In this article, we have covered the highlights of global market news about the EUR/USD, NZD/USD, USD/JPY and USD/CAD.
The EUR/USD rises as the USD falls, although the upside is limited to 1.0660.
In the first part of the European session on Thursday, the EUR/USD pair regained bullish momentum and surged to the high end of a trading range that has been in place for a week. The pair is now trading slightly around the mid-1.0600s, down a few pips from the daily peak set in the previous hour but still up more than 0.30% for the day.
Fresh selling of the US Dollar is prompted by several reasons, which is regarded as providing some support for the EUR/USD pair. The safe-haven dollar continues hampered by broad optimism surrounding the equities markets. The recent decline in US Treasury bond rates also keeps the USD bulls on the back foot.
In reality, despite predictions that the Fed would shift from a very hawkish attitude to a more neutral one, the yield on the benchmark 10-year US government bond falls away from the monthly peak set on Wednesday. It’s important to remember that the US central bank said last week that it would keep raising borrowing prices to fight persistently rising inflation.
The European Central Bank’s more hawkish position, on the other hand, which indicates that it will need to hike rates substantially higher to control inflation, is what supports the common currency. However, given the impending recession risks brought on by an increase in COVID-19 cases and the ongoing Russia-Ukraine conflict, the upside for the EUR/USD pair remains constrained.
NZD/USD holds over 0.6300 with a weaker USD and good risk sentiment.
On Thursday, there is modest buying interest in the NZD/USD pair, which somewhat undoes the previous day’s decline to a new monthly low in the vicinity of 0.6275. The pair maintains gains during the first half of the European session and is trading only a few pips below the daily peak, in the range of 0.6315–0.63110.
The US Dollar is being weighed for several reasons, which is considered a positive for the NZD/USD pair. The safe-haven dollar continues to suffer due to the recent improvement in global risk sentiment, which is shown by a broadly upbeat tone in the equities markets and helps the risk-averse Kiwi. The continued decline in US Treasury bond rates puts more pressure on the US dollar.
In fact, amid predictions that the Fed would switch from a very hawkish position to a more neutral one, the yield on the benchmark 10-year US government bond falls even more from the monthly peak set the previous day. It’s important to remember that the US central bank predicted last week that it will increase interest rates by an additional 75 basis points by the end of 2023 to fight inflation.
USD/JPY recovers a few pips from its daily low but remains in the red at 132.00 amid a weaker USD.
On Thursday, the USD/JPY pair experienced some renewed selling pressure, which caused a significant portion of the rebound gains from the day before to be lost. In the early North American session, the pair does, however, bounce back a few pips from the daily low and trades just below the 132.00 level, still down around 0.40% for the day.
The US Dollar has some downward pressure from a minor decline in US Treasury bond rates, thus seen as a major reason pushing the USD/JPY pair down. Investors anticipate the Federal Reserve to change its tone from last week’s aggressive remarks to something more neutral. This weakens the dollar and pulls the yield on the 10-year US government bond below the monthly top reached on Wednesday.
On the other hand, the Bank of Japan’s policy adjustment, which widened the range for variations in the yield on 10-year government bonds, continues to strengthen the Japanese Yen. The unexpected revision of the yield curve control strategy by the Japanese central bank is considered a sign that the ultra-accommodative monetary policy is about to expire. The resulting rate difference between the US and Japan strengthens the JPY and puts pressure on the USD/JPY pair.
USD/CAD bears target 1.3540 as the US Dollar, yields and oil prices fall.
In the early hours of Thursday morning in Europe, the USD/CAD accepts bids to retest the intraday low at 1.3580. This results in the Loonie pair falling for the fourth day in a row while extending the previous day’s bearish breach of a short-term major support trend line in the direction of another support line.
Nevertheless, the recent decline in the quotation may be related to the general decline in the US Dollar and higher prices for WTI crude oil, Canada’s principal export commodity. It should be noted that the mixed Canada inflation data prints from the day before did not convince USD/CAD purchasers to change their positions.
The US 10-year Treasury rates stay low at around 3.65%, extending the previous day’s decline from the monthly high, and the US Dollar Index (DXY) falls by half a percent to as late as 103.85.
Mild losses are recorded for WTI crude oil as it offsets daily gains of around $78.40. Even still, expectations of increased energy consumption brought on by the harsh winter and increased travel expectations keep the price of black gold rising each week.
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