CFD Markets News and Forecasts — 14-11-2024

• EUR/USD continues to decline as the Euro deflates.
• Fiber found a 57-week low as the Greenback continues to climb.
• US Retail Sales in the barrel for Friday will wrap up the economic calendar.

EUR/USD briefly tested fresh year-long lows on Thursday, piercing the 1.0500 handle for the first time in 54 weeks. A lack of meaningful EU data is doing very little to provide support for the Euro, and Fiber bids continue to tilt in favor of the safe haven US Dollar. European Gross Domestic Product (GDP) growth figures failed to spark a bid under the Euro, printing exactly at-expectations. Quarterly pan-EU GDP came in at 0.4% QoQ exactly as markets expected, with annualized GDP also matching forecasts at 0.9% YoY.

Producer Price Index (PPI) producer-level inflation figures came in roughly as expected, despite a slight upswing in annualized core PPI numbers. Headline PPI matched forecasts in October, rising 0.2% MoM compared to the previous month’s revised 0.1%. Core PPI for the year ended in October accelerated more than expected, ticking up to 3.1% compared to the expected 3.0% rising above the previous period’s 2.9%, which was also revised slightly higher from 2.8%.

The economic calendar is once again one-sided on Friday, with US Retail Sales in the barrel to wrap up the trading week. The last blast of US economic data this week will be Retail Sales for October, which are expected to ease to 0.3% from the previous month’s 0.4%.

EUR/USD price forecast

The EUR/USD daily chart is displaying sustained bearish momentum, with the pair sharply falling below the 50-day and 200-day Exponential Moving Averages (EMAs), which are positioned around 1.0867 and 1.0884, respectively. The recent "death cross," where the 50-day EMA crossed below the 200-day EMA, reinforces the downside pressure and suggests a continuation of the prevailing downtrend. EUR/USD is now trading near multi-month lows around the 1.0520 level, which could act as a psychological support in the short term. However, any recovery is likely to face strong resistance around the 1.0700 level, where the EMAs converge.

The MACD indicator further supports the bearish outlook, as the MACD line remains below the signal line in negative territory, with expanding histogram bars below the zero line. This configuration indicates a robust downward trend, with selling momentum persisting. Unless the pair manages to stage a clear breakout above the EMAs, the bias remains firmly to the downside. A break below the 1.0500 level could open the door for a deeper decline, with 1.0400 emerging as the next potential support area. Bulls would need a decisive recovery above the 1.0880 mark to negate the bearish bias.

EUR/USD daily chart

• USD/CAD trades on a flat note around 1.4060 in Friday’s early Asian session. 
• Fed’s Powell said there is no need to hurry rate cuts as the US economy remains strong. 
• The lower crude oil prices continue to undermine the Loonie.

The USD/CAD pair trades flat near 1.4060 amid the consolidation of the US Dollar (USD) during the early Asian session on Friday. The US October Retail Sales will be in the spotlight on Friday along with the Fedspeak. 

The Greenback holds steady near the fresh 2024 highs despite Trump trades showing signs of slowing. The upside of the pair might be limited amid the cautious remarks from the US Federal Reserve (Fed). On Thursday, Fed Chair Jerome Powell said that the recent performance of the US economy has been “remarkably good,” giving the Fed room to lower interest rates at a careful pace.

Furthermore, Producer inflation in the US rose more than expected in September. Data released by the US Bureau of Labor Statistics on Thursday showed that the US Producer Price Index (PPI) rose 2.4% on a yearly basis in October. This figure followed the 1.9% rise seen in September (revised from 1.8%) and came in above the market expectation of 2.3%.

On the Loonie front, the decline in crude oil prices could weigh on the commodity-linked Canadian Dollar (CAD) in the near term. 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.

• GBP/USD backslid yet again on Thursday, falling to a 19-week low.
• Cable is on pace for its single worst week since mid-2023.
• GBP bidders will be waiting for Friday’s UK GDP print.

GBP/USD fell to a fresh 19-week low on Thursday, piercing the 1.2700 handle before finding near-term technical support from 1.2650. The Pound continues to ease with a lack of meaningful faith behind it, while broader markets continue to bolster the Greenback higher across the board.

Producer Price Index (PPI) producer-level inflation figures came in roughly as expected, despite a slight upswing in annualized core PPI numbers. Headline PPI matched forecasts in October, rising 0.2% MoM compared to the previous month’s revised 0.1%. Core PPI for the year ended in October accelerated more than expected, ticking up to 3.1% compared to the expected 3.0% rising above the previous period’s 2.9%, which was also revised slightly higher from 2.8%.

