CFD Markets News and Forecasts — 01-11-2024

• AUD/USD declines due to modest US dollar gains after a packed economic calendar.
• Weak Chinese PMIs weigh on the Australian Dollar.
• RBA expected to maintain a hawkish stance, supporting AUD/USD, but concerns over China's economy linger.

Daily digest market movers: Australian Dollar dips amidst mixed US data, worries over Chinese economy

• Market expectations for an RBA rate cut are low, with only a 15% probability assigned to a December cut.
• On the data front, Australia's PPI growth slowed in Q3 to 3.9% QoQ but remains well above the RBA’s target.
• On the US front, disappointing US Nonfarm Payrolls from October (12,000 versus 113,000 expected) weakened the Dollar, while wage inflation rose to 4%.
• The US service sector expanded in September, with the Services PMI rising to 54.9 above expectations. The bad news for the US is that the Manufacturing PMI unexpectedly contracted, which flashed alarms among investors.
• Markets priced in an almost certain 25 bps Fed rate cut next week and an 85% chance of another cut in December.
• Expectations of inflationary policies under former President Trump provided additional support to the US Dollar.

AUD/USD Technical Outlook: Bearish momentum present, sideways period on the horizon

• NZD/JPY has been trading sideways recently, with mixed signals from technical indicators.
• The pair is currently supported at 90.70 and faces resistance at 91.90.
• There are some signs of bearish momentum mounting which could threaten the 20-day SMA.

Friday's trading saw the NZD/JPY pair continue its sideways movement of the past sessions. The pair exhibits a range-bound pattern with no significant upward or downward spikes. By the end of the week the cross mildly rose to 91.20, but the outlook remains neutral.

Technical indicators provide mixed signals regarding the NZD/JPY's future direction. The Relative Strength Index (RSI) sits at 53, indicating positive territory for the pair. The upward slope of the RSI suggests a steady buying pressure. However, the Moving Average Convergence Divergence (MACD) shows signs of increasing selling pressure, with rising red bars in the histogram. 

Support levels lie at 91.00 (20-day Simple Moving Average (SMA)), 90.70, and 90.50. Conversely, resistance levels are found at 91.30, 91.50, and 91.70. These levels define the range within which the NZD/JPY has been trading recently.

NZD/JPY Daily chart

• Dow climbs 0.71%, rebounding as softer data fuels rate-cut speculation.
• S&P 500 and Nasdaq follow, both gaining over 0.6% amid broad optimism.
• Amazon shines with 6.5% rise; Apple lags with 1.5% drop on weak China sales.

The Dow Jones Industrial Average (DJIA) posted solid gains of close to almost 300 points or 0.71% on Friday, on softer-than-expected economic data, reinforcing investors' hypothesis of further easing by the Federal Reserve. Wall Street made a U-turn following Thursday’s losses and rallied sharply ahead of the weekend.

Data revealed by the US Bureau of Labor Statistics (BLS) showed that strong hurricanes and union strikes distorted Nonfarm Payrolls in October. The US economy created 12K jobs, below the 113K estimated. Despite this, the unemployment rate remained at 4.1%, as traders braced for other data.

The Institute for Supply Management (ISM) recently revealed that manufacturing activity fell for the seventh consecutive month, hitting its lowest level since July 2023. The ISM Manufacturing PMI dipped from 47.2 to 46.5, missing forecasts of 47.6.

Meanwhile, Wall Street posted solid gains, with the S&P 500 following the Dow Jones’ upward path, gaining over 0.63% to 5741.45, while the Nasdaq climbed 0.75% up to 18,230.29.

Next week, the US economic docket will be busy with the US Presidential Elections on November 5. Traders will also be eyeing the Federal Reserve’s monetary policy on November 6-7 and will scrutinize Fed Chair Jerome Powell's speech.The CME FedWatch Tool shows odds for a 25 bps rate cut by the Fed reaching 95%, down from 97% a day ago. This would leave rates in the 4.50%-4.75% range.

Dow Jones news

In stock news, Amazon (AMZN) is up 6.5%, bolstered by strong retail sales, which lifted its profits above estimates. Apple (APPL) was hit by a drop in sales in China and fell 1.5%, while Chevron (CVX) exceeded estimates on profits per share, production, and sales. Meanwhile, Boeing (BA) shareholders were relieved as the stock climbed 3%, and the ongoing strike is nearing an end.

The stocks leading the pack in Dow Jones are Intel (INTC), up 6.92% at $23.01 a share, closely followed by Amazon, up 6.02% at $197.62, and Boeing, up 2.99% at $153.77. The laggards are Apple shares, down 1.63% at $222.22; Verizon (VZ), losing 1.51% at $41.50; and the Dow (DOW), with its share price at $48.87, losing 1.03%.

Dow Jones price forecast

The Dow Jones Industrial Average has risen above 42,000 after hitting a weekly low of 41,692 below the 50-day Simple Moving Average (SMA) at 41,943. Initially, this increased the chances to challenge the September 2 high turned support at 41,564 ahead of the 41,000 area. However, buyers emerged and lifted the US equity index higher ahead of next week’s US Presidential Elections.

If the Dow Jones posts a daily close above 42,000 buyers, it could remain hopeful of challenging the October 30 low, which turned resistance at 42,122. Once cleared, the next stop would be October 31, high 42,460. On further strength, 42,500 could be reached before testing 43,000.

Momentum is bearish, with the Relative Strength Index (RSI) remaining below its neutral line. But, in the short-term, a small spike threatening to cross the neutral line hints that buyers are gathering steam.

Dow Jones daily chart

• US Dollar retreated after posting solid gains in recent weeks.
• Nonfarm Payrolls increased by 12,000 in October, falling short of market expectations.
• Markets remain almost fully pricing in a 25 bps cut by the Fed next week.

The US Dollar Index (DXY), which measures the value of the USD against a basket of six currencies, rebounded intraday despite the weak jobs data as annual wage inflation rose to 4%, indicating that inflationary pressures remain elevated. In the meantime, markets remain almost fully expecting a 25 basis-point-cut by the Federal Reserve (Fed) next week. On the data front, ISM PMIs also came in mixed from September.

The DXY continues to trade sideways near 104.00. Despite persistent inflation, weak job growth data raises expectations of a less hawkish Fed stance, which might start to weaken the USD.

Daily digest market movers: US Dollar recovers after NFPs

• Nonfarm Payrolls in the US rose by a mere 12,000 in October, significantly missing market expectations of 113,000.
• The Unemployment Rate remained unchanged at 4.1%, in line with expectations.
• Wage inflation, as measured by Average Hourly Earnings, rose to 4% from 3.9%.
• Business activity in the US manufacturing sector continued to contract at a faster pace in October, with the ISM Manufacturing PMI dropping to 46.5 from 47.2 in September. This figure came in below the market expectation of 47.6.
• The Services PMI rose to 54.9 in October, indicating a strong expansion in the US service sector.
• Markets are pricing in a 25 bps cut by the Fed next week and an 85% chance of another 25 bps cut in December.

DXY technical outlook: DXY consolidating, finds support the 200-day SMA

The index retested the 200-day Simple Moving Average (SMA) support at 104.15 and buyers successfully defended it. The Relative Strength Index (RSI) is pointing down, still near overbought territory, and the Moving Average Convergence Divergence (MACD) is printing lower green bars, indicating bearish momentum. In that sense, if buyers show resilience it may present better around the mentioned SMA.

Key support levels include 104.15, 104.05, and 104.00, while resistance is encountered at 104.70, 104.90, and 105.00. Traders monitor these levels closely for breakout opportunities.

• US positive labor market data was initially bearish on the USD, but the currency recovered losses.
• The ISM Manufacturing PMI came in weaker than expected, suggesting a contraction in the manufacturing sector.
• Canadian Dollar remains under pressure due to rate cut expectations.

The USD/CAD currency pair saw a mild decline in Friday's session, reaching a low of 1.3920. Positive labor market data in the United States, including a steady Unemployment Rate and rising Average Hourly Earnings, initially weighed on the USD, but the currency later recovered its losses. A weaker-than-expected ISM Manufacturing PMI also influenced market sentiment.

Additionally, expectations of further interest rate cuts by the Bank of Canada (BoC) continue to exert downward pressure on the Canadian Dollar.

Daily digest market movers: Canadian Dollar mildly declined after mixed US data

• Nonfarm Payrolls in the US rose by 12,000 in October, missing the market expectation of 113,000 by a wide margin.
• The Unemployment Rate remained steady at 4.1% as expected, while Average Hourly Earnings rose expectedly by 4.0%.
• The immediate effect of the labor market data was bearish on the US Dollar, while it recovered all intraday losses.
• The ISM Manufacturing PMI for October has come in surprisingly weak, declining to 46.5 compared to expectations of 47.6.
• Rising expectations of more interest rate cuts by the BoC continue to weigh on the CAD.
• The BoC has already reduced its key borrowing rates by 125 basis points to 3.75% this year.

USD/CAD technical outlook: Bulls start to give up, consolidation coming

The Relative Strength Index (RSI) is in the overbought area with a value of 76, however, the RSIhas formed a declining slope. This suggests that buying pressure is declining, similar to the direction given by the lower green bars of the Moving Average Convergence Divergence (MACD).

Supports: 1.3870, 1.3850, 1.3830, Resistances: 1.3930, 1.3950, 1.3980.

• GBP/USD targets 1.3000 as bullish harami pattern signals further gains.
• 100-day SMA at 1.2977 poses significant resistance for bullish momentum.
• Failure to clear resistance may trigger a pullback toward 1.2900, with 200-day SMA at 1.2808 as next support.

The Pound Sterling erased some of its Thursday’s losses against the Greenback and rose 0.56% above its opening price after a dismal US jobs report reassured investors the Federal Reserve would continue to ease policy. At the time of writing, the GBP/USD trades at1.2970

GBP/USD Price Forecast: Technical outlook

The GBP/USD is forming a ‘bullish harami’ candle pattern, which hints the pair could test the previous day's high of 1.2999, opening the door to test the 1.3000 figure. However, strong resistance lies overhead at the 100-day Simple Moving Average (SMA) at 1.2977, which if decisively broken, 1.3000 would be up next.

On further strength, the pair can rise to the current week’s high at 1.3043—the October 30 high—before reaching 1.3100.

If GBP/USD fails to clear the 100-day SMA, a drop toward 1.2900 is on the cards. The next key support is seen at the 200-day SMA at 1.2808.

Oscillators suggests that buyers are gathering momentum, but with the Relative Strength Index (RSI) still far from reaching neutral levels,

GBP/USD Price Chart – Daily

We think the bar is high for a 75bps OCR cut given the prevailing economic backdrop. Inflation in New Zealand is back within the target band, driven by disinflation in tradables. But non-tradables inflation remains stubbornly high; housing and insurance among the sticky components. NZD to underperform on rising odds of a Trump-Republican sweep and dovish RBNZ expectations, Standard Chartered’s economists Bader Al Sarraf and Nicholas Chia note.

Softening inflation, hard decisions

“Inflation, at 2.2% y/y in Q3-2024 (3.3% in Q2) – a touch softer than the Reserve Bank of New Zealand’s (RBNZ’s) 2.3% forecast ­– is back within the central bank’s 1-3% target band. This has led markets to anticipate more aggressive rate cuts, with latest market pricing indicating c.57bps of easing at the 27 November; this equates to around a 30% implied probability of a 75bps cut.”

“Historically, the RBNZ has tended to favour larger official cash rate (OCR) adjustments during periods of significant market shocks and economic surprises (Figure 1). During past crises, such as the Global Financial Crisis and the COVID-19 pandemic, the RBNZ responded with outsized OCR cuts of up to 150bps. Conversely, the Q3-2022 CPI that printed 0.8ppt above RBNZ forecasts led to a 75bps hike.”

“We do not think that the prevailing growth and inflation backdrop necessitates an outsized policy rate cut. While a 75bps cut cannot be ruled out at the November meeting, we think the bar for such a move is high, and we maintain our call for a 50bps cut. We expect the RBNZ to tread cautiously at this stage when contemplating further rate cuts, balancing the risks of an unintended boost to the housing market and NZD instability – both of which are key factors influencing the transmission of monetary policy to CPI inflation.”  

• EUR/CAD has decisively broken out of a multi-month price pattern. 
• If it can follow through higher it will probably confirm the start of a strong move higher. 

