ONLINE FOREX BROKER
2019-11-11 • Updated
Fed Dudley was a superstar of yesterday’s trading sessions. In the absence of any significant economic data overnight, the market’s focus was on Fed member Dudley who gave an upbeat assessment to the US economy and forecasted a further increase in inflation rate due to tightening of the labor market. He also noted that Fed withdraws its monetary policy accommodation very judiciously, gradually so that it wouldn’t cause a recession. Dudley’s hawkish tone allowed the USD to regain its strength that consequently reverberated across the trading desk. Federal Reserve Chicago head Charles Evans a little hampered the USD rally today after he said that he would like to see more data confirming the surging inflation rates before hiking once more time. He does support a gradual reduction of the Fed’s balance sheet. This allowed the USD not to lose its ground.
USD/JPY rose to 111.65. Dudley’s effect was so strong that even Russia’s threat to target US warplanes in Syria failed to ruffle any risk-averse sentiment that would support safe-haven yen. The pair swiftly moved from neutral to bullish phase. We will be waiting for a further upside towards 112.00/112.20.
EUR/USD ticked a little bit higher in Tokyo morning. It is trading along the 1.1155 level. The single currency needs to break below 1.1105 so as the pair moved into a bearish phase. We cannot speak of the restoration of the uptrend unless EUR moves clearly above 1.2000 and makes some additional gains.
The British pound drifted lower during the EU-UK negotiations held yesterday in Brussels. Dudley’s comments sent it even lower to 1.2722. At the present moment, it is trading near 1.2740 against the USD. Today’s focus will be on the BOE’s Governor Mark Carney’s speech which is due at 10:30 am (MT time). Market participants will be curious to know his comments on the last week’s unexpected 5-3 vote to remain the cash rate unchanged. With annual consumer prices spiking to 2.9%, some BOE’s officials believe that a positive trade-off between supporting job and activity vs. returning inflation back to the target no longer exists. It would be interesting to know on whose side Carney is on.
Aussie dropped to 0.7585 yesterday on the news that Moody decided to cut the credit rating of the big four Australian banks to AA3 from AA2. Again, Dudley’s speech increased AUD’s losses. In today’s session, AUD/USD felt better, it rose above 0.7600. From here, the upsurge towards 0.7680 will be complicated given the yesterday’s unexpected drop. So, we expect to rise at least to 0.7535 in the short-term.
USD/CAD didn’t change its position from yesterday. It holds still at 1.3217. There was little support from oil prices as investors saw more signs of the rising crude production in the US, Libya, and Nigeria. OPEC-led output cuts seem to be no longer effective. Brent oil futures dropped to $46.78 yesterday. In Tokyo morning, they were trading near $49.95.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
China's economy is rocketing. On the other hand OPEC+ countries take the decision to cut the production. What will be the impact on the oil price?
Get ready for some suspense as the Bank of Canada faces a tough decision on whether to raise interest rates or keep them on hold. The resilient Canadian economy and the goal of curbing inflation further are at the heart of this dilemma. While some money markets and economists predict another rate hike, others believe the central bank should exercise caution and wait, hinting at a possible increase later in the summer.
Let's take a closer look at Australia's recent economic performance. Brace yourselves for some interesting developments. The country's economy experienced its slowest growth since late 2021 in the first quarter, raising doubts about the Reserve Bank of Australia's rapid interest rate increases. Despite the bank's record-breaking 12 rate hikes in the last 13 months, the resource-rich economy only grew by a modest 0.2% in the quarter, falling short of economists' expectations.
Let's dive into the latest developments shaping the global economic landscape. Good news first: the threat of an unprecedented US debt crisis has receded, as US lawmakers passed a bill to raise the debt ceiling and avoid a catastrophic default. Phew! But don't pop the champagne just yet, because storm clouds are still looming. High inflation, rising interest rates, and sluggish growth are challenges that have yet to disappear.
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