In this article, we have covered the highlights of global market news about the USD/JPY, EUR/SEK, USD/CAD and GBP/USD.
USD/JPY consolidates below 147.00, with bulls maintaining control at a 24-year high ahead of the US CPI.
In the first part of the European session, the USD/JPY pair oscillates in a constrained zone and seems to have started a bullish consolidation phase. As investors prepare for the critical US CPI data, spot prices are still close to reaching their highest point since August 1998, near the 147.00 level reached on Wednesday.
The amount of the subsequent interest rate increase by the Fed will depend on the US inflation rate, which will also influence the trajectory of the US dollar and the USD/JPY exchange rate in the short future. While there is suspicion that Japanese authorities may continue to intervene in the currency market, traders prefer to stay out of it. In reality, the government is prepared to step in and take necessary action in response to excessive FX swings, as Japan’s Finance Minister Shunichi Suzuki stated earlier this week.
Haruhiko Kuroda, governor of the Bank of Japan, said the government’s involvement last month to halt unilateral measures to devalue the Japanese yen was reasonable. Nevertheless, the Bank of Japan’s (dovish) and other major central banks’ (hawkish) different stances on monetary policy and the tendency to take risks continue to undercut the safe-haven JPY. It is important to note that the Japanese central bank has not yet desired to raise interest rates.
Additionally, Fumio Kishida, the prime minister of Japan, said that the BoJ must maintain its ultra-lose strategy until salaries increase. On the other hand, the markets have been pricing in another massive 75 bps Fed rate rise in November, which continues to sustain rising US Treasury bond rates. Bullish traders are favored by the resulting widening of the US-Japan rate gap. Therefore, any significant price decline might be seen as a purchasing opportunity and is likely to be temporary.
EUR/SEK could rise to 11.20 in the following months, according to Danske Bank
The Swedish krona has dropped to its lowest point since March 2020 due to weaker economic forecasts. Danske Bank economists anticipate a rise in the EUR/SEK rate to 11.20 in the following months.
“We maintain our long-held, non-consensus, bearish view on the SEK, which is supported by the sombre forecast for global GDP, the corresponding bleak outlook for both Swedish and global stocks, and relative monetary policy – a triple whammy, if you will.”
“The 100 bps rate increase by the Riksbank had no long-term beneficial effects on the krona. The rate trajectory fell short of forecasts. Additionally, increased frontloading will worsen the Swedish housing market’s decline, hurting the krona.
10.80 (1M), 11.00 (3M), 11.20 (6M), and 11.20 (12M) are the forecast times.
USD/CAD maintains small advances over 1.3800, with an eye on US CPI for further impetus.
The USD/CAD pair retreats a few pips from the daily high reached during the early European session as it tries to take advantage of its minor intraday gain. However, spot prices remain above the 1.3800 round-figure level as investors choose to remain passive and prepare for the critical US consumer inflation data.
The commodity-linked loonie seems to be supported by a modest rebound in crude oil prices, which also supports the USD/CAD pair. On the other hand, the underlying environment seems skewed in favor of bullish traders. It supports extending the current rise from the psychological level of 1.3500. As a result, any significant downturn may still be seen as a buying opportunity and is thus more likely to be restricted.
Investors are still concerned that the continued decline in the world economy and the recurrence of COVID-19 cases in China would reduce gasoline demand. On Wednesday, OPEC revised its projections for both 2022 and 2023 global oil demand growth downwards. This makes up for the initial excitement around OPEC+’s last week plan to cut output by the most since the 2020 COVID epidemic and should end any significant comeback for the black liquid.
GBP/USD is poised to retest the 1.0350 level – Credit Suisse
GBP/USD is still up 6% from last month’s all-time low of 1.0350. The pair still exhibits notable fragility, which raises the possibility of a swift return to those lows, according to economists at Credit Suisse.
The UK’s monetary and fiscal policies conflict with one another.
“UK monetary and fiscal policy is operating at cross purposes, and given the sheer number of entities who must cooperate flawlessly to avert repeated mayhem, the potential for errors that cause disaster is high.”
“We continue to anticipate a shift to the lower end of the range,” the statement said. “We set our GBP/USD Q4 range goal at 1.0350-1.1400.”
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