Create a vibrant Forex market analysis image featuring currency symbols like USD, GBP, JPY, and EUR. Include Federal reserved central banks around it chrismass trees,elements like a trading chart, economic calendar, and central bank-building icons, emphasizing volatility and market movements in a compelling layout. light and white color mode
Weekly Analysis
December 15, 2024

Forex Week Ahead – Dec 15, 2024 – Anticipating Central Bank Decisions and Key Economic Indicators

Key Insights

​This week is crucial for Forex market participants as major central banks finalize their year-end policy decisions.​ Anticipated moves from the Federal Reserve, Bank of Japan, and Bank of England will significantly impact currency valuations. The U.S. Federal Reserve is expected to implement a 25 basis point rate cut, reflecting a cautious approach amid persistent inflation and a solid labor market. Traders should also monitor the upcoming Purchasing Managers’ Index (PMI) releases and inflation data across several economies, as these will provide insight into economic health and central bank strategies.

Market Overview

Last week’s Forex market saw the U.S. Dollar Index (DXY) gain about 1.3%, reflecting a robust market response to ongoing economic data releases. The prevailing sentiment was supported by sticky inflation figures that complicate the Fed’s rate-cut plans. Key reports showed the U.S. Consumer Price Index (CPI) rose by 2.7% year-on-year, slightly surpassing forecasts and reinforcing the narrative of sustained inflation pressures. The Euro faced headwinds, remaining under 1.0500 against the Dollar due to uncertain economic conditions in the Eurozone, while the British Pound showed resilience amid better-than-expected economic data, supported by a hawkish stance from the Bank of England.

In global contexts, the Japanese Yen saw mixed reactions ahead of the BoJ’s decision, which is expected to maintain a dovish approach despite some upward pressure from strong domestic consumption data. The outlook for the Canadian Dollar is contingent on inflation reports following the Bank of Canada’s aggressive rate cut. Overall, the Forex market is likely to experience heightened volatility as investors digest the ramifications of central bank announcements and incoming economic data.

Currencies Summary

🇺🇸 U.S. Dollar (USD): Last week, the DXY posted steady gains bolstered by inflation data showing a 2.7% rise in CPI, thereby adding doubts to the possibility of aggressive rate cuts. The upcoming Fed meeting is crucial, as a dovish tone could lead to a pullback in USD momentum, presenting opportunities for currency traders.

🇬🇧 British Pound (GBP): The GBP remained strong as UK economic data outperformed expectations, particularly in labor market statistics. Market sentiment suggests that the BoE will likely maintain rates, providing the pound with ongoing support. The upcoming CPI and labor data this week will be vital in gauging the economic trajectory and the pound’s resilience.

🇪🇺 Euro (EUR): The Euro struggled against the advancing USD, maintaining pressure below the 1.0500 mark due to ongoing challenges within the Eurozone economies. Preliminary PMIs this week could signal further economic deterioration, impacting the Euro’s stability against the Dollar and other currencies.

🇯🇵 Japanese Yen (JPY): With expectations for no rate changes from the BoJ, the Yen faces a crucial period that may see further weakening unless there are unexpected hawkish signals from policymakers. The strength of the Yen remains intertwined with global economic trends and local inflation metrics.

🇨🇦 Canadian Dollar (CAD): The CAD is under scrutiny following a significant rate cut from the BoC last week. The Friday release of inflation data will be critical, as continued inflation could mitigate prospects for further rate cuts, affecting CAD valuations through investor confidence.

Upcoming Economic Calendar

The upcoming economic calendar features critical data releases such as the U.S. Core Personal Consumption Expenditures (PCE) Price Index on Friday, which is closely watched by the Fed. Additionally, preliminary PMIs from the Eurozone will be released on Monday, UK job data on Tuesday, and UK CPI on Wednesday. These events are essential as they provide insights into economic health and inflationary pressures, helping traders make informed decisions about their positions and strategies based on central bank outlooks.

Conclusion

This week’s Forex market is poised for significant movements due to central bank decisions and pivotal economic data releases. Traders should focus on how these factors will shape currency valuations and the broader economic landscape. Engaging with these insights can help traders navigate the potential volatility and make strategic trading decisions in a dynamic market environment.

Admin
0
GBP england inflation
Analysis
April 19, 2023

High UK inflation, helps to a rate hike

Today’s unexpectedly high CPI growth and the above-consensus reading on core inflation means is now more likely another next month 25bp rate hike from the BOE (Bank of England).

Although these data all indicate high inflation and higher-than-expected costs for the UK, it should be taken into account that UK inflation has been on a downward trend in the past few months.

core CPI stayed at 6.2%, having been expected to slip back towards 6%. Headline inflation unexpectedly stayed in double-digits at 10.1%, though that will start to change in April when the effect of last year’s electricity/gas price hike filters out of the annual comparison. We expect headline CPI to reach the 8% area next month, 5% by summer and roughly 3% around year-end on current trends.

