Daily Forex News by XtreamForex.com

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USD/CAD Hits New 3-Week High Above 1.3370 as Investors Eye Canada/US Job Data

The USD/CAD pair has recently reached a new three-week high, hitting 1.3375 during the London trading session. This rally of the Loonie asset comes in spite of the prevailing weakness in the US Dollar Index (DXY), rising oil prices, and the anticipated additional interest rate hike from the Bank of Canada (BoC).

In Europe, S&P 500 futures have continued their downward trend initiated on Thursday. This came after the United States labor market demonstrated more resilience than anticipated, causing market sentiment to turn bearish. Investors are currently exercising extreme caution as they await the upcoming second-quarter result season and further labor market data.

The US Dollar Index (DXY) has found support near the 103.00 mark. As the Nonfarm Payrolls (NFP) data release draws closer, fluctuations in the USD Index are expected. Analysts at RBC Economics predict that the US jobs report for June will reflect a substantial increase in payroll employment by 260K, albeit a decrease from the +339K in May. However, this still signifies a high level of employment. They also anticipate a slight rise in the Unemployment Rate to 3.8%, calculated separately from the household survey, up from 3.7% in May.

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EUR/GBP Drops to 0.8550 Amid UK Job Woes, Lackluster German Inflation

The EUR/GBP exchange rate has recently experienced a significant drop to 0.8550, marking a significant shift in the currency markets. This movement is not random; it reflects a complex interplay of various factors influencing both the Euro and the British Pound.

From the Euro’s perspective, several elements play a substantial role. Economic indicators such as inflation rates, GDP growth, and unemployment rates within the Eurozone can cause fluctuations in the value of the Euro. Large economies like Germany and France often have a more significant impact due to their size and influence. For instance, the recent unimpressive German inflation data has potentially contributed to the weakening of the Euro.

Political events within the Eurozone, such as elections, policy changes, or unexpected announcements, can also cause substantial currency movements. Changes in the European Central Bank (ECB) policies are particularly impactful. The ECB’s decisions on interest rates, quantitative easing programs, and other monetary policies directly influence the value of the Euro. In this context, the mixed central bank talks and data from the Eurozone have likely played a role in the EUR/GBP rate’s recent decline.

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[xtreamforex26]

European Stock Futures Show Slight Increase; U.S. CPI Identified as Crucial Factor

A slight uptick in European stock futures has been observed, with the U.S. Consumer Price Index (CPI) report playing a crucial role in the trend. As of 02:00 ET (06:00 GMT), Germany’s DAX futures contract traded 0.4% higher, while France’s CAC 40 futures saw an increase of 0.4%. The FTSE 100 futures contract in the U.K., however, remained largely unchanged.

The positivity is believed to stem from the strong close on Wall Street, where the Dow Jones Industrial Average gained over 300 points, or 0.9%. Investors are hopeful that the upcoming U.S. inflation report for June may influence the Federal Reserve to conclude its interest rate hikes earlier than anticipated.

Federal policymakers are expected to raise interest rates during their next meeting later this month, following a pause last month. However, investors are keenly awaiting the monthly consumer inflation report for insights into potential additional hikes. The headline annual figure for June is projected to have risen by 3.1%, down from May’s 4% rise. Meanwhile, the core rate is predicted to have dropped for a third consecutive month to 5%, from 5.3%.

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[xtreamforex26]

AUD/JPY Cross Gains Momentum, Surpassing 100-hour SMA after Hitting Two-day High

The AUD/JPY cross is showing signs of momentum, pushing past the 100-hour Simple Moving Average (SMA) and reaching a two-day peak. This trend mirrors the progress of the EUR/USD pair, which is also advancing towards a fresh 2023 high close to 1.1150. The performance of both pairs has been influenced by a general weakening of the US dollar.

The AUD/JPY cross has managed to ascend to a two-day high, notably breaking through the 100-hour SMA. Market observers are now keenly waiting for the release of the Producer Price Index (PPI), an important economic indicator due later today.

Meanwhile, recent data from the US Bureau of Labor Statistics (BLS) reveals that the country’s Consumer Price Index (CPI) fell to 3% year-on-year in June, down from 4% in May. This figure came in slightly lower than the market estimate of 3.1%. Concurrently, core CPI inflation, which excludes unpredictable food and energy costs, slipped from 5.3% to 4.8%. Despite these decreases, both the CPI and core CPI saw monthly increases of 0.2%, not quite meeting analysts’ forecasts.

