Summary:
- The US dollar has fallen by as much as 3.3%.
- GBP supported in the wake of Kwarteng plans to move up the publishing of his fiscal plan.
- RBA interest rate announcement.
Investors wonder if the USD has peaked
The market is reflecting bullish signals for this currency pair. Since the high of last Wednesday, the US dollar has fallen by as much as 3.3%, and many are wondering if the USD has peaked. Given how severely overbought the dollar had been, this retreat appears to be a trend correction without any indication of anything bigger. Price is getting close to some important support, though, and how it performs around those levels will be crucial for deciding on a short-term course of action.
EUR/USD Price Chart
GBP supported on Tuesday
In an effort to restore market confidence, Chancellor of the Exchequer Kwasi Kwarteng announced he was moving up the publishing of his fiscal plan, which gave the British Pound another lift. Originally slated for distribution on November 23, the plan will instead be given later this month, according to a story published late Monday. Importantly, a complete set of estimates from the Office for Budget Responsibility will be included with the proposal (OBR).
The developments ensured a late-session rise in the pound sterling on Monday, resulting in a 1.15% increase in the pound's value relative to the euro. The improvements coincide with the pound's larger resurgence as markets restore their faith in UK assets after a turbulent time.
EUR/GBP Price Chart
RBA weaker in the wake of interest rate announcement
The Australian Dollar fell when the Reserve Bank of Australia (RBA) announced a 25 basis point increase in interest rates, indicating that the peak in Australian interest rates was approaching. Markets anticipated another 50bp increase, but the action caught them off guard. The RBA stated in a statement that additional interest rate hikes were still necessary to reduce inflation, although economists now believe only one more increase is now expected.
GBP/AUD Price Chart
Sources: finance.yahoo.com, poundsterlinglive.com, dailyfx.com