Coming up on Friday, UK Gross Domestic Product (GDP) figures will give Cable bidders something to chew on, while Greenback buyers will be looking for a surprise improvement in US Retail Sales. UK GDP for the third quarter is expected to sink to 0.2% QoQ from the previous quarter’s print ofg 0.5%. US Retail Sales are likewise forecast to ease slightly in October, expected to print at 0.3% MoM compared to September’s 0.4%.

GBP/USD price forecast

The GBP/USD daily chart shows a pronounced downtrend with significant bearish momentum. After a brief consolidation period around the 1.2900 level, the pair has broken below the 50-day and 200-day Exponential Moving Averages (EMAs), which were providing support near 1.2990 and 1.2865, respectively. This bearish cross between the 50-day EMA (blue line) and the 200-day EMA (black line) is a strong sell signal, commonly known as a "death cross," suggesting further downside potential. The recent break below these key moving averages reinforces the likelihood of continued downward pressure, with the next significant support zone around 1.2600.

The MACD indicator also confirms the bearish bias, as the MACD line has crossed below the signal line in negative territory. This indicates a strong bearish trend with increasing downside momentum. The histogram bars are deepening below the zero line, suggesting that selling pressure remains strong and the pair may struggle to find support. If the bearish momentum persists, GBP/USD could extend its losses, potentially testing the psychological 1.2500 level. A break above the 1.2865 resistance (200-day EMA) would be required to alleviate some of the immediate downside pressure, though the bias remains bearish as long as price remains below the 50-day EMA.

GBP/USD daily chart

• The Canadian Dollar found new lows against the Greenback on Thursday.
• Canada remains largely absent from the economic calendar until next week.
• US PPI inflation accelerated faster than expected for the year ended October.

The Canadian Dollar (CAD) backslid into new lows against the Greenback on Thursday, slipping to a fresh 54-month low and sending the USD/CAD pair to its highest prices in four and a half years. The pair broke through the 1.4000 handle, with the US Dollar getting sent even higher on the back of a slight upswing in US Producer Price Index (PPI) inflation figures on Thursday, sending the Loonie to multi-year lows.

Canada remains absent from the economic calendar this week with a notable lack of meaningful data releases on the radar. CAD traders will be forced to sit on their hands until next Tuesday’s Canadian Consumer Price Index (CPI) inflation update for October, which is unlikely to deliver much good news to Loonie fans.

Daily digest market movers: Canadian Dollar gets pummeled by US producer inflation

• The Canadian Dollar found a new four and a half year low against the Greenback on Thursday, tumbling to its lowest bids against the safe haven US Dollar in 54 months.
• US PPI inflation accelerated a little bit more than expected in October, keeping investors wary and reminding them that rock-bottom interest rates are much easier to wish for than to get.
• US core PPI inflation for the year ended in October rose 3.1% YoY, more than the forecast 3.0% and rising even further from the previous period’s revised 2.9%, which initially printed at 2.8%.
• Canadian CPI inflation data due next week is unlikely to deliver much good news to Loonie bulls as inflation in Canada slumps and the Bank of Canada (BoC) gets pulled into a rate cutting spiral.
• US Retail Sales figures due on Friday could give the US Dollar one last kick up the charts to wrap up the trading week.

Canadian Dollar price forecast

With USD/CAD breaching into multi-year highs, a chasm is opening up below the Canadian Dollar (CAD). After a brief reprieve last week, the Greenback is once again on pace to close higher against the CAD on a weekly basis. USD/CAD has risen nearly 5% since finding a floor near 1.3400 in September, cracking through long-term technical resistance and piercing the 1.4000 handle.

USD/CAD daily chart

• NZD/USD declines 0.65% during Thursday's session.
• The pair resumed downturn and printed fresh multi-month lows as bears extended the control.
• The NZD/USD RSI slipped into oversold territory after falling below 30, indicating rising selling pressure.

The NZD/USD pair declined by 0.65% during Thursday's session and fell below the 0.5900 mark, extending declines for the sixth day and hitting lows since November 2023. The bearish momentum escalated and oversold signals emerged.

