GBP achieves correction. Overview for 23.08.2023

The British pound sterling paired with the US dollar found a foothold by the middle of the week. The current GBPUSD exchange rate stands at 1.2752.

Strategically speaking, GBP is in a consolidation phase in a wide range.

From a fundamental point of view, the pound's positioning has improved slightly after investors' risk appetite rose. Earlier in the week, demand for safe-haven assets was strong due to rising US Treasury bond yields and concerns over the alarming state of the Chinese economy. During this time, the US dollar enjoyed a blaze of market glory. However, on Tuesday, both these factors lost their former acuteness. This allowed risk-sensitive currencies to stabilise.

Statistical data from the UK published yesterday showed that industrial production in the three months ending in August fell at the highest rate since autumn 2020. This hardly adds to GBP optimism.

However, the UK budget figures in July looked more favourable than before, as the deficit narrowed. This supported the GBP's position.

On a global scale, GBP behaviour is currently more dependent on risk attitude than on statistics.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

GBP hits seven-week lows. Overview for 25.08.2023

The British pound sterling paired with the US dollar hit its lowest point in seven weeks. The current GBPUSD exchange rate stands at 1.2560.

The market is actively reassessing its positions regarding the future actions of the Bank of England. Notably weak PMI statistics revealed that the country's economy will not withstand any further tightening of monetary conditions. It may well be that the BoE will not have to raise the interest rate to the extent initially projected to bring inflation to target levels. With the rise in product prices currently at the slowest pace since 2021, it is acting as a natural constraint on inflation.

From December 2021 until the present day, the Central Bank has raised the interest rate 14 times, bringing the rate to a level of 5.25 per cent per annum. This stands as the highest point in the last 15 years.

Next month, the rate will increase to 5.50%. However, the likelihood of the rate moving further up towards 6.00% is rapidly diminishing.

As a result, the Bank of England is nearing the end of its aggressive interest rate hike cycle. This is driving the pound lower.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

JPY is falling with dignity. Overview for 29.08.2023

The Japanese yen paired with the US dollar has suspended the wave of devaluation. The current USDJPY exchange rate stands at 146.47.

The US dollar's strong position on the global stage, driven by the Federal Reserve's inclination towards further interest rate increases, is exerting pressure on the JPY. In contrast to the Fed's approach, the Bank of Japan still adopts a conservative stance and keeps its interest rate negative. The constant decline of the yen is attributed to the interest rate differential.

Today it was announced that the Japanese government is contemplating a full-fledged economic stimulus package in September. This will include previously announced subsidies for fuel and a range of important goods. This could become a pro-inflationary factor, but with no details available yet, analysing it is challenging.

Should key US statistical data, scheduled for release this week, leave the Federal Reserve with chances for further interest rate hikes, the yen will fall again.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

AUD: not a step back. Overview for 31.08.2023

The Australian dollar has stabilised against the US dollar. August is closing with a 3% pullback The current AUDUSD exchange rate stands at 0.6479.

The weakening of the US dollar has worked in favour of the Aussie. Recent economic data from the US has strengthened investor confidence that the Fed is unlikely to continue with further interest rate hikes. The economy will not withstand this. The USD declined, and the AUD recovered.

However, over August, the Aussie lost more than 3% of its value. The easing of domestic inflationary pressure was perceived by market participants as a basis for maintaining the RBA interest rate at 4.1%. The next meeting of the Australian regulator is scheduled for September.

The RBA noted earlier that it needed more time to objectively assess the impact of the previous rate hikes on the economy.

The Australian Dollar (AUD) is influenced by two factors related to China: the evidence of economic weakness in China and the lack of decisiveness among Chinese regulators regarding stimulus measures.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

EURUSD attack by the bears. Overview for 04.09.2023

The major currency pair remained in a weak position on Monday, although it is attempting to correct itself. The current EURUSD exchange rate stands at 1.0780.

The US released a significant set of crucial macroeconomic statistics last Friday. The data impressed investors and revived discussions about the future of interest rates in the US market.

The unemployment rate rose to 3.8%, up from 3.5% a month earlier. Average hourly earnings increased by only 0.2% m/m, falling short of the forecasted 0.3% growth and the previous increase of 0.4%. This data was far from encouraging, indicating that the economy is still responding to high interest rates and not performing at its best.

Non-farm payrolls added 187,000 jobs, surpassing expectations.

Overall, the presented data gives investors cause for speculation. It is the employment market that currently appears mixed, and it is uncertain whether the Federal Reserve will base its decision on interest rates in November solely on this factor.

Today is a holiday in the US, and there will be no economic statistics released. The Eurozone will present the Sentix investor confidence index, which could drop to -19.6 points in September.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

JPY: a new slump. Overview for 06.09.2023

The Japanese yen, paired with the US dollar, is undergoing an active phase of devaluation. The current USDJPY exchange rate is 147.41.

The current levels for the yen are the lowest in the past 10 months. Overall, the yen has lost more than 12% of its value since the beginning of the year. The primary reason for the JPY's decline is the huge difference in interest rates. The Bank of Japan remains committed to an ultra-soft monetary policy, which is exerting substantial pressure on the yen.

Today, the country's chief currency diplomat, Masando Kanda, noted that the authorities are prepared to act if speculative currency movements persist. Earlier, a board member of the Bank of Japan, Naoki Tamura, expressed his intention to maintain the current parameters of the monetary policy, as he requires further evidence of stable inflation growth.