EUR/CAD rallies and pierces decisively above the slanting roof of the price pattern it had been trading in since the beginning of August. This is a bullish sign and if price follows through higher it could make a significant advance.

EUR/CAD Daily Chart 

A break above 151.72 (November 1 high) might confirm a continuation higher, probably to an initial target at 152.28, the August 5 high, followed by 1.5312, the 61.8% Fibonnacci price projection of the height of the pattern at its widest part, from the breakout point higher. 

The Moving Average Convergence Divergence (MACD) momentum indicator has risen above the zero line and is currently supportive of the bullish outlook. 

A bearish close on Friday, however, would also form a two-bar reversal pattern, which occurs after a rally when a long green up day is followed by a long red down day of a similar length. This is a bearish short-term reversal pattern and could indicate a deeper correction temporarily clouds the outlook. 

• USD/CAD falls slightly to near 1.3900 after the US NFP report for October.
• Labor growth was significantly lower due to hurricanes that affected various regions.
• The US Manufacturing PMI surprisingly declined at a faster pace.

The USD/CAD pair corrects mildly to near the round-level support of 1.3900 in Friday’s New York session. The Loonie asset drops after the release of the United States (US) Nonfarm Payrolls (NFP) data for October, which showed lower job additions at 12K against the estimates of 113K and the former release of 223K in September, downwardly revised from 254K.

Fresh payroll data appears to be in sharp contrast against the ongoing recruitment trend due to hurricanes in Florida and strikes in the aerospace industry.

The Unemployment Rate remained steady at 4.1%, as expected. Also, Average Hourly Earnings rose expectedly by 4.0%.

The immediate effect of the labor market data was bearish on the US Dollar (USD), while it recovered all intraday losses. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, strives to gain ground above 104.00.

Meanwhile, the ISM Manufacturing PMI for October has come in surprisingly weak. The Manufacturing PMI, which represents activities in the manufacturing sector, declined to 46.5. Economists expected the index to continue to contract but at a slower pace to 47.6 from 47.2 in September.

In the Canadian region, rising expectations of more interest rate cuts by the Bank of Canada (BoC) continue to weigh on the Canadian Dollar (CAD). The BoC has already reduced its key borrowing rates by 125 basis points (bps) to 3.75% this year.

The tiny 12k payroll employment gain in October was heavily distorted by the impact of hurricanes, a large strike in the manufacturing sector, and an unusually low initial survey response rate, RBC’ economists note.

Fed to cut rates by 25 basis points next week

“The unemployment rate was likely a 'cleaner' read on labour markets in October, and it was unchanged from September and still slightly below levels in the summer.”

“Underlying details are still consistent with a softening in labour markets - permanent layoffs rose and downward revisions knocked 112k off payroll employment growth in August and September - but still at a very gradual pace that is consistent with a 'normalization' from unusually low unemployment levels rather than a faltering.”

“Interest rates are still likely higher than they need to be for inflation to return fully back to the Fed’s 2% inflation target, and today's data helps to reinforce our expectation that the Fed will cut rates by 25 basis points next week.”

• EUR/JPY is correcting within a bullish advance.
• Given the short and medium-term trends are bullish more upside it expected providing certain conditions are met. 

EUR/JPY is pulling back after rising above the ceiling of its multi-month range and breaking above the cluster of major moving averages lying just above.  

EUR/JPY Daily Chart 

The short and medium-term trends are bullish suggesting the odds favor more upside to come and a resumption of the uptrend. A break above 166.69 (October 31 high) would probably confirm a continuation higher. 

Resistance at 167.96 (July 30 swing high) could act as a barrier to further upside. The minimum target for the breakout from the range lies at 169.68, the 61.8% Fibonacci extrapolation of the height of the range to the upside. 

The Relative Strength Index (RSI) momentum indicator is not yet in the overbought zone (above 70) suggesting the pair has room to go higher.

• The ISM Manufacturing PMI report showed ongoing contraction in business activity in October.
• The US Dollar Index holds steady near 104.00 after the PMI report.

The business activity in the US manufacturing sector continued to contract at an accelerating pace in October, with the ISM Manufacturing PMI falling to 46.5 from 47.2 in September. This reading came in below the market expectation of 47.6.

The Employment Index of the PMI survey edged slightly higher to 44.4 from 43.9 in the same period and the Prices Paid Index rose sharply to 54.8 from 48.3. Finally, the New Orders Index improved to 47.1 from 46.1.

Market reaction

The US Dollar Index stays in its daily range at around 104.00 after the ISM Manufacturing PMI data. 

The outcome of the US presidential election is also likely to have an impact on the oil market. However, the Trump effect on prices is rather unclear here, so that only concrete measures are likely to move prices, Commerzbank’s commodity analyst Barbara Lambrecht notes.

Withdrawal of the voluntary cuts can result in an oversupply

“In the short term, the oil price will be determined by the production plans of the eight OPEC+ countries, which had committed themselves to voluntary cuts of 2.2 million barrels per day almost a year ago. At the beginning of September, they had announced that they would start to reopen the oil tap from December onwards, month by month, by a total of around 180,000 barrels per day.”

“However, according to the Reuters news agency, sources close to OPEC have indicated that this production increase will be postponed again by at least one month. This would likely mean that the decision would be postponed until 1 December, when the oil ministers of the cartel will hold their next regular meeting to decide on next year's production strategy.”

“Although most of the production cuts are fixed until the end of 2025, a withdrawal of the voluntary cuts could result in an oversupply that would put further pressure on prices. If the postponement is announced at the beginning of next week, this should support prices. However, they are unlikely to rise significantly, as China's crude oil imports, which are due to be published on Thursday, are likely to bring demand concerns back into focus. A price increase would be likely if Iran were to attack Israel again in the coming days.”

• EUR/GBP completes an abc move higher after bouncing from multi-year lows. 
• A break above the top of the pattern could be a sign of a reversal and birth of a new uptrend.

EUR/GBP pulls back after peaking in the 0.8440s. On Tuesday it bounced off key support (gray dashed line) at multi-year lows and surged over a penny higher. In the process it completed a three-wave, zig-zag-shaped pattern, with waves labeled a,b and c. 

EUR/GBP 4-hour Chart 

It is possible this pattern is just a common three-wave abc correction. If so, this could imply the correction is now probably finished, that price will roll over, and return to the base of the consolidation and the multi-year low. 

However, the speed and strength of the move higher witnessed over the last few days suggests EUR/GBP may not just be correcting, but rather that it could be starting a new short-term uptrend. 

The test of whether this is the case or not, will be to see whether price can now break above the top of wave c at 0.8448 (green resistance level on chart). If it can, it will have formed a third higher high and established a new sequence of rising peaks and troughs, heralding the start of a new uptrend. Give the technical analysis principle that “the trend is your friend” the odds would then favor further upside to come. 

If pierce cannot make a new higher high above wave c, it is possible EUR/GBP will decline again as it continues unfolding its sideways range-bound trend.

The Pound Sterling (GBP) is trading marginally higher while Gilts remain soft (but off earlier lows) in the wake of Wednesday’s budget, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

GBP steadies after post-budget slide

“Markets continue to think a 25bps reduction in the BoE’s target rate on November 7th is likely but expectations have been pared back to 80% risk of a cut next week.”

“The GBP got roughed up on Thursday but price action suggests the pressure is abating. A solid rally off the intraday low yesterday put in a bug, bullish “hammer” pattern on the intraday chart, delivering some grinding gains for the pound which is keeping the intraday range today well inside yesterday’s—a clear consolidation signal.”

“Major support is developing now around 1.2840. Resistance is 1.2940/45 and (stronger) 1.30.”

• News that Iran is preparing an attack on Israel has given a fresh boost to Oil prices.
• OPEC+ members are considering delaying the output hike for at least one month.
• A somewhat stronger US Dollar ahead of the NFP is weighing on Crude.

Oil prices are appreciating for the third consecutive day on renewed concerns about escalating tensions in the Middle East. The US benchmark WTI has reached weekly highs at $71.40 after returning to the $70.50 area.

News reporting that Iran is considering an attack on Israel from Iraqi territory have reactivated fears of a regional war in the area that might curb global crude supply, boosting Oil higher.

Apart from that, Reuters informed on Thursday that the OPEC+ countries might delay the output increase originally planned for December by at least a month.

The plan to increase crude output by 180,000 barrels per day had already been delayed from its original date, in October, due to the low prices.

On Friday, the US Dollar is showing a somewhat firmer pace, with investors cautious ahead of the release of October’s employment report. This is also weighing on Oil’s rally.

Oil prices rose by almost 2% today. The rise was caused by news that Iran is planning an attack on Israel in the coming days, Commerzbank’s commodity analyst Carsten Fritsch notes.

Pricing out of the geopolitical risk premium seems premature

“Oil prices rose by around 2 per cent today, triggered by news that Iran is planning an attack on Israel in the coming days, possibly even before the US elections, according to the news portal Axios, which cited two sources close to Israeli intelligence. The attack is to be carried out using drones and missiles launched from Iraq.”

“At the beginning of the week, oil prices had fallen significantly after the Israeli retaliation last weekend spared Iran's oil and nuclear facilities, leading to the expectation that no further escalation would occur. This hope now appears to have been called into question, suggesting that the pricing out of the geopolitical risk premium in the oil market may have been premature.”

EUR/USD has drifted a little lower over the course of the session so far, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

EUR rebound momentum stalls

“Market participation has perhaps weakened ahead of the US jobs data, the weekend and the US election Tuesday, with no major data from the Eurozone to drive sentiment. More to the point, perhaps, is the fact that the steady narrowing in EZ/US short-term spreads that helped lift the EUR over the past week has stopped and reversed a basis point or so late in the week.”

“The EUR’s push through resistance at 1.0875 failed to give spot gains the additional boost I thought it might. Gains were capped around 1.0890 and now, spot’s drift lower risks extending in the short run if the market eases below 1.0845 minor support on the session.”

The World Gold Council published data on Gold demand in the third quarter this week. Taking into account over-the-counter (OTC) transactions, demand rose by 5% year-on-year, reaching a record level for a third quarter. The increase in demand was mainly driven by Gold ETFs, which recorded inflows for the first time in 10 quarters. As a result, investment demand more than doubled in comparison to the same quarter last year, although purchases of bars and coins were lower. By contrast, jewellery demand fell to its lowest level in a third quarter since 2000, except for the pandemic year 2020, Commerzbank’s Commodity analyst Carsten Fritsch notes.

Investment demand doubles compared to the same quarter last year

“In the first three quarters, demand for Gold, including OTC transactions, was 3% above the previous year's level. Investment demand exceeded the figure for the previous year despite somewhat lower purchases of bars and coins, because Gold ETFs recorded significantly fewer outflows. Jewellery demand and central bank Gold purchases were down year-on-year after three quarters. However, the latter are on a par with 2022, which ended with a record level. For the year as a whole, the WGC expects investment demand to be higher than in the previous year.”

“ETFs should see further inflows due to the expected interest rate cuts, high fiscal deficits and the highly valued stock markets. However, investment demand in the fourth quarter could be heavily influenced by the outcome of the US elections. The central bank's Gold purchases are likely to be strong again this year, but not at the levels seen in the previous two years. Jewellery demand is also expected to be lower than in the previous year, albeit somewhat higher than previously expected by the WGC.”

“The data did not provide a feasible explanation for the 15% rise in the Gold price in the third quarter. Rather, they showed that demand for Gold was curbed by the rising price level. This applies in particular to jewellery demand and also to Gold purchases by central banks. The increase in Gold demand in India was due to the reduction of the import tax and is therefore unlikely to be repeated. Excluding the less transparent OTC transactions, demand for Gold in the first three quarters was 3% below the previous year's level. Only the Gold ETFs provided positive impetus for demand. In the long term, this alone will hardly be enough to justify the high price level, let alone a further price increase.”

The Canadian Dollar (CAD) is unchanged on the session, holding in the low 1.39 area just below yesterday’s high which marked a virtual pinpoint retest of the August spot peak, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

CAD holds near low

“Back then, the USD closed well off the high and down on the session. Now, however, the bid for the USD remains persistent. Bargain hunters are treading lightly around the CAD at these levels, given the risk of post-election volatility in the USD. Fundamental factors which have helped drive the CAD lower in the past few weeks do appear to be steadying.”

“The CAD’s fair value estimate is unchanged again today at 1.3932, suggesting some (very minor) relief from bearish pressure for now. Neutral because major resistance at 1.3945/50 did hold yesterday but bullish because the USD closed out the day firmly and remains well-supported on minor dips.”

