In this article, we have covered the highlights of global market news about the USD/CHF, AUD/USD, EUR/USD and USD/JPY.
USD/CHF falls near 0.9840 as DXY’s pre-event consolidation erupts.
After failing to overcome the primary barrier of 0.9870 in the early European session, the USD/CHF pair has decreased. Pressure on the major has increased due to an outburst of pre-event consolidation in the US dollar index (DXY).
The DXY has re-established its day’s low at 109.54 and is anticipated to be on edge as market players’ risk appetite has significantly increased. As the corrective move ended and investors poured money into risky assets, S&P500 futures mostly recovered from Wednesday’s losses.
Meanwhile, as investors await the publication of crucial economic data from the US economy, the 10-year US Treasury rates have been more depressed. Starting the US Gross Domestic Product (GDP) data, which is anticipated to increase by 2.4%, might result in a significant change in the DXY.
The Durable Goods Orders data, predicted to increase by 0.6% versus a decline of 0.2%, is now available on the US economic calendar. The core Consumer Price Index (CPI) no longer seems to show weariness, which now makes sense.
AUD/USD breaks 0.6500, a three-week high, on weak USD demand.
On Thursday, the AUD/USD pair experienced some dip buying at the 0.6470 level and reached a brand-new three-week high ahead of the European session. The pair continues to be psychologically supported and is now trading above the 0.6500 level.
The better consumer inflation data from Wednesday have revived betting for a more aggressive policy tightening by the Reserve Bank of Australia, which supports the Australian currency. The headline CPI increased by 1.8% in the September quarter, and the annual rate accelerated to 7.3%, the highest level since 1990, according to the Australian Bureau of Statistics (ABS). The AUD/USD pair is further supported by the US dollar, hovering around its lowest point since September 20.
Market investors now anticipate that the Federal Reserve will decrease the speed of its rate-hiking cycle due to the worsening outlook for the US economy. This has further weighed on the dollar and is confirmed by the recent significant decline in US Treasury bond rates. In addition, the risk-on urge reduces demand for the safe-haven dollar, which benefits the risk-averse Australian dollar. The AUD/USD pair is then given an extra boost; however, the increase lacks bullish conviction.
EUR/USD forecasted to close the year at 0.93 by Nordea
The EUR/USD rate has risen over parity. According to experts at Nordea, the world’s most popular currency pair is expected to reach 0.93 by the end of the year. They anticipate that the dollar’s weakening will only be temporary.
“We need help to believe that will be the case with this week’s statistics, given the US labor market is still quite tight. The Fed must see clear indicators of slowing wage growth before they are happy. Therefore, if the Employment Cost IndexI indicates high(er) wage growth, which should drive rates up and equities down again, the USD weakness we presently see may very well turn out to be short-lived.
“We anticipate the Fed will raise rates by 75 basis points next week and by 50 basis points in December 2022 and February 2023.”
USD/JPY Price Analysis: Surrenders Monday’s knee-jerk response low of 145.50
The USD/JPY pair has fallen to a level not far from the knee-jerk response low of 145.48 on Monday. On Monday, investors saw the Bank of Japan’s (BOJ) covert intervention to support the declining yen as the cause of the knee-jerk response. It is “blindingly evident that the BOJ is interfering,” according to National Australia Bank (NAB) analysts in Sydney on Monday.
Because of the massive recovery in S&P500 futures, the risk-on market sentiment has suddenly returned. Meanwhile, the US dollar index (DXY) has declined to 109.65 as a less specific drop has ended.
The asset has given up crucial support hourly, which was 145.48 on Monday. The death cross that the 50- and 200-period Exponential Moving Averages (EMAs) have produced at 148.5 shows how strong the yen bulls are.
The low filters are further strengthened by the Relative Strength Index (RSI) (14) moving into the bearish 20.00-40.00 zone.
The asset will move closer to the October 4 low at 143.77 and the September 13 low at 141.60 in the future if it drops below the October 7 low at 144.60.
Please click here for the Market News Updates from 26 October, 2022.