CFD Markets Analysis: News and forecasts for 4 December 2024

23:52

Fed’s Daly: No urgency to decrease interest rates

Federal Reserve Bank of San Francisco President Mary Daly said on Wednesday that the central bank does not need to be urgent on rate cuts and more work ahead to achieve 2% inflation and lasting growth.

Key quotes

We do not need to be urgent.
Calls for continuing careful calibration of monetary policy
Will wait until the December meeting to make own decision.
There's a lot more work for us to do to deliver on 2% inflation and durable expansion.
Inflation is still the number one challenge people are facing.

Market reaction

The US Dollar Index (DXY) is trading 0.04% lower on the day at 106.32, as of writing.

Fed FAQs

What does the Federal Reserve do, how does it impact the US Dollar?

Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

How often does the Fed hold monetary policy meetings?

The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

What is Quantitative Easing (QE) and how does it impact USD?

In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

What is Quantitative Tightening (QT) and how does it impact the US Dollar?

Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.

23:50

Japan Foreign Investment in Japan Stocks down to ¥-607.7B in November 29 from previous ¥-446B

23:20

Beige Book: Fed districts report slight growth, rising business optimism for 2025

The Federal Reserve (Fed) commented in its latest Beige Book survey released on Wednesday that US economic activity increased slightly in November after little change in preceding months, and US businesses grew more upbeat about demand prospects.

Key quotes

Economic activity rose slightly in most districts.

Three regions exhibited modest or moderate growth that offset flat or slightly declining activity in two others.

Expectations for growth rose moderately across most geographies.

Employment levels are flat to slightly higher, hiring is subdued amid low turnover.

Wage growth softened to a modest pace, except for robust gains for entry-level and skilled trade positions.

Price increases are modest; firms report greater difficulty passing costs to customers.

Consumer spending is stable but price sensitivity is increasing.

Manufacturing activity mixed across regions.

Commercial real estate markets are showing signs of stabilization in some areas.

Market reaction

The US Dollar Index (DXY) is trading 0.01% higher on the day at 106.37, as of writing.

Fed FAQs

What does the Federal Reserve do, how does it impact the US Dollar?

Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

How often does the Fed hold monetary policy meetings?

The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

What is Quantitative Easing (QE) and how does it impact USD?

In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

What is Quantitative Tightening (QT) and how does it impact the US Dollar?

Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.

23:10

USD/CAD strengthens above 1.4050 as traders await US labour market data USDCAD

USD/CAD drifts higher to around 1.4075 in Thursday’s early Asian session.
Fed Chair Powell was upbeat about the US economy; US ISM Services came in weaker than expected in November.
The BoC will likely cut a deeper-than-usual interest rate in its December meeting.

The USD/CAD pair edges higher to near 1.4075 during the early Asian session on Thursday. The rising bets of the Bank of Canada (BoC) rate cut and a decline in crude oil prices continue to undermine the commodity-linked Canadian Dollar (CAD). The Canadian November Ivey PMI and US weekly Initial Jobless Claims are due later on Thursday.

The Fed Chair Jerome Powell said on Wednesday that the US economy is in remarkably good shape, allowing Fed officials to potentially be more cautious in cutting interest rates further. Powell further stated that Unemployment is still very low and making progress on inflation. The cautious stance by the US central bank is likely to underpin the Greenback against the CAD in the near term.

Data released by the Institute for Supply Management (ISM) on Wednesday showed that the US Services PMI fell to 52.1 in November from 56.0 in October. This reading came in weaker than the expectation of 55.5. The USD weakened in an immediate reaction to the downbeat US Services PMI data.

On the other hand, the expectation that the Bank of Canada (BoC) would continue cutting rates more aggressively than the Fed might help limit the USD’s downside. Investors anticipate the Canadian central bank to continue its easing campaign at an interest rate decision next week, with the market pricing in nearly 50% odds of another large 50 basis points (bps) move.

