Current situation

 Hello Traders

Before posting an analysis, let's review the current situation on major currencies.

The main triggers that affect markets this year are: 

• The Russian-Ukraine war that started Feb/2022
• Inflation that hit economies hard everywhere, triggered by massive easy money injected by central banks due to Covid and the war put extra weight
• Hiking rates that central banks started this year to fight inflation
• Deteriorating GDP growth and anticipating recessions next year
• Covid still plays a role especially in China due to its zero-Covid policy

The war is putting gloomy expectations for the Euro area in specific. Europe depends mainly on Russian gas for energy supply and Putin played this card to push on Europe due to their support to Ukraine. Until now, support continues but economies and people are suffering due to high energy prices. Winter is coming and Europe's problems will escalate, people will get angry and the economy will suffer more and more.

After a series of rates hiking, inflation starts to show cooling in some countries:

• Australia, Euro area, UK, Japan, and Newzealand still printing higher numbers
• Canada, Switzerland, and United States showed a sort of easing in inflation.

But how Central Banks act is the trigger behind FX price action. A dovish tone started to echo among central banks. Here is a summary of Interest Rates in 2022:

Zero-Covid policy in China is a risk-off event and plays a major role on AUD and NZD as they are main trading partners to China. Lately, there are talks about China easing this policy but Covid cases are increasing.

More details and updates are coming. Keep tuned.

Good Luck