EUR/USD Pair Remains Within Its Horizontal Trading Range, The Aussie Failed To Break The Resistance At 0.68
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The dollar weakens on Thursday after gaining in the previous session, and investors were nervous towards the end of the year as initial optimism about China reopening has faded.
China's reopening was initially met with applause in global markets, giving a boost to the commodity complex and risk assets in general, however, the rising number of COVID cases flooded local Chinese hospitals, adding to the level of concern for a positive reopening.
What's more, the Asian stock market is also influenced by information from China. Asian stocks weakened slightly on Thursday as soaring COVID cases in China alarmed investors and cast doubt on the chances of a quick recovery for the world's second-largest economy after the easing of stringent COVID-related restrictions.
From the USD's perspective, labor market data is scheduled for later today. Weekly initial jobless claims will be the only data appearing in the US economic report. Although expectations are slightly weaker than the previous reading, if the actual data is in line with these forecasts, the impact on the dollar breakout should be minimal given the minor changes.
USD/JPY
The Bank of Japan announced an unplanned bond purchase operation for the second time during the day, trying to limit yields. The Central Bank offered purchases of unlimited amounts of 2- and 5-year bills and a daily offer to buy 10-year debt at 0.5%. The BoJ faces an increasing challenge as it plans to increase its planned bond purchases in Q1 2023 by 23%.
Although yesterday during the US session USD/JPY exceeded 134, today it is trading well below 133.80.
AUD/USD
The uplifting Australian dollar has danced to the rhythm of global factors recently.
The Australian and New Zealand dollars struggled to recover on Thursday after failing to sustain overnight gains as concerns over the global interest rate outlook outweighed optimism over China easing COVID-19 restrictions. Faced with a scarcity of major market catalysts, the Australian pair (AUD/USD) lay flat.
Thus, the Aussie failed to break the resistance at around 68. Today, the pair is trading above 0.6710
The futures market now suggests the Reserve Bank of Australia may be more aggressive than previously thought as traders price in a higher peak of around 4% by September next year, down from 3.6% just a week ago. They also suspect the RBA will not cut rates until 2024.
EUR/USD
The EUR/USD pair traded mostly in the range of 1.0620-1.0630 in the morning, sometimes falling below the lower limit. Currently, the pair is trading around 1.0640.
EUR/USD fell below 1.0650 in the second half of the week as the risk aversion of the market environment helped the US dollar find demand. However, the pair remains within its horizontal trading range and the technical outlook offers no directional guidance for now.
GBP/USD
GBP/USD managed to rebound and climb towards 1.2050 early Thursday after falling to the 1.2000 area late Wednesday. The pair's short-term technical picture suggests buyers are still hesitant to commit to a steady recovery.
The cable pair trades below $1.21. Mostly trading on the daily chart is below 1.2050.
Source: investing.com, dailyfx.com, finance.yahoo.com