Additionally, the lower crude oil prices could drag the commodity-linked Loonie lower. It's worth noting that Canada is the largest oil exporter to the United States (US), and lower crude oil prices tend to have a negative impact on the CAD value.

Canadian Dollar FAQs

What key factors drive the Canadian Dollar?

The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.

How do the decisions of the Bank of Canada impact the Canadian Dollar?

The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.

How does the price of Oil impact the Canadian Dollar?

The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.

How does inflation data impact the value of the Canadian Dollar?

While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.

How does economic data influence the value of the Canadian Dollar?

Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.

23:00

South Korea Gross Domestic Product Growth (YoY) in line with forecasts (1.5%) in 3Q

23:00

South Korea Gross Domestic Product Growth (QoQ) came in at 0.1% below forecasts (0.5%) in 3Q

22:38

EUR/AUD Price Forecast: Snaps 4-day losses, climbs past 1.6350

EUR/AUD climbs over 0.86%, rebounding off a low of 1.6198 as bullish sentiment takes hold.
The pair tested but failed to breach the confluence of the 100 and 200-day SMAs at around 1.6378.
Potential upward targets set at 1.6400 and 1.6500, with October highs in view; support remains near weekly lows of 1.6159.

The EUR/AUD snaps four days of losses and climbs over 0.86% on Wednesday, late in the North American session. At the time of writing, the cross-currency pair trades at 1.6341 after bouncing off daily lows of 1.6198.

EUR/AUD Price Forecast: Technical outlook

The EUR/AUD remains sideways; yet It tested the confluence of the 100 and 200-day Simple Moving Averages (SMAs) at 1.6378-67 but failed to extend its gains past that level, retreating below 1.6370.

Momentum has shifted bullish, as depicted by the Relative Strength Index (RSI), an indication that the pair could aim towards 1.6400.

If EUR/AUD clears the 1.6400 figure, the next stop would be 1.6500, followed by the October 31 peak at 1.6600.

Conversely, if the pair reverses below 1.64300, it could test the current week’s low of 1.6159. A breach of the latter will expose the October 2 low of 1.6005 before testing the yearly low of 1.5966.

EUR/AUD Price Chart – Daily

Euro FAQs

What is the Euro?

The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

What is the ECB and how does it impact the Euro?

The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

How does inflation data impact the value of the Euro?

Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

How does economic data influence the value of the Euro?

Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

How does the Trade Balance impact the Euro?

Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

21:54

NZD/JPY Price Analysis: Pair Stabilizes Around 88.10 as Bears Take a Breather

NZD/JPY stabilized at 88.10 on Wednesday after recent declines.
Indicators flattened in negative territory, signaling a pause in bearish momentum.
Bears remain in control, but oversold conditions could limit further immediate downside.

The NZD/JPY pair stabilized around 88.10 on Wednesday, following a decline earlier in the week that saw the pair drop towards the 88.00 level. While the bears remain in control, the recent pause suggests a potential breather as technical indicators show signs of flattening in negative territory.

The Relative Strength Index (RSI) remains near oversold levels, currently at 32, reflecting subdued buying interest but signaling that further immediate downside might be limited. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram continues to print in the red but shows signs of stabilization, indicating weakening bearish momentum. This technical setup could prompt a period of consolidation before the next directional move.

On the upside, a recovery toward the 89.00 level could challenge bearish control, with 90.00 serving as a key resistance level for bulls. Conversely, if the bearish momentum resumes, the pair could retest the 88.00 level and potentially extend losses toward the 85.00-86.00 range.

NZD/JPY Daily chart

21:32

NZD/USD Price Analysis: Pair continues falling further below the 20-day SMA NZDUSD

NZD/USD falls for a third consecutive session, settling near 0.5830.
Bulls failed to reclaim the 20-day SMA, intensifying bearish momentum.
Indicators show deepening negative signals, reinforcing the bearish outlook.

The NZD/USD pair extended its losses on Wednesday, marking a three-day losing streak as it continued to drift lower, closing near 0.5850.