“USD gains remain very, very stretched on the daily chart and all else equal, I would probably be inclined to expect the USD to ease somewhat from a technical perspective from here. But the risk of heightened volatility in the next few days can’t be overlooked. Support is 1.3880 and 1.3750.”

• Gold recovers after the steep sell-off on the previous day amid rising safe-haven flows. 
• Hopes of a ceasefire in the Middle East were dashed after Hezbollah launched a rocket attack, killing seven people in northern Israel. 
• Gold could be impacted by the release of US Nonfarm Payrolls data on Friday as it could change the outlook for interest rates. 

Gold (XAU/USD) edges a third of a percentage point higher on Friday, recovering from the tumble it suffered on the previous day. The precious metal is trading in the $2,750s, just under a key chart resistance level. 

Gold is rebounding on the back of a revival in safe-haven demand after hopes of a ceasefire in the Middle East war were dashed by a Hezbollah rocket attack in northern Israel that killed seven people, making it the worst strike in months, according to the BBC. That, and the risk surrounding the US presidential election given how tight the race is, continue leavening demand for the yellow metal. 

Gold upside could be capped amid stronger US Dollar

Gold’s recovery could meet fresh resistance, however, as risks remain to the precious metal’s outlook. The US Dollar (USD) is rising on Friday, ending a week-long decline, and this is likely to present headwinds to Gold because it is mainly priced and traded in USD. 

The Dollar is rising as markets continue to scale back their expectations for Federal Reserve (Fed) easing because of strong employment data. Although the number of job openings fell unexpectedly, strong private payrolls data and lower unemployment benefit claimants data this week, made up for the openings miss. All these may help reassure the Fed that the labor market is solid. 

US Nonfarm Payrolls data out on Friday, however, will be key in gauging the health of the labor market and the Fed’s future interest rate decisions. It will also reveal the Unemployment Rate and Average Hourly Earnings. 

If markets radically revise their expectations regarding Fed policy – seeing more not less interest rate cuts on the horizon – Gold could gain a boost and reassert its established uptrend. 

Technical Analysis: Gold pulls back into former range

Gold has pulled back down into its former range between $2,708 and $2,758 after rolling over from its new all-time high of $2,790, established on Wednesday. 

Overall, the precious metal remains in a steady uptrend on all time frames (short, medium and long), which, given the technical principle that “the trend is your friend,” tilts the odds in favor of more upside. 

XAU/USD 4-hour Chart

That said, the decline from Wednesday’s peak has been steep, which could augur more downside to come. 

The Relative Strength Index (RSI) momentum indicator in the 4-hour chart is also showing a bearish dip in momentum accompanied by the recent sell-off, with RSI falling substantially below the 50 mark for the first time since October 10.

A deeper pullback would find support at $2,708, the floor of the range. The overall uptrend, however, might resume afterward. 

A break above the $2,790 high would probably lead to a move up to resistance at $2,800 (whole number and psychological number) followed by $2,850. 

This morning's Caixin PMI for the manufacturing sector surprised on the upside, pointing to a slight expansion of economic output at 50.3, after coming in at 49.3 last month. This joins the ranks of data from recent weeks that already point to a stabilisation of the Chinese economy in September, Commerzbank’s FX analyst Volkmar Baur notes.

US election to be a more decisive item on the agenda

“At first glance, this seems surprising, given that the political leadership was only discussing an additional fiscal package at the end of September. However, if we look at the budget and bond issuance data, it is clear that much stronger support for the economy had already begun in September. While budget spending was down year-on-year until August, September saw a 12 per cent increase in spending compared to September last year. In terms of bonds, preparations for this higher spending began as early as August. Here, too, it can be seen that the pace of issuance until July was significantly lower than last year, but has increased rapidly in the last two months.”

“In fact, it increased so sharply that RMB 3.6 trillion of so-called special local government bonds had already been issued by the end of September. At the beginning of the year, the limit for new issues of these bonds was set at RMB 3.9 trillion. This means that an increase in this limit – as is to be decided in the coming week – is urgently needed, otherwise local governments risk running out of money in the last three months of the year.”

“On the other hand, we should not expect too much from next week's stimulus package. At least some of the money was already used in September. But all this will probably not interest the RMB much next week anyway, because the US election is likely to be a more decisive item on the agenda, at least in the short term.”

The US Dollar (USD) is tracking a little higher ahead of the US jobs data at 8.30ET. Yesterday’s outperformers (JPY and CHF) in early trade here are today’s underperformers as the mood in equity markets improves, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

USD edges higher in quiet trade

“Broader market volatility is picking up. That should be no surprise ahead of the US election—the MOVE (bond) market vol index is around its highest in a year while the VIX is nudging back above 20 to its highest since early August. Uncertainty is perhaps helping the USD steady in the short run and it may be able to push a little higher this morning so long as the NFP is not a shocker. The consensus call for payrolls has edged steadily lower since last week and sits at a soft-ish 100k currently.”

“While weather– and strike-related issues would help explain away a poor number, a very soft number might lift Fed rate cut expectations. The Bloomberg “whisper” number, noting the jump in ADP private sector hiring last month, has moved the other way since mid-week and anticipates a 140k gain in jobs, however, and markets appear to be positioned for a decent, though perhaps not solid, gain in jobs. ISM Manufacturing data at 10ET is expected to show little change from September’s soft 47.2 reading.”

“Note that Dall Fed President Logan (non-voter) is on the calendar for a 9.45ET event. The Fed blackout is in effect ahead of next week’s FOMC decision so comments will not cover the economic or policy outlook. The DXY has found solid support in the upper 103 area through the latter part of the week and that should hold into the weekend and early next week as markets look to the US vote for the next directional cue for the USD.”

• Silver price remains on edge as traders brace for the US NFP data for October.
• Lower US Initial Jobless Claims data signaled an improvement in job demand.
• The US Dollar resumes its upside journey after a corrective move.

Silver price (XAG/USD) adds little gains in European trading hours on Friday after plunging to near $32.50 on Thursday. The white metal faced sharp selling pressure after the release of the United States (US) Initial Jobless Claims data for the week ending October 25, which came in lowest in almost 22 weeks.

The US Department of Labor showed that individuals claiming jobless benefits for the first time were 216K, lower than estimates of 230K and the former reading of 228K. A slowdown in the jobless claims’ growth pointed to an improving labor demand environment. On Wednesday, the ADP Employment Change data also showed a strong labor requirement in the private sector. The agency reported that 233K workers were hired by the private sector in October, significantly higher than 159K in September.

Meanwhile, the US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, rebounds strongly to 104.10 after a corrective move to 103.80. 10-year US Treasury yields climb to near 4.30%.

For more interest rate cues, investors await the US Nonfarm Payrolls (NFP) data for October, which will be published at 12:30 GMT. The NFP report is expected to show that the economy added 113K new workers, significantly less than 254K in September. Economists expect the Unemployment Rate to have remained steady at 4.1%. The NFP data will significantly influence market expectations for the Federal Reserve (Fed) interest rate cut path.

Silver technical analysis

Silver price extends its correction to near the key horizontal support plotted from the May 20 high of $32.50 on a daily timeframe. The white metal finds a temporary cushion near the 20-day Exponential Moving Average (EMA), which trades at around $32.80.

The 14-day Relative Strength Index (RSI) falls inside the 40.00-60.00 range, suggesting that a bullish momentum is over for now, however, the bullish trend remains intact.

Silver daily chart

• The Mexican Peso continues its recovery supported by resilient Q3 GDP growth data. 
• Multiple risk factors weigh, however, including the risk of Trump tariffs, Banxico interest-rate cuts and domestic political jitter.
• USD/MXN faces tough resistance just above the key 20.00 handle as bulls try to push higher. 

The Mexican Peso (MXN) edges higher across its key pairs on Friday, continuing the recovery of the previous day, in part supported by the release of higher-than-expected Mexican Gross Domestic Product (GDP) growth data, which showed a 1.5% rise in the third quarter. 

Mexican Peso strength could be capped by political risk factors

The Mexican Peso upside may be limited, however, as fears persist that a victory for former president Donald Trump in the US presidential election will lead to increased tariffs on imported Mexican goods. 

Concerns are easing, however, with the realization that Trump’s threats may be more rhetorical than realistic given how intertwined the two countries' supply chains are after three decades of free trade. Goods made in Mexico generally contain a substantial quantity of US or Canadian components and involve multiple border crossings to be manufactured, suggesting a trade war with Mexico would cause a self-inflicted wound on the US economy. 

Mexico’s lawmakers tighten grip on power

A further potentially negative risk factor for the Peso comes in the form of moves by the Mexican legislature to limit the power of the Supreme Court to suspend or block its reforms, according to El Financiero. This risks reviving market concerns about the rule of law and balance of power in the country, impacting its ability to attract foreign investment. The move recently led to eight of Mexico’s eleven Supreme Court judges handing in their resignations, effective from August 2025. 

Banxico expected to still cut in November – Capital Economics

Mexico’s surprise growth in Q3 does not “preclude another rate cut in November” from the Bank of Mexico (Banxico), according to Kimberley Sperrfechter, Emerging Markets Economist at London-based advisory service Capital Economics. 

If the Banxico was to go ahead with a 25 basis point (bps) (0.25%) cut to Mexico’s relatively high 10.50% key interest rate, it might put pressure on the Peso since lower interest rates attract less capital inflows.

“We still think the conditions are currently in place for Banxico to press ahead with another interest rate cut at its November meeting. But a lot will depend on the outcome of the US election. A Trump victory – and higher US Treasury yields and a stronger Dollar – would probably prompt Banxico to halt,” added Sperrfechter in the note. 

According to Christian Borjon Valencia, an analyst at FXStreet, “Money market futures hint that the Bank of Mexico (Banxico) is expected to cut rates between 175 to 200 basis points over the next 12 months.” 

Data out on Friday includes Mexican Business Confidence for October, the Unemployment Rate for September, and the S&P Manufacturing PMI for October. 

Technical Analysis: USD/MXN faces tough resistance in the 20.00 zone

USD/MXN seems to have stalled after stretching a foreshortened “c wave” higher of a bullish “abc” pattern, which began at the October 14 swing low. 

Whilst it is still possible wave c could reach its minimum upside target at 20.29 –  the Fibonacci 61.8% extension of the length of wave “a” – resistance in the 20.00 region is making lives difficult for bulls. 

USD/MXN 4-hour Chart 

USD/MXN is probably still in an uptrend on a short, medium and long-term basis and it is trading in a rising channel. Given the technical dictum “the trend is your friend,” the odds favor a continuation higher. Thus, a resumption higher is still possible. 

• The Yen resumes its downtrend losses as the effect of the hawkish comments by BoJ Governour Ueda fades.
• Investors' cautiousness ahead of the NFP report is pushing the US Dollar higher across the board.
• Technical indicators show the US Dollar rally losing steam.

The positive impact of Ueda's Hawkish rhetoric after the BoJ’s decision on Thursday has waned and the Yen is losing ground with the US Dollar firming up ahead of the US employment report.

October’s Nonfarm Payrrols change is expected to have declined to 113K in October from 254K. Hurricanes and strikes are likely to have had a relevant impact on last month's data, thus the market will look at the Unemployment rate -seen unchanged at 4.1%- for confirmation.
 

Beyond that, the US ISM Manufacturing PMI is seen little changed, at 47.6 from 47.2 in September.

On Thursday, BoJ Governour Ueda surprised investors, reiterating the bank's commitment to continue normalizing its monetary policy. These comments were taken as a hint to a further rate hike in December, which provided a fresh boost to the Yen.

From a technical perspective, the broader bullish trend remains intact although the pair might be running out of steam. A break of 151.65 would confirm a deeper correction and shift the focus to 150.60. On the upside, resistances are at 153.00 and 153.85.

After the market sent out the first warning signs of the new UK budget on Wednesday, it continued seamlessly yesterday, with UK government bond yields rising sharply and the pound depreciating. Moreover, since Tuesday, a rate cut of around 25 basis points by next September has been priced out. Clearly, the market has serious concerns about the new budget, Commerzbank’s FX analyst Michael Pfister notes.

