Market Expectations For ECB To Hike Interest Rates Grow (EUR/USD), Sunak’s Move To Stimulate The UK Economy Offers GBP Support(EUR/GBP), Weaker USD boosts AUD (AUD/USD), USD/JPY)
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Summary:
- Euro strengthening against the USD as market expectations for rising interest rates grow.
- GBP strengthened on Friday.
- Too soon to assume bearish USD sentiment.
ECB interest rate expectations offer EUR support
The market is reflecting bullish signals for this currency pair. The Euro has been strengthening recently due to growing expectations of the European Central Bank rising the interest rates. The market is now anticipating a 100bp hike in the rates starting in July.
At this point in time it is difficult to assume that the US Dollar will remain weak. The market has seen expectations of Fed interest rate hikes decrease, however, the increasing inflation seems to be keeping the Fed on track whilst tensions in China and between Russia and the Ukraine continue.
EUR/USD Price Chart
Sunak’s giveaway offers support to GBP
The market is reflecting mixed market sentiment for this currency pair. On Thursday Rishi Sunak announced that the UK government would be giving GBP15 billion to UK households in an attempt to boost consumer attitudes. On Friday the Pound Sterling strengthened against the euro as the move offered GBP support, in addition UK consumers are instilled with more confidence in spending.
In addition, the windfall tax that was implemented against oil companies has also offered GBP support.
EUR/GBP Price Chart
AUD is boosted by weaker USD
Market sentiment for this currency pair is reflecting bullish signals. Investor confidence in the Australian Dollar comes from a combination of a recovery in risk assets and weaker US Dollar in the wake of a Fed member hinting that there could be a pause in tightening monetary policy in September.
AUD/USD Price Chart
JPY underperforms
The market sentiment for this currency pair is reflecting bullish signals. Both the US Dollar and Japanese Yen were market underperformers during the Asian session. The US Dollar is, however, outperforming the Yen.
USD/JPY Price Chart
Sources: finance.yahoo.com, dailyfx.com, poundsterlinglive.com
