In this article, we have covered the highlights of global market news about the GBP/USD, USD/CNH, USD/JPY and EUR/USD.
GBP/USD: Long-term growth is probably over 1.2440 – UOB
Markets Strategist Quek Ser Leang and Economist Lee Sue Ann of UOB Group believe that after 1.2440 is passed, GBP/USD will continue to rise more convincingly.
The quick climb has the potential to challenge 1.2145, as we indicated yesterday. Added was. It’s not anticipated that the significant barrier at 1.2240 will become visible. GBP grew more than anticipated, reaching a high of 1.2200 before ending strongly at 1.2183 (1.22%). Even if it’s unclear whether the British pound can firmly breach over 1.2240, more GBP rise seems probable. Support is located at 1.2135; a break of 1.2090 would mean the upward pressure is no longer intense.
Upcoming 1-3 weeks: “We maintained the opinion that the outlook for GBP was mixed yesterday (14 Mar, spot at 1.2085), and we anticipated it to move in a wide range of 1.1950/1.2240 for the time being. In NY trading, the GBP reached a high of 1.2200, and upward momentum is starting to develop. But, for the GBP to make a sustained climb more probable, it must break decisively above 1.2440. As long as the pound continues above 1.2040, the likelihood of a clean break over 1.2440 will rise over the following days.
USD/CNH Price Analysis: Rebounds from the 50-DMA, but bears maintain control
Mild gains are seen in the USD/CNH at 6.8660 as it tries to hold onto the recovery from a one-month low on early Tuesday. In doing so, the offshore Chinese Yuan (CNH) pair presents a recovery from the 50-DMA while rationalizing the negative MACD signals and the downward breach of a five-week-old ascending support line that is now resistant.
But, until the quotation continues below the support-turned-resistance line from early February, which is now around 6.9350 as of this writing, the USD/CNH pair’s most recent rebound remains elusive.
The 100-DMA and the monthly high, at 6.9620 and 6..9970, respectively, might challenge the bulls even if the Yuan pair clears the 6.9350 barriers.
It should be noted that before handing the USD/CNH bulls power, the psychological magnet at 7,0000 functions as an additional upward filter.
On the other hand, the bears must be recalled by a daily close below the 50-DMA, preferably around 6.8360 at the latest.
USD/JPY approaches 134.00 on a rally ahead of US CPI.
After falling to its monthly low of 132.34, USD/JPY rose again. The short covering occurs before the US Consumer Price Index (CPI) publication. This week’s decline in US Treasury bond rates catalyzed the corrective decline in the USD/JPY rate.
Investors have reconsidered their rate-hiking expectations about the Federal Reserve’s (Fed) intentions to raise interest rates during the March FOMC meeting, which were surging exponentially before the most recent Nonfarm Payrolls (NFP) release. This is because of the fallout from Silicon Valley Bank’s (SVB) failure.
Highly leveraged corporations will inevitably have difficulty servicing their loans as borrowing rates rise. The value of US government bonds bought during a low-yield market time has decreased due to the current increase in US Treasury bond yields, reflecting the US economy’s lending rates.
Because of the rising yield and loosening lending conditions, firms are beginning to fall into a liquidity trap.
This circumstance is comparable to the recent UK bond market episode, in which the pension funds had liquidity issues.
Investors are holding off on placing new bets on risky assets since the Fed discourse is subdued to provide more clarity on the underlying US financial environment.
EUR/USD finds support at 1.0700 as the Fed avoids further rate rises in light of the SVB disaster.
In the Asian session, the EUR/USD pair senses a cushion close to the round-level support of 1.0700. The leading currency pair corrected as the upward momentum ran its course and reached its limit at 1.0740. Before the Consumer Price Index (CPI) statistics publication for the United States, the standard currency pair is anticipated to continue to be on edge.
After investors reduced short-liquidation following a sharp sell-off, the US Dollar Index (DXY) has rebounded and is now close to 104.00. The fear among market players for US inflation, which is anticipated to be a key trigger shortly, justifies short unwinding in the USD Index.
According to CIBC analysts, prices climbed by an uncomfortably quick 0.4% in February due to ongoing pressure in core categories and a rise in gas costs. Housing prices are expected to peak soon as the usual delays with new leases resetting at lower rates start to take effect. Still, the Fed will continue to tighten monetary policy due to ongoing pressure on other core services due to the tight labor market.
S&P 500 futures have shown a significant comeback in the Asian session after a turbulent Monday as investors are expecting a lesser interest rate rise from the Federal Reserve (Fed) as the disastrous collapse of Silicon Valley Bank (SVG) has heightened worries about the US recession. The return on 10-year US Treasury rates has risen to 3.57%.
Regarding the Eurozone, MNI said that despite falling market rate expectations due to unrest in Silicon Valley, the European Central Bank (ECB) planned to proceed with the 50 basis points (bps) rate rise at its forthcoming meeting.
Please click here for the Market News Updates from 13 March, 2023.