The NZD/USD pair's bearish sentiment is reinforced by technical indicators. The Relative Strength Index (RSI) has slipped below 30, indicating oversold territory and rising selling pressure. The declining slope of the RSI suggests that this pressure is intensifying. Furthermore, the Moving Average Convergence Divergence (MACD) remains bearish, with the histogram declining and red. These indicators align with the price action, confirming the pair's downward trajectory.

Support levels are at 0.5830, 0.5810, and 0.5800, while resistance levels are at 0.5900, 0.5950, and 0.5970. Traders should monitors these levels in case the oversold nature of the movements push the pair into a consolidation mode.

NZD/USD daily chart

• NZD/JPY declined mildly to 91.40 on Thursday's session.
• The pair continued trading within the range of 92.00-91.00 going nowhere.
• The RSI was at 52, showing flat buying pressure and the MACD histogram flat and red indicated selling pressure was flat.

The NZD/JPY pair declined mildly to 91.40 on Thursday's session and continued trading within the range of 92.00-91.00. Indicators are neutral with no clear dominant, but a recently completed bearish crossover between the 20 and 100-day Simple Moving Averages (SMAs) might eventually push the pair lower.

The NZD/JPY pair's technical outlook remains mixed, as suggested by neutral indicators. The Relative Strength Index (RSI) stands at 52, indicating balanced buying and selling pressures, while the Moving Average Convergence Divergence (MACD) histogram is flat and red, suggesting flat selling pressure.The pair is currently trading sideways, with support levels at 91.00, 90.50, and 90.00, and resistance levels at 92.00, 92.50, and 93.00.

NZD/JPY daily chart

• XAU/USD remains subdued under the weight of a strengthening Dollar and recent US inflation data.
• Producer Price Index exceeds expectations, suggesting Fed easing cycle might be reconsidered.
• Investors recalibrate expectations for December Fed rate cut amid ongoing inflation concerns.

Gold recovers some ground on Thursday yet remains trading below its opening price for the fifth consecutive day, undermined by the Greenback’s advance for its own fifth consecutive day. A slightly hot inflation report in the US and solid jobs data sponsored XAU/USD’s leg down toward the 100-day Simple Moving Average (SMA). At the time of writing, Bullion trades at $2,568.

The market mood shifted negatively yet failed to boost Gold’s prices and underpin the US Dollar. The US Bureau of Labor Statistics revealed that the Producer Price Index (PPI) rose in October, exceeding estimates and September’s figures.

This indicates that the Federal Reserve's (Fed) job is far from done, even though the central bank embarked on an easing cycle that has seen the Fed lower its primary interest rate instrument by 75 basis points since September 2024.

At the same time, the US Department of Labor revealed that unemployment claims filled by Americans diminished compared to the previous reading

Fed officials have recently underscored the delicate act of balancing inflation control with employment goals. Governor Adriana Kugler stressed the importance of addressing both mandates, pointing out that while strides have been made toward reducing inflation, hitting the 2% target remains challenging.

Likewise, Richmond Fed President Thomas Barkin acknowledged the progress in curbing inflation but warned against premature optimism. He sees risks like substantial union wage settlements and potential tariff hikes, which could spark inflationary pressure.

Gold has been undermined by investor fears that US President-elect Donald Trump’s proposed tariffs and tax reductions are likely to increase inflation, which could prompt the Fed to pause its easing cycle.

Market participants see a 72% chance of a quarter percentage rate cut by the Fed in the upcoming December meeting, down from 82% a day ago.

Investors are awaiting remarks from Fed Chair Jerome Powell later on Thursday along with Friday's US Retail Sales data.

Daily digest market movers: Gold steadies alongside strong US Dollar

• Gold prices recover as US real yields, which inversely correlate against Bullion, fall three basis points to 2.068%. The DXY registers gains of 0.18% to 106.67.
• Fed Chair Jerome Powell, commented the US economy is not sending signals that US central bank needs to be in a hurry to lower interest rates, and he expect inflation to “come down toward the 2% goal.” Powell reassured the Fed’s commitment on inflation.
• The US PPI surpassed expectations with the headline increasing by 2.4% YoY, beating the 2.3% forecast and up from 1.9% in September. The Core PPI, often influencing the core Personal Consumption Expenditures (PCE) Price Index, rose by 3.1% YoY, higher than the prior 2.9% and above the expected 3%.
• Initial Jobless Claims for the week ending November 9 came in at 217K, a decrease from the previous week's 221K and below the forecast of 223K.
• According to the December fed funds futures contract data from the Chicago Board of Trade, investors are projecting a 25 bps Fed rate cut in December.

