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Analysis: Currency market outlook and trends amid economic shifts

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Analysis: Currency market outlook and trends amid economic shifts

The US real GDP has come out with a growth rate of 4.9% in the third quarter. Experts and analysts are worried about the future since the number is less than what was expected. It was projected to be rolled out at 5.2%, hence the disappointment. It spreads across the currency market, with the US Dollar Index struggling at 101.81 at the time of articulating this piece.

There are also prevailing bearish trends for USD/JPY and EUR/JPY that need to be addressed. A single USD compares to 142.26 Japanese Yen, while a single Euro exchanges for 156.53 Japanese Yen. There is a fall on both sides, with anticipation that things may go further down.

Currency Market Movement

A movement in the currency market covers three aspects: the US dollar, major currencies, and geopolitical events.

US Dollar

What makes the US dollar a prime candidate for discussion is its mandatory involvement in major trades, despite most of the countries moving toward its elimination. GDP numbers are lower than expected, fueling doubts about whether the economy will rebound soon. USD/JPY and EUR/JPY express bearish trends and chances that the Japanese Yen could gain strength for a while.

The movement on the graph could be drawn to 101.50 as a support level. After that, a closer look into the segment will only be imperative.

As the dollar enters a seasonally sluggish phase, the EUR/USD pair has the potential to trade above 1.10 throughout the holiday period. 

Major Currencies

AUD and GBP are noting their movements. For instance, every USD goes for 1.47 AUD. GBP falls below the number-one mark for an exchange of 0.79 Pound Sterling. A downward trend is expected at ~0.6750 between AUD and USD. The British Pound looks for stability at 1.26 or 1.27.

Upcoming elections in the US, coupled with the decision of the Federal Reserve on rate cuts, could potentially hold the US dollar back in the market, extending to volatility during the near holiday season.

Geopolitical Events

A rate-cut decision remains due from the US Fed. Authorities are less likely to hike the rate, but they are also less likely to avoid the risk of cutting the rate down immediately. This will get worse as more countries agree to trade goods and services without any intervention from the US dollar.

India, for example, has signed an agreement with eighteen nations to trade in INR. Similarly, Russia has ditched the USD to use the Chinese Yuan with China. Joe Biden does not precisely look like a strong candidate for reflection, igniting thoughts about government change and revisions in policy.

Market Outlook

The overall market outlook spans across the US Treasury Yields, German Yields, and Indian Government Bonds.

US Treasury Yields

The 10-year treasury rate is below the average of 4.25%, fetching 3.89% from investors. It marks a fall from the average and a loss of confidence among investors. Nevertheless, funds could influx into the market in the hopes of a better future.

German Yields

The 10-year yield stands at 1.98%, lower than the 30-year yield of 2.18%. It reflects a higher inclination toward long-term standing.

Indian Government Bonds

Compared to that, India comes out as a brighter spot all over the world. It was last seen generating the 10-year bond at 7.184%. This is currently an estimate that could swing either way, but not as low as US and German figures.

Conclusion

Markets in some countries, mostly those with the holiday season coming up, will see less volatility for the next couple of days. The effects could be felt for weeks, but the low volatility factor will help draw more stable conclusions.

Understanding currency market trends comes in handy at a time when there is a need to deal with international trade and foreign exchange.

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