CFD Markets Analysis: News and forecasts for 9 January 2025

23:50

Japan JP Foreign Reserves declined to $1230.7B in December from previous $1239B

23:37

EUR/USD stuck in familiar territory ahead of NFP Friday EURUSD

EUR/USD remains stuck to the 1.0300 handle after flubbing 1.0400.
EU data is done for the week, but a key US NFP print still lies ahead.
US net jobs additions are expected to ease back in December.

EUR/USD trimmed further into the bearish side on Thursday, falling back a scant but persistent sixth of a percent and keeping bids nailed to the 1.0300 handle as the pair churns near 26-month lows.

European Retail Sales figures missed expectations in November, hobbling any potential bullish Euro momentum heading into Friday’s US Nonfarm Payrolls (NFP) print. Annualized EU Retail Sales slumped to just 1.2% YoY in December, well below November’s revised print of 2.1%.

American markets were dark on Thursday in a day of mourning in observance of the passing of former President Jimmy Carter, who passed away in December at the age of 100. Market participants got a reprieve from the week’s hectic US data release schedule, but another round of Friday NFP jobs figures is looming ahead, further constraining already tight market volumes. US job additions are expected to ease slightly in December, while wage growth is forecast to hold on the flat side and even ease in the monthly figures. Beats in wage and job growth could spell further chaos for broad-market rate cut hopes looking forward to 2025, as high wages keep inflation expectations on the high end. Still, strong employment figures mean the Federal Reserve (Fed) will have little reason to move policy rates.

EUR/USD price forecast

January just started, but Fiber is already on pace to close a fourth consecutive month in the red as the pair kicks the new trading off with a fresh bearish plunge into its lowest bids in over two years. The Euro has fallen sharply against the US Dollar since a bearish rejection from the 200-day Exponential Moving Average (EMA) near the 1.0900 region back in November. EUR/USD fell a little over 6.5% peak-to-trough, and Euro bulls are struggling to find a fresh foothold.

EUR/USD daily chart

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.

23:30

Japan Overall Household Spending (YoY) registered at -0.4% above expectations (-0.6%) in November

23:26

Canadian PM Justin Trudeau: We would definitely respond if Trump does impose tariffs

Canadian Prime Minister Justin Trudeau said Thursday that he would definitely respond if Trump does impose tariffs.

Trudeau further stated that President-elect Donald Trump’s threat of slapping a 25% tariff on Canadian products would ultimately hurt American consumers and businesses. Canada, Mexico, and China are the US’s biggest trade partners.

Market reaction

The USD/CAD pair is trading 0.08% higher on the day at 1.4399, as of writing.

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.

23:11

GBP/USD taps new 14-month low as NFP watch begins GBPUSD

GBP/USD sank to its lowest bids in over a year on Thursday.
Markets are coiling ahead of another NFP Friday data dump.
Pound-Dollar rate differential may widen further, weakening Cable even more.

GBP/USD tapped a fresh 14-month low on Thursday as the Pound Sterling rolls over further against the Greenback. Holiday-thinned markets are keeping one foot firmly in the safe haven US Dollar as investors await a fresh round of US Nonfarm Payrolls (NFP) data on Friday.

UK Chief Secretary to the Treasury Darren Jones spoke on Thursday, noting that UK financial markets continue to function in an “orderly way.” UK financial markets responded by promptly selling the Pound Sterling even further and stepping up their bets of further rate cuts from the Bank of England (BoE) throughout the year.

American markets were dark on Thursday, shuttered in a day of mourning in observance of the passing of former President Jimmy Carter, who passed away in December at the age of 100. Maretk participants got a reprieve from the week’s hectic US data release schedule, but another round of Friday NFP jobs figures are looming ahead, further constraining already-tight market volumes. US jobs additions are expected to ease slightly in December, while wage growth is forecast to hold on the flat side, and even ease in the monthly figures. Beats in wage and jobs growth could spell further chaos for broad-market rate cut hopes looking forward into 2025, as high wages keep inflation expectations on the high end and still-strong employment figures mean the Federal Reserve (Fed) will have little reason to move policy rates.

GBP/USD price forecast

A near-term bullish recovery for GBP/USD fizzled faster than it started, with a two-day win streak followed by a three-day losing run, sending Cable tumbling a little under 3% top-to-bottom this week. Price action has found fresh 14-month lows, but Pound Sterling bulls are still trying to put in a floor above the 1.2200 handle.

A continued backslide will see Cable retesting 15-month lows just above the 1.2000 major handle, a level the pair hasn’t had to contend with in almost two years.

GBP/USD daily chart

Pound Sterling FAQs

What is the Pound Sterling?

The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).

How do the decisions of the Bank of England impact on the Pound Sterling?

The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.

How does economic data influence the value of the Pound?

Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.

How does the Trade Balance impact the Pound?

Another significant data release for the Pound Sterling 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, its currency will benefit 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.

23:10

NZD/USD softens to near 0.5600 amid China deflation pressure NZDUSD

NZD/USD weakens to near 0.5600 in Friday’s early Asian session.
The Fed plans to slow the pace of interest rate cuts this year, lifting the USD.
Deflation risk in China weighs on the Kiwi.

The NZD/USD pair remains weak to around 0.5600 during the early Asian session on Friday. The firmer Greenback and deflation concerns in China weigh on the New Zealand Dollar (NZD). The US December employment data will be the highlights later on Friday, including Nonfarm Payrolls (NFP), Unemployment Rate and Average Hourly Earnings.

The US Federal Reserve (Fed) officials adopted a cautious stance this year due to inflation risks and uncertainty under the incoming Trump administration, which supports the US Dollar (USD). Several Fed policymakers suggested that the US central bank will move more slowly on rate cuts this year, after cutting at each of its last three meetings in 2024.

