In this article, we have covered the highlights of global market news about the USD/JPY, AUD/USD, NZD/USD and USD/CAD.
USD/JPY regains early lost territory, flirts with one-week high on risk-on sentiment
Throughout the first half of the European session, the USD/JPY pair recovered more than 50 pip from the daily low and slowly moved back toward the high end of its trading range. Almost flat for the day, the pair is now trading slightly below Wednesday’s one-week high and around the 132.75 level.
The safe-haven Japanese Yen (JPY) is threatened by an expansion of the risk-on rally across all global stock markets, which also helps the USD/JPY pair draw some dip buyers at the 132.20 level. Reducing worries of a full-blown banking crisis continue to be a strong support for the global risk mood, particularly in the wake of First Citizens Bank & Trust Company’s acquisition of Silicon Valley Bank. Also, there have been no new banking sector breakdowns over the previous two weeks, which has increased investor demand for risky assets and kept money flowing away from conventional safe-haven currencies like the JPY.
Although some selling has started to appear around the US Dollar, the upside for the USD/JPY pair is still limited (USD). Nonetheless, waning worries over the banking industry have led to new rumors that the Federal Reserve (Fed) may resume raising interest rates to combat inflation. This was a significant contributing cause to the recent sharp increase in US Treasury bond rates, which is regarded as supporting the Greenback and the likelihood for additional near-term appreciation of the currency. Bulls are hesitant to make risky wagers before the important US PCE data.
AUD/USD rises over 0.6700 and reaches a one-week high on positive market sentiment.
On Thursday, the AUD/USD pair draws new purchasing at 0.6660, continuing its steady intraday rise from the start of the European session. In the past hour, spot prices have risen to a one-week high near 0.6820, although further substantial gains remain difficult.
The continuous surge in the global equities markets, which reflects the positive market climate, causes some selling of the safe-haven US Dollar (USD) and becomes a major driver supporting the AUD/USD pair. Hopes for a robust economic rebound in China increase investors’ desire for riskier assets against the background of subsiding concerns of a worldwide financial crisis, which benefits the Australian Dollar, a proxy for China. In reality, Chinese Premier Li Qiang vowed further stimulus measures to promote domestic consumption and changes that may spur development when speaking at the Boao Conference.
Yet, deteriorating US-China ties and the possibility of an impending halt to the Reserve Bank of Australia’s (RBA) rate rises may discourage bulls from making risky wagers on the AUD/USD pair. In light of indications that inflation had peaked and economic growth was slowing, the markets have been reducing their wagers on additional RBA policy tightening. The most recent consumer inflation data from Australia, published on Wednesday and showed that the headline CPI slowed to an eight-month low in February, confirmed the projections.
NZD/USD refreshes daily peak slightly below mid-0.6200s amid favorable risk tone, rising wedge.
On Thursday, new purchasing is seen in the NZD/USD pair at the 0.6200 level, continuing the steady intraday rise that began in the early European session. The pair has risen more than 0.25% daily and is trading just below the mid-0.6200s. The overnight rejection slip from a theoretically important 50-day Simple Moving Average has been stopped (SMA).
Positive sentiment in the stock markets weakens the safe-haven US Dollar (USD). It is a major factor favoring the risk-averse Kiwi as investors need to pay more attention to lackluster data from New Zealand. Hopes for a robust economic rebound in China help investors feel more confident and sustain the pervasive risk-on climate as worries about a broad banking crisis lessen. Premier Li Qiang of China’s statements pledging further stimulus to promote domestic expenditure and enacting measures that may assist in driving GDP have contributed to the upbeat mood.
However, the upside for the NZD/USD pair seems limited, at least temporarily, since expectations of additional Federal Reserve policy tightening have returned (Fed). Market jitters over the potential of contagion were eased by First Citizens Bank & Trust Company’s acquisition of Silicon Valley Bank. Additionally, the absence of new banking sector fissures during the last two weeks gives reason for optimism that a full-blown financial crisis has been avoided. This may enable the US central bank to resume raising interest rates to combat inflation, which might bolster the US dollar.
USD/CAD falls below 1.3600 despite slow Oil price as BoC versus. Fed play teases bears.
Before Thursday’s European session, USD/CAD reverses from intraday and pares the first daily advances in four days around 1.3565. In doing so, the Loonie pair gives credit to Bank of Canada (BoC) officials’ hawkish remarks while paying some attention to the weak prices of WTI crude oil, Canada’s primary export revenue source.
According to BoC Deputy Governor Toni Gravelle on Wednesday, the BOC is prepared to intervene and assist the financial system’s liquidity in response to extreme market stress. The policymaker also said that the Quantitative Tightening (QT) program, which is effective but will take some time to run its course, would probably end in 2024 or the first part of 2025.
To test the market’s prior confidence, Fed Vice Chair for Supervision Michael Barr emphasized the importance of data reliance as Fed Chair Jerome Powell teased one more rate rise. The effort to change deposit insurance by Fed Chair Powell may be on the same track. Hence, the Fed’s hawks exercise their muscles but wait for more cues and raise market jitters ahead of Friday’s release of the US’s most important inflation indicator, the Core Personal Consumption Expenditure (PCE) Price Index.
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