The JPY is also under pressure due to the strengthening of the US dollar. The US currency is on the rise as investors seek safe-haven assets amidst global economic uncertainty.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

JPY has found a foothold. Overview for 11.09.2023

The Japanese yen, in the pair with the US dollar, took a pause in devaluation. The current USDJPY exchange rate stands at 146.45.

The pressure from the US dollar has decreased temporarily, allowing the JPY to stabilise.

Friday's statistics from Japan were disappointing. Average wages in August only increased by 1.3% y/y compared to the expected 2.3%. While this news is positive as a signal against inflation, it conveys a less optimistic picture when it comes to the employment sector.

Japan's final GDP in Q2 2023 increased by 1.2% q/q against the forecast value of 1.4% and the preceding estimate of 1.5%. The relative weakness of the Japanese economy is due to the decrease in export parameters.

In August, the Japanese Economy Watchers Survey index dropped to 53.6 points from the previous 54.4 points. The forecast had indicated that the index would remain unchanged.

This week, no significant statistics are expected from Japan.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

EUR maintains its balance. Overview for 13.09.2023

The major currency pair continues its consolidation on Wednesday. The current EURUSD exchange rate stands at 1.0747.

There were no significant US statistics published earlier this week. The most interesting developments will begin today with the US Consumer Price Index report for August. According to forecasts, inflation may have increased to 3.6% y/y from 3.2% earlier. On a monthly basis, a 0.6% surge is expected today against 0.2% earlier.

Core inflation could have kept its growth rate at 0.2% m/m. If the data aligns with expectations, market reactions are expected to be subdued.

In addition, the eurozone is preparing to release industrial production statistics for July. According to average forecasts, the indicator could have fallen by 0.8% m/m after a 0.5% m/m increase in June. If the data stays in positive territory, it would be a positive factor for the euro.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

EUR suffers defeat. Overview for 15.09.2023

The main currency pair is holding a weak position on Friday. The current EURUSD exchange rate stands at 1.0649.

The major currency pair experienced strong pressure yesterday. The European Central Bank held its meeting and raised the interest rate by 25 basis points to 4.5% per annum. The euro would have survived this decision quite well, were it not for the regulator's remarks on the meeting outcome.

The ECB said that the interest rate was at a level sufficient in the long run for taking inflation under control. This means the regulator is ready for a monetary pause and is preparing to keep borrowing costs high for as long as necessary to reduce price pressures. The inflation target remains at 2%.

The market reacted with heavy selling. The euro/dollar collapsed by almost a figure in the first hours after the decision and then tried to stabilise.

Against this background, statistics from the US did not receive attention. The PPI in August soared by 1.6% y/y after a 0.8% y/y gain earlier. Retail sales in August saw a 0.6% m/m increase, while economists had expected an expansion of only 0.2% m/m. All these indicators point to pro-inflationary signals, which is concerning ahead of the upcoming Federal Reserve meeting next week.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

AUD grows gradually. Overview for 19.09.2023

The Australian dollar, paired with the US dollar, is on its way to recovery. The current AUDUSD exchange rate stands at 0.6437.

This morning, the minutes of the previous RBA’s meeting were published. It is mentioned in the document that the Reserve Bank of Australia considered a new hike in the interest rate by 25 basis points in September before making a pause. The RBA finds that it needs more time to collect data and evaluate the effect that previous interest rate increases had on the economy. As risks, the RBA views poor growth of production and high inflation of service prices. Both these parameters propel interest rate hikes in the future.

The Australian economy might slow down additionally due to weak domestic demand and high levels of uncertainty in China, which is Australia’s main trade and economic partner.

Investors in Aussie are extremely cautious. Important decisions of the US Federal Reserve and the Bank of England are coming. The market is getting ready for high volatility.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

The pound is plummeting. Overview for 21.09.2023

The British pound sterling, paired with the US dollar, continues to weaken. The current GBPUSD exchange rate stands at 1.2316.

The pound has found itself under pressure as the US dollar strengthens its position. But there is more stress looming ahead.

The Bank of England meeting will take place today, and the market has become nervous. It is very likely that the interest rate will rise to 5.50% per annum, up from the previous 5.25%. Investors are eagerly awaiting commentary, pondering whether the BoE is prepared to further raise the cost of borrowing or will stop at this point. Opinions are also interesting on how the BoE will cope with such high basis prices.

Simultaneously, the minutes from the previous Bank of England meeting will be published, but the market is not likely to pay much attention to them, given the new data expected.

So far, the Bank of England had few difficulties in managing inflation. Prices could fluctuate, but quickly balanced out thanks to active internal processes. With Brexit, the pandemic and other complications, many natural and well-established relationships have been disrupted. The old approach is no longer effective, and a new one is yet to be found.

Against this background, the pound has come under significant pressure.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.

The yen's devaluation continues. Overview for 25.09.2023

The Japanese yen in the USDJPY pair remains at a ten-month low. The current USDJPY exchange rate stands at 148.40.

The Friday meeting of the Bank of Japan concluded without surprises, with the interest rate remaining at -0.10% annually. The regulator's comments provided clear indications of its readiness to alter the monetary policy structure.

Meanwhile, the US Federal Reserve System left the possibility of a rate hike open last week. This could further widen the spread between the BoJ and Fed rates, which could work against the yen.

The Bank of Japan has communicated that it requires more time to collect and analyse data.

Market sentiment suggests that the central bank may intervene when the dollar approaches 150.00 yen. However, there are no compelling reasons for such expectations. The Bank of Japan is unlikely to wait for the right moment to support the already weak yen.

Forecasts for other instruments can be found in the section "Forex Forecasts and Analysis" on our website.