The US Bureau of Labor Statistics (BLS) will publish the employment report for December later in the day. Economists expect 160,000 new jobs for December, while the unemployment rate is expected to remain at 4.2% during the same report period. The Average Hourly Earnings are projected to rise by 0.3% MoM in December. Any signs of a strong labor market, steady job growth, and rising incomes could boost the USD and act as a headwind for NZD/USD.

Deflationary pressures in China came despite months of effort by policymakers to stimulate demand. The country’s Consumer Price Index (CPI) increased 0.1% YoY in December, while the Producer Price Index (PPI) declined 2.3% YoY during the same period, sliding for the 27th straight month. This, in turn, exerts some selling pressure on the Kiwi, as China is a major trading partner to New Zealand.

New Zealand Dollar FAQs

What key factors drive the New Zealand Dollar?

The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.

How do decisions of the RBNZ impact the New Zealand Dollar?

The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.

How does economic data influence the value of the New Zealand Dollar?

Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.

How does broader risk sentiment impact the New Zealand Dollar?

The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD 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.

23:03

Colombia Consumer Price Index (MoM) above forecasts (0.41%) in December: Actual (0.46%)

23:03

Colombia Consumer Price Index (YoY) came in at 5.25%, above expectations (5.16%) in December

21:35

Australian Dollar weakens on muted Australian data, China CPI miss

AUD slides on Thursday, continuing its losing streak below 0.6200.
Slower Aussie Retail Sales fuel RBA rate cut bets.
China’s soft CPI dampens the Australian Dollar’s prospects.

AUD/USD slumps to near 0.6170 as the US Dollar performs strongly on a stubborn US inflation outlook on Thursday. The Aussie was a weak performer due to muted local data and soft Chinese inflation data. Investors now look ahead to US Nonfarm Payrolls (NFP) for hints on future rate actions from the Federal Reserve (Fed).

Daily digest market movers: Aussie weak as markets await Fed directions

Investors expect US President-elect Donald Trump’s pro-growth and inflationary policies to keep the Federal Reserve leaning hawkish.
December’s Federal Open Market Committee Meeting Minutes reveal Fed officials worried about a slowdown in disinflation, citing potential trade and immigration policy shifts.
Market participants await Friday’s US NFP release for new clues on the central bank’s next monetary policy steps.
On the data front, Australian Retail Sales grew 0.8% in November, undershooting the 1% forecast but above the previous 0.5%, upping RBA dovish bets.
Traders have fully priced in a 25-basis-point RBA rate cut for the April meeting, pressuring the Aussie.
China’s annual CPI for December edged up 0.1%, below the prior 0.2%, adding to concerns over the AUD’s proxy role in Chinese growth.

AUD/USD technical outlook: Bears reclaim control as key SMA caps recovery

The AUD/USD declined by 0.34% on Thursday, extending its losing streak for the third consecutive day. The Relative Strength Index (RSI) stands at 35, moving deeper into negative territory, while the Moving Average Convergence Divergence (MACD) histogram shows decreasing green bars.

Bears have invalidated the latest bullish recovery attempt, and unless the pair clears its 20-day Simple Moving Average (SMA), the outlook will likely remain tilted to the downside.

Supports: 0.6150, 0.6130, 0.6100.

Resistances: 0.6200, 0.6215, 0.6250.

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.

20:04

Gold price advances amid safe-haven demand ahead of US NFP

Gold price rises 0.35% as investors seek safety amid potential US tariffs and soaring UK Gilt yields.
Fed officials deliver mixed signals on the rate path during a quiet trading session.
Market focus shifts to upcoming US Nonfarm Payrolls and UoM Consumer Sentiment for further economic cues.

Gold's price surged for the third straight day and edged up 0.35% due to safe-haven demand spurred by concerns over Donald Trump’s proposed policies, while the United Kingdom (UK) dealt with a budget crisis. The XAU/USD trades at $2,671 at the time of writing.

On Wednesday, CNN revealed that United States (US) President-elect Donald Trump might consider declaring a national economic emergency, which would provide him with a legal justification to impose tariffs on adversaries and US allies. Earlier during Thursday’s overnight session, UK Gilt yields at the long end of the curve skyrocketed above 5%, their highest level since 1998.

In the meantime, Federal Reserve (Fed) officials are grabbing the headlines as US financial markets remained closed for former US President Jimmy Carter’s National Day of Mourning.

Fed Governor Michelle Bowman maintained a hawkish stance, saying the central bank should be cautious in adjusting interest rates, while Kansas City Fed Jeffrey Schmid added that rates are “near” neutral.

Earlier, Philadelphia Fed Patrick Harker revealed that the US central bank could pause amid uncertainty, while Boston Fed Susan Collins said the current outlook suggests a gradual approach to rate cuts.

This week, traders are eyeing the release of December US Nonfarm Payrolls data and the University of Michigan (UoM) Consumer Sentiment.

Daily digest market movers: Gold and the US Dollar surge modestly

Gold price shrugs off higher US real yields, which rose by two bps to 2.29%. At the same time, the US 10-year T-note yield remains unchanged at 4.691%
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six currencies, rises 0.16% to 109.18.
Further labor market data was announced. The US Challenger Jobs report for December showed a significant decline in layoffs, with employers cutting 38,792 jobs compared to November's 57,727.
Easing expectations of the Federal Reserve continued to edge lower. The December Fed funds futures contract is pricing in 54 basis points of easing.
The FOMC's December meeting minutes hinted that the central bank is near a point at which it would be appropriate to slow the pace of easing. Participants indicated that if data comes as expected, “it would be appropriate to continue easing.”
On Wednesday, the World Gold Council said physically backed Gold exchange-traded funds registered their first inflow in four years.

