In this article, we have covered the highlights of global market news about the NZD/USD, AUD/USD, GBP/USD and USD/CAD.
NZD/USD rises to 0.6240 on a swift resolution to the financial issue
NZD/USD applauds the optimism during Asian hours, driven by a lower US Dollar and a good risk appetite. The relief rally fueled by prompt action in the banking crisis is reflected in the risk proxy NZD/USD. When writing, the pair is trading higher by around 0.68%. Most Asian equities market trade green, while US Treasury rates remain stable.
In the lack of any important data from the US or New Zealand, Friday’s price activity for NZD/USD is more likely exploitation of the previous day. The risk attitude increased when the Swiss National Bank (SNB) stepped in to save Credit Suisse by offering CHF50 billion as a covered credit facility.
Credit Suisse’s financial condition became complicated last year, and a substantially similar issue occurred with Deutsche Bank not long ago.
On Thursday, we saw a concerted attempt by many significant market participants, including JPMorgan, Citibank, Bank of America, and many others, to resurrect the First Republic Bank in the US by providing a pool of liquidity worth US$30 billion.
Investors are convinced that, whatever the circumstances, there would be some help from the government to smooth over any financial hiccups. And during the COVID crisis, when all central banks tried to revitalize the economy, we saw this kind of effort.
AUD/USD Price Analysis: Inch away from weekly high above 0.6700 as risk appetite grows
The AUD/USD pair has seen intense purchasing activity from market players, and it is now very close to its weekly high, which is close to 0.6720. Due to investors drastically reducing their long positions in the US Dollar Index (DXY), the Australian asset has seen multiple offers. The Federal Reserve (Fed) is expected to take a less aggressive position on interest rates in the future. Many ignore the Dollar Index despite concerns about global financial instability.
S&P500 futures have reversed their minor losses in the Asian morning and are currently in the green. A continuation of Thursday’s strong purchasing in the 500-US stock basket futures suggests that the risk-taking trend is becoming more prevalent. Given that the risk-aversion trend is weakening, the Dollar Index has relocated its auction below 104.20 and is predicted to yield more losses.
AUD/USD has risen over 0.6700 after surmounting the pivotal resistance level of 0.6668. The Australian asset is now trading close to its weekly high. The 20- and 50-period Exponential Moving Averages (EMAs), which formed a bull cross at 0.6648, suggest upward movement.
GBP/USD bulls push the pair over 1.2150 ahead of UK and US consumer inflation expectations.
Before Friday’s London opening, GBP/USD still holds modest gains of around 1.2150. So, despite the weak US Dollar and the price-positive factors, the Cable pair maintains its strength for the second day. Nevertheless, it should be emphasized that the cautious atmosphere leading up to the crucial monetary policy meetings of the Bank of England (BoE) and the Federal Reserve (Fed) the next week, as well as the outcome of the ultimate Brexit vote, keeps the Cable purchasers bound.
As The Guardian reported, “The government has announced it is offering a large new pay offer to National Health Services (NHS) personnel in England, including a one-off bonus which unions believe amounts to £2.5bn,” the UK’s ongoing labor issues are likely to come to an end soon. Further strikes by ambulance drivers and other NHS employees have been put on hold, according to the unions participating in the wage negotiations. They advise their members to accept the new offer.
The Telegraph reported that the UK’s Members of Parliament (MPs) would deliver their final judgment on Rishi Sunak’s new Brexit deal next week after Downing Street confirmed a vote on the Windsor Framework would be held on Wednesday. This news gives GBP/USD buyers hope that the Brexit impasse will be resolved sooner and in a positive way.
Most importantly, the market’s cautious optimism and the US Dollar’s positioning for the Federal Open Market Committee (FOMC) monetary policy meeting the following week have allowed the GBP/USD purchasers to maintain control for a third consecutive week.
USD/CAD falls to 1.3700 as the Dollar Index falls and oil prices rise.
The round-level support of 1.3700 was breached by the USD/CAD pair during the Asian session. The Loonie asset has seen selling pressure and is moving in the footsteps of the US Dollar Index (DXY). An upward oil price expansion also supports the major’s downward movement.
S&P500 futures have recouped minor losses from the early Asian session, indicating market participants’ attitudes toward risk continue improving. The Federal Reserve (Fed) is anticipated to sound less aggressive at its monetary policy meeting next week, which might keep the US Dollar Index (DXY) on tenterhooks. The US Dollar Index (DXY) has fallen below the critical support level of 104.20.
In the meantime, the performance of US government bonds could be more precise due to uncertainty surrounding the prognosis for the Fed’s monetary policy. The yield on US 10-year Treasury bonds is now 3.57%.
Tuesday’s announcement of Canada’s inflation statistics will probably influence future movements of the Canadian Dollar. According to consensus, the headline Consumer Price Index (CPI) is anticipated to increase by 0.4%, which is less than the previous release’s 0.5% increase. The yearly headline CPI might increase as a result to 5.5%. Moreover, the annual core CPI is predicted to decrease from its previous report of 5.0% to 4.6%.
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