XAU/USD Technical Outlook: Gold price holds firm, but downside risks remain

Gold (XAU/USD) has recently declined below the October 10 swing low of $2,603, exacerbating further losses below $2,600 and opening the door to a new two-month low of $2,536, briefly below the 100-day Simple Moving Average (SMA) at $2,547. Nevertheless, sellers’ failure to push Bullion prices toward $2,500 paved the way for a leg-up.

XAU/USD’s first resistance is seen at $2,600. If buyers reclaim that level, they could test the  50-day SMA at $2,650, with subsequent resistance around $2,700. Surpassing this could open the path to the November 7 high of $2,710.

The Relative Strength Index (RSI) has moved away from its neutral line, suggesting a bearish momentum that could lead to further declines in XAU/USD.

• AUD/USD declines with the rising US Dollar as Australian employment data disappoints.
• Sluggish job growth and unchanged Unemployment Rate at 4.1% reduce inflation fears in Australia.
• Markets might start to bet on a less aggressive RBA.

The AUD/USD declined by 0.34% to 0.6470 in Thursday's session, extending its decline to a fresh three-month low of 0.6460. The US Dollar is easing after mixed data, while weak Australian employment data has reduced inflationary concerns, which might change the outlook of the Reserve Bank of Australia (RBA).

Lately, the AUD declined against the strengthening USD, driven by positive US economic indicators and increased confidence following Donald Trump’s presidential election. Despite a neutral stance from the RBA, the central bank hinted at a possible rate cut in May 2025. The overall price action indicates that the AUD/USD pair may continue its downtrend, with the DXY reaching new yearly highs, putting pressure on risk-related currencies like the AUD.

Daily digest market movers: Australian Dollar declines due to weak labor data, US data

• Australia's job growth slowed in October, adding 15.9K workers against estimates of 25K, easing inflation concerns.
• Despite the slowdown, the Unemployment Rate remained at 4.1%, suggesting a still-tight labor market.
• The RBA is unlikely to cut interest rates soon as Governor Bullock emphasizes the need to control inflation.
• The US Dollar Index surged to a one-year high near 107.00, driven by Trump's campaign promises of higher import tariffs and lower taxes.
• Investors await Federal Reserve Chair Powell's speech for guidance on interest rate policy.
• As for now, markets anticipate the first 25-basis-point interest rate cut in Australia not before May 2025 but remain confident in a 25 bps cut by the Fed in December.

AUD/USD technical outlook: Pair’s bearish momentum intact, it might start to consolidate

The AUD/USD downtrend remains intact, but oversold conditions in the daily RSI suggest a potential bounce. The indicator has reached deeply into negative territory around 30, a level that often precedes a reversal in momentum. This suggests that the pair may be due for a temporary rebound, although any gains should be viewed as corrective within the broader downtrend.

Support levels lie at 0.6450, 0.6430, and 0.6400, while resistance is encountered at 0.6500, 0.6515, and 0.6550.

The US Dollar continued its ascent, reaching fresh 2024 highs, even as the Trump-led rally showed signs of slowing and US yields dipped slightly ahead of a busy economic calendar on Friday.

Here is what you need to know on Friday, November 15:

The US Dollar Index (DXY) printed a new 2024 peak north of 107.00 despite declining US yields across the curve. Retail Sales will be at the centre of the debate across the pond, seconded by the NY Empire State Manufacturing Index, Export and Import Prices, Industrial and Manufacturing Production, and Business Inventories.

EUR/USD broke below the 1.0500 support to hit new 2024 lows amidst the incessant move higher in the Greenback. Germany’s Wholesale Prices are due along with speeches by the ECB’s McCaul, Lane, and Cipollone.

GBP/USD broke below the 1.2700 support to reach new lows amid further gains in the Greenback. The advanced Q3 GDP Growth Rate figures takes centre stage on the UK docket, followed by Business Investment, Goods Trade Balance, Industrial and Manufacturing Production, Construction Output, the final Q2 Labour Productivity index, and the NIESR Monthly GDP Tracker.

USD/JPY climbed past the 156.00 hurdle for the first time since mid-July on the back of further gains in the US Dollar. Key data releases in Japan will include flash Q3 GDP Growth Rate, Capacity Utilization, Industrial Production, and the Tertiary Industry Index.

Extra strength in the Greenback and the inconclusive price action in the commodity complex dragged AUD/USD to new lows near 0.6450. The RBA’s Jones will be the sole event Down Under at the end of the week.