XAU/USD technical outlook: Gold price soars above $2,650 as bulls stepped in

Gold price steadily advances, carving a successive series of higher highs and higher lows after bouncing off the 50-day Simple Moving Average (SMA) of $2,646, spurring XAU/USD’s jump toward the $2,670 area.

On further strength, Gold's first resistance would be $2,700, followed by the December 12 high of $2,726 and the all-time high (ATH) at $2,790.

On the downside, if sellers push XAU/USD below the 50-day SMA, the path to test the 100-day SMA will be cleared at $2,630. If surpassed, the next key support level would be $2,600, with further losses potentially extending to the 200-day SMA at $2,500.

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.

20:02

Forex Today: Late-week holiday gives way to another NFP Friday

US market flows were hobbled on Thursday, tripping up trade volumes as the calendar rounds the corner into another US Nonfarm Payrolls (NFP) Friday.

Here’s what you need to know heading into Friday, December 10:

The US Dollar Index (DXY) stepped tentatively higher on Thursday, driven by an overall tepid market outlook with American markets shuttered in a day of mourning in observance of the passing of former President Jimmy Carter, who passed away in December at the age of 100. Maretk participants got a reprieve from the week’s hectic US data release schedule, but another round of Friday NFP jobs figures are looming ahead, further constraining already-tight market volumes. US jobs additions are expected to ease slightly in December, while wage growth is forecast to hold on the flat side, and even ease in the monthly figures. Beats in wage and jobs growth could spell further chaos for broad-market rate cut hopes looking forward into 2025, as high wages keep infaltion expectations on the high end and still-strong employment figures mean the Federal Reserve (Fed) will have little reason to move policy rates.

EUR/USD continued to grind through chart paper near the 1.0300 handle on Thursday, sending the Euro into a third straight day of tepid losses as markets coil ahead of US jobs figures. Pan-European Retail Sales figures came in well below expectations in November, further crimping bullish potential in the Euro.

GBP/USD likewise dumped into fresh 14-month lows, driven further into the basement after UK Like-For-Like Retail Sales fell much steeper than expected in December, contracting by a full percent MoM and flubbing the median market forecast for a mild recovery, though the figure was always expected to remain in contraction territory.

AUD/USD continues to churn near the 0.6200 handle. Australian Retail Sales rebounded in November, climbing to 0.8% MoM, but still coming in below the forecast 1.0% increase. Further taking wind out of Aussie sales werte Chinese Consumer Price Index (CPI) inflation figures for December, which perfectly met expectations, as managed data almost always tends to do, but still easing to a scant 0.1% YoY as the Chinese economic engine sputters and wide market expectations of rising Chinese consumption demand fail to materialize.

Economic Indicator

Nonfarm Payrolls

The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months' reviews and the Unemployment Rate are as relevant as the headline figure. The market's reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.

Next release: Fri Jan 10, 2025 13:30

Frequency: Monthly

Consensus: 160K

Previous: 227K

Source: US Bureau of Labor Statistics

Why it matters to traders?

America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.

Nonfarm Payrolls FAQs

What are Nonfarm Payrolls?

Nonfarm Payrolls (NFP) are part of the US Bureau of Labor Statistics monthly jobs report. The Nonfarm Payrolls component specifically measures the change in the number of people employed in the US during the previous month, excluding the farming industry.

How does Nonfarm Payrolls influence the Federal Reserve monetary policy decisions?

The Nonfarm Payrolls figure can influence the decisions of the Federal Reserve by providing a measure of how successfully the Fed is meeting its mandate of fostering full employment and 2% inflation. A relatively high NFP figure means more people are in employment, earning more money and therefore probably spending more. A relatively low Nonfarm Payrolls’ result, on the either hand, could mean people are struggling to find work. The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labor market.

How does Nonfarm Payrolls affect the US Dollar?

Nonfarm Payrolls generally have a positive correlation with the US Dollar. This means when payrolls’ figures come out higher-than-expected the USD tends to rally and vice versa when they are lower. NFPs influence the US Dollar by virtue of their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means the Federal Reserve will be more tight in its monetary policy, supporting the USD.

How does Nonfarm Payrolls affect Gold?

Nonfarm Payrolls are generally negatively-correlated with the price of Gold. This means a higher-than-expected payrolls’ figure will have a depressing effect on the Gold price and vice versa. Higher NFP generally has a positive effect on the value of the USD, and like most major commodities Gold is priced in US Dollars. If the USD gains in value, therefore, it requires less Dollars to buy an ounce of Gold. Also, higher interest rates (typically helped higher NFPs) also lessen the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.

Sometimes Nonfarm Payrolls trigger an opposite reaction than what the market expects. Why is that?

Nonfarm Payrolls is only one component within a bigger jobs report and it can be overshadowed by the other components. At times, when NFP come out higher-than-forecast, but the Average Weekly Earnings is lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the fall in earnings as deflationary. The Participation Rate and the Average Weekly Hours components can also influence the market reaction, but only in seldom events like the “Great Resignation” or the Global Financial Crisis.

19:04

Fed's Bowman: Inflation risks are elevated and progress has stalled

Federal Reserve (Fed) Board of Governors member Michelle Bowman added her voice to a chorus of Fed speakers this week as policymakers work double-duty to try and smooth over market reactions to a much tighter pace of rate cuts in 2025 than many market participants had previously anticipated.

Key highlights

The current stance of policy may not be as restrictive as others may see it.

We should refrain from prejudging incoming administration's future policies.

I prefer a cautious and gradual approach to adjusting policy.

Inflation is elevated and I see upside risks; progress has stalled.

Inflation concerns may partly explain the rise in the 10-year Treasury yield.

Pent-up demand following election could pose inflationary risks.

I see greater risks to price stability, though deterioration in labor market conditions possible.