The inability to regain the 20-day Simple Moving Average (SMA) highlights the pair’s struggle to find sustained bullish momentum. Technical indicators point to mounting downside risks, with the Relative Strength Index (RSI) slipping further into negative territory, currently at 34, nearing oversold levels and signaling sustained selling pressure. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram has deepened in the red, with a widening gap between the MACD line and the signal line, underscoring intensifying bearish momentum.

With the technical outlook firmly bearish, the pair faces immediate support at 0.5850, with further downside risks toward the 0.5820 level. On the upside, reclaiming the 20-day SMA remains critical for any bullish recovery, but current conditions suggest that such a move remains unlikely in the near term.

NZD/USD Daily Chart

21:22

Australian Dollar sinks near 0.6400 amid heightened expectations of RBA's dovish stance

AUD/USD fell 0.76% to 0.6436 in Wednesday's session.
Disappointing Australian data sent the AUD/USD to a fresh four-month low near 0.6400.
Weak Q3 GDP data has boosted bets that the RBA will start cutting interest rates sooner rather than later.

The AUD/USD declined by 0.76% to 0.6435 in Wednesday's session, driven by disappointing data results from key fundamentals in Australia. This has sent AUD/USD to fresh four-month lows in the boundaries of the key contention zone at 0.6400.

In that sense, poor economic activity data led markets to believe that the Reserve Bank of Australia might consider cutting rates sooner instead of delaying it to May 2025.

Daily digest market movers: Australian Dollar sinks after weak GDP data from Australia

Australia's GDP growth unexpectedly slows to 0.8% year-over-year, below estimates of 1%.
Quarterly GDP expands by 0.3% below 0.4%.
This weak GDP data has increased expectations for RBA interest rate cuts to begin in April 2025.
On the US front, the Institute for Supply Management (ISM) Services PMI eased to 52.1 in November, below estimates and lower than October’s 56 reading.
In addition, Jerome Powell was on the wires and emphasized the Federal Reserve's independence, which is supported by both political parties.
Fed Chair Powell noted that the US economy is strong, with low unemployment and progress on inflation.
He confirmed that the Fed is moving cautiously toward neutral rates to balance inflation control with economic stability.

AUD/USD technical outlook: Pair faces selling pressure and struggles to recover

The AUD/USD pair remains under severe selling pressure and struggles to make a stride amidst a combination of fundamental and technical headwinds. Indicators stand firmly in the red, signaling the continuation of the bearish momentum.

The Relative Strength Index (RSI) plunges deep in the negative area, near the oversold territory, indicating extreme selling conditions. Meanwhile, the Moving Average Convergence Divergence (MACD) line lies well below the signal line, confirming the bearish bias. Overall, the technical outlook remains overwhelmingly bearish, suggesting that the AUD/USD may continue to face headwinds in the near term.

Australian Dollar FAQs

What key factors drive the Australian Dollar?

One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.

How do the decisions of the Reserve Bank of Australia impact the Australian Dollar?

The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.

How does the health of the Chinese Economy impact the Australian Dollar?

China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.

How does the price of Iron Ore impact the Australian Dollar?

Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.

How does the Trade Balance impact the Australian Dollar?

The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.

21:02

Gold price edges higher on Powell’s comments

Gold rises as Powell underscores the need for cautious monetary policy.
Mixed US economic data, including slightly disappointing ADP employment changes, support cautious investor sentiment.
Fed’s Musalem keeps optionality for the December meeting.

Gold price advances during Wednesday’s North American session, sponsored by mixed US economic data. Nevertheless, the non-yielding metal remained slightly subdued as Federal Reserve (Fed) Chair Jerome Powell crossed the wires. The XAU/USD trades at $2,652, up 0.35%.

Powell said the US economy is in good shape, adding that September’s rate cut was a message to support the labor market. He said that despite showing progress, it’s premature to declare victory on inflation, and the US central bank could be cautious in setting monetary policy.

