In this article, we have covered the highlights of global market news about the USD/JPY, NZD/USD, EUR/USD and USD/CAD.
USD/JPY falls from three-day high; downside seems limited despite some US Dollar gain
The USD/JPY pair cannot take advantage of its slight intraday gains and draws some selling around the mid-137.00s, or the three-day high reached on Tuesday. During the first part of the European session, spot prices fell below the 137.00 level, although the drop was muted due to a bit of US dollar strengthening.
The US Dollar Index, which gauges the dollar’s strength against a basket of currencies, is helping to support the USD/JPY pair by building on the previous day’s strong recovery from a five-month low. According to recent good macroeconomic statistics, the US economy seems to be robust despite increasing borrowing costs, which fuels speculation that the Fed may raise interest rates more than expected. This is seen as a crucial element supporting the dollar in turn.
NZD/USD is flirting with a daily low of about 0.6300, despite a minor US Dollar gain.
On Tuesday, the NZD/USD pair experiences some intraday selling at the 0.6355 regions, and throughout the early European session, it falls to the lower end of its daily range. Currently, the price of the pair is hovering around the 0.6300 level, which, if broken strongly, would pave the way for an extension of the rapid overnight decline from the highest level since mid-August.
This creates a barrier for the NZD/USD pair as the US Dollar picks up some steam and attempts to build on the solid overnight rebound from almost a five-month low. The better US ISM Services PMI reading on Monday revealed that the economy remained robust despite increasing borrowing prices in light of Friday’s positive US monthly employment report. This stoked rumors that the Fed would raise interest rates more than expected, which is a major factor supporting the dollar.
EUR/USD stays on the defensive below 1.0500, moving a little after German Factory Orders.
During the early European session, the EUR/USD pair gave up its little intraday gains and retested the daily low in the region of 1.0520. Following the announcement of better-than-expected German statistics, spot prices are still on the back foot below the psychological level of 1.0500.
According to the most recent statistics by the Federal Statistics Office, German factory orders increased 0.8% in October as opposed to the 0.2% loss predicted and the 4.0% decline seen the prior month. However, despite some continued US Dollar purchasing, the data failed to excite optimistic traders or provide the EUR/USD pair any significant momentum.
The US Dollar Index, which gauges the dollar’s performance against a basket of currencies, is seen strengthening after the overnight recovery from a low in place for more than five months. It operates as a headwind for the EUR/USD pair. The US dollar is supported by the improved US economic statistics, which feeds anticipation that the Fed may hike interest rates more than expected.
The US Service PMI unexpectedly increased to 56.5 in November, according to data published on Monday by the Institute for Supply Management (ISM), which contrasts with the positive US monthly employment report that was issued on Friday. This confirms predictions that the Fed would continue to tighten its monetary policy and shows that the US economy is robust despite increasing borrowing prices.
USD/CAD maintains stability at a one-week high as bulls attempt to take control near the 1.3600 level.
On Tuesday, the USD/CAD pair fluctuated within a small range while consolidating the overnight rise of almost 220 pips from below 1.3400. The pair has remained stable at a one-week high through the early European session. Bulls are now watching for further momentum above the 1.3600 round-figure level.
In anticipation of an increase in fuel demand and the relaxation of COVID-19 restrictions in China, crude oil prices rise and somewhat recoup their roughly 6.5% drop from the previous day. As a result, the commodity-linked Loonie is supported, which weighs down on the USD/CAD pair. The Federal Reserve may hike interest rates more than anticipated, which has sparked some US Dollar purchasing, which has helped to cushion the downside.
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