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27.01.202311:08 Forex Analysis & Reviews: Soft landing of the US economy could boost markets, but pressure dollar

Mixed economic data from the US had caused a downturn in stock markets, but the situation leveled off later, allowing indices to crawl back up again.

The reports indicated that GDP for Q4 declined from 3.2% to 2.9%, while weekly jobless claims dropped slightly to 186,000. The underlying durable goods orders also showed a smaller than expected decline. The only data that was positive was the quarterly core PCE index, which fell more than expected, from 4.7% to 3.9%. All this actually show that no real recession is in sight, however, the purchasing power of the US population is decreasing, so the inflationary pressure is slowing down further.

In this situation, the Fed could calmly pause its cycle of interest rate hikes for one quarter without the fear of seeing a severe fall in the economy. That could be a strong reason for a rally in equity markets, while demand for dollar will surely go under pressure.

But for today, there will probably a rise in dollar and a decline in stock indices not only in the US but also in Europe. However, the situation may change if the upcoming personal consumption index for the US show lower-than-expected figures.

Forecasts for today:

Exchange Rates 27.01.2023 analysis
Exchange Rates 27.01.2023 analysis

AUD/USD

The pair is currently trading below 0.7130. A breakdown of this level, which could happen if the Fed takes a pause in raising interest rates and the RBA announces a further rate hilke, will lead to a rise to 0.7235.

USD/CAD

The pair has fallen below 1.3345. If sellers manage to keep this situation and oil prices continue to rise, the quote will drop further to 1.3230.

*A análise de mercado aqui postada destina-se a aumentar o seu conhecimento, mas não dar instruções para fazer uma negociação.

Pati Gani,
Analytical expert of InstaSpot
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