Recently, inflation has proved to be stickier than expected. The latest three readings indicate that the disinflation process has stalled. Despite ticking up a tenth, prices remain far from hitting the Fed’s 2% goal.

Other officials crossed the newswires. St. Louis Fed President Alberto Musalem suggested that the time to slow or pause rate cuts might be approaching. He noted that the labor market aligns with full employment and expressed confidence that inflation could reach the 2% target within the next two years.

Meanwhile, Richmond Fed President Thomas Barkin stated that the risks to inflation and maximum employment appear balanced.

On the data front, US ADP National Employment Change figures came a whisker lower than foreseen in November, but October was downwardly revised. S&P Global and the Institute for Supply Management (ISM) revealed that Services PMIs cooled slightly, hinting the economy remains strong but is slowing down.

Ahead this week, the US docket will feature Fed speakers, Initial Jobless Claims and Nonfarm Payrolls (NFP) figures.

Daily digest market movers: Gold price capitalizes on weak US data

Gold prices advanced as US real yields dropped four basis points to 1.904%.
The US 10-year Treasury bond yield falls four basis points to 4.184%.
The US Dollar Index (DXY), which tracks the buck's performance against six currencies, stumbles 0.01% to 106.32 on the day.
The US ADP National Employment report for November showed private hiring increased by 145K, falling short of the 150K forecast and the downwardly revised October figure of 184K, previously 238K.
November's ISM Services PMI dropped to 52.1 from 56, underperforming the expected 55.7, while the S&P Global Services PMI also fell, declining to 56.1 from 57 and missing projections.
US Durable Goods Orders rose by 0.3% MoM in October, slightly improving from the 0.2% reported previously.
ADP data and the latest Job Openings & Labor Turnover Survey (JOLTS) report on Tuesday confirm that the labor market remains solid. Fed policymakers, who shifted their dual-mandate priority towards maximum employment, leaving aside price stability, can be relieved that the economy remains solid.
The CME FedWatch Tool indicates a 79% probability of a 25-basis-point rate cut at the Federal Reserve's December meeting, while Chicago Board of Trade data points to 19 bps of easing by the end of 2024.

Technical outlook: Gold price consolidates within $2,600 and the 50-day SMA

Gold remains upwardly biased yet remains subdued between $2,600 to $2,650 for the last seven days. It is capped on the upside by the 50-day Simple Moving Average (SMA) at $2,668; if it's broken, this would expose $2,700.

On further strength, bulls can test the year-to-date (YTD) high at $2,790. Conversely, bears stepping in could drag XAU/USD to $2,600, followed by the 100-day SMA at $2,578.

Gold FAQs

Why do people invest in Gold?

Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Who buys the most Gold?

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

How is Gold correlated with other assets?

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

What does the price of Gold depend on?

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

20:07

Dow Jones Industrial Average roils on hectic Wednesday

The Dow Jones rattled on Tuesday and continued to battle the 45,000 handle.
ADP jobs report says the number of new worker positions grew less than expected.
Despite firm gains in key stocks and sectors, the Dow Jones looked downward.

The Dow Jones Industrial Average (DJIA) churned in a tight range on Tuesday as investors grapple with mixed data and an overall headwind in non-tech stocks. ADP jobs figures hinted at a weaker-than-expected hiring phase in November, albeit by a slight margin.

Federal Reserve (Fed) Chairman Jerome Powell made an appearance on Tuesday, but the Fed head stuck closely to familiar talking points. Markets saw a brief spike in volatility, but the lack of momentous announcements regarding the odds of a rate cut in December saw investor interest wane.

US ADP Employment Change figures came in slightly below expectations for November, printing at 146K compared to the median market forecast of 150K. The figure eased further back from October’s initial print of 233K, which was revised sharply lower to 184K. With ‘preview’ Nonfarm Payrolls (NFP) figures showing potential slack in the labor market, investors are losing their sure-footedness about how Friday’s NFP print may turn out.

