Daily Forex News

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XAU/USD bulls advance but may run on empty product

Gold (XAU/USD) took advantage of the greenback’s bid as Asian stocks rallied on Wednesday on the back of a strong equity performance on Wall Street. US Treasury yields are holding highs near multi-year highs ahead of this week’s closely watched US inflation data. The DXY, an index that measures the greenback against a basket of currencies, is down about 0.13% at press time while XAU/USD is up 0.14% for yesterday’s business.

However, there are solid reasons the greenback is in action and gold’s error could be challenged sooner as the consumer price index is expected to reinforce expectations that the US Federal Reserve interest rates will be raised next month. If there’s a stronger-than-expected number, that could give the deal a larger 50 basis point gain.

The bulls face an area of ​​liquidity that could lead to supply entering the market, which will generally cap the price. This brings focus to the downside, leaving $1,811 vulnerable. Gold bulls (XAU/USD) appear to be losing momentum after three consecutive days trending up to 15-day highs, falling to $1,825 during Wednesday’s Asian session . In doing so, the yellow metal represents market anxiety over key US Consumer Price Index (CPI) data amid high multi-month Treasury yields and inflation expectations. America’s dimming.

Benchmark 10-year US Treasury yields remained more flat at 1.956% after rising the previous day to their highest levels since late 2019. On the contrary, US inflation expectations, as measured by the 10year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, remain sluggish around a three-month low flashed during late January, recently around 2.42%. That said, global traders remain anxious over the January inflation figures following the Fed`s upbeat performance. However, another player in the bull`s league, namely the European Central Bank (ECB), tried placating the reflation fears of late.

Also contributing to the gold`s upside momentum is the looming risk of a Russian invasion of Ukraine and the US China trade tussles. On the same line are the latest comments from the Chinese Communist Party (CCP) that was quoted in the South China Morning Post (SCMP) as saying, “China should `support and guide` the healthy development of capital, and prevent the `barbaric growth of capital.`

It`s worth observing that the positive comments from Dr. Anthony Fauci, a leading US health expert, underpin the market`s optimism. However, concerns about the regeneration process are dominating and challenging the public’s optimism in favor of gold prices. “The United States is emerging from the ‘official’ pandemic phase of Covid19, the US President’s chief medical adviser said,” according to the Financial Times (FT). Between these games, Wall Street had another positive day and S&P 500 futures are also trading positively, but the US Dollar Index (DXY) is struggling to extend its recovery moves return. Looking forward, risk catalysts and Fed speak will lead near-term XAU/USD moves ahead of Thursday’s US inflation.

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GBP/USD steady in Asia ahead of key US CPI data

GBP/USD is steady on the day and patiently waits between 1.3526 and 1.3538 ahead of today’s key event in the US Consumer Price Index. The British Pound initially benefited from a weak Dollar at the start of the week and calmed central bank sentiment at the European Central Bank. However, sterling eased slightly against a stronger currency amid deep and lingering uncertainty over the future course of the Bank of England’s monetary policy. Bank of England chief economist Huw Pill explained that it makes sense for central banks to step back from providing detailed guidance on the policy outlook, as Reuters reports.

Meanwhile, money markets value the BoE’s expected rate hikes at 25 basis points in March and 125 basis points in December 2022. As a result, the pound could rise as the face correction in the greenback more than the euro on the central bank. divergent. The CPI print could provide support to the bearish US Dollar today if the market continues to give further hawkish signs on the pace of Federal Reserve monetary tightening in the data. Whether. A higher number is expected to signal stronger interest rate hikes and should lift the value of the greenback across the board. That metric is expected to be up 0.5 percent month-on-month in January and 7.3 percent on the year, according to economists polled by Reuters.

To the Fed speakers, Cleveland Fed President Loretta Mester spoke on Wednesday and argued that future rate hikes after March will depend on the strength of inflation and the extent of its moderation or existence. Atlanta Fed President Raphael Bostic said he remains on track for a slightly faster rate hike this year.

Tonight’s US CPI data is important and should help settle the debate over whether the Fed will go with a 25bp or 50bp hike. But it’s not clear if this will actually benefit the USD,’ argued analysts at ANZ Bank, while analysts at Brown Brothers Harriman warned ‘if the news turns out to be hot, it could be to blame for US yields moving higher and potentially pushing 10 years above 2% for the first time since August 2019.

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NZD / USD struggles to strengthen US dollar despite high inflation expectations of Reserve Bank of New Zealand

At 0.6658, the NZD / USD fell 0.17% on the day as the greenback continues to dominate the top of the forex leaderboard. On a time basis, the US dollar is ahead while commodity currencies are behind. “CPI inflationary pressures remain strong in the short term, which should be reflected in rent and grocery prices next week,” ANZ Bank analysts said earlier. This should eventually take heat away from the CPI. ”

Meanwhile, the market is increasing overnight volatility as it does not move the needle and instead the US consumer price index heats up, leading to bilateral price behavior on New York Day. In , the data was accompanied by a very positive comment from Federal Reserve voting member James Bullard.