BoE rate cut next week is still likely

“Although a lot of information was deliberately leaked in the run-up to the release market participants were surprised by the extent to which the new budget is geared towards delivering more growth in the short term. In the long run, stronger growth would certainly be seen as a positive, but until then it is a bold gamble that needs to pay off. And in the short term, it is likely to increase inflation risks, which means that the Bank of England (BoE) will be less likely to cut interest rates.”

“We should remain calm for now. A BoE rate cut next week is still likely. And while the risks of another rate pause at the December meeting have increased, it should be remembered that the BoE has been rather dovish of late. It will probably want to cut rates sooner rather than later, which means that another cut in December is still on the table. Of course, a lot depends on how next week's decision is communicated. However, if inflation does not pick up significantly in the coming weeks, the BoE is likely to continue its rate-cutting cycle despite the current market jitters.”

“Even if further rate cuts are on the way, we still think that the pound should strengthen against the euro by the end of the year. This may seem confusing at first glance. However, it is simply supported by continued slightly stronger UK growth and more persistent inflation, which should lead the BoE to emphasise its caution despite the rate cuts. Meanwhile, the ECB has more reason to look beyond inflation as the real economy weakens. This should support the GBP against the EUR.”

USD could drift lower, but any decline is likely part of a lower trading range of 7.1150/7.1400. In the longer run, USD is under mild downward pressure; it could edge lower, but any decline is expected to encounter solid support at 7.1000, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

USD is under mild downward pressure

24-HOUR VIEW: “USD traded between 7.1200 and 7.1350 yesterday, closing largely unchanged at 7.1210 (-0.05%). Despite the quiet price movements, the underlying tone appears to be soft. Today, USD could drift lower, but any decline is likely part of a lower trading range of 7.1150/7.1400. In other words, USD is unlikely to break clearly below 7.1150 or above 7.1400.”

1-3 WEEKS VIEW: “In our most recent narrative from Monday (28 Oct, spot at 7.1460), we highlighted that ‘While upward momentum is building, USD must break and remain above 7.1600 before further sustained gains are likely.’ We added, ‘The likelihood of USD breaking clearly above 7.1600 will remain intact, provided that 7.1200 is not breached in the next few days.’ USD subsequently rose to 7.1650 before pulling back quickly. Yesterday, it dropped to a low of 7.1200. The buildup in upward momentum has faded, and downward momentum has increased slightly. From here, USD could edge lower, but any decline is expected to encounter solid support at 7.1000. On the upside, a breach of 7.1480 would mean that the current mild downward pressure has eased.”

If you look at the G10 exchange rate movements since October 24 (since the publication of the euro area PMIs), it is striking that, on the one hand, the Euro has been by far the best-performing currency, but on the other hand, it has been the currency that contributed least to the volatility of G10 exchange rates, Commerzbank’s Head of FX and Commodity Research Ulrich Leuchtmann notes.

EUR strength to end sooner or later

“What does it mean when a currency has covered a lot of ground but with low volatility? It cannot have moved much in the opposite direction. Indeed, the euro has appreciated against the G10 average on every single trading day since then.”

“In other words: we are observing a clear trend (for statisticians: a clear deterministic trend component). In a reasonably efficient market, this is not a permanent condition, but an indication that the market is undergoing a significant re-evaluation and is searching for new equilibrium levels for EUR exchange rates.”

“As much as I enjoy EUR strength, I have to admit that this phase should not last forever. At some point, the revaluation of the euro will be complete. I would even consider it quite bold to jump on the bandwagon of idiosyncratic EUR strength at this point.”

The US Dollar (USD) could drop further, but it does seem to have enough momentum to threaten the major support at 151.05. In the longer run, USD advance from early last month has ended; it must break and remain below 151.05 before a more sustained decline can be expected, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Has a chance to test 151.05

24-HOUR VIEW: “Yesterday, USD dropped sharply, closing lower by 0.90% at 152.03. Despite the relatively sharp decline, downward momentum has not increased much. However, provided that it remains below 152.85 (minor resistance is at 152.45), USD could drop further. That said, it does not seem to have enough momentum to threaten the major support at 151.05 (there is another support level at 151.50).”

1-3 WEEKS VIEW: “Our latest narrative was from Tuesday (29 Oct, spot at 153.05), wherein ‘while conditions are severely overbought, there is a chance for the advance in USD to extend to 154.00 before pausing.’ We added, ‘only a breach of 151.90 (‘strong support’ level) would indicate that the USD advance that started early this month has ended.’ Yesterday, USD broke below 151.90, reaching a low of 151.83 Not only has upward momentum faded, but downward momentum is beginning to build. However, at this stage, we view any decline is part of a pullback and not a major reversal. USD has to break and remain below 151.05 before a more sustained decline can be expected. The chance of USD breaking clearly below 151.05 will increase in the next few days as long as 153.35 is not breached.”

The US Dollar (USD) has been pretty strong over the past four weeks, even if it has slowed down a bit in the last few days, Commerzbank’s FX analyst Volkmar Baur notes.

Betting offices think Trump is more likely to win

“Since summer, it seems that the US dollar has been following the odds on whether Donald Trump will win the election. According to Realclearpolitics.com, which tracks several betting agencies for this purpose, this probability was recently seen at around 66%. At the beginning of October, we were still below 50%. As a result, the trade-weighted US dollar also saw a significant gain.”

“The issue here is, the polls and the models don't see the probabilities as clearly as the betting shops do. Let's look at the two most well-known models for the US presidential election: the one from fivethirtyeight.com and the one from The Economist. The first of them also showed a shift towards Donald Trump in the last few weeks. But the odds are still only 52% to 48% in Trump's favour, which is a lot lower than the 66% you see in the betting shops. The Economist's model says it's a tie between the two candidates.”

Harris even managed to make up some lost ground in that model over the last few days. The models are based on fundamental data and a lot of surveys, and they still suggest it's too close to call. But the betting offices think Trump is more likely to win. It seems that the US dollar is more influenced by the betting offices. This could end up being a bit of a letdown.

• USD/CHF sees more upside above 0.8700 as soft Swiss inflation boosts SNB dovish bets.
• Annual Swiss CPI grew at a softer pace of 0.6% against 0.8% in September.
• Investors await the US NFP data for fresh interest rate guidance.

The USD/CHF pair strives to break above the key resistance of 0.8700 in Friday’s European session. The pair strengthens as the Swiss Franc (CHF) weakens after the release of the Swiss Consumer Price Index (CPI) data, which showed that price pressures soften further in October.

Year-on-year Swiss CPI decelerated at a faster pace to 0.6% against the estimates and the prior release of 0.8%. On month, Swiss inflation deflated by 0.1%, slower than 0.3% in September but was expected to remain flat.

A sharp disinflation trend has prompted expectations of more interest rate cuts by the Swiss National Bank (SNB). The SNB has already reduced its key borrowing rates by 75 basis points (bps) to 1% this year, and a further slowdown in inflationary pressures points to the need for more cuts in the December meeting.

Meanwhile, the Swiss Franc pair is also performing better due to the upbeat US Dollar (USD). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, bounces back above 104.00 ahead of the United States (US) Nonfarm Payrolls (NFP) data for October, which will be published at 12:30.

Investors will pay close attention to the US official employment data as the Federal Reserve (Fed) has been more worried about easing labor market conditions, with high confidence in the disinflation trend towards the bank’s target of 2%.

Economists expect the economy to have added 113K workers, which is less than half of the job additions at 254K recorded in September. The Unemployment Rate is expected to remain steady at 4.1%.

• The US Dollar rally halts below 1.3945 with investors awaiting US employment data.
• Nonfarm Payrolls are expected to have declined significantly, but the unemployment rate is seen steady at 4.1%.
• Oil prices are rallying on speculation that Tehran is preparing a retaliation to Israel.

The Dollar is trading with marginal losses against its Canadian counterpart on Friday. A cautious market mood ahead of the all-important US payrolls report and higher oil prices have halted the pair’s rally.

Investors are wary about placing large US Dollar bets ahead of a particularly relevant US Nonfarm Payrolls report, with the Federal Reserve meeting less than one week away.

The US private sector is expected to have created 113K jobs in October, down from 254K in September. It is worth remembering that the impact of hurricanes and recent strikes might have distorted this month’s figures and that the unemployment rate will also be observed in case of a significant deviation from the forecasts.

On the other hand, Oil prices are rallying on the back of news reports that Iran would be considering a retaliation against Israel, which is providing additional support to the CAD.

The overall picture, however, shows the US Dollar’s upside trend intact, yet with a bearish divergence suggesting the possibility of a downside correction. Resistances are at 1.3945 ahead of the 1400 round level. Immediate support is at 1.3895 and below here, at 1.3840. 
 

• The US Dollar has pared some of the recent losses favoured by a cautious market mood ahead of the NFP report.
• The US economy is expected to have created fewer jobs in October, partly due to the effect of hurricanes and strikes.
• Technical indicators show a loosening bullish momentum, which keeps 103.80 on the bears’ focus.

The US Dollar Index (DXY) is paring some losses on Friday’s European morning trading, with buyers returning after a four-day losing streak. A mild risk aversion ahead of the release of the US Nonfarm Payrolls report has increased support for the safe-haven US Dollar (USD).

The unexpected decline in US jobless claims and the sticky Personal Consumption Expenditures (PCE) Price Index failed to provide significant support to the US Dollar (USD), which hit fresh weekly lows on Thursday.

Stronger-than-expected Consumer Prices Index (CPI) in the Eurozone and some hawkish remarks from the Bank of Japan (BoJ) Governor Kazuo Ueda, lifted the Euro (EUR) and the Japanese Yen (JPY), respectively, and added pressure on the USD.

Daily digest market movers: US Dollar ticks up with key US data on tap

• The US Dollar’s downside attempts remain limited as investors bide their time ahead of the ISM Manufacturing PMI data and the latest US Nonfarm Payrolls report, less than one week ahead of the Federal Reserve’s (Fed) meeting.
   
• Investors’ bets that former President Donald Trump will win the US presidential election and implement an inflationary policy of low taxes, big spending and tariffs on imports is providing additional support to the US Dollar.
   
• US Nonfarm Payrolls are expected to have increased by 113K in October, down from the 254K advance seen in September. Hurricanes and strikes might distort the final numbers, so the unemployment rate – which is seen steady at 4.1% – is likely to have particular relevance.
   
• The ISM Manufacturing PMI is expected to have improved marginally to 47.6 from 47.2 in the previous month. Still, it would remain at levels reflecting contraction in the sector’s business activity. 

• DXY technical outlook: Support at 103.85 remains in focus

The DXY index is moving within a horizontal channel, but the broader bullish trend appears to be losing steam and technical indicators show signs of a potential trend shift.

The 4-hour chart shows a bearish divergence in the Relative Strength Index (RSI) and price action capped below the 50-period Simple Moving Average (SMA).

These negative signs keep the support area at 103.85 in play. Below here, the next target would be 103.40. To the upside, the index has some resistance at 104.20 ahead of the October peak at 104.63.

US Dollar Index 4-hour chart

The New Zealand (NZD) is likely to trade in a range between 0.5950 and 0.5990. In the longer run, there is still no clear increase in downward momentum; the chance of a sustained break below 0.5950 is not high, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Chance of a sustained break below 0.5950 is not high

24-HOUR VIEW: “NZD dropped briefly to 0.5940 yesterday, then rebounded to close at largely unchanged at 0.5978 (+0.09%). The brief decline did not result in any increase in downward momentum, and instead of continuing to decline, NZD is more likely to trade in a range between 0.5950 and 0.5990 today.”

1-3 WEEKS VIEW: “We turned negative in NZD early last month. As we tracked the decline, in our most recent narrative from two days ago (30 Oct, spot at 0.5970), we indicated that ‘While NZD dropped to a fresh 3-month low of 0.5954, there is still no clear increase in downward momentum.’ We added, ‘The chance of a sustained break below 0.5950 is not high.’ Yesterday, NZD dropped below 0.5950, but rebounded quickly from 0.5940. Although NZD broke below the 0.5950 support level, there has been no further increase in momentum. In other words, we continue to hold the view that a sustained break below 0.5950 is not high. Overall, only a breach of 0.6010 (no change in ‘strong resistance’ level) would mean that the weakness has stabilised.”

The end of the week in the region should be quiet. The Polish and Hungarian markets are closed today and activity should be muted, ING’s FX analyst Frantisek Taborsky notes.

EUR/HUF is likely to continue to test new highs

“On the calendar we have PMIs across the region with the exception of Poland. These could show some improvement after the data in Germany. In the Czech Republic, the budget result for October will be released which should indicate the first costs associated with the floods.”

