPY.
EUR/USD reclaimed 1.0600, extending its gains thanks to a weak US dollar.
On a weaker US Dollar and amid rumors that the US Federal Reserve (Fed) will not raise rates further than what money market futures anticipate, the pair reversed its path and is expected to end the week with gains of more than 0.80%. After reaching a daily low of 1.0588, the EUR/USD trades at 1.0635.
Investors overlooked harsh Fed rhetoric, which helped the EUR/USD pair Wednesday’s losses. US stocks are expected to end the week higher. The US Dollar Index (DXY), which gauges the Dollar’s value about a basket of peers, declined from a two-and-a-half-month high to 104.526 after US statistics underlined the strength of the US economy (US).
The US ISM Non-Manufacturing PMI for February was 55.1, a bit lower than the previous month’s 55.2; it beat estimates of 54.5, showing that business activity is still robust. This indicates that business activity in the US has improved. Investors were looking to the pricing index subcomponent for hints about inflation, and it spiked to 65.5, beating expectations of 64.5 but falling short of January’s report.
USD/CAD: Revised year-end goal increased to 1.32 – NFB
The National Bank of Canada increased its USD/CAD year-end goal from 1.27 to 1.32. But, they caution that the reopening of the Chinese economy would help restrain the Canadian Dollar’s decline, as will the interruption of commodities supply brought on by the conflict in Ukraine.
BoC pauses because of Canada’s weak GDP
“While employment growth is still robust, a lackluster GDP report and slower-than-expected inflation indicate that Canada and the US have different monetary policies. The reopening of the Chinese economy and the interruption of commodities supply brought on by the conflict in Ukraine would help limit the depreciation of the CAD, even if our updated spread projection is not good news for the Canadian currency in the immediate term.
The USD/CAD is projected to remain in the 1.36-1.39 range during the first half of 2023 before returning in the second half of the year when the Fed finally concludes its tightening campaign. This is according to our updated US forecast for growth and interest rates. Formerly, we had a year-end objective of 1.27; now, it is 1.32.
USD/BRL: Potential for the Brazilian Real to gain strength over China and pick up favorable carry, according to MUFG
According to MUFG Bank analysts, the Brazilian Real can rise shortly against the US dollar. Their suggested trade is shorting USD/BRL at 5.22 with a target of 4.90.
Under Brazil’s Terms of Trade, real price improvement still needs to be completed. When it first surfaced around the end of last year, “China reopening optimism” has not benefited the BRL as much as it has other EM currencies.
“A stronger BRL has not entirely benefited from the additional improvement in Brazil’s terms of trade at the beginning of this year. It partially reflects the increased anxiety felt at the beginning of this year about domestic policies under the new President Lula, particularly about fiscal and monetary policy. We anticipate that these worries won’t become more pressing in the immediate future, allowing fresh optimism about China’s openness to propel the BRL.
“The excellent carry pick-up continues to assist long BRL holdings. Despite pressure from the government to decrease rates, the BCB is anticipated to maintain rates at a high level of 13.75% in the foreseeable future.
USD/JPY Price Analysis: US Dollar Retraces to 136.00 on Weak US Dollar
Despite statistics confirming the US economy’s durability, the USD/JPY fell from the 136.70s to the 136.00 regions on Friday. As of this writing, the USD/JPY is trading at 136.02.
JPY/USD Price Movement. After falling from weekly highs in the 136.10s range, the pair is neutrally upward-oriented on the daily chart. Retaking the 136.00 mark by the USD/JPY bears would invite additional losses. Strong support below 135.00 would be the next support after the low of 135.25, which occurred on March 1. the 134.00 points, then the 20-day EMA at 134.39, and finally, the 100-day EMA at 134.90.
On the other hand, if USD/JPY bulls manage to keep prices above 136.00, a bullish continuation would continue. The psychological 137.00 level would be the first barrier, followed by the high point on December 20 at 136.77.
Please click here for the Market News Updates from 3 March, 2023.