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The British pound sterling to Brazilian real exchange rate is bound to continue its uphill climb as pound traders gain more confidence from Brexit related news. Aside from that, the pound is also getting support from the recent decision of the Bank of England to hold on to current rates of 0.75% in its last monetary policy meeting. However, the pair will have a tough fight before it reaches resistance as the Brexit also plays as a double edge sword for the pound. The divorce stalemate takes its toll on local investments that could later have a domino effect on the currency. Meanwhile, the Brazilian IPCA inflation index rebounded to 0.07 from last reading’s -0.01%. Just last month, the country’s inflation hit 1-year lows, raising concerns for local traders. Brazil will hold its pre-salt oil auction, giving the Brazilian government almost $27 billion in signing bonuses alone, giving the country’s sluggish economy a much-needed boost.
The single currency is trying to hold on to current levels against the Czech koruna, however, the heavily German data reliant single currency could soon tumble. The koruna continues to get strength from EC news, placing the euro in a tough spot in sessions. The European Commission recently released its economic activity forecasts, wherein the organization expects the Czech Republic to have the lowest unemployment rate in the whole European Union. Prague is expected to only have a 2.2% to 2.3% turnout in its unemployment record in the next two years. Although, the recent decision of the Czech Parliament’s lower house to add more taxes could give the euro some breathing space as the hike can fend off investors. Just yesterday, the minority government reached its planned budget revenues for the year 2020, this will include tax hikes on tobacco, alcohol, and other items that will bring in additional 110 billion koruna to the government.
The mood for the NZDJPY looks good as the Japanese manufacturing industry is at its bleakest in over 6 years, since 2013. Japanese manufacturers have turned more pessimistic this November and the country’s service sector’s hopes also fell into three-year lows according to a poll on companies and investors. Japanese yen traders are concerned for the outlook of the currency as it gets jammed in a triple whammy of economic disasters – the global economic slowdown brought by trade disputes, typhoons hitting the country, and the aftereffects of the October 1 national sales tax hike. The investors expect that the glooming outlook of the country pushes the Japanese Prime Minister and central bank to release economic stimulus. Fortunately for the yen, the kiwi is also struggling due to investors raising their expectations for a rate slash by the RBNZ next week. A local survey showed that from 50%, 70% of traders now expect a cut after the unemployment rate rose.
Despite falling into a recession, the Hong Kong dollar still stands stronger than the US dollar, this is of course after the United States Federal Reserve slashed its interest rate on the last week of October. As the political unrest rocks the country’s economy, HK plunged into a recession, the first in a decade this third quarter. The country’s economy declined to 3.2% according to government data released earlier today. The Hong Kong Monetary Authority said earlier this Thursday that there is still no capital outflow from the Chinese special administrative region’s banking system. The HKMA added that the local currency is still significantly stable as it can still hold itself in trading sessions. The USDHKD’s downfall can be traced after the US fed slashed its interest rates by 25 basis points to a range of 1.5% to 1.75%. The benchmark rate cut was part of the midcycle adjustment according to Fed Chairman Jerome Powell.