“In the markets, the Czech koruna showed some outperformance yesterday within the region while the Hungarian forint remains under pressure. EUR/HUF almost touched 410 yesterday but returned to 408. There still seems to be no room for stabilisation here in the near term and we expect Central and Eastern Europe (CEE) to remain under pressure at least until the US election.”

“Further direction will depend on the outcome of the election. Therefore, EUR/HUF is likely to continue to test new highs. EUR/CZK bounced down from 25.40 and the koruna reaffirms its resistance within the region, which remains our preference for the days ahead.”

The Australian Dollar (AUD) is expected to trade in a range between 0.6550 and 0.6600. In the longer run, the potential for further sustained decline may be limited; the next level to monitor is 0.6520, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Next level to monitor is 0.6520

24-HOUR VIEW: “AUD traded in a range between 0.6540 land 0.6585 yesterday, closing slightly higher at 0.6582 (+0.15%). Momentum indicators are turning neutral, and AUD is expected to continue to trade in a range, likely between 0.6550 and 0.6600.”

1-3 WEEKS VIEW: “In our most recent narrative from two days ago (30 Oct, spot at 0.6565), we pointed out the ‘Although the weakness has not stabilised, given that the current decline is entering its second month, the potential for further sustained weakness may be limited.’ We also pointed out ‘The next level to monitor is 0.6520.’ There is no change in our view. Overall, only a breach of 0.6620 (no change in ‘strong resistance’ level) would mean that the weakness in AUD has stabilised.”

Eurozone flash inflation estimates for October showed a re-acceleration to 2.0%, which is understandably favouring a repricing to the hawkish side in the Euro (EUR) curve, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

EUR/USD is starting to look a bit expensive

“The OIS market now prices in 58bp of easing by the European Central Bank over December and January, with the chances of a half-size move in December now having been scaled back to just 22%.”

“There are no ECB speakers until Monday and today is a holiday in some eurozone markets, meaning potentially slightly reduced action in the euro markets.”

“EUR/USD is starting to look a bit expensive in the upper half of the 1.08-1.09 range, and barring a US jobs data-induced push today, we favour some depreciation in the pair into US Election Day, with a move back to 1.0800 as being completely in line with a wide rate differential in favour of USD.”

• EUR/USD falls as investors stay cautious ahead of the US official employment and the Manufacturing PMI data for October.
• The US presidential election could potentially inject volatility into the major pair as a Trump win could hurt the Eurozone’s export sector.
• Market expectations for large rate cuts from the ECB in December have diminished amid a pickup in inflation and higher growth.

EUR/USD slumps from a fresh two-week high near 1.0890 in European trading hours on Friday. The major currency pair declines as the US Dollar (USD) bounces back amid caution ahead of the release of the United States (US) Nonfarm Payrolls (NFP) and the ISM Manufacturing Purchasing Managers’ Index (PMI) data for October, which will be published in the New York session.

Economists expect the US economy to have added 113K fresh payrolls, significantly lower than the 254K increase seen in September. The Unemployment Rate is expected to have remained steady at 4.1%. 

Investors will pay close attention to the employment data as it will significantly influence market expectations for the Federal Reserve (Fed) interest rate path. Recent commentary from Fed officials indicates that the central bank is more focused on reviving labor market strength after gaining confidence about inflation returning to the bank’s target of 2%.

Traders are fully pricing in a 25 basis points (bps) rate cut at the Fed’s next meeting on Thursday, and the NFP is unlikely to alter this outlook unless there is a huge surprise. However, the data could have implications for the Fed’s December meeting: higher-than-expected payroll data would point to improving labor market conditions – which could dampen Federal Reserve (Fed) rate cut bets –, while weak employment numbers would boost them. 

Investors will also focus on the Average Hourly Earnings data for October, a key measure of wage growth, and the Manufacturing PMI data from both the ISM and S&P Global. 

As for earnings, the month-on-month wage growth measure is expected to have grown by 0.3%, slower than 0.4% in September, with annual figures rising steadily by 4%. 

The ISM Manufacturing PMI is seen at 47.6 in October, up slightly from 47.2 in September, suggesting that the contracting trend is intact but its pace has slowed. The final estimate of the S&P Global Manufacturing PMI is expected to remain unchanged from the 47.8 flash reading.

Daily digest market movers: EUR/USD falls as US Dollar rebounds

• EUR/USD faces a slight correction from near 1.0890 due to US Dollar’s recovery. However, the Euro’s (EUR) performance against other peers has remained firm on multiple tailwinds. Faster-than-expected Eurozone Gross Domestic Product (GDP) growth in the third quarter of the year and hotter-than-forecasted inflation have forced traders to reassess bets supporting European Central Bank (ECB) larger-than-usual rate cut bets for the December policy meeting.
• Eurostat showed on Wednesday that the Eurozone economy expanded by 0.9% compared to the same quarter of the preceding year, accelerating from the 0.6% growth in the previous quarter, mainly due to a surprise performance of the German economy, according to flash estimates. This has diminished the immediate risks of an economic downturn, although the outlook remains uncertain ahead of the US presidential election, which will take place on Tuesday.
• Eurozone exports are expected to be hit if former President Donald Trump wins against current Vice President Kamala Harris. Trump has vowed for a universal tariff of 10% on all nations – except China, which is expected to face much higher tariffs – to boost in-house manufacturing capabilities.
• Another factor supporting the EUR is the recent inflation uptick in the Eurozone. The preliminary Harmonized Index of Consumer Prices (HICP) accelerated more than expected to 2% in October from 1.7% in September.

Technical Analysis: EUR/USD struggles to climb above 200-day EMA

EUR/USD falls after posting a fresh two-week high around 1.0890 on Thursday. The major currency pair faces selling pressure near the 20-day Exponential Moving Average (EMA), which trades at around 1.0900. EUR/USD had previously rebounded sharply after gaining a firm footing near the upward-sloping trendline around 1.0750, which is plotted from the April 16  low at around 1.0600.

The 14-day Relative Strength Index (RSI) climbs to near 42.00 after staying in the 20.00-40.00 range for almost a month, suggesting that the bearish momentum is waning.

Looking up, the shared currency pair could rise to near the September 11 low around 1.1000 after breaking above the 200-day EMA around 1.0900. On the downside, the October 23 low of 1.0760 will be the key support area.

The Pound Sterling (GBP) is likely to trade in a range, probably between 1.2860 and 1.2950. In the longer run, GBP must break and remain below 1.2845 before a sustained decline can be expected, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Below 1.2845 a sustained decline can be expected

24-HOUR VIEW: “Yesterday, GBP fell by 0.48%, closing at a 2-1/2-month low of 1.2899. The sharp drop appears to be overdone, and GBP is unlikely to weaken much further. Today, GBP is more likely to trade in a range, probably between 1.2860 and 1.2950.”

1-3 WEEKS VIEW: “We indicated on Wednesday (30 Oct, spot at 1.3010) that ‘While GBP is expected to trade in a 1.2950/1.3070 range for now, the slightly firm underlying tone suggests it will likely test the top of the range first.’ GBP subsequently rose to 1.3043, but in a sudden move yesterday, it plunged sharply to a low of 1.2845. While there has been a buildup in momentum, GBP must break and remain below 1.2845 before further sustained decline can be expected. The likelihood of GBP breaking clearly below 1.2845 will remain intact, provided that 1.2985 is not breached. Looking ahead, the next level to watch below 1.2845 is 1.2795.”

The US releases jobs data for October today. Consensus is centred on a slowdown in nonfarm payrolls to 100k and unemployment unchanged at 4.1%, ING’s call is in line with consensus at 100k, although analysts see unemployment ticking higher to 4.2%. If they are right with this call today, they expect a slightly negative impact on the USD, as some of the strength associated with the previous jobs report is priced out and markets may push the Fed pricing back to 50bp of easing by year-end, ING’s FX analyst Francesco Pesole notes.

Greenback rally loses some steam this week

“That said, we doubt the dollar is due a large correction so close to the US election, and there is also a risk markets (and the Fed) will give a reduced weight to a softer payrolls numbers given the temporary hit to jobs from the latest severe weather events. The unemployment rate should, however, be less affected by those events, and that can have longer-lasting market implications.”

“The greenback rally has lost some steam this week against the euro due to stronger than expected eurozone data, but has remained generally bid against the high-beta currencies that are more exposed to Trump hedges. We cannot exclude that those hedges are increased once the payroll risk event is cleared, and some broad-based deleveraging ahead of a highly-binary US election for markets causes the kind of worsening in FX liquidity conditions that leads to a further rotation into dollars.”

“The US calendar also includes the ISM manufacturing, which is expected to inch higher from 47.2 to 47.6. The employment component is expected to have improved marginally too, and that may attract a bit more interest.”

The Bank of Japan (BOJ) returned to its very succinct policy statement at its scheduled Monetary Policy Meeting (MPM) on Thu (31 Oct) as the BOJ took a unanimous decision to keep its monetary policy guidelines for money market operations unchanged, in line with market expectations but against our projection for a 25-bps rate hike, UOB Group’s economist Alvin Liew notes.

Policy unchanged but reinstated policy outlook in Outlook Report

“The Bank of Japan (BOJ) at its scheduled Monetary Policy Meeting (MPM) on 31 Oct, took a unanimous decision to keep its monetary policy guidelines for money market operations unchanged. This was in line with market expectations but against our projection for a 25-bps rate hike.”

“While the BOJ did not provide any forward guidance in the latest Oct MPM statement, the pledge to continue to increase rates if the BOJ’s outlook is realized reappeared in the Oct Outlook Report (The Bank’s View) after being left out in the preceding Sep MPM statement.”

“Still expecting one more 25 bps hike for 2024 but external developments may delay that outcome into 2025: Based on the latest Oct 2024 Outlook report and Ueda’s comments during the press conference, we believe that the BOJ is not done with hikes but the timing could be influenced by external developments, especially the significant events taking place in the US in the very near future.”

Silver prices (XAG/USD) rose on Friday, according to FXStreet data. Silver trades at $32.84 per troy ounce, up 0.55% from the $32.66 it cost on Thursday.

Silver prices have increased by 38.03% since the beginning of the year.

The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 83.82 on Friday, down from 84.01 on Thursday.

(An automation tool was used in creating this post.)

The Euro (EUR) could rise to 1.0905; the major resistance at 1.0935 is unlikely to come under threat. In the longer run, upward momentum is beginning to build, but any advance is EUR is likely to face significant resistance at 1.0935, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.          

EUR is likely to face significant resistance at 1.0935

24-HOUR VIEW: “EUR rose and closed higher for the fourth straight day yesterday (1.0883, +0.26%). Upward momentum is building, albeit tentatively. Today, EUR could rise to 1.0905. As upward momentum is not strong for now, the major resistance at 1.0935 is unlikely to come under threat. Support is at 1.0865, followed by 1.0845.”

1-3 WEEKS VIEW: “We shifted from a negative to neutral stance in EUR two days ago (30 Oct, spot at 1.0820), indicating that ‘the month-long decline has come to an end.’ We held the view that EUR ‘is expected to trade in a 1.0760/1.0885 range for the time being.’ Yesterday, EUR rose slightly above the top of our expected range, reaching a high of 1.0887. Upward momentum is beginning to build. From here, EUR could edge higher, but any advance is expected to face significant resistance at 1.0935. To maintain the buildup in momentum, EUR must remain above the ‘strong support’ level, currently at 1.0815.”

• The Pound Sterling trades muted against the US Dollar ahead of key US data on the horizon.
• US NFP and the Manufacturing PMIs could influence the Fed interest rate path.
• The BoE is expected to cut interest rates only once in the remaining two meetings this year.

The Pound Sterling (GBP) ties in a tight range near 1.2900 against the US Dollar (USD) in Friday’s London session. The GBP/USD pair consolidates as investors await the United States (US) Nonfarm Payrolls (NFP) data for October, which will be published at 12:30 GMT. The official labor market data will influence market expectations for the Federal Reserve (Fed) interest rate path for the remainder of the year.

The NFP report is expected to show that the economy added 113K new workers, less than half of 254K jobs created in September. Economists expect the Unemployment Rate to remain steady at 4.1%. Consensus for the NFP data appears to be diverging when compared with Wednesday’s ADP Employment Change data, which showed that 233K new workers were hired by the private sector in October and pointed to an improvement in labor market conditions.

