– Written by


Frank Davies

STORY LINK Euro to Dollar Rate Forecast: EUR/USD Needs “Softer Data” for 1.16+

The Euro to Dollar exchange rate (EUR/USD) briefly broke above 1.16 before steadying as investors positioned for upcoming US employment figures that could determine whether the Federal Reserve delivers another December rate cut.

Analysts, including ING and MUFG, expect further dollar softness if data confirms a slowing labour market.

EUR/USD Forecasts: 10-Day Highs

UoB commented; “The price movements have resulted in an increase in upward momentum, but it is not sufficient to indicate a sustained rise. Today, we continue to expect EUR to trade in a range, likely between 1.1560 and 1.1610.”

According to ING; “We’re happy that EUR/USD is trading closer to 1.16 than 1.15, but will probably require some softer US data to justify a move well above 1.16 now.”

The bank has a year-end EUR/USD target of 1.18.

On Wednesday, the House of Representatives is due to vote on the resolution which would allow a re-opening of the government.

There are expectations that it will be passed, although the vote is liable to be close.

ING commented; “If approved, that means the US government can reopen, perhaps on Friday, and that the September NFP jobs report (potentially USD negative) can be released early next week.”

Rabobank added; “The Employment Report for September may be one of the first to be published, because it was originally scheduled for October 3, so it was likely almost or completely finished. This will be lagging data, but it could confirm the continued labor market weakness assumed by the FOMC and shown in other labor market data for September.”

On Tuesday, ADP data released data which indicated private-sector job losses of 11,000 per week during October.

MUFG commented; “The drop in the dollar underlined the sensitivity to private sector employment that could shape the NFP data to be released.”

The bank added; “The jobs data will be key to whether the Fed can continue to cut and is an important element of our view that the dollar can weaken notably as we approach the end of the year.”

At this stage, markets are pricing in around a 63% chance of a December rate cut with the dollar responding to any shift in expectations.

Euro-Zone data has not triggered any positive assessment of the economic outlook.

The German ZEW investor confidence index edged lower to 38.5 for November from 39.3 previously, but wider Euro-Zone data posted a net gain.

Danske Bank commented on the German data; “The report thus indicates that the economy is still at a weak footing and the expectation for an improvement is weakening.”

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The Japanese yen continued its downtrend this week, moving to its lowest level since February this year. The USD/JPY exchange rate was trading at 154.70, up sharply from the year-to-date low of 139.86. So, what next go the yen and will the Bank of Japan intervene?

Why the Japanese yen is failing 

The Japanese yen has come under renewed pressure in the past few months, making it one of the worst-performing currencies in the developed world. 

The main reason for the ongoing crash is the recent political changes in the country that saw Sanae Takaichi become the first woman prime minister. 

Takaichi is widely seen as a growth-oriented premier like Shinzo Abe. She has already called for parliament to provide more stimulus funds worth billions of dollars to boost the economy. Additional funds in the economy normally leads to more currency weakness over time. 

The Japanese yen has also dropped because of the Bank of Japan (BoJ), which has been reluctant to hike interest rates as most economists were expecting. Recent inflation numbers show that the country does not need to hike rates as inflation is moving in the right direction.

The most recent report showed that the headline Consumer Price Index (CPI) rose to 2.8% in September from the previous 2.7%. Economists expect the upcoming figure to come in at 2.6%, much lower than the January high of 4.0%.

The ongoing Japanese yen has pros and cons for the country. On the positive side, it is making Japan a relatively cheaper destination for international tourists. It is also benefiting its exporters, especially those selling goods to the United States, where Donald Trump left tariffs on all imports.

On the other hand, a weaker yen can lead to higher inflation since the country imports most of its supplies, like crude oil and natural gas. At the same time, the country could see higher tariffs as Trump has always criticized it for maintaining a weak currency.

Japan has tools to intervene when the yen crashes too much. It can hike interest rates or deploy some of its $1.15 trillion in foreign currency to intervene. For example, it intervened last yrear by buying yen and selling dollars.

The USD/JPY exchange rate will also react to developments in the United States, where the government shutdown is expected to end this week. The House of Representatives will vote for this bill today, a move that will reopen the government.