The coming months should bring clarity on incoming administration's policies, inflationary pressures.

Bank regulators should adopt a more pragmatic approach to policymaking.

The December interest rate cut should be the last.

18:49

Fed's Schmid: Fed close to meeting mandates, needs to shrink balance sheet

Federal Reserve (Fed) Bank of Kansas President Jeffrey Schmid hit newswires on Thursday, noting that most of the Fed's mandated targets have been hit as of late, and now it's time to start shrinking the Fed's books.

Key highlights

Interest rate policy may be near where it needs to be for the longer run.

Any further rate cuts should be gradual and data-driven.

The jobs market is weaker but still healthy.

The Fed should work toward Treasury-only holdings.

Inflation moving toward target, growth showing momentum.

The Fed is pretty close to meeting both of its mandates.

I want the Fed to shrink the balance sheet further.

I am optimistic inflation pressures will continue to abate.

I am optimistic over growth, hiring prospects.

I'm fairly optimistic inflation will continue declining.

18:18

Fed's Barkin: Lack of fiscal space is a risk for future recessions

Federal Reserve (Fed) Bank of Richmond President Tom Barkin noted on Thursday that even though consumer debt ratios are in an overall better place than they were in years past, the Fed is facing some key difficulties looking forward to future downturns unless space on the central bank's books opens up.

Key highlights

The consumer debt burden is still well below 2018-2019.

The lack of fiscal space is a risk for future recessions.

I think the term premium is moving long rates, not inflation.

18:10

US Dollar ticks higher as Gilts wobble under inflation pressure, eyes on NFPs

Traders remain alert to potential Chinese stimulus effects, though the US Dollar’s upward trajectory looks steady on Thursday.
Intensifying concerns over rising consumer prices triggered a mini-crisis in Gilts, enhancing safe-haven demand for the USD.
Steady labor market data, cautious FOMC Minutes, and anticipation of Friday’s December Nonfarm Payrolls further underpin Greenback strength.

The US Dollar Index (DXY), which measures the value of the USD against a basket of currencies, ticks up on inflation woes, with the Greenback consolidating at current levels. Inflation concerns take over and trigger a mini-crisis in the UK’s Gilts. The DXY currently orbits the 109.00 mark, supported by robust demand amid ongoing monetary policy tightening signals. Now, investors’ eyes are on Friday’s US Nonfarm Payrolls (NFP) for December.

Daily digest market movers: USD sees gains as markets assess FOMC Minutes as NFP looms

Initial Jobless Claims fell to 201K in the week ending January 4, better than the 218K consensus. Meanwhile, ADP reported 122K private-sector jobs in December, below expectations.
FOMC Meeting Minutes highlight placeholder assumptions on trade and immigration policies, with officials concerned about inflation possibly taking longer to reach 2%. Most participants backed a 25 bps cut in December, but upside inflation risks pushed policymakers toward caution.
US yields stabilize as the 10-year hovers near 4.67%, while the 30-year yield sits around 4.90% after a heavy auction week. Despite earlier lukewarm demand for 10-year notes, 30-year bonds saw solid uptake, reflecting investor resilience.
Loose financial conditions continue with the Chicago Fed’s indicator loosening for ten straight weeks, helping spur growth as the Fed readies for potential fiscal stimulus down the road.
Markets gear up for December NFP data on Friday, with investors expecting clarity on labor market momentum and possible policy implications. The headline figure is expected to come down from 227,000 to 160,000.

DXY technical outlook: Indicators hold upward traction but begin to flatten

The US Dollar Index defended its 20-day Simple Moving Average (SMA), maintaining a constructive bias despite intermittent pullbacks. Technical indicators still tilt positive, though they appear to be flattening rather than accelerating further.

Key support rests around 108.40, followed by 108.00 if bearish momentum picks up. As long as inflation concerns and steady yields persist, the DXY may retain its elevated stance near 109.00, albeit with narrower trading ranges in the near term.

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.

17:52

Mexican Peso dives as Banxico signals aggressive easing

Mexican Peso faces pressure after Banxico's dovish shift suggests larger, and possibly quicker, interest rate cuts.
Mixed inflation data from INEGI maintains uncertainty, adding to Peso's volatility in light trading conditions.
Interest rate differential concerns increase as Banxico's potential 150 bps cuts contrast with the Fed's more conservative 57 bps easing outlook.

The Mexican Peso loses some ground against the US Dollar on Thursday after the Banco de Mexico (Banxico) hinted that interest rates could be reduced faster in some meetings. This and the disinflation progress weighed on the Peso despite thin trading in observance of the funeral of former US President Jimmy Carter. The USD/MXN trades at 20.50, up 0.55%.

The Instituto Nacional de Estadística Geografía e Informatica (INEGI) revealed that inflation figures were mixed. However, Banxico turned dovish, while a member said it was necessary to increase the size of the rate cuts.

Therefore, the Peso would be at risk of further depreciation due to the reduction of the interest rate differential between Mexico and the US. Although Federal Reserve (Fed) officials stated they are in an easing cycle, but market players are eyeing just 57 basis points (bps) of easing in the US this year against 150 bps by Banxico.

