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4 Global Market Updates- 17 January, 2023

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

USD/JPY is stable below 129.00, rising slightly on minor USD gains.

Tuesday sees the USD/JPY pair edging upward for a second straight day after recovering overnight from its lowest point since late May. However, during the first part of the European session, spot prices declined a few ticks from the day high and held below the 129.00 level.

Speculation that the Bank of Japan (BoJ) may make another adjustment to the yield control policy at its meeting on Wednesday continues to strengthen the Japanese Yen. A milder risk tone also supports the JPY’s standing as a relative haven and helps to limit the upward potential for the USD/JPY pair. However, due to some continued US Dollar purchasing, the fall is still muted, at least temporarily.

The USD is helped to build on the previous day’s rebound from a seven-month low by a goodish intraday increase in US Treasury bond rates, giving some support to the USD/JPY pair. However, the likelihood of a more gradual tightening of monetary policy by the Fed might drag US bond rates and the dollar. Investors are confident that, despite reducing inflationary pressures, the Fed will moderate its aggressive position.

EUR/USD rises at 1.0830 ahead of essential data.

The euro seeks to recover from recent losses, encouraging EUR/USD to rise mildly and return to the 1.0830 area on Tuesday.

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Around 1.0800 EUR/USD continues to have strong support. As the risk complex has improved, the EUR/USD has so far managed to withstand two daily pullbacks in a row, particularly in light of the encouraging findings of the Chinese fundamental data that were revealed during the opening hours of trading.

In addition, the dollar’s recent rebound has been slightly restrained, which has caused the USD Index (DXY) to give up some of its recent gains as US market activity has resumed.

Data-wise, the ECOFIN Meeting will likely draw all the focus to the economic sentiment readings for Germany and Euroland. Final inflation data for Germany earlier in the day showed that the CPI decreased 0.8% MoM in December and increased 8.6% over the previous twelve months.

The NY Empire State Index, short-term bill auctions, and J. Williams’ address by the FOMC will all be in the spotlight across the Atlantic.

USD/CAD: Weak Canadian inflation puts the Loonie under strain – Commerzbank

The Canadian Consumer Price Index (CPI) data will be the focus of today. According to Commerzbank experts, weak numbers might hurt the Canadian dollar, but losses should be kept to a minimum.

The last component of the puzzle? The Bank of Canada (BoC) will decide next week whether to raise its benchmark rate and, if so, by how much based on today’s Canadian inflation figures for December. Although the market anticipates a 25 bps increase, key interest rates might remain steady.

“If today’s inflation report is unexpectedly poor, the market may drop its rate rise expectations even more, which might put pressure on the Canadian currency’s exchange rate versus the US dollar. However, as the US currency is not in high demand either, CAD losses should be kept to a minimum.

NZD/USD: More gains are possible, according to UOB

Additional increases in the NZD/USD are likely shortly, according to UOB Group economists Lee Sue Ann and Quek Ser Leang.

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24-hour view: “We said yesterday that the New Zealand dollar is expected to fluctuate sideways between 0.6415 and 0.6340. NZD, on the other hand, climbed to a high of 0.6426 before falling to 0.6363 and ending barely changed at 0.6382 (-0.05%). The NZD may touch 0.6430 first before the possibility of a more significant reversal rises as upward momentum has somewhat improved. It is not anticipated that the key barrier at 0.6470 will become visible. 0.6370 and 0.6350 provide support.

In the next 1-3 weeks: “Last Friday (13 January, spot at 0.6390), we underlined that although the bias for NZD is on the upward, weak momentum implies the possibility of a breach of the significant resistance around 0.6475 is not great. NZD climbed to a high of 0.6426 yesterday before declining. The momentum has not changed much, and we still have the same opinion. A break of 0.6325 (the previous 0.6305 “strong support” level) would suggest that the upward tilt has diminished.

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

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