Euro: Is There A Broader Correction To Be Feared? Aussie Got Little Support From The RBA Decision
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The financial markets are already starting to slow down, and currently I have no major events on my calendar that could affect the movement of currency pairs. For now, the currency pairs are waiting for next week, where, among others, the Fed and the ECB will decide on interest rates.
- The EUR/USD, recorded a correction this morning.
- The British pound had exactly the same background as the euro.
- The RBA raised the spot rate by 25 basis points to a 10-year high.
- The yen did not get support from the Governor of the Bank of Japan Kuroda
EUR/USD - The overall picture of pray remains positive
The EUR/USD exchange rate strengthened yesterday, recorded a correction this morning. Currently, the pair is trading around 1.0500. The overall picture of pray remains positive. Now the question for EUR/USD as the correction started yesterday is whether this is just a respite or is there a broader correction to be feared.
Retail sales in Europe continue to fall. It came down to -2.7% in October, which is far worse than the expected. US Services PMI, Industry Orders and ISM Services PMI exceeded expectations. These reports added support to the US Dollar but contributed to the decline of the Euro/Dollar pair.
The macroeconomic calendar is completely empty today, so market players have nothing to watch.
GBP/USD started a correction
The GBP/USD pair also fell. It is currently trading around 1.2200.
On Monday, the GBP/USD currency pair also started a correction. The British pound had exactly the same background as the euro, except for the retail sales report, which was only for the European Union. In addition, the neutral index of business activity was also published in the UK.
There won't be many significant events in either the UK or the US this week. Yesterday, the US ISM services sector published a quite important business activity index, which led to the strengthening of the dollar. Therefore, the correction is justified.
AUD/USD Pair gets a lot of support
Currently, the appreciation of AUD/USD is slightly decreasing.
The US dollar continued its rebound on Tuesday morning against its main competitors in the foreign exchange market, but not against the Australian Dollar, which was supported by the RBA decision.
The Reserve Bank of Australia raised rates for the eighth time as part of the current monetary policy tightening cycle, with an accompanying statement that was slightly less dovish than market participants expected. The Reserve Bank of Australia matched market forecasts by announcing a 25 basis point rate hike to 3.10%.
The currency pair is not only supported by events in its economy but also by events in China. Australia and China cooperate economically, therefore its influence is visible and justified. So reports China will soon reduce its strict Zero-COVID policy seemed to support market optimism as well as AUD/USD bulls.
USD/JPY
USD/JPY continued its gains in the Asian session, followed by a slight correction.
Yesterday, the dollar posted its biggest daily gain against the yen since June. Bank of Japan Governor Kuroda didn't help the yen overnight with dovish comments about aiming for a sustained and stable 2% inflation target.
Sources: dailyfx.com, investing.com