WTI prices added to Wednesday’s marginal gains and shifted their focus to the key $70.00 mark on the back of a positive EIA’s weekly report.

Prices of Gold advanced marginally and regained the $2,570 region after bottoming out in new lows near $2,535 earlier in the day. Silver prices bounced off the sub-$30.00 zone per ounce, making a decent U-turn and eventually ending the day with marked gains.

• Unanimous decision reflects changed stance since September; further rate cuts may follow as inflation outlook improves.
• Banxico emphasizes continuing economic challenges but sees potential for easing as non-core inflation effects diminish.
• Inflation expected to reach target by Q4 2025, with updated projections suggesting a gradual disinflationary trend.

The Bank of Mexico cut rates by 25 basis points for the fourth time since March 21, diminishing Mexico’s primary reference rate from 10.50% to 10.25%. It’s worth noting that the decision was unanimous after Deputy Governor Jonathan Heath voted to hold rates unchanged at the September meeting.

Bank of Mexico reduces key rate to 10.25%, citing improving inflation outlook and downside economic risks

In its monetary policy statement, Banxico acknowledged that the balance of risks to economic activity growth is skewed to the downside. They added, “the nature of the shocks that have affected the non-core component and the projection that their effects on headline inflation will dissipate over the next quarters.”

The board added the inflationary scenario “will allow further reference rates adjustments,” and although it requires a restrictive monetary policy stance, the evolution of the disinflation process “implies that it's adequate to reduce the level of monetary policy restriction.”

Banxico updated their forecasts for 2024, 2025 and 2025. The board projects that headline inflation will converge to the bank’s 3% target in Q4 2025.

USD/MXN Reaction to Banxico’s decision

The USD/MXN spiked toward 20.55, before printing new daily lows below 20.45. Despite this, the exotic pair bias is tilted to the upside, unless sellers push the exchange rate below 20.00, ahead of testing the 50-day Simple Moving Average (SMA) at 19.74. On the upside, buyers had a clear path to test year-to-date (YTD) highs at 20.80, if they reclaim 20.50.

• Remarks from Fed Chair Jerome Powell will heat the US session on Thursday.
• Fed officials maintain the monetary policy path despite the new political scenario.
• Powell’s speech and Fed commentary will likely revolve around Trump’s victory.

Federal Reserve (Fed) Chairman Jerome Powell is due to participate in a panel discussion titled "Global Perspectives" at an event hosted by the Federal Reserve Bank of Dallas this Thursday, and speculative interest eagerly awaits his words.

The Fed had recently delivered as expected, trimming the benchmark interest rate by 25 basis points (bps) in November after cutting it by 50 bps in September. Back then, the Fed established a monetary policy path, which continues as planned.

However, the outcome of the recent United States (US) presidential election has made investors wonder for how long.

Fed policymakers and the Republican victory

The return of former President Donald Trump to the White House has fueled concerns about renewed inflationary pressures, as his platform would move the economy in a sharply different direction. Tax cuts, tariffs on foreign goods, and harsh migration policies are among Trump’s motto.

The Fed, particularly Chairman Jerome Powell, had done their best to clarify the central bank’s independence from the government, but that’s far from enough to grant a smooth continuation of the current monetary policy.

With a Republican Congress behind Trump, things will take an interesting twist next year, and financial markets are not quite sure where that will end.

About Jerome Powell (via Federalreserve.gov)

"Jerome H. Powell first took office as Chair of the Board of Governors of the Federal Reserve System on February 5, 2018, for a four-year term. He was reappointed to the office and sworn in for a second four-year term on May 23, 2022. Mr. Powell also serves as Chairman of the Federal Open Market Committee, the System's principal monetary policymaking body. Mr. Powell has served as a member of the Board of Governors since taking office on May 25, 2012, to fill an unexpired term. He was reappointed to the Board and sworn in on June 16, 2014, for a term ending January 31, 2028."

• The Dow Jones eased on Thursday as Trump election rally short-circuits.
• US producer-level prices printed at expectations, easing investor concerns.
• Friday brings Retail Sales data to round out the trading week.

The Dow Jones Industrial Average (DJIA) pumped the brakes on the recent post-election rally that saw a decisive win for presidential candidate and former President Donald Trump. Investors overwhelmingly perceived the returning contender for the White House as a pro-market representative within the US government. The election glut in equities is now fizzling out as equities pare back slightly from record highs.