His rhetoric caused a wave of bets on aggressive rate hikes. Bullard told Bloomberg that he hopes to raise 100 basis points by July and can consider raising rates between meetings. This has led some Fd watchers to talk about rate hikes prior to the March meeting. Interest rate futures rose 50 basis points next month, shifting to a above-average possibility of tightening more than 160 basis points by the end of the year.

According to data on Thursday, , the US consumer price index rose 7.5% year-on-year in January, surpassing 6% for the fourth straight month, slightly above economists’ forecast of 7.3%. rice field. As a result, yields on US Treasuries soared and the dollar soared to a five-week high of ¥ 116.34. Kiwi was exhausted for part of the day on the flight to the merchandise, but soon turned around and under pressure after Bullard appeared. The New Zealand dollar fell about 0.3% each in the morning trading.

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EUR/USD towards 1.1305 as threat of Russian aggression grows heavier

EUR/USD rallies early in the day as risk appetite fades with major Asian indexes printed in red. The EUSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.2 percent, while Japan’s Nikkei index lost 2.5 percent. At 1.1353, the Euro is now steady on the day against the US Dollar after correcting a significant portion of Friday’s sell-off to a high of 1.1369. A tumultuous start to the week following last week’s alarming US inflation figures combined with the threat of Russia’s invasion of Ukraine. US President Joe Biden and Russian President Vladimir Putin spoke by phone for an hour on Saturday about what many see as a last-ditch effort to repel Russia’s invasion of Ukraine.

However, the call brought no fundamental change to the deepening crisis, although the United States and Russia agreed to remain engaged in the coming days, according to a senior US official, who spoke on condition of anonymity reported to journalists. The official also told reporters that “Russia may decide to take military action anyway.”

Meanwhile, there is speculation that the Federal Reserve could raise interest rates by 50 basis points in March with talk of an emergency hike between meetings. That was boosted in part by the timing of the Fed board’s caucus on Monday, even though the event was supposed to be routine. However, not all members of the Fed sing from the same hymn. While Hawk and St. Louis Fed James Bullard debates 50 basis point hike at March meeting, San Francisco Fed President Mary Daly down played the need for a half point move in an interview on Sunday . Daly thinks being too “brutal and belligerent” politically can backfire.

Fed President James Bullard will be in the spotlight late Monday, with his recent calls for a more aggressive stance by the Fed, meaning a 100 basis point tightening in June. As for the other events of the week, minutes of the Federal Open Market Committee meeting will be released and traders will keep an eye on discussions regarding short-term policy plans. Analysts at TD Securities explained that the market will be eyeing balance sheet normalization plans, following the announcement of the “principles” for normalization in January data, the added the analyst. The market will then turn to US retail sales, where an improvement from December’s sharp drop could support the US dollar. As illustrated, the euro is on the back foot again, capped through the 38.2% ratio, so far, which leaves the emphasis on the downside and prospects of a bearish extension of the broader trend. 1.1305 serves as potential support below current lows.

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USD/CAD Traders Looking for Oil Price for Direction

USD/CAD steadies in Asia as traders remain jittery over the possibility of increased tensions around the prospect of Russia invading Ukraine. The price of oil, which CAD trades as a proxy, has increased in proportion to the Russian risk premium. As a result, the Loonie is a tough opponent for US Dollar bulls as USD/CAD rallies have dipped below previous daily highs. At the time of this writing, USD/CAD is trading at 1.2734 in a 10-pip range as geopolitical tensions, which could push oil prices further into triple digits, are watched very closely. . It has been almost confirmed that Russia intends to invade Ukraine, but only through the misinterpretation of the Ukrainian President’s Facebook messages to his country by various media sources.

Ukrainian President Volodymyr Zelenskiy has called on Ukrainians to wave the country’s flag from buildings and sing the national anthem in unison on February 16, a date that some Western media have cited as the start date Russian invasion. However, the comments were interpreted as if the President of Ukraine had been officially informed that Wednesday would be the day of the attack. Markets react in kind and sell out, but not so if an actual invasion does take place. There was an air of doubt in the air in the market and moves were limited to what looked more like a false start. Immediately after the first instinctive moves, a Ukrainian official said Zelenskiy was not planning an attack on the 16th, but was instead responding skeptically to foreign media reports.