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[xtreamforex26]

US Inflation Slows; Equity Markets Rally on Earnings News

The slowing down of US inflation has been a welcome development in the financial markets. Along with positive earnings news, this has contributed to a robust rally in equity markets. The EUR/JPY pair, however, has seen only a slight recovery from its intraday low, hovering around 154.80 as we head into Friday’s European session.

This performance of the EUR/JPY pair seems to reflect the recent bounce in Treasury bond yields, while also mirroring underwhelming data from Japan. Amid relatively slow trading hours, the US 10-year and two-year Treasury bond yields are showing modest gains around 3.78% and 4.65% respectively. This is after hitting a two-week low the previous day, indicating some form of recovery.

In Japan, the Government Bond (JGB) yields for 10-year have retreated from an 11-week high. This comes as the bond yields from Europe and Germany await the opening bell for their next move. Furthermore, Japan’s Industrial Production for May dropped significantly to -2.2% MoM and 4.2% YoY, compared to the previous figures of -1.6% and 4.7% respectively. This suggests a significant slowdown in Japan’s industrial sector. Capacity Utilization also fell sharply to -6.3%, a stark decline from the market forecast of -2.5% and previous readings of 3.0%.

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[xtreamforex26]

EUR/USD Volatility Rises Above 1.1200 Ahead of US Retail Sales

As the anticipated US Retail Sales data for June looms, the EUR/USD pair has experienced a noticeable increase in volatility, crossing the significant 1.1200 threshold. This major currency pair has found a degree of stability as investors from around the globe eagerly await these crucial figures that will undoubtedly influence their financial strategies and future market moves.

During the Asian trading session, S&P500 futures have logged some losses, signaling a cautious sentiment among market participants as we delve into the second-quarter earnings season. Additionally, US equities faced some downturns last Friday, with investors expressing apprehension that corporate earnings might experience fluctuations due to the Federal Reserve’s assertive tightening policies and the strict credit standards established by commercial banks to preserve asset quality.

Simultaneously, the US Dollar Index (DXY) is witnessing a decrease in volatility after forming a base just below the 100.00 level. It is projected that the DXY will exhibit significant movement following the announcement of the US Retail Sales data. The market consensus suggests an increased growth in monthly retail demand at a faster rate of 0.5%, a notable increase from the previous 0.3%. Excluding automobiles, retail demand is expected to see an upturn of 0.3%, a slight rise from the last recorded figure of 0.1%.

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[xtreamforex26]

AUD/USD Steady Above 0.6800 Amid RBA Policies

The Australian dollar to United States dollar (AUD/USD) pair is currently demonstrating a steady performance, maintaining its position above the 0.6800 mark in the Tokyo session. Despite the Reserve Bank of Australia (RBA)’s inclination towards further policy restrictions, the Aussie currency has yet to experience a significant shift.

During the RBA’s monetary policy meeting in July, the board’s preference leaned towards the Australian economic outlook, leading to the decision to keep interest rates steady. This decision comes amidst a backdrop of weak consumer spending in the second quarter and a Gross Domestic Product (GDP) growth rate of approximately 0.2%. These figures illustrate the impact of the aggressive policy-tightening measures that have been implemented.

It’s worth noting that there is a stark contrast between the interest rates raised by the RBA and those of other developed economies. This discrepancy provides ample room for potential future hikes by the RBA, which could potentially influence the performance of the AUD/USD pair.

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[xtreamforex26]

GBP/JPY drops 100 pips below 181.00 due to poor UK inflation, yields

The GBP/JPY currency pair saw a considerable drop of 100 pips to below 181.00, driven primarily by disappointing UK inflation data and weaker Treasury bond yields. The pair dipped further to around 180.80 in the early hours of Wednesday morning in London, reflecting the market’s reaction to these economic indicators. This decline has been amplified by cautious market optimism and a dovish perspective on the Bank of Japan (BoJ).

In June, the UK’s Consumer Price Index (CPI) inflation fell short of expectations, dropping to 7.9% Year-on-Year (YoY), compared to the anticipated 8.2% and the previous figure of 8.7%. A similar trend was observed in the Core CPI, which slipped to 6.9% YoY, moving against market predictions and previous readings of 7.1%.

This downturn in inflation rates has thrown into question the previously hawkish sentiment surrounding the Bank of England (BoE). The uncertainty has contributed to the GBP/JPY’s three-day losing streak, highlighting the sensitivity of the currency pair to changes in economic conditions.

Alongside this, BoJ Governor Kazuo Ueda defended the bank’s easy-money policy at a G20 meeting in India. He acknowledged that achieving the 2% inflation target sustainably remains a distant goal for the central bank, thus reinforcing a dovish outlook.

