Articles tagged with "currency-pair-of-the-week"

The higher oil goes, the worse it may get for the euro, which, to be fair, has performed well during the more recent rises in oil prices compared to earlier this year. Still, the risks to the near EUR/USD forecast remains tilted lower as the pair tests the 200-day average ahead of a pivotal week.

Ultimately, unless yields start to head lower, the pressure will likely remain on the US dollar, with currencies of countries with better fiscal discipline, like the Norwegian Krone and Swiss franc, likely to remain supported. This makes the USD/NOK our favourite currency to take advantage of the slump in the dollar.

There will be some key data from the UK to watch this week, which could set the tone for the pound, while the macro calendar in the US is a lot quieter. Once again, much of the market’s direction may therefore come down to crude oil. The greenback has been weighed down in recent weeks by a softer run of data which has reduced expectations of a Federal Reserve rate hike in September.

Friday’s US employment report was the first of four major pieces of economic data due before the Federal Reserve’s September meeting. The figures delivered a significant downside surprise, prompting markets to scale back expectations of a September rate hike to around 44%, from above 55% ahead of the release.

Energy prices are once again setting the tone for currency markets, with the renewed tensions in the Middle East reinforcing the dollar’s appeal while weighing on low-yielding and energy-importing currencies. As oil and natural gas prices climb, investors are becoming increasingly reluctant to price out further Fed tightening, providing the greenback with another tailwind.

US investors will be back from a long weekend break today. We have some important economic data to look forward to this week following that disappointing jobs report on Thursday, which triggered a bit of dollar selling. But the greenback has started this week on the front foot again, with the USD/JPY surging back above 162.00 on disappointment there was no signs of intervention on Friday as some, including us, had expected.

The FX markets are bracing for a potentially defining week, after a two-week rally for the dollar on the back of a hawkish Fed. While one can make a case for a euro comeback amid the recent plunge in oil prices, which could put pressure on the dollar, so far this hasn’t been the case. This is largely due to a hawkish Fed and with the US data remaining largely positive.

The euro started the week on a softer footing against the dollar, surrendering part of Friday’s rebound as investors continued to digest last week’s shift in Federal Reserve messaging. Although the EUR/USD managed to stabilise towards the end of the previous week, the overall backdrop remains supportive for the dollar after policymakers at the Fed signalled a more hawkish policy outlook than markets had anticipated, with markets now pricing some 40-45 basis points of hikes by the end of the year.

The confirmation of a ceasefire sparked a broad rally across risk assets as oil prices, bond yields and the US dollar all fell back. Yet, the USD/JPY remained stubbornly strong above 16.00 amid record short bets against the yen ahead of a busy week for central banks. With both the BoJ and Fed rate decisions to come, amid a backdrop of easing geopolitical risks and lower oil prices, the USD/JPY forecast could take a bearish tilt this week. It is also now a more favourable time for the Japanese government to intervene again, if monetary policy doesn’t do the trick.

Following last week’s surge in the US dollar, there was some further upside initially and that caused the EUR/USD to fall to 1.15 handle first thing this morning, before bouncing back. The euro initially fell further as oil prices extended their gains on fresh escalation in the Middle East conflict with Iran and Israel exchanging fires. However, the moves unwound slightly by late morning London trade as Trump said that Israel and Iran were looking to do an immediate ceasefire.

Just like last week, investors were slightly alarmed by the latest pick up in tensions in the Middle East, causing oil prices to rebound around 3% on the day, even if global equity markets were once again ignoring the noise.

Following the long bank holiday weekend, investors are slightly alarmed by the latest US military actions in Iran, causing oil prices to rebound around 4% from their lows hit on Monday (and around 2% on the day). That, in turn, has seen index cash and futures trim a good chunk of their gains made since markets closed on Friday.