Daily digest market movers: Mexican Peso weakened by dovish tone of Banxico minutes

Banxico’s meeting minutes revealed the evolution of disinflation, suggesting that the easing cycle might continue to reduce the restiveness of monetary policy. To achieve that, the Governing board stated, “larger downward adjustments could be considered in some meetings.”
Mexico’s central bank improved the inflation outlook due to the progress in headline and core inflation. Officials acknowledged that services inflation decreased, and they expect CPI to converge to its 3% goal in Q3 2026.
INEGI revealed that December’s Consumer Price Index (CPI) dipped to 0.38% MoM below estimates of 0.40% and the prior month’s 0.44% jump. Core CPI in the same period increased by 0.51%, up from 0.05% in the prior reading and above the forecasted 0.45%.
On an annual basis, headline inflation came in at 4.21%, missing projections of 4.28% and was beneath November’s 4.55% reading. Excluding volatile items, inflation modestly increased from 3.58% to 3.65%, exceeding expectations of 3.62%.
On Wednesday, the Fed revealed its December Meeting Minutes. Officials opted to reduce borrowing costs by 25 basis points, but the minutes showed that "some participants saw merit in maintaining rates at current levels, citing the heightened risk of persistently high inflation."
Despite this, policymakers expected inflation to continue moving toward the US central bank's 2% goal, although they acknowledged potential changes in trade and immigration policy. Several officials noted that the disinflationary process “stalled.” The Minutes underscored that Fed officials opened the door to slowing the pace of interest rate cuts.

USD/MXN technical outlook: Mexican Peso remains heavy as USD/MXN climbs above 20.35

The USD/MXN uptrend remains intact. During the week, sellers tried to push the exchange rate below the 50-day Simple Moving Average (SMA) of 20.29 but failed as the pair found acceptance near the 20.40 to 20.50 range.

If buyers clear the top of the range, the next resistance would be last year’s high of 20.83, followed by the current yearly high of 20.90. On further strength, the USD/MXN could test 21.00, ahead of the March 8, 2022 high at 21.46.

Conversely, if USD/MXN tumbles below the 50-day SMA, the next support would be the 20.00 figure, ahead of the 100-day SMA at 19.93, followed by the 19.50 figure.

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.

17:31

GBP/JPY backslides on data-light Thursday

GBP/JPY dumped another 0.6% and tested the 200 EMA on Thursday.
Another limited showing on the economic calendar this week for the Guppy.
Pound Sterling traders, take heart: UK inflation and consumer activity figures due next week.

GBP/JPY took another leg lower on Thursday, falling to it’s lowest prices in almost a month and coming within touch range of the 200-day Exponential Moving Average (EMA). Market sentiment has tilted to the cautious side this week, keeping the Guppy hobbled and drifting into the midrange.

BoE's Breeden: Some evidence of activity weakening, but we expect it to pick up again

Economic figures have been light on both sides of the currency pair this week, leaving policymaker speeches as the key driver for GBP/JPY traders to chew on. UK Chief Secretary to the Treasury Darren Jones spoke on Thursday, noting that UK financial markets continue to function in an “orderly way.” UK financial markets responded by promptly selling the Pound Sterling even further and stepping up their bets of further rate cuts from the Bank of England (BoE) throughout the year.

Yen traders have faced a borderline anemic economic calendar this week, and next week promises more of the same. On the other side of the Guppy, UK traders will have Consumer Price Index (CPI) inflation and Retail Sales figures to context with next week.

GBP/JPY price forecast

The Guppy’s backslide on Thursday saw the pair tap the 200-day EMA once again as the pair grinds into a medium-term consolidation pattern. Bidders will be looking to price in a near-term floor at the 200-day EMA near 193.50, while sellers will want to crack the key technical level and head for the last major swing low point near the 188.00 handle.

GBP/JPY daily chart

Pound Sterling FAQs

What is the Pound Sterling?

The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).

How do the decisions of the Bank of England impact on the Pound Sterling?

The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.

How does economic data influence the value of the Pound?

Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.

How does the Trade Balance impact the Pound?

Another significant data release for the Pound Sterling 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, its currency will benefit 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.

17:09

Canadian Dollar continues slow grind lower on Thursday

The Canadian Dollar shed another 0.1% on Thursday as buyers evaporate.
Canada remains open for business while the US is taking the day off.
Holiday-thinned markets are doing few favors for the Loonie except slow the bleed.

The Canadian Dollar (CAD) chalked in a third straight losing day against the US Dollar on Thursday, falling for a third straight day and highlighting the Loonie’s ability to lose ground against the Greenback even when US markets aren’t open.

Thursday was yet another slim showing for Canadian data on the economic calendar. CAD traders will be looking ahead to Friday’s release schedule with Canadian labor and wages data on the offering. However, most of the market will be looking forward to Friday too, with another round of US Nonfarm Payrolls (NFP) jobs data on the docket as well.

Daily digest market movers: CAD markets pull back slightly ahead of key labor print

The Loonie’s ability to lose ground while everyone else is on holiday is nothing short of remarkable.
US markets are shuttered in observation of a day of mourning in honor of the passing of former President Jimmy Carter, who died at age 100 in December.
Canadian Net Change in Employment, due on Friday, is unlikely to spark much faith in the CAD as the figure is expected to decline by half, from 50.5K in November to 25K in December.
The Canadian Unemployment Rate is also expected to tick higher from 6.8% to 6.9%.
On the US side of things, US NFP net jobs additions are expected to ease back to 160K in December from the previous 227K, and traders will be keeping an eye out for any sharp revisions.
The US Michigan Consumer Sentiment Index is also expected to slip for the first time in six months, but only slightly.
A wide range of tepid to softening data could could broader market flows firmly planted on the buy side of the Greenback, further hobbling the Loonie.

Canadian Dollar price forecast

The Canadian Dollar remains caught in a tight spiral against the US Dollar, trading into multi-year lows and keeping the USD/CAD pair bolstered into the 1.4400 region. CAD weakness has been the name of the game, sending the Greenback to its highest bids against the Loonie since the pandemic.

USD/CAD is up over 7% from September’s low end near 1.3400, and although it looks like the CAD isn’t going to lose any more ground for the time being, Loonie bidders remain unable to prop things up and get the pair pushed back down below 1.4300. The immediate barrier to a CAD recovery will be the 50-day Exponential Moving Average (EMA) climbing into 1.4200, putting a technical floor underneath the Greenback.