The US ISM Services Purchasing Managers Index (PMI) for November also slipped back to a three-month low, easing to 52.1 MoM compared to the forecast decline to 55.5 from October’s 56.0. While the Services ISM PMI component is still holding above the contractionary 50.0 level, the number still lost ground and pairs poorly with the Manufacturing PMI component released earlier this week that showed aggregated business opinions expect a slowdown in business conditions in the months ahead.

Dow Jones news

Despite battling into the high side throughout the day, the Dow Jones struggled on Wednesday, with roughly half of the board dipping into the red. Salesforce (CRM) rallied by a stunning 9% to cross $362 per share, climbing to all time highs on the back of continued promises of integrating AI into the company’s data management operations, despite missing the bottom line on earnings per share in its latest earnings call.

Dow Jones price forecast

Bullish momentum in the Dow Jones chart may have chilled in recent days, but bidders aren’t leaving much room for sellers to move. The major equity index is pinned close to record highs set north of the 45,000 handle. While buyers have yet to break into a fresh set of record highs this week, odds favor the high side as short momentum remains more of a bear trap than an opportunity.

Traders interested in an exhaustion play should anticipate a potential decline to the 50-day Exponential Moving Average (EMA), which is currently rising through 43,000. However, due to a long-standing pattern of bouncing off this key moving average, it's advisable for traders to avoid trying to time the exit and instead follow the crowd as the market moves into a new upward leg.

Dow Jones daily chart

Dow Jones FAQs

What is the Dow Jones?

The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.

What factors impact the Dow Jones Industrial Average?

Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.

What is Dow Theory?

Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.

How can I trade the DJIA?

There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.

19:40

Forex Today: The US labour market remains in the spotlight

The Greenback traded on the defensive for the second day in a row on Wednesday amid lower yields and the absence of news in Powell’s remarks at an event hosted by the New York Times.

Here is what you need to know on Thursday, December 5:

The US Dollar Index (DXY) kept the trade in the low-106.00s against the backdrop of diminishing yields and further recovery in the risk complex. The October’s Balance of Trade figures are due, along with the usual weekly Initial Jobless Claims, and Challenger Job Cuts. Furthermore, the Fed’s Barkin is expected to speak.

EUR/USD added to recent gains and looked to consolidate the breakout of the key 1.0500 barrier. The HCOB Construction PMI in Germany and the euro area are expected, seconded by Factory Orders in Germany, and Retail Sales in the euro zone. In addition, the ECB’s Montagner is due to speak.

GBP/USD managed to trespass the key 1.2700 hurdle amid the widespread rebound in the risk-associated assets and the weak tone in the Greenback. Next on tap is the S&P Global Construction PMI, followed by New Car Sales, and the BoE’s Decision Maker Panel. In addition, the BoE’s Greene will speak.

USD/JPY rebounded further and briefly rose to three-day highs north of the 151.00 barrier, although it loss some impulse towards the end of the NA session. The weekly Foreign Bond Investment figures will be published seconded by the speech by the BoJ’s Nakamura.

There was no respite for the selling pressure in AUD/USD, which this time challenged the key contention zone near 0.6400, weighed down by poor data in Oz. The Balance of Trade results take centre stage Down Under.

Prices of WTI plummeted below the $69.00 mark per barrel following the mixed report by the EIA despite geopolitical concerns remained well in place.

Prices of Gold added to Tuesday’s uptick and maintained their gradual uptrend alive, this time flirting with the $2,660 mark per troy ounce. Silver prices rose for the second consecutive day and confronted four-week highs near the $31.50 region per ounce.

18:37

US Dollar weakens after disappointing ISM and S&P Services data

US Dollar Index declines toward 106.10 on Wednesday.
Soft services data seems to be pushing the USD lower.
Market attention will turn to Fed Chair Powell’s words late in the American session.

The US Dollar Index (DXY), which measures the value of the USD against a basket of currencies, declined toward 106.10 on Wednesday amidst slight profit-taking after steep rallies against many major G20 currencies this week.