The end of the government shutdown means that top statistics agencies will start publishing economic numbers on the labor market and inflation. 

USD/JPY technical analysis 

The daily timeframe chart shows that the USD to JPY exchange rate has been in a strong bull run in the past few months. It has jumped from a low of 139.86 in April to 154.55 today. The current level is the highest point since February this year. 

The pair has recently moved above the important resistance level at 153.12, the highest point in October. It formed a golden cross pattern in October as the 50-day and 200-day Exponential Moving Averages (EMA) crossed each other.

Top oscillators like the Relative Strength Index (RSI) and the MACD indicators have pointed upwards. Therefore, the most likely scenario is where the pair keeps rising as bulls target the next key resistance level at 156. A move below the support at 153 will invalidate the bullish outlook.

The post USD/JPY forecast: here’s why the Japanese yen is crashing appeared first on Invezz

Platinum price kept its fluctuation below $1605.00 barrier, forcing it to provide new nixed trading by its continued fluctuation near $1580.00, reminding you that the stability above the sideways track’s support at $1520.00 and the continuation of providing positive momentum by the main indicators, these factors make us keep the bullish suggestion, to expect surpassing the current barrier by recording new gains by its rally towards $1642.00 and $1660.00.

While the decline below the current support and providing negative close, will confirm activating the bearish corrective track, to expect suffering several losses by reaching $1485.00 reaching the next support at $1440.00.

The expected trading range for today is between $1545.00 and$1642.00

Trend forecast: Bullish

– Written by


Tim Boyer

STORY LINK Pound-to-Dollar Forecast: GBP/USD Recovery Halts on Dovish BoE Outlook

The British Pound’s recent rebound faltered after disappointing UK jobs data pushed the Pound-to-Dollar exchange rate down toward 1.31, with analysts warning that a softening labour market gives the BoE room to cut rates again next month.

MUFG and ING both see further GBP losses ahead with a December move as increasingly likely.

GBP/USD Forecasts: Recovery Halted

Pound Sterling was hurt on Tuesday by increased speculation of a December Bank of England (BoE) interest rate cut following weaker-than-expected UK jobs data.

The Pound to Dollar (GBP/USD) exchange rate dipped sharply to 1.3120 from highs near 1.3180 ahead of the data with the Pound struggling to secure any benefit from favour able risk conditions and a fresh record high in the FTSE 100 index.

Crucial Pound support remains at 1.30. ING has a year-end GBP/USD forecast of 1.34 as the dollar loses ground.

The UK jobs data was significantly weaker than expected with the unemployment rate increasing to a fresh 4-year high of 5.0% in the three-months to September from 4.8% previously and above consensus forecasts of 4.9%.

The ONS also reported a decline in payrolls of 32,000 for October, matching a final 32,000 retreat for September.

There was also a small net slowdown in underlying wages growth to 4.6% from 4.7%.

According to MUFG; “The data suggests that the downturn in the labour market is getting worse ahead of the Autumn Statement.”

Markets are now more convinced that the BoE will cut rates again in December.

MUFG added; “Loosening labour market conditions should give the BoE more confidence that wage growth will continue to slow dampening upside inflation risks. The weak labour market report supports our forecast for the BoE to cut rates next month.”

There will be potential implications for politics and the budget with pressure for measures to support the jobs market.

Capital Economics UK economist Ashley Webb commented; “The 32,000 fall in payroll employment in October was the eleventh monthly decline over the past year and suggests that businesses continued to trim headcounts after the Chancellor announced the rises in payroll taxes and the minimum wage in last year’s October Budget.”

According to ING; “Now, both inflation and jobs data are starting to point down, and we think the Autumn Budget’s tax hikes will provide the final argument for a cut in December.”

On Monday, the US Senate voted to end the government shutdown and it will now move to the House of Representatives.

Assuming there is a near-term re-opening, there is the potential for some relief surrounding consumer confidence while the focus will switch to postponed data releases with a particular focus on the jobs market.

ING commented; “a resumption of data releases in the US does carry non-negligible downside risks to the dollar. In our view, the latter factors should prevail, as we think markets are underestimating the downside risks for the labour market, US front-end rates and – by extension – the dollar into year-end.”

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TAGS: Pound Dollar Forecasts