3 min to read
The USDJPY pair has been trading in the lower 149 yen range
in today's New York foreign exchange market.
“In today’s New York foreign exchange market, the USD/JPY pair has been trading in the lower 149 yen range”
During the afternoon session, the release of the FOMC meeting minutes caused a slight dip in the value of the dollar. These minutes underscore the unanimous consensus among committee members to proceed with caution and advocate for the retention of restrictive interest rates in the near term. While there are indications hinting at a possible conclusion of the rate hike cycle, the Federal Reserve (FRB) has also made it clear that they intend to uphold the current high-interest rate environment.
The market reacted to the release of the September US Producer Price Index (PPI) today, which exceeded expectations, primarily due to the surge in gasoline prices. Although there was an initial uptick in the dollar following the announcement, this response was short-lived.
In recent days, market sentiment has been leaning towards the expectation that the US rate hike cycle might be coming to an end, influenced by statements from FRB officials. While today’s PPI data does not directly validate these expectations, market sentiment seems to align with the notion that the rate hike cycle has indeed concluded.
Looking ahead, tomorrow’s release of the US Consumer Price Index (CPI) will be eagerly anticipated to gauge whether it confirms the prevailing market consensus that the current rate hike cycle has ended while keeping interest rates elevated.
In light of these developments, the dollar’s recent vigor has slightly subsided. However, it is widely believed that a substantial shift towards a weakening trend in the dollar is improbable unless the expectations for a rate cut become prominent.
The EUR/USD pair is currently navigating an uncertain phase, hovering around the 1.06-dollar mark. After surpassing the 21-day moving average, there are indications that the pair may embark on a rebound. Nevertheless, given the economic uncertainties within the Eurozone, the prospects for significant gains by the euro appear challenging. The prevailing sentiment suggests that a self-sustained euro rebound is not imminent.
Today, the final figures for Germany’s September Harmonized Index of Consumer Prices (HICP) were released, and these figures remained in line with the initial values. In Germany, a persistent inflation slowdown is expected to continue until 2024. The recent deceleration in September is primarily attributed to the base effect, reflecting the normalization of prices following the subsidized public transportation offer that was implemented from June to August the previous year. Consequently, transportation service prices have declined by 3.9% compared to the previous year, after the substantial 19.8% increase witnessed in August.
However, it is highly probable that Germany’s inflation will continue its gradual decline, signifying the initiation of this trend.
The GBP/USD pair has exhibited fluctuations within the 1.22-dollar range, with movement observed above the 21-day moving average in the mid-1.22-dollar area, fostering expectations of a potential rebound. However, in a market where the anticipation of a stronger dollar persists, it is anticipated that a substantial self-sustained rebound may remain elusive.
On the contrary, the pound has been attracting buying interest against the euro. Given the weak economic data emerging from the Eurozone, it is a challenging prospect for the pound to become overly bearish. It is noteworthy that the International Monetary Fund (IMF) recommended just yesterday that the Bank of England should implement one more rate hike to conclude the rate-cut cycle. Nevertheless, there are voices in the market suggesting that this cycle may have already drawn to a close, in alignment with the European Central Bank (ECB).
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