AUD continues to rise. Overview for 11.01.2024

The Australian dollar, paired with the US dollar, continues its recovery. The current AUDUSD quote is 0.6719.

The RBA’s forecast regarding the prospects of the Australian dollar looks rather pessimistic. The upward reversal of AUD at the beginning of the year has not changed anything. The RBA believes that if the US Federal Reserve starts softening its credit and monetary policy no later than Q2 2024, it will create new market conditions entirely.

The RBA also mentions a geopolitical risk for half the globe: this year, political elections will be held in countries where 40% of the global population lives. They will start in Taiwan this Saturday and conclude with the US elections in November.

The Reserve Bank of Australia believes the relationships between the US and certain Asian countries might become complicated, inevitably affecting the currencies associated with risks.

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

GBP stands at a five-month peak. Overview for 15.01.2024

The British pound sterling, paired with the US dollar, hovers near a five-month peak. The current GBPUSD exchange rate stands at 1.2754.

Previously released statistics confirmed that economic growth in the UK surpassed expectations in November. At the same time, it remained subdued over the last quarter.

In November, the UK's GDP rose by 0.3% y/y, exceeding forecasts. However, the production volume dropped by 0.2% over the three months ending in November.

Over the past months, the pound has held a prominent position, benefiting from the consistently higher inflation in the UK compared to the US and Europe. This reinforces the notion that there is no reason to anticipate an imminent interest rate decrease from the Bank of England. This same factor stabilised the yield of UK bonds, making the pound more attractive for investors.

Market participants expect a 125-basis point reduction in the Bank of England's interest rate this year.

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

EUR has found support. Overview for 18.01.2024

The primary currency pair steadied on Thursday after a previous decline. The current EURUSD exchange rate stands at 1.0893.

The flow of statistics published yesterday prompted the market to adjust its perspectives.

In December, final inflation in the eurozone reached 2.9% y/y, marking a significant acceleration from the previous 2.4%. Although the data aligned with forecasts, it failed to ease market concerns – there is a possibility that prices may be rising again.

In the US, industrial production increased by 0.1% m/m in December, following no changes in November. On an annual basis, the indicator rose by 1.0%. The capacity utilisation rate in the US for December stood at 78.6%, unchanged from November.

Retail sales volume expanded by 0.6% m/m in December, surpassing the expected 0.4%. On a year-on-year basis, retail sales increased by 5.6%.

Here comes the most crucial part: the pro-inflationary signal is gaining strength, pointing to a potential future price acceleration. Consumers are managing high interest rates well, having adapted to them and spending easily.

It seems the Federal Reserve will need to consider any decision to reduce the cost of lending carefully.

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

EUR attempts to rise. Overview for 22.01.2024

The primary currency pair is strengthening on Monday. The current quote in EURUSD is 1.0904.

The Federal Reserve currently resembles parents on a long journey with small children, constantly answering "Are we there yet?" This question pertains to the interest rate. Everyone expects the rate to change, but when exactly will it happen? Is it sure to be in March? What if it is later? There are no answers to these questions yet.

At the meeting on 30-31 January, the Fed will keep things unchanged because there was insufficient time to gather inflation data. The current focus is on the March meeting.

Approximately half of the Fed's monetary policymakers believe rates can be decreased in the first half of 2024 if inflation falls more rapidly than expected. The other half of Fed officials hold a more conservative stance.

Much depends on operational data. The Fed unquestionably needs to see more evidence that the inflation trend is returning to 2% before deciding to ease monetary conditions.

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

GBP speculates about the rate. Overview for 24.01.2024

The British pound sterling remains in a sideways range against the US dollar. The current quote in GBPUSD is 1.2698.

While the pound maintains its balance against the USD, it has reached a four-month high against the EUR. This was influenced by the fact that the British economy appears as stable as before, and the Bank of England will decide on rate cuts later than anyone else.

Yesterday's published statistics showed that the UK budget deficit in December was below expectations. Theoretically, this allows for a reduction in tax rates in the new budget, which will come into effect in March.

The main question for GBP is how far the Bank of England will lag behind the Federal Reserve and the ECB regarding easing monetary policy.

The average stock market expectations reflect a 50% probability of a BoE interest rate cut in May, which may be too early for the regulator still concerned about high inflation in the country.

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

JPY remains in consolidation. Overview for 26.01.2024

The Japanese yen, paired with the US dollar, continues to balance in a sideways range. The current USDJPY exchange rate stands at 147.76.

A week ago, the instrument reached a peak at 148.80.

Core inflation in Tokyo in January dropped to 1.6% y/y, compared to the previous figure of 2.1% and a forecast of 1.9%. This is negative news for the JPY and the national regulator.

This week, price action has remained unstable since the Bank of Japan’s meeting. All market expectations regarding potential monetary policy tightening have shifted to April. The Bank of Japan may stabilise the interest rate at zero after maintaining a negative rate for many years. However, to accomplish this, the government must promptly address the earthquake's consequences in the country on 1 January.