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[xtreamforex26]

The GBP/USD pair continues to experience pressure, hovering near the 1.2920 level

The GBP/USD pair is enduring continuous strain, staying close to the critical 1.2920 level as the European session commences. This stress is fueled by the weaker-than-expected inflation data from the UK for June. The monthly Consumer Price Index (CPI) saw a mere increase of 0.1%, failing to meet the anticipated growth of 0.4% and significantly lesser than May’s 0.9% rise. More alarmingly, the yearly CPI fell to 7.9%, not meeting the predicted 8.2% and considerably lower than May’s 8.7% increment. Furthermore, the core CPI, which eliminates the unpredictable food and oil prices, dropped to 6.9%, below the expected market consensus of 7.1%.

Considering this underwhelming inflation data, there is speculation over the Bank of England’s (BoE) approach in its forthcoming policy meeting on August 3. Market analysts suggest that the BoE may lean towards a modest rate hike of 25 basis points (bps) instead of the previously speculated 50 bps increment, in an effort to stimulate economic growth amidst these uncertain times.

In the meantime, the US Dollar Index (DXY), a measure of the Greenback’s strength against other major currencies, has seen a significant surge, reaching the 100.20 mark after initially hitting the 100.00 level during the early Asian market hours. This rise in the DXY contributes further to the downward pressure on GBP/USD, making the Pound Sterling less appealing to investors due to a stronger US Dollar.

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Edited July 20, 2023 by xtreamforex26

[xtreamforex26]

USD/JPY Crosses 140.20 Mark in Surge While Investors Anticipate BoJ Rate Decision

During the European session on Friday, the USD/JPY pair demonstrated strong upward momentum, crossing the 140.20 mark. This surge in the exchange rate can be attributed to the diverging monetary policies pursued by the Bank of Japan (BoJ) and the Federal Reserve (Fed). The BoJ has maintained an ultra-loose monetary policy, while the Fed has resumed its tightening policy, leading to the weakening of the Japanese Yen against major currencies.

Positive signs for the US economy were evident in the latest weekly data released by the US Department of Labour (DOL). Initial Jobless claims for the week ending July 15 totaled 228,000, surpassing market expectations of 242,000 and marking a decline from the previous figure of 237,000. This reading represented the lowest level since mid-May. Furthermore, the Philadelphia Federal Reserve Manufacturing Survey showed a reading of -13, better than the consensus of -10. However, Existing Sales for June were disappointing, revealing a contraction of 3.3% MoM after a marginal 0.2% gain in the previous reading.

Investors are eagerly awaiting the upcoming Federal Reserve meeting, with expectations of a 25-basis-point interest rate hike. Additionally, the possibility of another rate hike before the year’s end has gained traction following the release of the latest economic report. As a result, the US Dollar is displaying broad-based strength in the forex market.

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WTI Oil Holds Steady Above $76.60 as FOMC Meeting Approaches

Western Texas Intermediate (WTI), the benchmark for US crude oil, is maintaining its position above the $76.60 level on Friday, displaying consolidation after achieving its fourth consecutive weekly gain. This upward momentum comes amidst indications of a tightening oil market.

Adding to market dynamics, tensions between Russia and Ukraine have escalated, with Russia attacking Ukrainian food export facilities for the fourth consecutive day and seizing ships in the Black Sea. These geopolitical developments have provided support to WTI prices.

Examining recent data, the Energy Information Administration (EIA) reported a decrease of 708,000 barrels in crude oil stocks for the week ending July 14. This figure contrasted with expectations of a 2.44-million-barrel decline and a 5.946 million barrel gain observed the previous week, further contributing to the positive sentiment surrounding WTI.

Additionally, Baker Hughes disclosed a decline of seven oil rigs in the United States this week, marking the largest drop since early June. With the number of active oil rigs reaching its lowest level since March 2022, at 530, concerns over the supply-side dynamics have emerged, propelling crude oil prices higher.

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[xtreamforex26]

AUD/USD Holds Firm to Robust Intraday Advances, Nears Daily Peak at Approximately 0.6770-75 Range

The Australian Dollar (AUD) against the US Dollar (USD) pair, also known as AUD/USD, has been exhibiting strong intraday gains during the early European trading session on Tuesday. For the second consecutive day, it continues to experience fresh buying interest around the 200-day Simple Moving Average (SMA), a key technical indicator that traders use to analyze market trends. The spot prices have reached a new daily high in the 0.6770-75 range, buoyed by multiple supportive factors.

