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4 Global Market Updates- 18 January, 2023

In this article, we have covered the highlights of global market news about the EUR/USD, AUD/USD, USD/JPY and GBP/USD.

EUR/USD will trade in the 1.12-1.15 range – Citigroup

FX The EUR/USD pair is anticipated to trade in a range of 1.12-1.15, according to Citigroup strategists, who also justify their positive perspective.

“China reopens at the same time that US inflation peaks and natural gas prices fall.”

Represents a significant change in the market narrative and the start of a new FX regime.

Renewed equity slump that would bolster the US dollar is a risk to consider.

Technical analysis favors EUR/USD advances targeting a major Fib of 1.0938.

Dealers should watch out for future option-related headwinds, however.

AUD/USD will continue to rise toward 0.75, according to SocGen

The AUD/USD exchange rate has rapidly improved from its October low. According to Société Générale economists, the reopening of China will push the pair rate over 0.70.

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Only a 25 bps increase is anticipated at the RBA meeting in February.

“The Chinese reopening continues to be the key macro story in FX, and the performance of the pair is closely related to Chinese stocks. China’s GDP printed at 0.0% QoQ (consensus projected -1.1%) in the fourth quarter of 2012, above expectations. December activity statistics also positively surprised me.

Only a 25 bps increase is anticipated at the next RBA meeting in February, and the market only anticipates one further increase of that magnitude to reach the terminal rate.

Australian economy could be one of the least impacted in the G10 by the global tightening cycle, possibly assuring more AUD/USD gains towards 0.75 since the RBA went dovish before other central banks.

USD/JPY continues to aim towards 126.35 – UOB

UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang say that the outlook for USD/JPY continues to point to a potential decline to the 126.35 level in the coming weeks.

In the past day, we anticipated that the US Dollar would “trade between a band of 127.85/129.05.” Before settling at 128.13 (-0.32%), the US Dollar moved between 127.98 and 129.13. The US Dollar will trade between 127.40 and 129.40 since the price actions seem to be consolidating.

Within the next three weeks: “We don’t have anything to contribute to our Monday report (16 Jan, spot at 128.00). As previously said, the danger for the US Dollar continues to the downside, and 126.35 is the next level to keep an eye on. On the other side, a break of 130.05 (a level that has remained a “strong resistance”) would show that the US Dollar is not losing further ground.

GBP/USD bulls break above 1.2300 despite lower UK inflation, US Retail Sales, and PPI in the focus

GBP/USD saunters over a five-week high, hitting 1.2320 early on Wednesday morning in London, despite weakening UK inflation statistics. In doing so, Cable also disregards concerns that increased taxes in the next British budget may negatively affect growth after remarks by Chancellor Jeremy Hunt that he would not be decreasing taxes.

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According to data released early on Wednesday morning, the UK Consumer Price Index (CPI) declined to 10.5% YoY from 10.6% predicted and 10.7% previously. The Retail Sales Index (RPI) fell to 13.4% from 13.9% market forecasts and 14.0% earlier readings. Even though the Core CPI also came in at 6.3% YoY, below market estimates of 6.6%, the GBP/USD exchange rate continued to rise.

The Guardian published an article speculating on future political drama with the tax cuts. According to the newspaper, “Jeremy Hunt is contemplating a “slimmed down” spring budget without any quick tax cuts as the Conservative party tries to regain economic credibility after the harm caused by the Truss government.

Please click here for the Market News Updates from 17 January, 2023.

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