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News

Queen Elizabeth’s passing sends sterling lower

 

Friday, September 09, 2022, 8.45am GMT

The news shaping the markets today

Ukraine confirmed the launch of a counterattack in its Kharkiv region against Russia. However, the US dollar index traded lower this morning.


China’s annual inflation rate eased to 2.5% in August, from a 2-year high of 2.7% in July, which sent the CNY/USD pair higher in forex trading this morning.


New Zealand’s electronic card transactions climbed by 26.9% year-over-year to NZ$6,117 in August, compared to a 0.5% decline a month ago, lending support to the NZD/USD forex pair.


Colombia’s consumer confidence index climbed to -2.4 in August, from a reading of -10.4 in the previous month, which sent the COP/USD pair higher in forex trading this morning.


The Philippines reported a widening of its trade deficit to $5.93 billion in July, from $3.50 billion in the year-ago month. However, the PHP/USD forex pair remained broadly unchanged on the news.

 

What’s happening: The British pound came under pressure on Thursday after news of Queen Elizabeth’s passing.

What happened: Queen Elizabeth, Britain’s longest-reigning monarch, died at 96.

The news sent the sterling lower against the US dollar and the euro.

Why it matters: “The Queen died peacefully at Balmoral this afternoon,” Buckingham Palace said in a statement. Prince Charles succeeds the late Queen to become Britain’s new king.

The British pound had been trading lower even before the news broke. Markets supported the US dollar with hawkish comments from Federal Reserve Chairman Jerome Powell suggesting more rate hikes ahead.

Investors were also cautious as Liz Truss was named Britain’s new Prime Minister. Although PM Truss expressed her commitment to reducing surging energy costs, markets remain concerned about rising oil prices.

Truss said on Thursday that the average household energy bills would be capped at about £2,500 per annum for the next two years. However, crude prices climbed on Thursday after Russia’s President Vladimir Putin threatened to halt oil and gas exports if European buyers decide to impose caps on gas prices.

Although the GBP/USD pair rose as high as 1.1516 after the Queen’s passing news, the British currency came under pressure and ended the session lower. The EUR/GBP fore pair rose by 0.1% to 86.85.

What to watch: Traders will continue monitoring remarks from Fed officials regarding their monetary policy tightening, which impacts the GBP/USD forex pair. Markets will also keep an eye on rising crude oil prices.

The markets today

The Canadian dollar will be in focus today ahead of the jobs report

Context: The CAD/USD had risen on Thursday amid a rise in oil prices.

Details: On Wednesday, the Bank of Canada increased its key lending rate by 0.75 points to 3.25% to control inflation in the country. BoC officials also signalled further rate hikes in the months ahead.

The country’s central bank said that although inflation had eased from the peak reached in June, the figure was still much higher than its 2% target.

A rise in the price of crude oil, one of Canada’s major exports, also provided support to the CAD/USD forex pair. Crude prices recovered on Thursday after hitting a 7-month low in the previous trading session, after the US announced a surprise increase in oil inventories.

The EIA (Energy Information Administration) said that US crude stockpiles had climbed by 8.844 million barrels last week, representing the highest gain since April, amid a rise in imports and releases from government emergency reserves. The data was significantly better than market expectations of a decline of 300,000 barrels.

Data from the API (American Petroleum Institute) also showed a rise of 3.6 million barrels rise in inventories. Gasoline stockpiles also rose by 0.333 million barrels, while distillate inventories grew 0.095 million barrels last week.

Analysts widely project a rebound in the loonie over the course of 2023 the coming year, driven by higher interest rates.

The CAD/USD pair gained around 0.2% to settle at 1.3093 on Thursday, after hitting its weakest intraday level in approximately eight weeks at 1.3208 in the prior session.

Canada’s S&P/TSX Composite Index, meanwhile, gained 0.89% to settle at 19,413.00 on Thursday.

What to watch: Traders await the release of jobs data from Canada today, which is expected to provide some insights into the economy’s strength. The Canadian economy, which shed 30.6 thousand jobs in July, is expected to add 15 thousand jobs in August. The unemployment rate in Canada is expected to increase to 5% in August from 4.9% in the previous month.

Other Markets: European trading indices closed mostly higher on Thursday, with the FTSE 100, CAC 40 and STOXX Europe 600 Index up by 0.33%, 0.33% and 0.50%, respectively. However, the DAX 40 traded lower by 0.09% in the previous session.

Support & resistances for today

Technical Levels News Sentiment
USD/JPY – 143.58 and 143.80 Positive
EUR/JPY – 144.57 and 144.77 Negative
Silver – 18.690 and 18.762 Negative
Nasdaq 100 – 12272.16 and 12346.36 Negative
S&P 500 – 3984.55 and 4000.20 Positive

Market snapshot

Futures at 0400 (GMT)
EUR/USD (1.0078, 0.79%) Dow ($31,928, 0.21%) Brent ($89.60, 0.5%)
GBP/USD (1.1577, 0.63%) S&P500 ($4,016, 0.26%) WTI ($83.81, 0.3%)
USD/JPY (143.40, -0.49%) Nasdaq ($12,448, 0.41%) Gold ($1,730, 0.6%)

What else to watch today

Norway’s inflation rate, Romania’s balance of trade, France’s industrial production, Austria’s industrial production, Spain’s industrial production and consumer confidence indicator, Belgium’s industrial production, Ireland’s industrial production, Mexico’s industrial production, India’s value of deposits, foreign exchange reserves and value of loans, Brazil’s inflation rate, car production and auto sales, US wholesale inventories, as well as Russia’s gross domestic product, and inflation rate.

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