Hey Valutraders! Did you see the fall in USD? Don’t be fooled!
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I’m Brad Alexander and in this week’s Market Blast Fundamentals let’s take a look at GBPUSD, WTI (USOil), Gold (XAUUSD), the USD Index, the NASDAQ (US100), CHFJPY, and USDCHF.
Starting late last week, the USD started to fall and the most prominent pair was USDCHF.
CHF is almost the only safe-haven left, with the extreme weakness of JPY, and we will look at that in a minute.
Overall, the USD Index tells the same story and you may be asking, “Why?”
The answer is in the stock market and this chart on the NASDAQ tells the story of investor optimism, shifting cash into equities.
If we put the two charts (the NASDAQ and the USD Index) together, we can see the inverse correlation.
However, many analysts feel that this USD weakness is temporary and that the Fed will ignore tomorrow’s CPI figures and severely raise Interest Rates next week.
Price action on Gold rose based on the weaker USD and we will look at the technical aspects tomorrow.
The weakness of the JPY is still a big concern in Japan as global Interest Rate rises, by other central banks, make the JPY quite unattractive for investors.
Both CHF and JPY have been considered to be Safe-Havens for many years but this monthly chart on CHFJPY, starting in 1998, shows just how bad the situation is.
We see a continuing downtrend on WTI as global demand may be in doubt and many countries, including the G-7, are encouraging a price cap on Russian Crude with which Russia may have no choice.
The UK economy is currently in great difficulty, with inflation running very high, and the new Prime Minister, Liz Truss, wants to make some radical changes to get the situation under control.
However, she and Andrew Bailey, are postponing their plans and Interest Rate rises, as the nation is in mourning over the death of Queen Elizabeth II.
The Bank of England will meet next week, the day after the Fed.
Watch out for the fireworks.
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