Tag: Forex

The Bank of England’s (BOE) study of the impact of negative interest rates to support the economy from the coronavirus pandemic-induced downturn revealed ‘encouraging’ evidence, said policymaker Silvana Tenreyro in a Sunday Telegraph interview published late Saturday. Key quotes “The evidence has been encouraging,” adding that cuts in interest rates below zero had been almost fully reflected in reductions in interest rates charged to borrowers. “Banks adapted well – their profitability increased with negative rates largely because impairments and loss provisions have decreased with the boost to activity and the increase in asset prices.” “Flare-ups, like we’re seeing, may potentially lead to more localized lockdowns and will keep interrupting that V (-shaped recovery). Another factor...

Gold (XAU/USD) shed about 4.5% in the past week, delivering a weekly closing below the August month low of $1863. The yellow metal booked the first weekly loss in three, with the risks skewed to the downside in the US Non-Farm Payrolls (NFP) week ahead. The persistent haven demand for the US dollar, in the wake of fiscal stimulus wrangling and coronavirus resurgence in key economies, continues to exert the downward pressure on the metal. Further, central banks’ skepticism on providing additional monetary stimulus also undermines the sentiment around gold. How is gold positioned technically, with all eyes on the critical US NFP release? Gold: Key resistances and supports Gold failed to hold onto the critical $1862 barrier on a daily closing basis. Therefore, the Technical Confluences In...

Late Friday, the US-based Fitch Ratings affirmed the UK’s sovereign credit rating at 'AA-' with maintaining a negative Outlook. Key takeaways “The Negative Outlook reflects the impact the coronavirus pandemic is having on the UK economy and the resulting material deterioration in the public finances, with Fitch forecasting the fiscal deficit to materially widen this year and government debt set to increase to well over 120% of GDP over the next few years. “ “The COVID-19 pandemic and the containment measures imposed to limit its spread have hit UK economic activity hard.”  “Changes in UK-EU trading arrangements are likely to curtail the pace of recovery as the Brexit transition period ends on 1 January 2021.”  Related reads Credit: FX Street

USD/JPY trades 0.18% higher on Friday and 1% higher on the week. There was a strong rejection of 104.00 to the downside. USD/JPY daily chart USD/JPY does not seem to like trading below 104.00 as there seems to be a quick recovery as soon as the level is pierced. The key level on the chart is the area marked in orange at 106.00. This level seems like a magnet for price and if the bulls manage to break the level it could be significant in the future.  There are also two trendlines to look out for on the chart. The first is marked in blue and the market is currently testing the zone. The black trendline is the stronger one as it has had more touches.  The indicators are back to mid-range as the price has pulled back. The MACD signal lines are still bearish, howeve...

The Federal Reserve's monetary policy and changing capital rules may hasten the ongoing consolidation in the banking industry, Kansas City Federal Reserve Bank President Esther George said on Friday, as reported by Reuters. In her prepared remarks for delivery to the Independent Bankers of Colorado, George warned that bank strains could still materialize and noted that community banks need to be vigilant given stress in their core markets, particularly commercial real estate. Market reaction These comments don't seem to be having a significant impact on market sentiment. As of writing, the S&P 500 Index was up 0.4% on the day at 3,260. Credit: FX Street

EUR/JPY appears to be stabilizing above the 100-day SMA (122.42). The resumption of the selling bias could see the 200-day SMA retested. EUR/JPY still navigates within a side-lined mood around the key 122.90 region so far on Friday. This area of contention coincides with January’s peak. The recent selling pressure seems to have met decent contention in the mid-122.00s for the time being. If cleared, there is a minor support at the 100-day SMA near 122.40 ahead of the critical 200-day SMA, today at 120.87. Below the 200-day SMA the outlook on the cross is expected to shift to bearish. EUR/JPY daily chart Credit: FX Street

In light of FX Strategists at UOB Group, EUR/USD is unlikely to drop to the 1.1600 region in the next weeks. Key Quotes 24-hour view: “Yesterday, EUR dipped to a low of 1.1625 before rebounding to close slightly higher at 1.1672 (+0.11%). The price actions were in line with our expectations wherein EUR has room to ‘dip below the major support at 1.1630 but the next support at 1.1600 is unlikely to come into the picture’. The rebound from the low appears to have scope to extend higher but any advance is viewed as part of a 1.1640/1.1710 range. In other words, a sustained rise above 1.1710 is not expected.” Next 1-3 weeks: “There is not much to add to our update from 2 days ago (Sep 23, spot at 1.1710). As highlighted, the risk for EUR is still on the downside and ‘the next support is a...

AUD/USD bears bailing out as price consolidates the down move. US dollar giving back some ground, could give rise to healthy upside correction in AUD crosses. AUD/USD is currently trading at 0.7044 between a narrow start of the day range in Asia of 0.7042 and 0.7048 following an overnight session of corrective behaviour from a low of 0.7015 to 0.772 the high. August's combination of rising equity prices and a sliding US dollar has been reversed in no uncertain terms, sending the AUD/USD back to late July levels. However, despite the market chatter about Reserve Bank of Australia cuts next month, AUD/USD is performing the bid in improved risk appetite. US stocks finished in the green on Thursday and the greenback is starting to find sellers across the board acco...

On Thursday, the Central Bank of the Republic of Turkey (CBRT) rose its key rate by 200bps to curb lira’s weakness.  According to analysts from Rabobank, the efforts from the central bank to stabilise the currency via higher interest rates should be accompanied by the Erdogan administration accelerating the pace of structural reforms. Key Quotes:  “The question is whether the 200bps hike will prove sufficient to stabilise the lira? While today’s move is a very important step in the right direction, as it reduces risk of inflation and financial stability, the CBRT will have to do more to restore shattered confidence in the lira not only amongst foreign investors, but also amongst domestic households and corporates.” “Today’s decision provides the severely battered lira w...

GBP/JPY gained traction for the second consecutive session on Thursday. Move beyond 100-hour SMA supports prospects for further intraday gains. Mixed technical indicators still warrant some caution for aggressive bulls. The GBP/JPY cross built on this week's modest rebound from the 133.00 mark, or near three-month lows and edged higher for the second consecutive session on Thursday. The cross has now moved back above 100-hour SMA, with bulls now looking to build on the momentum beyond the overnight swing high. Given that the cross had shown some resilience below the 50% Fibonacci level of the 124.07-142.72 move up, a subsequent move beyond the 134.50-60 region might prompt some short-covering move. The cross might then accelerate the momentum towards reclaiming the key 135....