In this article, we have covered the highlights of global market news about the EUR/USD, NZD/USD, USD/CAD and GBP/USD.
EUR/USD breaks through 1.0800 with the release of US CPI data.
EUR/USD accelerates more quickly and overtakes 1.0800. When the DXY measures the Dollar, it falls to multi-month lows. US inflation data continued to fall in December. The bullish movement of the EUR/USD intensified on Thursday, reaching levels last seen in late April 2022 north of 1.0800.
EUR/USD increased to nine-month highs above 1.0800. Due to growing Dollar selling pressure, notably aggravated by the publication of US inflation data for December, the EUR/USD price has increased for the fifth session to trade above the 1.0800 resistance level.
Regarding the latter, the headline CPI increased at an annualized 6.5% in December, while the Core CPI, which does not include food and energy prices, increased at a rate of 5.7% YoY. As a result, headline consumer prices have declined for six consecutive months, adding to the growing belief that the Fed may change course soon.
NZD/USD is on the defensive at mid-0.6300s ahead of US consumer inflation.
Due to a lack of follow-through selling, the NZD/USD pair slipped lower on Thursday and stayed under pressure until the European session. Traders eagerly await the publication of the most recent US consumer inflation numbers, which is why the pair is trading around the mid-0.6300s.
The critical US CPI data will impact the Federal Reserve’s rate-hiking trajectory, fuel demand for the US Dollar, and provide the NZD/USD pair a new directional impetus. The market jitters before the important macroeconomic data help the Dollar maintain its role as a relative haven while hurting the risk-averse Kiwi.
Nevertheless, the US Dollar is under pressure due to increasing expectations of lower Fed rate rises and a positive risk tone, which helps to limit the downside for the NZD/USD pair. Market participants are persuaded that the US central bank would moderate its hawkish outlook in the face of early indications of lessening inflationary pressure, as seen by declining US Treasury bond rates.
The benchmark 10-year US Treasury note’s yield is now hovering at a multi-week low, which maintains the US Dollar in a bear market close to a seven-month low reached earlier this week. This makes it wise to hold off on positioning for any significant corrective decline until there is actual follow-through selling before determining that the NZD/USD pair has peaked in the short term.
USD/CAD falls from a weekly high but remains over 1.3400 ahead of US consumer inflation.
The USD/CAD pair struggles to build on its slight intraday gains and encounters selling pressure at the mid-1.3400s, or a new weekly high reached earlier this Thursday. However, it stays above the 1.3400 level going into the North American session as the pair declines to the lower end of its daily trading range.
For the second day in a row, crude oil prices have increased due to recent optimism on China’s decision to abandon its zero-COVID policy, which is anticipated to increase fuel demand. Due to the commodity-linked Loonie’s support and the pervasive US Dollar selling bias, the USD/CAD pair is hampered.
As expectations rise for a more gradual tightening of policy by the Fed, the US Dollar Index, which gauges the performance of the Dollar against a basket of currencies, is hovering close to a seven-month low. In light of early indications of reducing inflationary pressures, investors are confident that the Fed would moderate its aggressive attitude.
The likelihood of future Fed rate rises being more gradual weighs on the Dollar and keeps US Treasury bond rates close to a multi-week low. In addition, a generally upbeat atmosphere in the equities markets and a significant increase in JPY demand are pushing flows away from the safe-haven Dollar.
GBP/USD: The Pound’s gains on the US CPI will be limited in the short term, according to Scotiabank.
Below 1.22, GBP/USD consolidates. According to Scotiabank experts, the Pound may find it difficult to gain from Dollar weakening after US inflation statistics.
“Today, more strike action was declared, adding to the existing work stoppages in the health and transportation sectors. Due to falling energy costs, Peak BoE pricing has decreased from a recent high of over 4.75% to 4.41%. If the Dollar weakens more after US inflation statistics, these factors might limit GBP gains relative to the weaker US Dollar.
According to the short-term charts, “Spot seems well-supported above 1.21, but momentum is weak, and we believe Cable will need to move either above 1.2210 or below 1.21 to provide a firmer sense of short-term direction.”
Longer-term price signs lean risks in favor of a move to the upside.