In this article, we have covered the highlights of global market news about the EUR/USD, USD/CNY, GBP/USD and USD/JPY.
EUR/USD is stronger and gets closer to 0.9900, says Lagarde.
The continued euphoria around the euro encourages the EUR/USD to play Tuesday with the edges of the critical resistance level at 0.9900.
Due to the dollar’s continued decline and a further improvement in the risk-related universe, EUR/USD extends Monday’s gain and moves closer to the 0.9900 level. As a result, the pair begins the second week in a row after bottoming out at 0.9350 in late September.
The upbeat mood around the pair coincides with a further decline in the yields on German 10-year bunds, which are now testing the 1.80% area after reaching new multi-year heights around 2.35% last week.
The single domestic release on the schedule will be Producer Prices in the Euro Area, followed by talks by A. Enria, L. De Guindos, and C. Lagarde of the ECB.
Factory Orders will take center stage on the other side of the Atlantic, as FOMC members Logan, Williams, Mester, Jefferson, and Daly are all scheduled to speak.
With a new objective near 0.900, EUR/USD maintains its robust rebound, always against the background of the dollar’s sharp decline.
Price movement around the euro is anticipated to closely track dollar trends, geopolitical tensions, and the Fed-ECB divergence in the interim. Following the Fed’s most recent rate increase and Powell and the other members of his rate-setting colleagues’ persistently hawkish stance, the latter has become much worse.
USD/CNY is expected to depreciate over the following months, according to MUFG.
In September, the Chinese yuan lost 3% of its value versus the US dollar. According to MUFG Bank experts, downward pressure on the CNY will continue for the remainder of this year, but the USD/CNY is expected to revert back in 2023.
“We anticipate modestly better sentiment to merit a slightly firmer CNY,” the report said. “While USD/CNY may remain volatile in the short term and supported by the Fed’s rate rising process.
We anticipate that the USD/CNY will be at 7.0500 in Q4 2022, 6.9500 in Q1 2023, 6.8500 in Q2 2023, and 6.7500 in Q3 2023.
GBP/USD rises to a two-week high, reclaiming 1.1400 and beyond amid persistent US Dollar selling
On Tuesday, the GBP/USD pair goes positive for the sixth day after attracting some dip-buying at the 1.1280 area. The momentum, supported by several reasons, drives spot prices to a two-week high and back over the 1.1400 level in the early European session.
The British pound is still supported by the UK government’s decision to cancel a contentious tax reduction proposal unveiled in its mini-budget last week. While the US Treasury bond rates continue to decline, the US currency continues its current dramatic slide from a two-decade high and provides extra support for the Euro and US Dollar pair.
The Bank of England reiterated its readiness to purchase long-dated gilts worth up to £5 billion, which helped push US Treasury bond rates away from a multi-year high set last week. Additionally, the general risk-off sentiment, shown by a robust advance in global equities markets, is seen as a drag on the safe-haven dollar.
The GBP/USD pair confirms a breakthrough back above a resistance level that has been a nearly two-month-old falling trend line. This may have already prepared the groundwork for the current rebound from last Monday’s record low. Spot prices are still at the mercy of the US Dollar price dynamics in the lack of macroeconomic data from the UK.
USD/JPY: A decline will begin in 2023, according to MUFG
Just below 145, USD/JPY remains top-heavy. According to MUFG Bank economists, the pair is expected to be supported. The yen’s comeback is expected to get underway in 2019.
“Despite the MoF’s assistance, it is difficult to envision a change in the USD/JPY right now.”
“While the BoJ eases, the Fed and other central banks worldwide need to tighten up much more. However, we believe that after its rate increase in December, the Fed will be able to take a break as the terms of trade shock for Japan should pass by the end of the year and may even be accompanied by a move by the BoJ, all of which would aid in the yen’s recovery.
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