This week’s Forex market was dominated by the anticipation of rate decisions from the central banks overseeing the US Dollar, Euro, and Japanese Yen1. With surprise rate hikes from the Reserve Bank of Australia and the Bank of Canada last week, these meetings have become a hot topic, and high volatility is expected in the Forex market1. Amid these discussions, the US Dollar has been on the rise, starting the week stronger and continuing to ascend12.
In Canada, the Canadian Dollar retreated as employment fell unexpectedly, causing the currency to ease against its major counterparts2. In contrast, CADCHF is moving in an Ascending channel and has reached the resistance area of the minor consolidation pattern. Bank of Canada is expected to maintain interest rates at 4.5%, but it might increase them further if necessary, backed by strong GDP, inflation, and retail sales data3.
In Australia, the AUDCAD is also moving in an Ascending channel and has reached the higher high area of the channel. The Australian economy is slowing down, with the first-quarter GDP of 2023 at 2.3%, compared to the 2.4% expected and 2.7% recorded in 2022. Despite this, there is a strong likelihood of an interest rate increase by the Reserve Bank of Australia (RBA), which would bring the terminal rate to 4.32% by the end of the third quarter3.
The Japanese Yen, on the other hand, has been affected by the nation’s machine tool orders, which have declined for the fifth straight month, plunging 22.2% in May2. The New Zealand Dollar also displayed a downward trend, as NZDUSD moved in a Descending triangle pattern, falling from the lower high area of the pattern. The Reserve Bank of New Zealand signaled it was finished with its most aggressive hiking cycle since 1999, further devaluing the New Zealand Dollar3.
Despite these fluctuations in the Forex market, global stock markets look bullish, with several global stock market indices reaching new 1-year highs, including the S&P 500 Index and the NASDAQ 100 Index1. The Turkish Lira, however, fell to another record low, as a result of President Erdogan’s election victory, which appears increasingly likely1.
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