Producer Price Index (PPI) producer-level inflation figures came in roughly as expected, despite a slight upswing in annualized core PPI numbers. Headline PPI matched forecasts in October, rising 0.2% MoM compared to the previous month’s revised 0.1%. Core PPI for the year ended in October accelerated more than expected, ticking up to 3.1% compared to the expected 3.0% rising above the previous period’s 2.9%, which was also revised slightly higher from 2.8%.

US Retail Sales are due on Friday and is the last batch of meaningful US data on the docket this week. October’s Retail Sales are expected to ease to 0.3% MoM from the previous 0.4%, while Retail Sales excluding automobiles are expected to decline to 0.3% from 0.5%.

Dow Jones news

The Dow Jones is roughly on-balance on Thursday despite a slight easing in the index’s headline average price. Half of the Dow’s constituent equities are in the green for the day, with gains led by Walt Disney (DIS). Disney is up nearly 7% for the day and testing $110 per share after beating earnings in FY Q4. On the low side, Salesforce (CRM) eased lower around 2.5% to $333 per share as the AI-fueled tech rally takes a breather on Thursday.

Dow Jones price forecast

The Dow Jones is struggling to hold onto the 44,000 handle as the major equity index eases back from record highs set just north of 44,4000. Downside potential remains limited as bears have few footholds to grab onto, but a near-term downturn to the 50-day Exponential Moving Average (EMA) near 42,400 can’t be discounted.

The Dow Jones is still trending deep into bull country regardless of any near-term drags; the index is on pace to close in the green for all but two months of 2024. The DJIA is also trading well above it’s 200-day EMA near 40,150, with nearly 10% of value between current price action and the long-term moving average.

Dow Jones daily chart

• US Dollar retreats after reaching its highest level after labor and inflation data.
• US citizens filing new applications for unemployment insurance last week arrived below expectations.
• The headline PPI for October came in at 2.4%, higher than expected.

The US Dollar Index (DXY), a measure of the value of the USD against a basket of six currencies, softened after hitting a fresh year-to-date high near 107.00. The Greenback has been on a rise in recent days, but profit-taking and disappointing US economic data have led to a slight retracement. The headline Producer Price Index (PPI) for October came in at 2.4% YoY, above expectations of 2.3%, and the PPI excluding Food and Energy rose to 3.1% YoY, also arriving above forecasts. 

Additionally, US citizens filing new applications for unemployment insurance was reported at 217K for the week ending November 9, which came in below expectations of 223K. .

Daily digest market movers: US Dollar eases after hitting new annual high due to profit-taking and economic data

• Initial Jobless Claims in the US increased to 217K in the week ending November 9, below estimates of 223K and the prior week’s 221K.
• The seasonally-adjusted insured unemployment rate remained at 1.2%, while the four-week moving average decreased to 221K.
• Headline PPI in the US rose 2.4% YoY in October, exceeding estimates and marking a significant increase from September's 1.9% revised gain.
• Excluding Food and Energy, PPI increased by 3.1% YoY, higher than expectations and the previous reading of 2.9%.
• On a monthly basis, headline PPI and core PPI both rose by 0.2% and 0.3%, respectively, meeting expectations but higher than the previous rate.

DXY technical outlook: Index shows bullish momentum, but overbought indicators warrant caution

The technical analysis of the DXY Index indicates a surge in momentum, driven by strong gains in the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD). However, as these indicators approach overbought territory, the DXY may enter a period of consolidation. 

The recent surge and subsequent retreat in the DXY suggests that buyers may be taking profits after a strong rally. This could indicate a potential reversal or consolidation in the short term. The 107.00 level has acted as a strong resistance, and its failure to break through on a sustained basis could add weight to the notion of a pullback. 

• Mexican Peso consolidates as traders anticipate a 25-basis-point cut from Banxico.
• US inflation data hints at halted disinflation, potentially influencing Fed's future decisions.
• Federal Reserve officials continue to remain cautious regarding December’s meeting.

The Mexican Peso wavers against the US Dollar on Thursday after snapping three days of losses on Wednesday. Traders await the Bank of Mexico (Banxico) monetary policy decision. Along with solid data from the US hinting that disinflation has halted, this capped the Peso’s recovery. The USD/MXN trades at 20.50, virtually unchanged.