Profit taking and soft ISM PMIs seem to be the reasons for the USD weakness. However, the Buck might get bailed out by Federal Reserve (Fed) Chair Jerome Powell’s words later in the American session.

Daily digest market movers: US Dollar declines against major rivals after soft ISM Services figures

The ISM Services PMI fell to 52.1 in November, a decline of 3.9 points compared to the previous month.
The PMI reading missed market expectations of 55.5 and marked a significant drop from October's level of 56.
The decline in the Services PMI suggests a slowdown in the growth of the US services sector.
Later in the session, the Fed Beige Book report is expected to reflect a similar economic outlook to the previous report, which showed ‘moderate growth’ in the US economy.

DXY technical outlook: DXY tests the 20-day SMA, break below could worsen short-term outlook

The US Dollar Index is facing a potential turning point as it approaches the 20-day Simple Moving Average (SMA). A break below this key level could worsen the short-term outlook for the index, as it has recently lost some momentum.

Technical indicators are sending mixed signals, with the Relative Strength Index (RSI) remaining in bullish territory but the Moving Average Convergence Divergence (MACD) showing red bars. Resistance levels at 107.00 and 108.00 may pose challenges, while support is expected at 106.00-106.50. Overall, while the DXY is facing some headwinds, the bullish trend remains strong.

US Dollar FAQs

What is the US Dollar?

The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

How do the decisions of the Federal Reserve impact the US Dollar?

The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.

What is Quantitative Easing and how does it influence the US Dollar?

In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.

What is Quantitative Tightening and how does it influence the US Dollar?

Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.

18:01

Mexican Peso rallies following mixed US economic data

Mexican Peso capitalizes on mixed economic data from the US.
Mexico's economic indicators show a slowdown, with housing construction down 5.2% YoY in September.
Fed's mixed messages on future rate cuts keep markets guessing, with further US data awaited this week.

The Mexican Peso registers decent gains versus the US Dollar after mixed US economic data augmented the chances that the Federal Reserve (Fed) could lower interest rates at the December meeting. The USD/MXN trades at 20.26, down 0.20%.

Mexico’s economic docket remained absent, yet September Gross Fixed Investment figures revealed on Tuesday hinted that the economy is slowing down. Figures showed that housing construction plunged 5.2% YoY in September, posting back-to-back months of losses, the most profound fall since March 2021.

Capex in machinery and equipment witnessed a mild advance of just 0.8%, the lowest level since the post-Covid-19 recovery in March 2021.

Across the border, the US jobs market revealed solid figures. Still, business activity witnessed a dip in the services sector, according to S&P Global and the Institute for Supply Management (ISM).

In the meantime, Fed speakers crossed the newswires. St. Louis Fed President Alberto Musalem said that time might be near to slow or pause rate cuts. Musalem added that the labor market is consistent with full employment and that inflation can converge toward 2% in the next two years.

At the same time, the Richmond Fed’s Thomas Barkin said that risks on inflation and maximum employment remain balanced.

Ahead this week, Mexico’s schedule will feature the release of automobile production data. In the US, the docket will feature Fed speakers, Initial Jobless Claims and Nonfarm Payrolls (NFP) figures.

Daily digest market movers: Mexican Peso boosted by falling US Dollar

The latest Citi Mexico survey showed that most economists estimate Banxico will cut rates by 25 basis points at the December meeting. Analysts project the economy will grow 1.5% in 2024 and 1% in 2025.
US ADP National Employment report for November revealed that private hiring jumped by 145K, below forecasts of 150K, and beneath the downwardly revised October figures from 238K to 184K.
The ISM Services PMI in November retreated from 56 to 52.1, below estimates of 55.7. Earlier, S&P Global Services PMI dipped from 57 to 56.1, missing forecasts of 57.
US Durable Goods Orders improved from 0.2% to 0.3% MoM in October, according to the US.
The CME FedWatch Tool suggests that investors see a 79% chance of a 25-basis-point (bps) rate cut at the Fed’s December meeting.
Data from the Chicago Board of Trade, via the December fed funds rate futures contract, shows investors estimate 19 bps of Fed easing by the end of 2024.
Banxico’s November survey shows that analysts estimate inflation at 4.42% in 2024 and 3.84% in 2025. Underlying inflation figures will remain at 3.69% in 2024 and 2025. GDP is forecasted at 1.55% and 1.23% for 2024 and 2025, respectively, and the USD/MXN exchange rate at 20.22 for the rest of the year and 20.71 in 2025.