Also, Initial Jobless Claims data for the week ending October 25 fell to 216K against estimates of 230K, the lowest level in almost 22 weeks. Signs of improving labor demand would diminish the risks of an economic downturn and would allow the Fed to follow a more gradual rate-cut path. According to the CME FedWatch tool, the central bank is expected to cut interest rates by 25 basis points (bps) in both policy meetings in November and December.

In Friday’s North American session, investors will also focus on the Average Hourly Earnings and the ISM Manufacturing PMI data for October. Average Hourly Earnings, a key measure of wage growth, is estimated to have grown steadily by 4% on year. Month-on-month, the wage growth measure is expected to have risen by 0.3%, slower than the 0.4% increase seen in September. As for the PMI data, the index is expected to increase to 47.6 from 47.2 in September, signaling that activity in the US manufacturing sector contracted again but at a slower pace.

Daily digest market movers: Pound Sterling could rebound as BoE dovish bets ease

• The Pound Sterling exhibits a mixed performance against its major peers on Friday. The British currency fell significantly on Thursday but appears to have held ground as traders reassess the amount of interest-rate cuts that the  Bank of England (BoE) is expected to deliver for the remainder of the year. 
• The BoE is expected to cut interest rates once in any of the two meetings in November and December. According to Reuters, traders see an 80% chance that the BoE will cut its key borrowing rates by 25 basis points (bps) on Thursday, pushing them lower to 4.75%.
• On the contrary, analysts at the Bank of Montreal (BMO) expect the BoE to leave interest rates unchanged at 5% in its meeting on Thursday due to various factors. "Considering the composition of the MPC, and the effect the budget measures will have on the BoE projections and on inflation persistence, we think at least 5 [policymakers] may well vote for an unchanged Bank Rate."
• Market speculation for BoE interest rate cuts has reduced after the United Kingdom (UK) Chancellor of the Exchequer unveiled a 40 billion pounds worth of tax increase, the highest since 1993, and measures to increase fiscal deficit to revive public spending and boost investment. Also, the Office for Business Responsibility (OBR) raised inflation forecasts for 2024 and 2025 to 2.5% and 2.6%, respectively, prompting traders to further pare back BoE rate-cut bets.

Technical Analysis: Pound Sterling breaks down from Rising Channel

The Pound Sterling remains vulnerable near the fresh 11-week low of around 1.2850 against the US Dollar, which was posted on Thursday. The near-term trend of the GBP/USD pair remains uncertain as it stays below the 50-day Exponential Moving Average (EMA), which trades around 1.3060 but has found a cushion near the 200-day EMA around 1.2850.

The GBP/USD pair also delivers a breakdown of the Rising Channel chart formation on the daily time frame, which results in a bearish reversal.

The 14-day Relative Strength Index (RSI) slides back into the 20.00-40.00 range, signaling a fresh bearish momentum.

Looking down, the round-level support of 1.2800 will be a major cushion for Pound Sterling bulls. On the upside, the Cable will face resistance near the 50-day EMA around 1.3060.

• AUD/JPY may regain its ground as the RBA is widely expected to maintain a hawkish policy outlook.
• China’s Caixin Manufacturing PMI increased to 50.3 in October, from September’s 49.3.
• The au Jibun Bank Japan Manufacturing PMI declined to 49.2 in October, from 49.7 in September.

The AUD/JPY pair remains subdued for the second day, hovering around 100.00 during the European session after the release of mixed Q3 Producer Price Index (PPI) data on Friday. Despite this, expectations for a hawkish approach from the Reserve Bank of Australia (RBA) could have supported the Australian Dollar, helping limit losses in the AUD/JPY cross.

Australia’s Producer Price Index rose 0.9% quarter-on-quarter in Q3, following a 1.0% increase in the previous period and surpassing forecasts of a 0.7% rise, marking the 17th consecutive period of producer inflation. On an annual basis, PPI growth slowed to 3.9% in Q3, down from a 4.8% increase in the prior quarter.

China's Caixin Manufacturing Purchasing Managers Index (PMI) rose to 50.3 in October, up from 49.3 in September, exceeding market expectations of 49.7. Given China's role as a major trading partner for Australia, economic shifts in China could have a substantial impact on Australian markets.

In Japan, the headline au Jibun Bank Japan Manufacturing PMI stood at 49.2 in October, indicating a decline from 49.7 in September. This composite single-figure indicator shows that Japanese manufacturing production continued to decline at the beginning of the fourth quarter of 2024, with both output and new order inflows decreasing at more pronounced rates.

On Thursday, the Japanese Yen (JPY) strengthened following comments from Bank of Japan (BoJ) Governor Kazuo Ueda, which were interpreted as raising the likelihood of a rate hike in December. The central bank intends to continue adjusting policy rates as long as economic conditions and inflation align with its forecasts. The BoJ's policy remains focused on sustainably and stably achieving its 2% inflation target.

Japan's Chief Cabinet Secretary Yoshimasa Hayashi stated on Friday that he expects the Bank of Japan to work closely with the government to implement effective monetary policy, targeting stable and sustainable achievement of its price goals.

• EUR/GBP may appreciate as higher Eurozone inflation has bolstered chances of the ECB adopting a cautious approach to rate cuts.
• The ECB has emphasized that inflationary pressures remain high, driven mainly by wage growth.
• The UK’s Office for Business Responsibility has raised its 2024 inflation forecast to 2.5%, up from March estimates of 2.2%.

EUR/GBP inches lower after two days of gains, trading around 0.8430 during the early European hours on Friday. This downside of the EUR/GBP cross could be limited as unexpected increase in Eurozone inflation has bolstered expectations that the European Central Bank (ECB) will maintain a cautious approach to rate cuts, steering clear of significant reductions.

The preliminary Eurozone Harmonized Index of Consumer Prices increased to 2.0% year-over-year in October, up from the previous 1.7% reading and surpassing forecasts of 1.9%. The core inflation rate held steady at 2.7% year-over-year. This rise in inflation is supported by stronger-than-anticipated economic growth, with the Eurozone economy expanding by 0.4% quarter-on-quarter in Q3, twice the growth seen in Q2 and exceeding predictions of 0.2%.

The ECB has highlighted that inflationary pressures remain elevated, primarily due to wage growth. In its recent October meeting, the ECB reaffirmed its commitment to a "data-dependent and meeting-by-meeting" strategy for future policy decisions.

The Pound Sterling (GBP) lost ground since the UK Labour government’s first budget announced £40 billion in tax hikes aimed at reducing public finance gaps and bolstering public services, as reported by CNBC.

The UK’s Office for Business Responsibility (OCR) has revised its 2024 inflation forecast upward to 2.5%, from the previous estimate of 2.2% in March. This adjustment has also led traders to anticipate fewer interest rate cuts by the Bank of England (BoE).

• USD/CHF trades stronger to around 0.8640 in Friday’s early European session. 
• Investors will closely monitor the US October employment report on Friday. 
• The risk-off sentiment could boost the CHF, a safe-haven currency. 

The USD/CHF pair gathers strength to near 0.8640 during the early European session on Friday. The rebound of the US Dollar (USD) underpins the major pair ahead of the release of the US employment report, which is due later on Friday.

The US economic data have surprised on the upside over the last two months, indicating that the US Federal Reserve (Fed) ought to be patient with its easing policy in its next meetings. Financial markets have priced in about a 90% possibility that the Fed will cut rates by 25 basis points (bps) next week, a reduction from the 50 basis points in September, according to the CME FedWatch tool. 

Nonetheless, the US central bank may take the upcoming Nonfarm Payrolls (NFP) data on Friday into consideration about the pace and size of rate reductions in November. The US economy is estimated to added 113K job additions in October, while the Unemployment Rate is expected to remain steady at 4.1% during the same period. 

Substantial job market cooling could prompt the Fed to react with more aggressive cuts, weighing on the USD. However, some labor weakness may be attributed to temporary distortions from Hurricane Helene. 

On the Swiss front, the risk-off mood amid the uncertainty surrounding the US presidential election next week and the ongoing geopolitical tensions in the Middle East could boost the safe-haven flows, benefiting the Swiss Franc (CHF). Authorities say two separate Hezbollah rocket attacks killed seven people in northern Israel, making it the worst day of such strikes in months, per the BBC. 

• EUR/USD depreciates as traders adopt caution ahead of US Nonfarm Payrolls scheduled for Friday.
• The US Dollar rebounds as market caution persists amid uncertainty ahead of the upcoming US presidential election.
• The unexpected rise in Eurozone inflation has reinforced expectations that the ECB will adopt a cautious approach to rate cuts.

EUR/USD halts its four-day winning streak, trading around 1.0870 during the Asian session on Friday. This downside is attributed to the improved US Dollar (USD) due to ongoing market caution amid uncertainty leading up to the upcoming US presidential election.

On Thursday, the US Dollar encountered difficulties as the US Personal Consumption Expenditures (PCE) Price Index indicated that core inflation rose by 2.7% year-over-year in September. The monthly core PCE Price Index rose 0.3%, in line with the consensus. However, Initial Jobless Claims fell to a five-month low of 216,000 for the week ending October 25, signaling a resilient labor market and reducing expectations for imminent rate cuts by the Federal Reserve (Fed).

Traders are awaiting the Nonfarm Payrolls (NFP) report set for release on Friday. The US economy is projected to have added 113,000 jobs in October, with the Unemployment Rate expected to remain unchanged at 4.1%.

The annual inflation rate in the Eurozone increased to 2.0% in October, up from the previous 1.7% reading and surpassing forecasts of 1.9%. The core inflation rate held steady at 2.7% year-over-year. This rise in inflation is supported by stronger-than-anticipated economic growth, with the Eurozone economy expanding by 0.4% quarter-on-quarter in Q3, twice the growth seen in Q2 and exceeding predictions of 0.2%.

This unexpected increase in inflation data has bolstered expectations that the European Central Bank (ECB) will maintain a cautious approach to rate cuts, steering clear of significant reductions.

The ECB has highlighted that inflationary pressures remain elevated, primarily due to wage growth. In its recent October meeting, the ECB reaffirmed its commitment to a "data-dependent and meeting-by-meeting" strategy for future policy decisions.

Here is what you need to know on Friday, November 1:

The US Dollar (USD) stays resilient against its rivals early Friday, with the USD Index holding steady near 104.00 following a three-day slide. The US Bureau of Labor Statistics will publish the labor market report for October, which will include Nonfarm Payrolls, Unemployment Rate and wage inflation figures. Later in the day, the US economic calendar will also feature ISM Manufacturing PMI data for October.

The USD struggled to find demand following mixed macroeconomic data releases on Thursday. The Initial Jobless Claims declined by 12,000 to 216,000 for the week ending October 26, while the Employment Cost Index rose by 0.8% in the third quarter, falling short of the market expectation of 0.9%. The risk-averse market atmosphere, however, helped the USD find a foothold later in the American session. In the European morning on Friday, US stock index futures trade in positive territory, pointing to an improving market mood. In October, Nonfarm Payrolls are forecast to rise by 113,000 following the impressive 254,000 increase recorded in September.

During the Asian trading hours on Friday, the data from China showed that the Caixin Manufacturing PMI rose to 50.3 in October from 49.3 in September. This reading came in better than the market expectation of 49.7. In the meantime, the Producer Price Index in Australia rose 0.9% on a quarterly basis in the third quarter, at a stronger pace than analysts' estimate of 0.7%. AUD/USD showed no reaction to these data releases and was last seen trading in the red, slightly above 0.6550.

USD/CHF lost about 0.4% on Thursday and touched its lowest level in two weeks near 0.8630. The pair recovers slightly in the European morning on Friday and trades at around 0.8650. October Consumer Price Index (CPI) data from Switzerland will be published during the European trading hours.

USD/JPY declined sharply on Thursday and dropped below 152.00, pressured by hawkish comments from Bank of Japan (BoJ) Governor Kazuo Ueda. The pair stages a rebound on Friday and trades above 152.50.

EUR/USD extended its recovery and closed the fourth consecutive day in positive territory on Thursday. The pair struggles to build on its weekly gains and fluctuates below 1.0900 in the European morning. 

GBP/USD failed to benefit from the persistent USD weakness and fell to its lowest level since mid-August below 1.2850 on Thursday. Although the pair managed to erase a small portion of its daily losses, it lost its traction after testing 1.2900. At the time of press, GBP/USD was moving up and down in a narrow band near 1.2890.