Still, it was scary enough for energy markets that have pushed oil prices to all-time highs in the current bull cycle with WTI in $95.79 billion. USD/CAD then made a trip to print the session low of 1.2719. However, the US dollar is a double-edged sword and benefits from both risk aversion and the prospect of a faster pace of tightening from the Federal Reserve. The US Dollar Index hit a two-week high on Monday not only due to the prospect of an escalating war, but also to comments by the President of the Federal Reserve St. Louis James Bullard, who reiterated the Fed’s call for faster rate hikes. The Dollar Index (DXY) hit 96.435, the highest level since February. 1.

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EUR/USD pullback eyes 1.1300 ahead of Fed Minutes, US Retail Sales

EUR/USD takes offers to revive every day low close 1.1345, down 0.11% intraday, as the pair dealers merge the heaviest day by day hop in a fortnight during Wednesday’s Asian meeting. The significant cash pair merchants appear to regard the market’s mindful confidence while following the most recent improvements encompassing Russia, as well as blended worries over the US Central bank’s (Took care of) next move.

In doing as such, the statement overlooks playful remarks from European National Bank (ECB) Leader Load up Part Isabel Schnabel, distributed on Monetary Times (FT) during the late Tuesday. The policymakers said, per FT, “The gamble of acting past the point of no return has expanded.” On a similar line were fears of higher expansion raised by the ECB’s Financial Announcement.

The explanation could be connected to the raising chances of the Federal Reserve’s 0.50% rate climb in Spring, as well as firmer US expansion assumptions depicted by the 10-year breakeven expansion rate per the St. Louis Central bank (FRED) information. All things considered, the BOE Fed Watch Device signals around 60% probabilities of 50 premise focuses (bps) of rate lift in Spring yet the Reuters’ survey features the hesitation. “The US Central bank will start off its fixing cycle in Spring with a 25-premise point loan cost rise, yet a developing minority say it will select a more forceful half-direct push toward pack down expansion,” said Reuters
The most recent US information, be that as it may, came in blended as the US Maker Value File (PPI) information showed a hot industrial facility door expansion figure supporting the Federal Reserve’s rate-climb concerns. All things considered, the PPI rose past 9.1% YoY assumptions to 9.7%, versus upwardly reexamined 9.8% earlier, in January though the Maker Value File ex Food and Energy, otherwise called Center PPI, energized to 8.3% versus 7.9% market agreement. Also, NY Domain State Assembling List facilitated beneath 12.15 figures to 3.1, contrasted with – 0.7 past readouts.

Somewhere else, any desires for no further heightening in the Russia-Ukraine tussles, after Moscow moved back a portion of its soldiers from borders, appear to burden the US Depository yields. Nonetheless, the US stock fates battle to follow the Money Road benchmarks’ benefits. It should be noticed that the US Dollar File (DXY) guards the 96.00 limit regardless of downbeat yields, chiefly because of the market’s uneasiness.

Looking forward, Eurozone Modern Creation for December, expected 0.3% Mother versus 2.3% earlier, will offer quick signs in front of the January Retail Deals from the US, expected to switch – 1.9% past withdrawal with +2.0% development. Additionally significant will be the Government Open Market Panel (FOMC) Minutes as merchants bump more than 0.50% rate-climb hints.

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AUD/USD bulls are moving in as hopes of diplomacy succeeding continue to support risk

The AUD/USD is up 0.16 percent in the Asian session, trading at 0.7197, as risk appetite returns on what appears to be more signs of diplomacy shining through the cracks of fear of an impending war between NATO and Ukraine vs. Russia.

Initially, the Australian had taken a more cautious approach, fearing that Russia would invade Ukraine. According to a State Department spokesman, reports that US Secretary of State Blinken has accepted an invitation to meet Russia’s Lavrov late next week have calmed some nerves in Asia. In addition, US President Joe Biden will host a meeting on Ukraine on Friday with leaders from Canada, France, Germany, Italy, Poland, Romania, the United Kingdom, the European Union, and NATO.

According to Reuters, iron ore fell sharply this week as Beijing increased its efforts to restrain the steel-making mineral. “ANZ analysts noted that inventories of many resources were near record lows, just as manufacturers were looking to build up stocks in response to recent supply disruptions. This, combined with forecasts of strong global growth this year, suggested that resources could withstand higher interest rates.” Meanwhile, TD Securities analysts explained that “should geopolitical risk ease, aluminum prices are vulnerable as the disruptive lockdown in Baise ends, along with Chinese curtailments and easing European power woes.’

“Markets sensitivity to Ukraine risk is likely to rise heading into February 20th, which marks the end of war games in Belarus, as the West monitors for signs that Russian troops will return to base in a strong sign of de-escalation,” the analysts added. In contrast, failure to do so would almost certainly precipitate a significant increase in Russia’s risk premium. “In turn, positions that benefit from a rise in Russia risk premium have significant time decay, as traders must be correct about the risk’s direction and timing — axes on which most participants have little advantage.”

