In this article, we have covered the highlights of global market news about the USD/CNH, GBP/USD, USD/JPY and EUR/USD.
USD/CNH: More gains are still possible, according to UOB
There is still space for USD/CNH to advance shortly, according to UOB Group economist Lee Sue Ann and markets strategist Quek Ser Leang. 24-hour view: “We said yesterday that we anticipate US Dollar to trade within a range of 7.2500/7.3400 and that the “choppy action is likely part of a wide sideways range.” In NY trading, the US Dollar temporarily fell to a low of 7.2614 before rising to 7.3480. Although there is room for the quick advance to continue, a breach of 7.3600 is improbable. Support is located at 7.3200, then 7.3000.
Within the next three weeks: “Our update from yesterday (November 02, time at 7.3020) remains valid. As was said, even though the rising momentum has not strengthened, there is still a potential for the US Dollar to go higher as long as the level of 7.2400 (which remains a “strong support” level from yesterday) is not crossed. However, it seems doubtful that 7.3745 will be broken.
GBP/USD will fall to 1.1250 as a 50 basis point BoE surprise – ING
ING economists predict the Bank of England (BoE) to surprise with a raise of merely 50 basis points. As a result, the GBP/USD pair may go as low as 1.1250.
The BoE will raise only 50 bps. With the consensus 75bp increase, the BoE’s 2% objective for the UK CPI in 2025 would be missed. In other words, the BoE does not need to tighten more quickly.
“The FX options market ties today’s event risk to a 150 pip GBP/USD range. If we are correct in our BoE prediction, it might result in the GBP/USD trade returning to the region of 1.1250. The EUR/GBP exchange rate may return to 0.87.
Sterling also appears to be under threat from two factors: I the global investment environment, where US equities dropped 2.5% yesterday on the expectation of higher Fed rates in the future; and (ii) what is expected to be a challenging fiscal event in the UK on November 17 as the new government tries to close its borrowing gap.
USD/JPY: Above 150, there is a very high possibility of intervention – TDS
Late on Wednesday, the pair attempted a comeback before ending the day flat around 148. According to TD Securities economists, the intervention risk is big over the 150 mark.
The USD/JPY pair might start to build a top. “The BOJ/MOF action on intervention and comments that changes to the YCC are feasible if inflation and wages rise is a major shift in language and may aid the pair to start building a top,” the author writes.
Given that FX intervention has a bad track record overall, why bother using it if you did not anticipate making any policy moves of your own? “A higher Fed endpoint is a worry, but we believe MOF/BOJ is now the canary in the coal mine,” the authors write.
“We believe that the risk of an intervention is quite strong over USD/JPY 150.”
EUR/USD: Tomorrow’s push to 0.9650 may quickly gain momentum, according to ING
The pair has fallen below 0.98. If US employment and pay statistics do not slow as much as anticipated tomorrow, ING economists predict the pair will test 0.9650.
Today, the EUR/USD price range might be between 0.9760 and 0.9850.
According to analysts, if US employment and salary statistics do not stall as much as anticipated, momentum may quickly develop for a push above 0.9650 tomorrow.
The doves are attempting to convince people that the impending recession will contribute to bringing inflation down from its highs. There are several European Central Bank speakers today.
Please click here for the Market News Updates from 2 November, 2022.