Mexican Peso technical outlook: USD/MXN drops below 20.30 on Peso’s strength

The USD/MXN uptrend remains intact, although the exotic pair fell below 20.50. Momentum shows that bears are in charge, as depicted by the Relative Strength Index (RSI) aiming toward its neutral line.

If USD/MXN drops below the November 19 low of 20.06, the next stop would be 20.00. On further weakness, the exotic pair will test the 50-day Simple Moving Average (SMA) at 19.97. A breach of the latter will expose the 100-day SMA at 19.61 before the psychological 19.00 figure.

On the other hand, if USD/MXN reclaims 20.50, the next resistance would be the year-to-date peak at 20.82. If surpassed, the next stop would be 21.00, ahead of the March 8, 2022 peak at 21.46, followed by the November 26, 2021 high at 22.15.

Mexican Peso FAQs

What key factors drive the Mexican Peso?

The Mexican Peso (MXN) is the most traded currency among its Latin American peers. Its value is broadly determined by the performance of the Mexican economy, the country’s central bank’s policy, the amount of foreign investment in the country and even the levels of remittances sent by Mexicans who live abroad, particularly in the United States. Geopolitical trends can also move MXN: for example, the process of nearshoring – or the decision by some firms to relocate manufacturing capacity and supply chains closer to their home countries – is also seen as a catalyst for the Mexican currency as the country is considered a key manufacturing hub in the American continent. Another catalyst for MXN is Oil prices as Mexico is a key exporter of the commodity.

How do decisions of the Banxico impact the Mexican Peso?

The main objective of Mexico’s central bank, also known as Banxico, is to maintain inflation at low and stable levels (at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%). To this end, the bank sets an appropriate level of interest rates. When inflation is too high, Banxico will attempt to tame it by raising interest rates, making it more expensive for households and businesses to borrow money, thus cooling demand and the overall economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.

How does economic data influence the value of the Mexican Peso?

Macroeconomic data releases are key to assess the state of the economy and can have an impact on the Mexican Peso (MXN) valuation. A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only does it attract more foreign investment but it may encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this strength comes together with elevated inflation. However, if economic data is weak, MXN is likely to depreciate.

How does broader risk sentiment impact the Mexican Peso?

As an emerging-market currency, the Mexican Peso (MXN) tends to strive during risk-on periods, or when investors perceive that broader market risks are low and thus are eager to engage with investments that carry a higher risk. Conversely, MXN tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.

17:48

Fed’s Powell discusses monetary policy amid increasing bets for further easing

Comments from Fed Chief Jerome Powell will be closely followed midweek to get clues about the interest rate outlook.
The Fed is seen reducing its interest rates by a quarter point at this month’s meeting.
The US labour market takes centre stage this week, with NFP due on Friday.

Federal Reserve Chair Jerome Powell is set to participate in a moderated discussion on the economic outlook on Wednesday at the New York Times DealBook Summit in New York. Investors will closely monitor his remarks, eager for any signals about future monetary policy.

The event comes at a time when markets largely expect the Fed to cut its policy rate by another 25 basis points during its December 17-18 meeting. However, this expectation lost some momentum following Powell's remarks at an event in Dallas on November 14.

During his Dallas speech, Powell indicated that the Fed could take its time before making further rate cuts. He pointed to steady economic growth, a strong labour market, and inflation remaining above the Fed's 2% target as reasons for a cautious approach. His comments aligned with the views of FOMC Governor Michelle Bowman, who has consistently advocated for a prudent stance on rate adjustments.