USD/CAD daily chart

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.

17:01

BoE's Breeden: Some evidence of activity weakening, but we expect it to pick up again

Bank of England (BoE) Monetary Policy Committee (MPC) member and Deputy Governor for Financial Stability Sarah Breeden noted that it might finally be time for the BoE to start loosening policy rates now that UK economic data has effectively begun to crumble.

Key highlights

There is some tentative evidence that activity is starting to weaken, though we expect it to pick up again.

Important questions as I look ahead are what shocks explains the recent slowdown in activity and how will employers respond to higher employment costs.

Recent evidence further supports the case to withdraw policy restrictiveness.

Inflation has fallen materially in last year.

It is difficult to know how quickly to remove the restrictive policy.

Upside CPI scenarios are no longer core consideration.

I expect the bank rate to come down over time.

Evidence supports gradual removal of restriction.

What is key for the BoE is how the rest of the world reacts to Trump.

The bank rate will be coming down; the question is pace.

16:37

United States 4-Week Bill Auction dipped from previous 4.265% to 4.245%

15:54

GBP/USD faces downward pressure due to UK fiscal concerns GBPUSD

GBP/USD dips by 0.49% despite inactive US markets, influenced by record high UK bond yields and fiscal worries.
US labor market shows resilience with a significant decrease in layoffs, according to the Challenger Jobs Report.
Fed officials signal cautious stance on rate cuts, with future decisions hinged on upcoming economic data.

The Pound Sterling depreciated against the Greenback on Thursday, even though the financial markets remained closed due to former US President Jimmy Carter's funeral. The GBP(SD traded volatile during the session and exchanged hands at 1.2300, down by 0.49%.

UK Gilt yields rose to its highest level since 1998, Cable tumbles

Cable remains battered after UK bond yields rose to their highest level in 16 years as confidence in Britain’s fiscal outlook deteriorated. The 10-year Gilt yield soared to 4.925%, before ending at around 4.795%.

Usually, a higher yield in the UK would boost the Sterling, nevertheless, once the relationship has broken, reflects investors worries about the country's finances. The yield in the 30-year Gilt soared above 5.3%, its highest since 1998.

In the US, the US Challenger Jobs report for December revealed that employers lay off 38,792 fewer people than in November’s 57,727. Hence, the US labor market continues to fare better than expected.

In the meantime, Federal Reserve speakers crossed the wires. Boston Fed Susan Collins said she favors fewer cuts than before and added she’s less concerned about the labor market. Meanwhile, Philadelphia Fed Patrick Harker said the US central bank is still on the rate-cut path, and future movements would be data-dependent.

The British economic docket will remain absent this week. Across the pond, US Nonfarm Payrolls figures for December are foreseen at 160K, down from 227K. Furthermore, the University of Michigan will reveal the US Consumer Sentiment for the same period.

GBP/USD Price Forecast: Technical outlook

The GBP/USD has carved a successive series of lower highs and lower lows, an indication that the downtrend remains intact. Earlier, the pair dipped to a 13-month low of 1.2237 but bounced off that level to around the 1.2290 area. A daily close below 1.2300 will exacerbate further downside, with the following key support at 1.2200.

Conversely, if bulls step in and push the exchange rate above 1.2351, a recovery toward 1.2350 and 1.2400 is seen.

British Pound PRICE Today

The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Australian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.18%	0.50%	-0.27%	0.10%	0.35%	0.26%	0.08%
EUR	-0.18%		0.31%	-0.42%	-0.08%	0.17%	0.08%	-0.10%
GBP	-0.50%	-0.31%		-0.76%	-0.41%	-0.15%	-0.23%	-0.38%
JPY	0.27%	0.42%	0.76%		0.33%	0.61%	0.48%	0.36%
CAD	-0.10%	0.08%	0.41%	-0.33%		0.26%	0.16%	0.01%
AUD	-0.35%	-0.17%	0.15%	-0.61%	-0.26%		-0.09%	-0.24%
NZD	-0.26%	-0.08%	0.23%	-0.48%	-0.16%	0.09%		-0.15%
CHF	-0.08%	0.10%	0.38%	-0.36%	-0.01%	0.24%	0.15%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

15:48

EUR/USD Price Analysis: Extended losing streak tests bullish recovery EURUSD

EUR/USD slips, settling near 1.0305 and marking three consecutive days of losses.
RSI remains flat at 40 in negative territory, suggesting momentum has stalled.

The EUR/USD pair continued its downtrend on Thursday, edging 0.18% lower to trade around 1.0305. This decline not only extends the losing streak to a third session but also underscores the pair’s struggle to establish a more robust recovery. Despite a brief bounce earlier in the month, the 20-day Simple Moving Average (SMA) remains out of reach, signaling that bullish momentum has yet to build meaningful traction.

Technical readings reflect a market grappling with waning upward impulses. The Relative Strength Index (RSI) rests at 40, indicating only minimal buying interest, while the Moving Average Convergence Divergence (MACD) histogram is printing fewer green bars, highlighting the gradual erosion of bullish momentum. If the pair fails to rebound above the 20-day SMA in the coming sessions, sellers may maintain the upper hand.

Looking ahead, EUR/USD could find immediate support around the 1.0280 region, with a deeper pullback potentially targeting 1.0250. On the upside, recapturing the 20-day SMA near 1.0350 would be critical for a more convincing recovery, exposing the 1.0400 threshold as the next key resistance.

EUR/USD daily chart

15:00

United States Wholesale Inventories meets expectations (-0.2%) in November

14:22

NZD/USD Price Forecast: Walks on thin rope near 0.5600 NZDUSD

NZD/USD faces selling pressure as the US Dollar performs strongly.
The Fed is expected to follow a gradual policy-easing cycle as officials worry about a slowdown in the disinflation trend.
China’s inflation grew at a slower pace in December, which weighs on the NZ Dollar.