The core CPI printed at 6.2% as expected (prev was 6%), while headline inflation was unexpectedly at 10.1%. However, the effect of last year’s electricity/gas price hike will filter out in April, and headline CPI is expected to reach 8% next month, 5% by summer, and roughly 3% around year-end.

Core CPI is much more important for BOE. Because service-sector inflation trends are more persistent and relevant over the long term for monetary policy.

Instead, it is core goods inflation that is proving much stickier than expected.

with the clear disinflationary trend in durable goods, We doubt high inflation will last given improving supply chains, lower input costs, as well as the lower orders-to-inventory ratios we’ve seen in the surveys over recent months. The Bank of England itself said something similar in its most recent set of meeting minutes.

There is a clear trend of disinflation in durable goods, and the improving supply chains and lower input costs suggest that high inflation will not last. The Bank of England also expressed a similar sentiment in their recent meeting minutes.

However, the data was high enough to push the pound higher across all currency pairs.
The thing is, in this situation, we cannot be very confident about the continued growth of the pound, and even with this positive sentiment, we cannot propose a decline for the pound. because all the data is priced until next BOE meeting, For now, patience is the best option.

Tags: 🏷️ , , ,

Leave a Reply

Admin
0
GBPUSD Pond dollar
Trade idea
April 7, 2023

GBPUSD BUY idea

GBP/USD needs balanced GDP data to climb.
The pound has been positive for several months, benefiting from the surprising economic strength of the UK. On the other hand, the US dollar has fallen behind, but the recent concerns about the global economy have moved the flows toward the safe dollar.
Markets are mostly bearish today, with the only catalyst for their movement being non-farm payroll data.
In order to see the correction of the US dollar, despite the disappointment, we need below $200,000 to force the Federal Reserve to stop raising interest rates. But not so weak that it can ensure the flow of orders in US dollars.
Weak wage growth will also help.
In such a case, GBPUSD has the space to increase levels up to 1.252
But to enter the purchase transaction, one should wait for the failure of the 1.245 level to enter the transaction at this level in the pullback.

GBPUSD long/Buy idea by Alisabbaghi on TradingView.com

Admin
0
uk-finance economy
Analysis
April 2, 2023

Positive signs for the UK economy

The UK economy grew in the last quarter of 2022 and avoided recession. England’s Office for National Statistics reported that gross domestic product, the value of all goods and services produced in England, increased by 0.6% in the fourth quarter of 2022, after falling by 0.1% in the previous quarter. This growth was caused by the increase in consumer spending and business investment, as well as the increase in exports.

A recession is when the economy shrinks for two consecutive quarters, which can lead to job losses and lower living standards. The UK economy has not fully recovered from the impact of the pandemic, but current growth is a positive sign, the Office for National Statistics said. This is good news for the job market and people in the UK who rely on a strong economy to thrive.

Admin
0
UK shopping inflation
News
March 22, 2023

UK inflation resurgence points to final 25bp rate hike this week

January’s dip in services inflation seems to have been a temporary one, and the bounce back in core CPI in February is unwelcome ahead of the Bank of England’s meeting this week. We expect a final 25bp hike on Thursday

A day before the Bank of England announces its latest decision, it is faced with an unwelcome resurgence in UK core inflation. Core CPI is back up at 6.2% (from 5.8% in January), and more importantly shows that the surprise dip in services CPI last month was a temporary one.

Policymakers have signaled this is an area they’re paying particular attention to, not least because service-sector inflation tends to be more ‘persistent’ (that is, trends tend to be more long-lasting than for goods) and less volatile. Inflation in hospitality is proving particularly sticky.

The caveat here is that the Bank has indicated it is paying less attention to any one single indicator, and is focused more on a broader definition of “inflation persistence” and price-setting behavior. And in general, the data has been encouraging over the past month or so. The Bank’s own Decision Maker Panel survey of businesses points to less aggressive price and wage rises in the pipeline, and the official wage data finally appears to be gradually easing.

We suspect the Bank will want to see more evidence before ending its rate hike cycle entirely, and that’s particularly true after these latest inflation numbers. We’re still narrowly expecting a 25bp hike on Thursday, and we think the BoE will take a leaf out of the European Central Bank’s book and reiterate that it has the tools available if needed to tackle financial stability, thereby allowing monetary policy to focus on inflation-fighting. This was the mantra it adopted last October/November during the mini-budget and LDI pensions fallout in UK markets.

However, assuming the broader inflation data continues to point to an easing in pipeline pressures, then we suspect the committee will be comfortable with pausing by the time of the next meeting in May.

source: ing

Admin
0
Privacy Settings
We use cookies to enhance your experience while using our website. If you are using our Services via a browser you can restrict, block or remove cookies through your web browser settings. We also use content and scripts from third parties that may use tracking technologies. You can selectively provide your consent below to allow such third-party embeds. For complete information about the cookies we use, data we collect, and how we process them, please check our Privacy Policy
Youtube
Consent to display content from - Youtube
Vimeo
Consent to display content from - Vimeo
Google Maps
Consent to display content from - Google
Save
We use cookies to enhance your experience while using our website. To learn more about the cookies we use and the data we collect, please check our Privacy Settings.
I Accept