As of now, the probability of a 25-basis-point rate cut this month stands at approximately 75%, according to the CME Group’s FedWatch Tool. However, investors anticipate no more than 75 basis points of easing over the next 12 months.

The Fed and Trump: A collision course ahead?

The return of former President Donald Trump to the White House has raised concerns about renewed inflationary pressures. His proposed policies could significantly alter the economic landscape, featuring looser fiscal measures, the reintroduction of tariffs on exports from China, Europe, Mexico, Canada, and the BRICS nations, as well as stricter immigration policies.

In fact, a new chapter in the US-China trade war has already begun. China recently announced a ban on exporting gallium, germanium, and antimony to the US – minerals critical for military technologies. This move came just one day after Washington introduced new restrictions targeting China’s semiconductor industry.

While Powell has repeatedly declined to speculate on the economic impacts of potential policies under a renewed Trump administration, it's likely that any resurgence in inflationary pressures could lead the Fed to pause or even halt its current easing cycle.

Amid these developments, the US Dollar (USD) surged in October and November before entering a period of consolidation/correction. However, this pause should be temporary, leaving the bullish outlook for 2025 unchanged.

Fed FAQs

What does the Federal Reserve do, how does it impact the US Dollar?

Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

How often does the Fed hold monetary policy meetings?

The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

What is Quantitative Easing (QE) and how does it impact USD?

In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

What is Quantitative Tightening (QT) and how does it impact the US Dollar?

Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.

Interest rates FAQs

What are interest rates?

Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.

How do interest rates impact currencies?

Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.

How do interest rates influence the price of Gold?

Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.

What is the Fed Funds rate?

The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.

16:14

EUR/USD Price Analysis: Pair sees more gains and rises to 1.0530 EURUSD

Pair saw modest 0.20% gains and positioned itself at 1.0530.
Buyers target continues to be the 20-day SMA.
Until the short-term SMA isn’t recovered, the outlook will be bearish.

The EUR/USD pair found support around the psychological 1.0500 level after opening the week with a sharp decline of over 1% and tallies a two-day winning streak. On Wednesday, the pair saw a modest rebound, rising to 1.0530 as buyers stepped in, though the technical outlook remains bearish.

Despite this recovery, the pair remains below the 20-day Simple Moving Average (SMA), which continues to act as a strong resistance level. Indicators have gained some ground but remain in negative territory, reflecting lingering downside risks. The Relative Strength Index (RSI) has ticked higher to 42 but still signals bearish momentum, while the MACD histogram shows slightly improving momentum but both indicators don’t give clear signals of sustained reversal has yet to materialize.

For now, traders will focus on whether the pair can build on this rebound and regain the 20-day SMA. If bullish momentum fades, the pair remains at risk of retesting support levels at 1.0500 and 1.0450, while resistance near 1.0550 could cap further upside in the near term.

EUR/USD daily chart

15:30

United States EIA Crude Oil Stocks Change below expectations (-1M) in November 29: Actual (-5.073M)

15:11

Gold: Sizable liquidations over the coming week are possible – TDS

Precious metals have remained locked in a tight range, but recent flows have been interesting, TDS’ Senior Commodity Strategist Daniel Ghali notes.

Precious metals remain locked in a tight range

“Firstly, our advanced positioning analytics suggest macro funds have re-accumulated a substantial portion of their extreme positions held in Gold prior to US election night. This is surprising given the notably different outlook for Fed policy, which no longer bears the same risk of an 'overly easy' policy on the horizon, which points to additional vulnerabilities.”

“CTAs have been whipsawed both ways, but price action has now unlocked scenarios that could see sizable liquidations over the coming week, which will feature Chair Powell's moderated discussion, the NFP report and will soon be followed by the Dec FOMC meeting.”

“There may well be another shoe to drop after all before the balance of risks shifts back towards the upside in Gold.”