The NZD/USD pair rises slightly after posting a fresh more-than-two-year low of 0.5570 in Thursday’s North American session but is still down quarter-to-a-percent. The outlook of the Kiwi pair remains bearish as the US Dollar (USD) performs strongly across the board on expectations that the Federal Reserve (Fed) will follow a gradual rate-cut approach this year.

Market speculation for a slower Fed policy-easing path is backed by commentary from officials that progress in the disinflation trend could stall by potential trade and immigration policies, as shown by the latest Federal Open Market Committee (FOMC) minutes.

Meanwhile, investors await the US Nonfarm Payrolls (NFP) data for December, which will be published on Friday. The US NFP report is expected to show that the economy added 154K workers in December, fewer than 227K additions in November. The Unemployment Rate is seen steady at 4.2%. Investors will pay close attention to the US labor market data as it will influence market expectations about when the Fed will deliver its first interest rate cut of this year.

The New Zealand Dollar (NZD) faces selling pressure as China’s inflation has slowed in December as expected. China’s annual Consumer Price Index (CPI) rose by 0.1%, slower than the former release of 0.2%. Being a proxy to China’s economy, the Kiwi dollar faces pressure on expectations of poor business outlook in the New Zealand (NZ) region.

NZD/USD finds a temporary cushion near the two-year low of 0.5520 on a weekly timeframe. However, the outlook for the Kiwi pair remains bearish, as the 20-week Exponential Moving Average (EMA), which trades around 0.5867, is declining.

The 14-week Relative Strength Index (RSI) slides to near 30.00, suggesting a strong bearish momentum.

The Kiwi pair could decline to near the 13-year low of 0.5470 and the round-level support of 0.5400 if it breaks below the psychological support of 0.5500.

On the flip side, a decisive break above the November 29 high of 0.5930 could drive the pair to the November 15 high of 0.5970 and the psychological resistance of 0.6000.

NZD/USD weekly chart

New Zealand Dollar FAQs

What key factors drive the New Zealand Dollar?

The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.

How do decisions of the RBNZ impact the New Zealand Dollar?

The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.

How does economic data influence the value of the New Zealand Dollar?

Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.

How does broader risk sentiment impact the New Zealand Dollar?

The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD 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.

14:13

Fed's Harker: Fed still on rate-cut path, future moves driven by data

Philadelphia Federal Reserve President Patrick Harker said on Thursday that the US central bank is still expected to continue to cut rates but explained that the path will depend on data, per Reuters.

Key takeaways

"Underpinnings of economy strong amid high uncertainty."

"Fed must be data-dependent amid high uncertainty."

"Labor markets stabilized, are in better balance."

"Job creation pace has normalized."

"It is taking longer to get back to 2% inflation than expected."

"Fed has had success getting inflation down from peak."

"More of overall consumer spending resting on higher incomes."

Market reaction

The US Dollar Index showed no immediate reaction to these comments and was last seen posting small daily gains at 109.07.

14:09

Fed's Collins: Current outlook calls for gradual, patient approach to rate cuts

Federal Reserve Bank of Boston President Susan Collins said on Thursday that the current outlook calls for a gradual and a patient approach to rate cuts, as reported by Reuters.

Key takeaways

"Supported December Fed rate cut but was a close call."

"Fed not on preset path, policy well-positioned."

"Current outlook in line with Fed December forecasts."

"Economy in a good place overall with notable uncertainties."

"Too soon to say what impact election will have on economy."

"Now expecting more inflation relative to recent past."

"December rate cut provided insurance for labor market."

"Job market unlikely to be driver of inflation right now."

"Housing factors still major driver of inflation."

"Less worried about labor market fragility."

"Economy on gradual, uneven trajectory back to 2% inflation."

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.

13:37

GBP underperforms as Gilts remain weak – Scotiabank

The Pound Sterling (GBP) fell to its lowest since 2023 before steadying. UK 1OY yields rose 120bps in a handful of disorderly trading days either side of the infamous 2022 UK budget and required the BoE to step in a stabilize the markets, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

GBP rebounds from intraday low

“GBP also dropped 5%. The sell-off in UK debt over the past month or so has taken UK 10Y yields up 60bps or so, twice the rise in core Eurozone debt yields but less than US 10Y Treasurys amid general weakness in sovereign bond markets.”

“The government may have a problem making its fiscal math work under a higher rate regime (which will likely entail spending cuts or more revenue enhancements ahead) and a falling exchange rate alongside rising yields is not a comfortable sight but this is not a repeat of 2022. Keep your lettuce in the fridge for now.”

“A new cycle low for Cable (lowest since November 2023) keeps the broader outlook for the pound negative. But there are signs from the intraday pattern of trade that a minor low is developing via a bullish ‘hammer’ pattern on the 6-hour chart which may help the GBP steady in the short run. Gains may retest the mid-1.23s but it will take price moving well above 1.24 to stabilize the technical tone at this point I think.”

13:34

EUR diverges further from spreads & fair value – Scotiabank

The Euro (EUR) perked up a little yesterday after finding support in the upper 1.02 region but it is finding the going tough against the USD and marginal gains earlier in the session have reversed, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

EUR looks technically soft

“Tariff concerns remain a drag on the EUR. Spot is clearly diverging from (more EUR-supportive) spreads to trade one standard deviation below our fair value estimate (1.0546) currently.”

“The EUR’s early week failure to press on above 1.0450 remains a weak feature on the short-term charts. The market has consolidated around 1.03 over the past day or so and does seem to draw firm demand on dips under the figure. But trend momentum is bearish and a retest of 1.0225/30 remains likely. Resistance is 1.0325 and 1.0450.”