Investor sentiment is primarily being driven by China’s pledge to bolster its fragile economy. This commitment has infused a positive risk tone in the global equity markets, which is beneficial for the risk-sensitive Australian Dollar. This optimism stems from the recent announcements made by China’s Politburo, the ruling Communist Party’s top decision-making body. They have outlined plans to make strategic adjustments to their economic policies with a focus on increasing domestic demand, bolstering confidence, and mitigating risks.

Adding to this, the National Development and Reform Commission (NDRC) of China has introduced measures aimed at stimulating private investment in infrastructure projects. They also aim to strengthen financing mechanisms for private initiatives. These actions are seen as proactive steps towards stabilizing the Chinese economy and have contributed to the upbeat investor sentiment. 

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[xtreamforex26]

USD/CHF Dips, Stays Above 0.8600 Pre-FOMC

Today, the USD/CHF currency pair is again experiencing a downward trend, marking a second consecutive day of decline. Following an intraday uptick to the 0.8655 region, the pair has seen fresh selling activity and drifted into negative territory. During the early European session, spot prices fell to a new weekly low, with the pair currently trading around the 0.8620 area, down nearly 0.20%.

The U.S. Dollar (USD) is extending its modest pullback from a two-week high and continues to lose ground for the second straight day. This ongoing downtrend in the USD is exerting significant downward pressure on the USD/CHF pair. The USD’s dip can be attributed to some repositioning trade ahead of the anticipated Federal Open Market Committee (FOMC) decision. However, this dip is expected to be limited as traders eagerly await fresh cues about the near-term policy outlook.

Market participants have been progressively discounting the possibility of any further rate hikes this year, following the widely expected 25 basis points increase slated for this Wednesday. Despite this, investors remain skeptical about whether the Federal Reserve (Fed) will commit to a more dovish stance, given the strength and resilience of the U.S. economy. This skepticism persists despite Tuesday’s upbeat U.S. Consumer Confidence Index, which raised optimism that the U.S. economy could avoid a recession this year.

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[xtreamforex26]

AUD/USD Gains Momentum Above 0.6800 Amid Weakening USD

The AUD/USD currency pair demonstrated considerable strength during Thursday’s Asian trading session, surpassing the key 0.6800 level. This significant surge was largely driven by a weakening US Dollar, pushing the major pair to trade around 0.6807, marking a day’s gain of 0.75%. This movement exhibits the dynamic nature of global currency markets, where fluctuations can be triggered by a multitude of factors ranging from economic data releases to changes in monetary policy.

One of the contributing factors to this movement is the release of key economic data from Australia. The Australian Bureau of Statistics disclosed that the Import Price Index for the second quarter fell by 0.8% on a quarter-over-quarter basis. This figure is considerably less than the market’s expected decline of 7.3%, and it also marks an improvement from the previous reading’s drop of 4.2%. On the other hand, the Export Price Index experienced a steeper fall than anticipated, dropping by 8.5%, which contrasts with a rise of 7.8% in the first quarter.

This recent softening in Australian data has led to speculation about the Reserve Bank of Australia (RBA) potentially pausing additional rate hikes. Earlier in the week, the Australian Consumer Price Index (CPI) increased by 0.8% in the second quarter of 2023, a slower growth compared to the 1.4% increase seen in the first quarter and also below the market consensus of a 1.0% rise.

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EUR/JPY Rebounds from Intraday Low, Remains Steady Around 153.00 Level

The EUR/JPY cross experienced a rollercoaster ride in the financial markets, starting with a brief bullish spike that pushed it towards the 155.00 region. However, this upward momentum was short-lived as the pair swiftly plummeted to its lowest level since mid-June. The culprit behind this sudden downturn was a somewhat hawkish message delivered by the Bank of Japan (BoJ) on a Friday, which caught many traders off guard.

The BoJ’s announcement on that eventful Friday was centered around its Yield Curve Control (YCC) policy. The central bank decided to make the YCC policy more flexible by shifting away from rigid limits for the 10-year Japanese government bond yield cap, opting for “references” instead. This decision had an immediate and profound impact on the financial markets, particularly the Japanese Yen.

As a consequence of the BoJ’s policy shift, the 10-year Japanese government bond yield surged to its highest level since September 2014. This significant boost in yields strengthened the Japanese Yen, prompting aggressive selling around the EUR/JPY cross and leading to a sharp decline in its value.

Despite the initial turmoil, the EUR/JPY pair demonstrated resilience and managed to recover a considerable portion of its intraday losses. During the early European session, spot prices found stability just above the 153.00 mark, with only marginal changes for the day. This recovery was partly supported by a positive sentiment surrounding US equity futures, which diminished the safe-haven appeal of the Japanese Yen.