Gold made a deep correction from the record-high it set at $2,790 and lost more than 1.5% on Thursday. XAU/USD clings to small daily gains and trades above $2,750 to begin the European session.

• US Nonfarm Payrolls are expected to rise by 113K in October after September’s stellar gain of 254K.
• The United States Bureau of Labor Statistics will release the labor data on Friday at 12:30 GMT.
• The US Dollar’s fate and the Fed’s future interest rate cuts hinge on the US jobs data.

All eyes are on the market-moving Nonfarm Payrolls (NFP) data for October, to be released by the United States Bureau of Labor Statistics (BLS) on Friday at 12:30 GMT.

US labor market data is critical to determining the Federal Reserve’s (Fed) future interest-rate cuts and has a significant influence on the value of the US Dollar (USD) against its major rivals.

What to expect in the next Nonfarm Payrolls report?

Economists expect the Nonfarm Payrolls to show that the US economy added a meager 113,000 jobs in October, following a strong gain of 254K in September.

The Unemployment Rate (UE) is likely to remain steady at 4.1% in the same period.

Meanwhile, Average Hourly Earnings (AHE), a closely-watched measure of wage inflation, are expected to increase by 4.0% in the year through October, at the same pace seen in September.

The October jobs report is eagerly awaited for fresh hints on the Fed’s interest rate path, especially as industry experts and analysts speculate that the Fed could pause its easing cycle next month on a blockbuster Nonfarm Payrolls print.  

However, downside risks to the jobs data persist, as it is likely to be distorted by the two recent hurricanes and the strike at Boeing.

Previewing the October employment situation report, TD Securities analysts said: “The November NFP report is set to be extremely noisy, but we expect a below-consensus 70k gain. High-frequency labor market data already shows some softening, and Hurricanes and the Boeing strike may subtract a further 80k from the reading.”

“We expect the UE Rate to rebound to 4.3% from 4.1% as the decline was likely overstated, but for AHE to rise 0.4% MoM amid distortions,” they added.

How will US October Nonfarm Payrolls affect EUR/USD?

Before the Fed entered its ‘blackout period’, several policymakers supported further interest rate cuts while warranting caution on the inflation outlook, echoing the US central bank’s data-dependent approach.

At the time of writing, markets are fully pricing in a 25 basis points (bps) Fed rate cut in November, with about a 70% probability of another quarter percentage point reduction in December, according to CME Group's FedWatch tool.

The USD has been capitalizing on US economic resilience and odds of a less aggressive Fed’s easing cycle leading into the NFP showdown on Friday.

Earlier in the week, the BLS reported that the JOLTS Job Openings declined to 7.44 million in September from 7.86 million in August. This reading came in below the market expectation of 7.99 million but failed to alter the market’s pricing for November’s rate cut move. 

The Automatic Data Processing (ADP) announced on Wednesday that employment in the US private sector increased by 233,000 jobs for October, accelerating from the upwardly revised 159,000 in September and better than the market estimate of 115,000. Even though these figures aren’t always correlated with the official NFP numbers, the strong ADP jobs report eased concerns about the health of the US labor market, leaving room for an upside surprise in Friday’s payrolls data.

If the headline NFP reading surprises with a payroll growth below 100,000, it could trigger a fresh knee-jerk US Dollar selling wave. However, the Greenback is expected to resume its recent uptrend against its major rivals as the dust settles and markets digest the noisy data due to hurricanes and strikes. In such a scenario, EUR/USD traders will brace for a whipsaw within a familiar range.

Conversely, a stronger-than-expected NFP print and elevated wage inflation data would seal in a rate reduction by the Fed next week, providing extra legs to the USD uptrend while dragging EUR/USD back toward 1.0700.

In conclusion, the reaction to the US labor data may be short-lived, with the Greenback expected to continue its advance.

Eren Sengezer, European Session Lead Analyst at FXStreet, offers a brief technical outlook for EUR/USD: 
“Once EUR/USD stabilizes above 1.0870, where the 200-day Simple Moving Average (SMA) is located, and starts using this level as support, it could gather bullish momentum. On the upside, 1.0940 (100-day SMA) could be seen as the next hurdle before 1.1000-1.1010 (round level, 50-day SMA).” 

“On the flip side, technical sellers could emerge if EUR/USD fails to clear the 1.0870 hurdle. In this scenario, 1.0800 (round level) could be seen as interim support before 1.0670 (static level from June).”

• USD/CAD softens to near 1.3925 in Friday’s early European session. 
• The uncertainty surrounding the US presidential election and geopolitical risks might help limit the USD’s downside. 
• Economists support calls for another oversized rate cut from the BoC. 

The USD/CAD pair loses momentum to around 1.3925 during the early European trading hours on Friday. The weakening of the US Dollar (USD) drags the pair lower. Traders brace for the highly-anticipated US Nonfarm Payrolls (NFP) for October, which is due later on Friday. 

The Commerce Department report showed the US Personal Consumption Expenditures (PCE) Price Index, inflation by the Fed's targeted measure, increased  2.1% on a yearly basis in September, compared to 2.2% in August. This figure came in line with market expectations. 

The downside of the Greenback might be limited amid the uncertainty ahead of the US presidential election next week and the ongoing geopolitical tensions in the Middle East, boosting the safe-haven currency like the USD. However, the US October NFP report on Friday could provide cues about the Fed's interest rate outlook. Any signs of weakness in the US economy or labor market could prompt the bets of a jumbo Fed rate cut again, which might exert some selling pressure on the USD. 

On the Loonie front, the rising expectation that the Bank of Canada (BoC) could deliver a bigger rate cut again amid signs the economy stalled might contribute to the Canadian Dollar’s (CAD) downside. Andrew Grantham, CIBC senior economist, said, “With growth once again appearing to fall short of their already downgraded forecast, we continue to forecast that policymakers will deliver another 50 bps cut at the December meeting.”

• NZD/USD remains steady due to an unexpected increase in its largest trading partner China's factory activity.
• China’s Caixin Manufacturing PMI rose to 50.3 in October, up from September’s 49.3, surpassing the expected 49.7 reading.
• The US Dollar breaks its four-day losing streak as market caution persists amid uncertainty ahead of upcoming US presidential election.

NZD/USD remains stable for the third consecutive session, trading around 0.5980 during the Asian hours on Friday. The New Zealand Dollar (NZD) may have gained some support from an unexpected increase in China's factory activity, as China is New Zealand's largest trading partner.

China's Caixin Manufacturing Purchasing Managers Index (PMI) rose to 50.3 in October, up from 49.3 in September, exceeding market expectations of 49.7. Additionally, the seasonally adjusted Building Permits from Statistics New Zealand showed a 2.6% month-on-month increase in new construction permits for September, following a 5.3% decline in August.

However, the Kiwi Dollar may face challenges due to a heightened likelihood of a more dovish stance from the Reserve Bank of New Zealand (RBNZ), especially after inflation returned to the central bank's target range. The markets have fully priced in a 50 basis point rate cut in November and currently project a decrease in the cash rate from 4.75% to 3.82% by the end of this year.

The US Dollar (USD) breaks its four-day losing streak due to ongoing market caution amid uncertainty leading up to the upcoming US presidential election. However, the Greenback encountered difficulties as the US Personal Consumption Expenditures (PCE) Price Index indicated that core inflation rose by 2.7% year-over-year in September.

However, Initial Jobless Claims fell to a five-month low of 216,000 for the week ending October 25, signaling a resilient labor market and reducing expectations for imminent rate cuts by the Federal Reserve (Fed).

Traders are awaiting the Nonfarm Payrolls (NFP) report set for release on Friday. The US economy is projected to have added 113,000 jobs in October, with the Unemployment Rate expected to remain unchanged at 4.1%.

Gold prices rose in India on Friday, according to data compiled by FXStreet.

The price for Gold stood at 7,439.47 Indian Rupees (INR) per gram, up compared with the INR 7,418.85 it cost on Thursday.

The price for Gold increased to INR 86,773.19 per tola from INR 86,531.95 per tola a day earlier.

FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.

(An automation tool was used in creating this post.)

• The Japanese Yen depreciated following the release of Manufacturing PMI on Friday.
• The headline Jibun Bank Japan Manufacturing PMI registered at 49.2 in October, reflecting a decrease from 49.7 in September.
• US Nonfarm Payrolls are expected to increase by 113,000 jobs in October, a decline from the previous count of 254,000.

The Japanese Yen (JPY) retraces some of its recent gains following the release of the Manufacturing Purchasing Managers Index (PMI) by Jibun Bank and S&P Global on Friday. However, the USD/JPY pair declined as the JPY strengthened after post-meeting comments from Bank of Japan (BoJ) Governor Kazuo Ueda on Thursday, which were seen as increasing the likelihood of a rate hike in December.

The headline au Jibun Bank Japan Manufacturing PMI stood at 49.2 in October, indicating a decline from 49.7 in September. This composite single-figure indicator shows that Japanese manufacturing production continued to decline at the beginning of the fourth quarter of 2024, with both output and new order inflows decreasing at more pronounced rates.

Japan's Chief Cabinet Secretary Yoshimasa Hayashi stated on Friday that he anticipates the Bank of Japan will collaborate closely with the government to implement appropriate monetary policy aimed at achieving its price target in a sustainable and stable manner.

Traders are anticipating the release of the US Nonfarm Payrolls (NFP) report on Friday, with expectations that the US economy added 113,000 jobs in October, while the Unemployment Rate is forecasted to remain steady at 4.1%.

Daily Digest Market Movers: Japanese Yen depreciates despite increased odds of BoJ rate hikes

• The USD/JPY pair gains ground as the US Dollar (USD) breaks its four-day losing streak due to ongoing market caution amid uncertainty leading up to the upcoming US presidential election. However, the Greenback encountered difficulties following the release of the Personal Consumption Expenditures (PCE) Price Index data on Thursday.
• The US Personal Consumption Expenditures (PCE) Price Index showed that core inflation increased by 2.7% year-over-year in September. Additionally, Initial Jobless Claims dropped to a five-month low of 216,000 for the week ending October 25, signaling a robust labor market and lessening expectations for imminent rate cuts by the Federal Reserve (Fed).
• The Bank of Japan decided to keep its short-term interest rate target at 0.25% following the conclusion of its two-day monetary policy review on Thursday. This decision was in line with market expectations for maintaining stability.
• According to the BoJ Outlook Report for Q3, the central bank plans to continue raising policy rates as long as the economy and prices align with its forecasts, particularly given that real interest rates are currently very low. The Bank of Japan aims to conduct monetary policy with a focus on sustainably and stably achieving its 2% inflation target.
• US Gross Domestic Product (GDP) annualized expanded by 2.8% in Q3, below 3.0% in Q2 and forecasts of 3.0%. The ADP Employment Change report showed that 233,000 new workers were added in October, marking the largest increase since July 2023. This followed an upward revision to 159,000 in September and significantly exceeded forecasts of 115,000.
• On Tuesday, the US Bureau of Labor Statistics (BLS) reported that JOLTS Job Openings reached 7.443 million in September, down from 7.861 million in August and falling short of the market expectation of 7.99 million.
• Japan’s Economy Minister Ryosei Akazawa remarked on Tuesday that a weaker Yen could drive up prices via higher import costs, potentially reducing real household income and dampening private consumption if wage growth does not keep pace.
• Japan’s Liberal Democratic Party (LDP)-coalition lost its parliamentary majority in Sunday's election, which has increased uncertainty regarding the Bank of Japan's (BoJ) rate-hike plans.

Technical Analysis: USD/JPY may re-enter the ascending channel to strengthen its bullish bias

The USD/JPY pair trades around 152.40 on Friday. Daily chart analysis indicates the potential softening of the bullish bias, as the pair has broken below its ascending channel. However, the 14-day Relative Strength Index (RSI) remains above the 50 mark, suggesting that bullish momentum is active.

In terms of resistance, the USD/JPY pair faces resistance at the lower boundary of the ascending channel, which is at the 152.50 level. If the pair successfully re-enters this channel, it could target the upper boundary around the 158.30 level.

On the downside, support for the USD/JPY pair may be found around the 14-day Exponential Moving Average (EMA) at the 151.50 level, with further support around the psychological level of 150.00.

USD/JPY: Daily Chart

• WTI price gained ground due to rising geopolitical tensions amid reports that Iran may attack Israel.
• Israeli intelligence believes Iran intends to launch numerous drones and ballistic missiles before the US presidential election.
• US Oil production increased by 1.5% in August, reaching a monthly record high of 13.4 million barrels per day.

