The reduction of fears related to a possible frosty winter may support the euro exchange rate
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The situation of currency pairs is affected by macroeconomic and political events. In the Asian market, developments in China, which has recently been struggling with an increase in coronavirus infections, are of particular importance. December is particularly important because the last decisions regarding interest rates will be made this year, which will affect the forex market.
- Decreased winter fears may support the euro.
- The looming recession in the UK is starting to take its toll on the pound.
- The Aussie awaiting RBA decision
- Positive Japan services PMI
EUR/USD
The EUR/USD pair is at its highest level in months. The upward trend in recent weeks has been strong. ING FX experts remain bearish on the euro/dollar exchange rate until the end of the year, but there are experts who believe that the exchange rate will continue its upward move.
It is worth paying attention to the readings of PMI indices for services that will be released today from many countries and the already mentioned ISM data from the US. Today's readings for the EU were weaker than expected, but it seems that the market is waiting for the release of the US report.
The news related to energy issues in the euro zone may be loud this week. The price cap of the G7 is $60. per barrel, and Urals oil is traded at $10. below this ceiling. Moscow has already announced that it prefers to limit production rather than sell at a fixed price. However, the reduction of fears related to a possible frosty winter may support the euro exchange rate.
GBP/USD
The pound/dollar exchange rate increased its gains in November. The recent rebound in the pound/dollar (GBP/USD) has regained momentum, but Monday morning brings some break to the rally.
The final service PMI reading for November published today was in line with expectations (48.8). More and more serious opinions announcing a more significant and prolonged recession in the British economy may start to show up in the pound's quotations. Especially that the market will also price in scenarios regarding the decision of the Bank of England on the level of interest rates. The Bank of England will decide next week's rate on Thursday (December 15), the same day as the ECB and a day later than the Federal Reserve (December 14).
AUD/USD
AUD/USD refreshed to a seven-week high above 0.6850. Now turned down, sentiment remains bearish.
The AUD/USD exchange rate is susceptible to the economic situation in the US and Australia. The situation in China is of great importance for the strength of the Australian dollar. Announcement of easing covid restrictions in China may support the situation of the Australian dollar. Markets are expecting the Reserve Bank of Australia to keep the cash rate on hold at 2.85% after inflation slowed sharply in October. The RBA will be deciding on rates tomorrow. The market is pretty much 50/50 on a 25 bp bump up.
Read next: Chinese And European Services PMIs Fell| FXMAG.COM
USD/JPY
USD/JPY bearish movement developed and the currency pair is moving to its lowest level since August.
The USD/JPY pair is very liquid as both currencies are among the top reserve currencies in the world. As with other major currency pairs, USD/JPY can also be sensitive to macroeconomic data from the US and Japan. Today's reading for PMI services in Japan was optimistic.
Source: finance.yahoo.com, investing.com,
