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World central banks are ready to raise rates

November 24, 2021

USD/JPY: The US dollar renewed its multi-year high against the yen on Wednesday after strong US data and hawkish comments from Fed policy makers strengthened expectations of an early rate hike. US retail sales rose faster-than-expected in October, a report on Tuesday showed consolidating on last week’s momentum when data revealed consumer prices rose to their highest level since 1990. Money markets are pricing in a high probability of a Fed rate increase in June, followed by another in November. The greenback rose as far as 115.00 yen, its highest since March 2017, before retreating to 114.55 yen. Statistics and the likelihood of monetary tightening in the US will keep supporting the dollar.  Strong resistance can be seen at 115.00. A breakout to the upside can trigger growth towards 115.50.

BUY STOP 115.00/TP 115.50/SL 114.80


EUR/USD: The euro initially dipped on Wednesday but recovered most of its losses after Eurozone Oct inflation data. Eurozone inflation surged to more than twice the European Central Banks target in October, with more than half of the jump due to a spike in energy prices. Eurostat said inflation in the 19 countries sharing the euro rose 0.8% month-on-month in October, for a 4.1% year-on-year surge, in line with an earlier Eurostat estimate. However, the rise in inflation is still not enough for the ECB to tighten its policy.  Immediate support is located at 1.13. A breakout below could take the pair towards 1.12.

SELL STOP 1.13/TP 1.12/SL 1.1340


GBP/USD: The pound rose against the dollar on Wednesday after data showed UK inflation rose to a 10-year high last month, which supported expectations of a rate hike from next month. The Bank of England is expected to become the first major central bank to raise interest rates since the coronavirus pandemic rocked the global economy, with markets pricing a 60 percent chance it will happen at a December 16 meeting. On Tuesday, the data showed that the UK labor market had weathered the end of the government’s program, allaying serious concerns about the risks of monetary tightening. Immediate resistance can be seen at 1.35. A breakout to the upside can drive the pair towards 1.3570.

BUY STOP 1.35/TP 1.3570/SL 1.3470