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[xtreamforex26]

Dollar Plunges to Upper 138 Yen Zone Amidst Speculation Over BOJ Policy Adjustment

The U.S. dollar saw a dramatic fall to the upper 138 yen level in Tokyo’s early trading hours on Friday. This substantial shift was driven by widespread speculation that the Bank of Japan (BOJ) may be considering adjustments to its ultra-easy monetary policy during its meeting later that day.

The yield on the benchmark 10-year Japanese government bond soared to 0.505 percent, exceeding the central bank’s upper limit of 0.500 percent. This increase in yields was spurred by a news report suggesting that the BOJ could potentially discuss a policy alteration, which might permit long-term interest rates to rise above the current cap by a certain margin.

In reaction to this news report, the value of the dollar plunged by roughly 2 yen. As of 9 a.m., the U.S. currency was being traded at 138.88-91 yen, a noticeable drop from its preceding rates of 139.45-55 yen in New York and 139.98-140.00 yen in Tokyo at 5 p.m. the previous day.

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[xtreamforex26]

GBP/JPY Surges to a Three-Week High of 182.80-182.85 on Broad JPY Weakness

The GBP/JPY pair has seen a significant rise for the second consecutive day on Monday, reaching a three-week high in the early European trading session. The pair is currently hovering around the 182.80-182.85 region, a surge of over 650 pips from Friday’s lowest point since June 13. This upward trend is largely due to the widespread weak performance of the Japanese Yen (JPY).

Indeed, the JPY is one of the worst-performing currencies among the G-10 and is under pressure due to an unexpected operation by the Bank of Japan to purchase ¥300 billion ($2 billion) worth of Japanese government bonds (JGB). This marks the first such operation since February 2022 and comes after a notable increase in the yield of 10-year benchmark JGB to a nine-year high, triggered by the BoJ’s decision to introduce more flexibility into its Yield Curve Control (YCC) policy last Friday. The BoJ stated that the 0.5% cap for the 10-year JGB yield will now be considered “references” rather than “fixed limits”.

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[xtreamforex26]

On 7/31/2023 at 3:28 AM, xtreamforex26 said:

USD/CAD holds above the 1.3200 mark with limited upside potential

During Tuesday’s Asian session, the USD/CAD pair exhibited a modest rebound, managing to recover most of the losses experienced in the previous trading session. Presently, the pair is hovering around the 1.3220 mark, reflecting a modest 0.25% increase for the day. This recent price action places the spot prices in proximity to the three-week high recorded on Monday, generating interest among traders and investors.

The principal driving force behind the recent strength of the US Dollar (USD) can be attributed to the growing likelihood of the Federal Reserve (Fed) implementing further policy tightening measures. Fed Chair Jerome Powell’s statements from the previous week, emphasizing the necessity of an economic slowdown and labor market weakness to achieve a credible 2% inflation target, have significantly contributed to the USD’s surge. Additionally, a positive US GDP report has bolstered market expectations regarding a potential 25 basis points rate hike by the Fed, possibly taking place in either September or November. As a result of these developments, US Treasury bond yields have experienced an upward trajectory, thereby increasing the allure of the Greenback as a safe-haven asset, especially amid lingering concerns surrounding China’s post-COVID recovery slowdown.

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[xtreamforex26]

EUR/GBP Stalls Near 0.8600 Ahead of BoE Announcement with Mixed Sentiments

EUR/GBP is currently facing a struggle to maintain its strength near the 0.8600 level, as it enters Wednesday’s London session. The cross-currency pair appears to be brushing off mixed Eurozone data, while at the same time validating concerns over the UK’s economic outlook, resulting in the largest daily surge in two weeks seen in the previous trading session.

The recent release of the UK’s inflation data, which showed a downturn, has given some support to the Bank of England (BoE) hawks, as they try to combat soaring inflation amidst sluggish economic activities and labor market challenges domestically. Adding to the woes of the British Pound (GBP) is the setback faced by the ruling Tory Party in the recent by-elections, where they lost some key seats, further dampening market sentiment towards the currency.

Meanwhile, on the European front, Germany’s Unemployment Rate for June eased to 5.6%, slightly better than the 5.7% forecast and the previous reading. Additionally, the final figures of Germany’s HCOB Manufacturing PMI for July came in as expected at 38.8. Similarly, the Eurozone’s HCOB Manufacturing data also matched the initial forecasts of 42.7.

Supporting the euro, the European Central Bank (ECB) has been taking a “meeting-by-meeting” approach, and their recent decision to implement a 0.25% rate hike has boosted confidence among EUR/GBP bulls.

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