13:32

CAD holds narrow range around 1.44 – Scotiabank

The Canadian Dollar (CAD) is little changed on the session. The immediate focus for local markets is on tomorrow’s labour market update but the data perhaps won’t add too much to short-term FX dynamics, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

CAD little changed on the day

“Markets are 80% priced for a rate cut at the end of the month. Wide spreads remain a headwind for the CAD and account for much of its weak valuation versus the USD, despite tariff risks. Spot is trading close to its estimated equilibrium of 1.4334 currently. Clarity on the domestic political front is unlikely for some time.”

“Even if an election were to be called now, rules would prevent a vote happening until mid-February at the earliest. A late spring vote might suit the opposition parties who can hold the government’s feet to the fire in the meantime and make a big deal of the power vacuum when the election finally comes.”

“Spot is back to pivoting aimlessly around the 1.44 point in the short run. The failed downside breakout below 1.4335 is a negative for the CAD but the hefty drop in the USD at the start of the week remains a minor blot on the technical landscape still. The USD will need to overcome 1.4465 resistance to regain the technical initiative and make a run for 1.47. Support is 1.4335 (minor) and 1.4280.”

13:17

USD remains firm as GBP underperforms – Scotiabank

The US Dollar (USD) is firm but off its early session highs, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

USD firm but off highs, may consolidate ahead of NFP

“With no major data reports due today and US payrolls out tomorrow, it may be a day of consolidation for a still stretched—in my view—looking USD. Positioning and valuation remain extended and while US yields are firmer, spreads have generally steadied or narrowed marginally against the USD. Technicals are leaning marginally bearish for the DXY intraday; a bit more softness might creep in below 108.95 support.”

“Yesterday’s FOMC minutes for the December policy decision reflected the expected degree of caution on the outlook for rates following Trump’s election win. A ‘substantial majority’ of policymakers thought the Fed was well-positioned to ‘take its time’ with rate policy moving forward.

“Markets have effectively priced out any chance of another rate cut before mid-year and remain reticent on pricing in much more than one 25bps cut over the balance of 2025, with a bit less than 40bps of hikes priced in to the swaps curve for the year overall. There are a number of Fed speakers on tap today; among them, Collins, Schmid and Bowman are voters this year. Comments from Collins overnight echo the Fed’s more cautious stance.”

12:50

US Dollar moves slightly higher on inflation woes

The US Dollar ticks up on inflation woes, with the Greenback consolidating at current levels.
Inflation concerns take over and trigger a mini-crisis in UK Gilts.
The US Dollar Index (DXY) resides and orbits around 109.00.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades roughly flat above 109.00 on Thursday while bond markets are coming off the boil for a minute. Yields surged across the globe after traders started to worry about r all the plans President-elect Donald Trump wants to implement, e most of them perceived as highly inflationary. This has triggered widening rate differentials between the US and other countries

The mentioned surges in yields triggered a brief mini-crisis in UK Gilts. This week, long-term UK borrowing costs have soared substantially and the British Pound (GBP) has fallen. Markets perceive this as a sign that investors have lost faith in the government’s ability to manage the national debt and control inflation.

The US economic calendar is light, with a shortened trading day due to the National Day of Mourning for former President Jimmy Carter. The US Challenger Job Cuts number for December will get most of the attention, while four Fed members are set to speak.

Daily digest market movers: Markets indigestion

US stock markets will remain closed or will be trading in shortened hours this Thursday in honor of former President Jimmy Carter.
The Fed Minutes released on Wednesday showed Fed officials confirming a gradual and possibly longer steady rate before considering to cut further, Bloomberg reported.
At 14:00 GMT, Federal Reserve Bank of Philadelphia President Patrick Harker speaks in Princeton right before the National Association of Corporate Directors New Jersey Chapter Economic Forecast 2025.
Around 17:40 GMT, the Federal Reserve Bank of Richmond Thomas Barkin speaks to the Virginia Bankers Association and the Virginia Chamber of Commerce.
At 18:30 GMT, the Federal Reserve Bank of Kansas City President Jeffrey Schmid delivers a speech on the economic and monetary policy outlook at the Economic Club of Kansas City.
Around 18:35GMT, the Federal Reserve Governor Michelle Bowman will give a speech at the California Bankers Association 2025 Bank Presidents Seminar about 2024 reflections, including monetary policy, economic performance and lessons for banking regulation.
Equities are off to a rough start this Thursday with losses across the board
The CME FedWatch Tool is projecting a 93.1% chance that interest rates will be kept unchanged at current levels in the January meeting. Further on, expectations are for the Fed to remain data-dependent with uncertainties that could influence the inflation path once President-elect Donald Trump takes office on January 20.
US yields are softening a touch with the US 10-year benchmark at 4.673%, off the fresh nine -month high at 4.728% seen on Wednesday.

US Dollar Index Technical Analysis: Stalling and grinding

The US Dollar Index (DXY) seems to be stalling its rally just above 109.30 on Thursday. Although 110.00 is very near, the DXY might need to dip again back to 108.00 or lower in order to take out that 110.00 level in the next rally, as the market seems to have fully priced in all inflation elements for now.

On the upside, it is key that the green ascending trend line can hold as support, although that is often not the scenario going forward. If the DXY can head and break above the 110.00 psychological barrier, 110.79 becomes the next big level. Once beyond there, it is quite a stretch to 113.91, the double top from November 2023.

On the contrary, the first downside barrier is 107.35, which has now turned into support. The next level that might halt any selling pressure is 106.52, with the 55-day Simple Moving Average (SMA) at 106.63 reinforcing this region of support.

US Dollar Index: Daily Chart

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.