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

JPY has moderately strengthened. Overview for 30.01.2024

The Japanese yen, paired with the US dollar, slightly strengthened by Tuesday. The current USDJPY exchange rate stands at 147.40. might reconsider its large-scale stimulus program in this scenario.

This morning saw the release of stronger-than-expected statistics on the employment market in Japan, reinforcing market expectations for the future tightening of monetary conditions by the Bank of Japan. might reconsider its large-scale stimulus program in this scenario.

The unemployment rate in the country fell to 2.4% in December from the previous 2.5%. might reconsider its large-scale stimulus program in this scenario.

The focus is now shifting to reports on retail sales, industrial production, and consumer confidence, set to be released later this week. might reconsider its large-scale stimulus program in this scenario.

Earlier, the yen saw a slight increase as BoJ governor Kazuo Ueda did not rule out sustained inflation rising to 2%, provided there was an increase in wages. The Bank of Japan might reconsider its large-scale stimulus program in this scenario.

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

JPY has plummeted. Overview for 05.02.2024

The Japanese yen, paired with the US dollar, finds itself in a weakened position. The current USDJPY exchange rate stands at 148.30.

The yen has retraced to a two-month low against the US currency due to the rally in the US dollar, triggered by a stronger-than-anticipated employment report in the US for January. This development prompted investors to reassess their predictions for interest rate cuts in the US, shifting the focus on this issue to May.

Meanwhile, the market is still debating whether the Bank of Japan will decide to move the interest rate into positive territory. Given recent data indicating the persistence of economic challenges in Japan, such measures may be postponed.

Industrial activity in Japan remains sluggish, while consumer spending is expanding at an overly slow pace. These conditions could be more conducive to embarking on fiscal tightening.

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

EURUSD begins correction. Overview for 07.02.2024

The primary currency pair on Wednesday appears more assured compared to yesterday. The current EURUSD exchange rate stands at 1.0763.

While the US dollar continues to hover near its three-month highs, its aggressive stance has softened. With a nearly 1.5% decrease over two days, it is time to pause.

Declining yields on US treasury bonds are alleviating pressure on the EURUSD pair.

Retail sales in the eurozone declined by 0.8% y/y in December following a 1.1% y/y drop the previous month, contrary to a forecasted more substantial decrease. This may serve as a localised inflationary indicator. Such developments represent a subtle negative for the EUR.

Little significant statistical data is being released presently. Today, attention should be directed towards December's US trade balance report.

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

AUD appears weak. Overview for 09.02.2024

The Australian dollar, paired with the US dollar, started declining again a couple of days after the RBA’s meeting. The current AUDUSD exchange rate stands at 0.6492.

So, the AUD has now dropped to its 12-week low against the US dollar. This development occurred within several days after the Reserve Bank of Australia meeting. Investors are still assessing the comments given by the CB’s manager.

Michele Bullock, the RBA’s chairperson, mentioned earlier that waiting until inflation dropped to 2.5% was unnecessary to begin decreasing the interest rate. In practice, the central bank is prepared to lower the loan cost, although the sentiment following its official meeting suggested otherwise.

The market is anticipating an interest rate reduction of 75 basis points this year.

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

AUD is in a sideways trend. Overview for 13.02.2024

The Australian dollar, paired with the US dollar, continues to hover. The current AUDUSD exchange rate stands at 0.6520.

According to today's data, business conditions in Australia have improved, with consumer confidence reaching a 20-month high. January's NAB business environment index came in at 6 points, below the long-term average. Business confidence improved, reaching 1 point compared to the previous zero value.

The market believes that interest rates will remain high for most of the year. However, there are concerns about price pressures amid significant global uncertainty.

According to Westpac observations, consumer sentiments have stabilised, with the indicator rising to 86 points. However, it must surpass 100 points to confirm the transition to robust optimism.

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

JPY is in the spotlight once again. Overview for 15.02.2024

The Japanese yen, paired with the US dollar, remains weak. The current USDJPY exchange rate stands at 150.14.

While JPY quotes have marginally rebounded from their lows, their performance is far from impressive. Market attention is heavily focused on the state of the Japanese economy, with today’s statistics confirming the economy's downturn into recession.

The country’s GDP in Q4 2023 declined by 0.4% y/y, following a 3.3% drop in the previous quarter. The primary forecast had implied a 1.4% y/y increase. Weak domestic demand and subdued capital expenditure are detrimental to the economy. Without activity from these pivotal drivers, the economy will fail to enter positive territory.

A recession is typically confirmed when GDP declines for two consecutive quarters, which is the case here.

There is a prevailing belief that the recession will intensify at the end of Q1 2024, which is negative news for the JPY. Under such circumstances, the Bank of Japan is unlikely to decide to tighten monetary mechanisms.

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