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The USD/JPY is licking its wounds near a 13-day low due to lower yields and risk aversion

USD/JPY pares intraday losses near the lowest levels since February 03, bouncing off the multi-day low to 114.70 during Tuesday’s mid-Asian session. Despite the yen pair’s recent corrective pullback, the market’s risk-off mood supports the USD/safe-haven JPY’s demand. S&P 500 futures fall more than 1.5 percent, while US 10-year Treasury yields fall six basis points (bps) to 1.87 percent by press time. Furthermore, stocks in Asia-Pacific are losing money on a daily basis as a result of widespread risk aversion.

Fears of a Russian invasion of Ukraine are fueling the moves, as troops from Moscow move closer to borders after President Vladimir Putin summoned them to mark peacemaking efforts. The move was the market’s second setback after Russian President Vladimir Putin declared Donetsk and Luhansk in Eastern Ukraine independent states and signed a decree “on friendship and cooperation.”

Following that, Western warnings about Moscow’s readiness for an impending invasion of Ukraine gained credence and ruined the mood. The latest hints by the US, EU, Canada, and the UK to criticise Russian actions are also negative for risk appetite. Furthermore, Yomiuri cited Japan’s warning to halt chip exports to Moscow if it invades Ukraine, while Australia’s Prime Minister Scott Morrison stated that Australia will stand in lockstep with allies on sanctions against Russia. It’s worth noting that Japan’s Finance Minister (FinMin) Shunichi Suzuki stated that Tokyo will work with the Group of Seven (G7) countries to deal with Ukraine.

In terms of economics, Japan’s Corporate Service Price Index increased 1.2 percent in January, compared to 0.7 percent forecast and 1.1 percent expected. Holidays in the United States and Canada, on the other hand, provided a dull start to the week, despite the general risk-off mood. However, given the recently softer Fedspeak, today’s preliminary readings of February PMIs for the US will be critical. However, Federal Reserve Board Governor Michelle Bowman, echoing Chicago Fed President Charles Evans and New York Fed President John Williams, stated on Monday, “It is too soon to tell if the Fed should hike 25 or 50 basis points in March.”

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EUR/GBP is hovering around 0.8330 ahead of the Bank of England’s monetary policy report hearings

In the Asian session, the EUR/GBP is trading in a narrow range of 0.8330-0.8345, as investors await the Bank of England’s (BOE) monetary policy report hearings on Wednesday. The cross has remained volatile in recent trading sessions due to the obscurity of the Russia-Ukraine spat. Market participants, however, have been underpinning the pound against the shared currency, as the latter may be more impacted by the escalation of sanctions against Russia.
Both economies have imposed sanctions in response to Russia’s aggression against Ukraine. In a tweet on Tuesday, British Foreign Minister Liz Truss stated that her government will impose new sanctions on Moscow in response to their violation of international law and assault on Ukraine’s sovereignty and territorial integrity.

Later, Britain imposed sanctions on five Russian banks: Rossiya bank, IS bank, General bank, Promsvyazbank, and Black Seabank, while Germany blocked a new gas pipeline from Russia, despite the fact that Germany relies on Russia for domestic gas. According to The New Statesman, Russia accounts for 65 percent of Germany’s natural gas imports and nearly 40 percent of the EU’s.

Meanwhile, the European calendar is jam-packed with events on Wednesday, beginning with a speech by European Central Bank (ECB) member Frank Elderson and Vice President Luis De Guindos. According to The New Statesman, Russia accounts for 65 percent of Germany’s natural gas imports and nearly 40 percent of the EU’s.

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AUD/USD rate stages another attempt for 2022 opening range breakout

AUD/USD appears to be unfazed by the RBA’s dovish forward guidance as it clears the February high (0.7284), and it remains to be seen if the update to Australia’s Gross Domestic Product (GDP) report will derail the recent advance in the exchange rate amid expectations for a slowdown in economic activity.

Australia is projected to grow 3.7% after expanding 3.9% during the third quarter of 2021, and indications of a slowing economy may keep the RBA on a preset course as the central bank pledges to “not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range.”

As a result, the advance from the January low (0.6968) may turn out to be a correction in the broader trend with the Federal Reserve on track to normalize monetary policy ahead of its Australian counterpart, but recent price action raises the scope for another run at the January high (0.7314) as it clears the February range.

In turn, AUD/USD may continue to carve a series of higher highs and lows over the coming days if it shows a limited reaction to Australia’s GDP report, and a further appreciation in the exchange rate may fuel the recent flip in retail sentiment like the behavior seen in 2021.