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It’s suspected that as long as there is no US-China trade agreement, the Japanese yen will still continue steadily to pull the EURJPY pair lower in sessions. Aside from that, the Eurozone’s economic growth remains stagnant, registering no growth after the German PMI shows that business conditions in Berlin continue to get worse; definitely not a good sign for the single currency. EURJPY traders are starting the week with a very cautious approach as they digest the latest news about the US-China trade agreement from Saturday and weighing the outlook for the bloc’s economy in the near term. However, there are strong hopes that the single currency won’t plummet below support levels as the European Central Bank continues its bond-buying program. The stimulus measures of the bloc’s central bank haven’t given any positive signs of effectiveness since it started.
The small bullish reversal in today’s trading is brought by the short-term strength that the British pound sterling accumulated from the weekend’s headlines regarding Brexit. Just yesterday, the British Prime Minister Boris Johnson promised to deliver the controversial UK-EU divorce before the Christmas period. The short-term weakness of the New Zealand dollar also came from the trade war uncertainties. But still, the New Zealand dollar is expected to continue to gradually drag the British pound lower as traders are confident that the Reserve Bank of New Zealand will hold on to its current interest rates, this is of course after seeing that the country’s economic outlook still looks bright. The Organization for Economic Cooperation and Development or OECD released its economic outlook report last week. The OECD projects that New Zealand’s economy will grow between 2.4% and 2.7% from 2019 to 2021.
The US dollar to Hungarian forint pair is expected to inch past its resistance before the year ends as the HUF continues to be Europe’s second worst-performing currency. Not a flattering title indeed. In fact, the Hungarian forint’s losses against the greenback are greatly due to the insistence of the Hungarian central bank to hold on to its ultra-loose monetary policy. Just last week, the National Bank of Hungary opted to leave its interest rates unchanged, as expected, at 0.9% and its overnight deposit rate at -0.05%. This comes in line with forecasts of unchanged rates until 2021. The NBH kept its accommodative monetary stance and has emphasized its view that the struggling economic performance of Europe will also keep domestic prices intact. The Hungarian central bank is aiming to reach 3% inflation growth. The tax-adjusted core inflation rate of the country went up from 3.4% to 3.7% in October.
Since the USDSEK pair had a bearish reversal two weeks ago, the pair has had trouble regaining its footing as the Swedish krona steadily gains traction. It appears that the Swedish krona has an empty economic calendar on its end, so traders will have to look for different fundamentals elsewhere to drive the currency to gain even further against the US dollar. Meanwhile, the US dollar is still struggling to find momentum as traders remain extra vigilant regarding trade war news. Last Saturday, the United States National Security Adviser Robert O’Brien said during a security conference in Halifax that there was still a possibility for the US and China to reach an agreement before the year ends. However, O’Brien added that the US President still wouldn’t turn a blind eye on the events in Hong Kong. This drew in concerns considering the US Senate recently passed the Hong Kong Human Rights and Democracy bill.