West Texas Intermediate (WTI) Oil price holds steady on Friday during Asian trading hours, around $70.20 per barrel, following gains in the previous session. Crude Oil prices were bolstered by rising geopolitical tensions amid reports that Iran may be planning a retaliatory strike on Israel from Iraqi territory in the near future.

According to a Reuters report citing Axios, two unnamed Israeli sources revealed that Israeli intelligence believes Iran intends to launch an attack from Iraq, potentially involving numerous drones and ballistic missiles, possibly before the US presidential election on November 5.

Furthermore, the OPEC+ coalition, which comprises the Organization of the Petroleum Exporting Countries and its allies, including Russia, may delay its planned output increase for December by at least a month amid concerns over weak oil demand and rising supply.

Originally, the group had aimed to boost production by 180,000 barrels per day (bpd) in December, but this increase was previously postponed from October due to falling prices, according to four sources familiar with the situation, as reported by Reuters on Wednesday.

US Oil production increased by 1.5% in August, reaching a monthly record high of 13.4 million barrels per day (bpd), according to the US Energy Information Administration's (EIA) latest Oil and natural gas production report. This figure surpasses the previous record of 13.31 million bpd set in December 2023. In major Oil-producing states, Texas saw a 1.7% rise in output to a record 5.82 million bpd, while New Mexico's production climbed 2.8%, reaching a record 2.09 million bpd.

• Gold price trades in positive territory in Friday’s Asian session. 
• US election uncertainty and geopolitical risks underpin the Gold price, but renewed USD might cap its upside. 
• The US October Nonfarm Payrolls data will take center stage on Friday. 

The Gold price (XAU/USD) recovers some lost ground on Friday. The uncertainties surrounding the US presidential election and the ongoing geopolitical tensions in the Middle East provide some support to the precious metal, a traditional safe-haven asset. 

Nonetheless, the rising US treasury bond yields and a stronger US Dollar (USD) might weigh on the yellow metal. Traders will closely watch the US October employment report on Friday for fresh impetus, including the Nonfarm Payrolls (NFP), Unemployment Rate and Average Hourly Earnings. The stronger outcome could prompt bets for less aggressive policy easing by the Federal Reserve (Fed), exerting some selling pressure on the non-yielding yellow metal. 

Daily Digest Market Movers: Gold price rebounds ahead of highly-anticipated US NFP data

• “Gold should retain its upward bias and may even flirt with $2,800 in the days ahead, as long as US election risks continue weighing on market sentiment, while Fed rate cut expectations remain intact,” said Han Tan, chief market analyst at Exinity Group. 
• The US Personal Consumption Expenditures (PCE) Price Index, rose 2.1% on a yearly basis in September, compared to 2.2% in August. This figure came in line with market expectations. On a monthly basis, the PCE increased 0.2%, as expected. 
• The core PCE Price Index, which excludes volatile food and energy prices, jumped 2.7% in the same period, matching August's rise and above the market estimation of 2.6%. The core PCE Price Index rose 0.3% on a monthly basis, in line with the consensus.
• US Initial Jobless Claims for the week ending October 26 fell from 228K to 216K, coming in below the forecast of 230K.
• Markets are currently pricing in almost 100% odds for a 25-basis points (bps) rate cut by the Fed in the November meeting. 

Technical Analysis: Gold price remains strong in the longer term

The Gold price gains momentum on the day. The precious metal keeps a strong bullish trend on the daily timeframe as the price is well-supported above the key 100-day Exponential Moving Average (EMA). Additionally, the 14-day Relative Strength Index (RSI) stands above the 50-midline near 62.30, suggesting further upside looks favorable in the near term. 

The all-time high and psychological mark in the $2,790-$2,800 zone appears to be a tough nut to crack for Gold bulls. A decisive break above this level could result in a rally to $2,850. 

On the downside, the initial support level for the yellow metal emerges at $2,715, the low of October 24. The additional downside filter to watch is $2,624, the low of September 30. The next contention level is located at $2,600 before $2,500, the low of September 9 and round figure. 

• The Australian Dollar edges lower following the mixed Producer Price Index data released on Friday.
• China’s Caixin Manufacturing PMI rose to 50.3 in October, up from September’s 49.3, surpassing the expected 49.7 reading.
• The US Dollar has struggled since the Personal Consumption Expenditures - Price Index data released on Thursday.

The Australian Dollar (AUD) edges lower against the US Dollar (USD) following two days of gains, as Australia's mixed Producer Price Index (PPI) data for the third quarter was released on Friday. However, expectations of a hawkish stance from the Reserve Bank of Australia (RBA) continue to support the Aussie Dollar, limiting losses in the AUD/USD pair.

Australia's Producer Price Index rose by 0.9% quarter-on-quarter in Q3, following a 1.0% increase in the prior period and surpassing market forecasts of a 0.7% rise. This marks the 17th consecutive period of producer inflation. On an annual basis, the PPI growth slowed to 3.9% in Q3, down from the previous quarter’s 4.8% increase.

China’s Caixin Manufacturing Purchasing Managers Index (PMI) increased to 50.3 in October, up from 49.3 in September, surpassing market expectations of 49.7. As China is a key trade partner for Australia, shifts in the Chinese economy could significantly influence Australian markets.

The US Dollar (USD) faced challenges after the release of Personal Consumption Expenditures (PCE) - Price Index data on Thursday. However, the downside of the USD would be restrained due to prevailing market caution amid uncertainty ahead of the upcoming US presidential election.

Traders are awaiting the Nonfarm Payrolls (NFP) report set for release on Friday. The US economy is projected to have added 113,000 jobs in October, with the Unemployment Rate expected to remain unchanged at 4.1%.

Daily Digest Market Movers: Australian Dollar loses ground after PPI data

• The US Personal Consumption Expenditures (PCE) Price Index indicated that core inflation rose by 2.7% year-over-year in September. Additionally, Initial Jobless Claims fell to a five-month low of 216,000 for the week ending October 25, signaling a resilient labor market and reducing expectations for imminent rate cuts by the Federal Reserve (Fed).
• The seasonally adjusted Australian Retail Sales rose by 0.1% month-over-month in September, falling short of the expected 0.3% and significantly down from the 0.7% growth seen in the previous month. On a quarterly basis, Retail Sales increased by 0.5% in Q3, rebounding from a 0.3% decline in the prior quarter.
• China's NBS Non-Manufacturing PMI rose to 50.2 in October, up from 50.0 in the previous month but slightly below market expectations of 50.4. Meanwhile, the NBS Manufacturing PMI edged up to 50.1 from the prior reading of 49.8, modestly surpassing the forecast of 50.0.
• US Gross Domestic Product (GDP) annualized expanded by 2.8% in Q3, below 3.0% in Q2 and forecasts of 3.0%. The ADP Employment Change report showed that 233,000 new workers were added in October, marking the largest increase since July 2023. This followed an upward revision to 159,000 in September and significantly exceeded forecasts of 115,000.
• The Australian Bureau of Statistics reported that the Consumer Price Index (CPI) rose just 0.2% quarter-over-quarter in the third quarter, down from 1.0% in the previous quarter and slightly below the anticipated 0.3%. The monthly CPI rose by 2.1% year-over-year in September, coming in below market expectations of 2.3% and down from August's reading of 2.7%.
• On Tuesday, the US Bureau of Labor Statistics (BLS) reported that JOLTS Job Openings reached 7.443 million in September, down from 7.861 million in August and falling short of the market expectation of 7.99 million.
• The Reserve Bank of Australia signaled that the current cash rate of 4.35% is sufficiently restrictive to guide inflation back to the target range of 2%-3% while continuing to support employment. As a result, a rate cut in November appears unlikely.
• ANZ-Roy Morgan Australia Consumer Confidence dropped to 86.4 this week, down from 87.5 the previous week.

Technical Analysis: Australian Dollar must reintegrate into descending channel to firm up bearish bias

AUD/USD trades near 0.6570 on Friday. The daily chart indicates a potential softening of the bearish bias, as the pair has broken above its descending channel pattern. The 14-day Relative Strength Index (RSI) aligns with lower highs and lows, suggesting that bearish sentiment persists.

On the support side, AUD/USD may test the upper boundary at 0.6550, potentially re-entering the descending channel. A successful return would reinforce the bearish bias, pushing the pair toward the key psychological level of 0.6500, followed by the channel's lower boundary near 0.6480.

Regarding resistance, AUD/USD could challenge the nine-day Exponential Moving Average (EMA) at 0.6604. A break above this level may bolster the pair, potentially paving the way to the psychological level of 0.6700.

AUD/USD: Daily Chart

China's Caixin Manufacturing Purchasing Managers' Index (PMI) jumped to 50.3 in October after recording 49.3 in September, the latest data showed on Friday.

The market forecast was for a 49.7 figure in the reported month.

AUD/USD reaction to China’s PMI data

At the time of writing, AUD/USD is trading 0.13% lower on the day at 0.6573.

Japan Chief Cabinet Secretary Yoshimasa Hayashi said on Friday that he expected the Bank of Japan (BoJ) to work closely with the government to conduct appropriate monetary policy to sustainably, and stably hit its price target.  

Key quotes

Market reaction

At the time of writing, USD/JPY is trading 0.03% higher on the day at 152.07. 

The People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead on Friday at 7.1135, as compared to the previous day's fix of 7.1250 and 7.1122 Reuters estimates.

• USD/JPY edges lower to 151.95 in Friday’s Asian session. 
• The BoJ leaves the door open for a near-term rate hike. 
• Investors await the US NFP data, which is due later on Friday. 

The USD/JPY pair softens to around 151.95 during the Asian trading hours on Friday. The Japanese Yen (JPY) edges higher after Bank of Japan (BoJ) Governor Kazuo Ueda’s remarks, which were interpreted as heightening the chance of a rate hike in December.

The Bank of Japan (BoJ) decided to keep short-term interest rates at 0.25% at its two-day meeting on Thursday. The central bank projected inflation would move around its 2% target in the coming years. "Looking at domestic data, wages and prices are moving in line with our forecasts. As for downside risks to the US and overseas economies, we're seeing clouds clear a bit," said BoJ Governor Kazuo Ueda. The less dovish remarks from the BoJ officials are likely to underpin the JPY in the near term. 

The US October Nonfarm Payrolls (NFP) data will be the highlight on Friday. The US economy is estimated to added 113K job additions in October, while the Unemployment Rate is expected to remain steady at 4.1%. In case of the weaker-than-expected data, this could prompt Federal Reserve (Fed) dovish bets, exerting some selling pressure on the Greenback. 
 

• GBP/USD weakens to near 1.2895 in Friday’s early Asian session. 
• The US Nonfarm Payrolls data will take center stage later on Friday. 
• The UK Autumn Forecast Statement weighs on the GBP. 

The GBP/USD pair remains on the defensive around 1.2895, the lowest since August 16 during the early Asian trading hours on Friday. The major pair edges lower after the UK Labour government announced its first Autumn Forecast Statement on Wednesday. 

The US inflation, as measured by the Personal Consumption Expenditure Price Index (PCE), grew at a slightly faster-than-expected pace in September. Data released by the US Bureau of Economic Analysis (BEA) on Thursday showed that the headline PCE rose 2.1% YoY in September, compared to 2.2% in August, in line with the market consensus of 2.1%. 

The core PCE, which excludes volatile food and energy prices, jumped 2.7% in the same period, matching August's rise and above the market estimation of 2.6%. According to the CME FedWatch tool, the financial markets expect the Fed to cut the interest rate by 25 basis points (bps) in both of the policy meetings to be held in the November and December meetings.

Investors will closely monitor the US Nonfarm Payrolls (NFP) data for October on Friday for fresh impetus. The NFP report is expected to show that the US economy added 113K job additions in October, while the Unemployment Rate is expected to remain steady at 4.1%.

On the UK’s front, the UK's new Labour government released its first budget on Wednesday, which includes £40 billion in tax rises to plug a hole in the public finances and allow for investment in public services. 

Additionally, the UK’s Office for Business Responsibility (OCR) upwardly revised inflation forecasts for 2024 to 2.5% from 2.2% estimated earlier in March, a revision that also led traders to expect less interest rate reductions by the Bank of England (BoE). This, in turn, might cap the downside for the Pound Sterling (GBP).