In this article, we have covered the highlights of global market news about the USD/JPY, AUD/USD, USD/CAD and USD/MXN.
USD/JPY trades with minor losses as the USD weakens; the downside seems restricted.
For the second straight day, the USD/JPY pair saw some selling pressure and moved farther away from the YTD top, which was at the 137.10 area achieved last week. Nevertheless, the pair bounces back a few pips from the daily low and trades in the early European session slightly around mid-135.00s, down about 0.20% for the day.
The US Dollar starts the new week mutedly with a slight decline in US Treasury bond rates, a significant driver pushing the USD/JPY pair down. In addition, the imminent threat of a recession favors the Japanese Yen (JPY), a haven currency, and supports the offered tone around the major. As China announced a lower-than-anticipated objective for economic growth and predicted that the economy would grow by 5% in 2023, concerns of a more profound global economic collapse reemerged.
Yet, given the contrasting monetary policy outlooks of the Federal Reserve and the Bank of Japan, the downside for the USD/JPY pair seems cushioned. Kazuo Ueda, the new governor of the Bank of Japan, recently said that the central bank wasn’t looking to end a decade of enormous easing quickly and emphasized the need to maintain the ultra-loose policy to assist the weak economy. In contrast, everyone anticipates that the US central bank will maintain its hawkish attitude and raise rates for longer to control excessive inflation.
AUD/USD: Is the downtrend over? – UOB
Markets Strategist Quek Ser Leang and Economist Lee Sue Ann of UOB Group believe that the AUD/USD pair has most likely entered a consolidation range.
24-hour view: “Last Friday, we anticipated that the AUD would fluctuate between 0.67 and 0.76. Although the increase in AUD to 0.6775, the rising momentum has not improved much. Now, it is doubtful that AUD will increase much further. The most probable trading range for the Australian dollar is 0.6735 to 0.6780.
During the next three weeks: “From the middle of last month, we have a bearish AUD perspective. The possibilities of the Australian dollar weakening any more have significantly decreased, according to our most recent story from last Thursday (02 Mar, spot at 0.6755). AUD reached a high of 0.6775 in NY trading. While our strong resistance level at 0.6800 has not been crossed, the negative impetus has died. In other words, AUD is no longer in the weak phase. The present price movements are probably the beginning of a consolidation period, and for the time being, the Australian dollar is expected to trade between 0.6695 and 0.6820.
USD/CAD fails to find a clear direction and trades inside a narrow range at 1.3600.
The USD/CAD pair seesaws between mild gains and small losses to begin the new week, hovering around the 1.3600 level in the European session. The pair, however, is still trading inside Friday’s more comprehensive trading range and is being impacted by several divergent factors.
The US Dollar bulls are kept on the defensive by a lower tone around US Treasury bond rates, which hurts the USD/CAD pair. Yet, amid concerns that a worse global economic slowdown would reduce fuel consumption, a slight decline in crude oil prices weakens the currency’s relationship to commodities and supports the major. The worries returned as China predicted that the economy would grow by 5% in 2023, which was lower than projected.
In addition, rising expectations that the Federal Reserve would maintain its hawkish posture favor the USD bulls and boost the likelihood that some dip-buying may appear around the USD/CAD pair. The incoming US macro data pointed to an economy that is robust despite increasing borrowing rates and showed that inflation is decreasing slower than planned. Moreover, during the March policy meeting, several FOMC members supported the argument for further rate increases and supported a 50 basis point lift-off.
USD/MXN remains at a multi-month low of 17.95 as Mexican inflation, the Fed’s Powell, and the US NFP all loom.
The USD/MXN crosses the 17.98 level with modest gains as it reverses the most significant weekly loss in seven months early on Monday in Europe. This allows the Mexican Peso (MXN) pair to anticipate the top-tier data events by tracking the market’s consolidation phase.
Nevertheless, the US Dollar’s inability to recoup its upward momentum, mainly due to the depressed Treasury bond rates, adds to the recent worries pointing to a divergence in monetary policy between the US Federal Reserve (Fed) and Mexico to question USD/MXN purchasers.
The USD/MXN pair’s most recent recovery may be related to the late conflicting worries surrounding China and the recent downturn in oil prices. According to Reuters, the People’s Republic of China’s National Development and Reform Commission (NDRC) recently said that it “Would further liberate the potential for consumption” and noted that China’s economy is continuously strengthening. Market mood earlier in the day soured due to China’s National People’s Congress (NPC) annual session seeming to be sad due to its development objective and geopolitical worries.
Please click here for the Market News Updates from 4 March, 2023.