Market participants await Banxico's decision, though the majority have priced in a 25-basis-point (bps) rate cut from 10.50% to 10.25%. The decision will be announced at 19:00 GMT, and the statement is expected to provide reasons behind the board’s decision and forward guidance.

Nevertheless, the latest inflation reading failed to justify Mexico’s central bank decision, as the headline Consumer Price Index (CPI) rose to 4.76% YoY. However, the core CPI has fallen to 3.80%, down for the tenth consecutive month since the beginning of 2024.

It would be interesting if the decision were unanimous after Deputy Governor Jonathan Heath voted to hold rates unchanged at the September 26 meeting. Most of the Governing Council adopted a dovish stance, justifying their decision on core prices moving toward the bank's 3% goal, but mainly on the economy showing signs of weakness.

The US Bureau of Labor Statistics revealed that prices paid by producers topped estimates in core and headline figures. At the same time, the number of Americans filing for unemployment claims dipped below estimates and the previous week's reading for the week ending November 9.

In the meantime, the Federal Reserve (Fed) parade continued. Fed Governor Adriana Kugler stated the Fed must be mindful of both inflation and employment mandates. Later, Richmond Fed President Thomas Barkin said the US central bank has made progress on inflation, but needs to continue.

According to CME FedWatch Tool data, odds for a rate cut decreased from 82% a day ago to 78% on Thursday, post PPI data.

Meanwhile, Minneapolis Fed President Neel Kashkari stated the Fed would need additional rate cuts, adding, “I think inflation is heading in the right direction and have confidence in that.”

Ahead this week, Mexico’s economic docket will feature the Banxico policy decision. On the US front, Fed speakers and Retail Sales will help dictate the direction of the USD/MXN pair.

Daily digest market movers: Mexican Peso steadies against US Dollar

• The USD/MXN hovers around 20.50 ahead of Banxico’s decision.
• The US Dollar Index (DXY), which tracks the performance of the Greenback against six peers, holds to minimal gains of 0.08% at 106.56 after refreshing yearly highs of 107.06.
• The Producer Price Index (PPI) in the US exceeded estimates. Headline PPI rose by 2.4% YoY, exceeding forecasts of 2.3%, up from 1.9% in September. Core PPI, which usually impacts the calculation of the core Personal Consumption Expenditures (PCE) Price Index, expanded by 3.1%YoY, up from 2.9% and above projections of 3%.
• Initial Jobless Claims for the week ending November 9, were 217K, down from prior 221K a week earlier and below forecasts of 223K.
• Data from the Chicago Board of Trade, via the December fed funds rate futures contract, shows investors estimate 25 bps of Fed easing by the end of 2024.

USD/MXN technical outlook: Mexican Peso counterattacks as USD/MXN hovers around 20.50

The USD/MXN pair remained upwardly biased, fluctuating around the psychological 20.50 figure. Although prices had consolidated during the last three straight days, bulls are in charge unless sellers push the exchange rate below 20.00, followed by a drop below the 50-day Simple Moving Average (SMA) at 19.74.

Oscillators like the Relative Strength Index (RSI) is bullish, suggesting that further upside in the USD/MXN is seen.

Therefore, the USD/MXN’s first resistance would be the current week’s peak at 20.69. Once surpassed, the year-to-date (YTD) high of 20.80 emerges as the next ceiling level before testing 21.00. A breach of the latter will expose the March 8, 2022, peak at 21.46.

• EUR/GBP rose by 0.14% to 0.8320 in Thursday's trading session.
• Bears took a breather after recent declines but technical indicators remain deeply negative.
• RSI signals recovering buying pressure while MACD suggests flattening selling pressure, overall outlook mixed.

The EUR/GBP pair rose to 0.8320 in Thursday's session. Despite a temporary respite for the bears after recent declines, technical indicators remain deeply negative, with the pair trading below the 20-day Simple Moving Average (SMA) which stands around 0.8340. This suggests that the short-term outlook remains bearish until this level is conquered.

The Relative Strength Index (RSI) which measures the strength of buying and selling pressure, has a reading of 47 and points up, indicating that buying pressure is recovering. The Moving Average Convergence Divergence (MACD), which is a trend-following indicator, is flat and in red, suggesting that selling pressure is flat. With the RSI suggesting that buying pressure is recovering, while the MACD, it suggests that selling pressure is flat and it points out that the pair may consolidate in the next sessions.

Support levels can be found at 0.8300, 0.8250, and 0.8230, while resistance levels can be found at 0.8340, 0.8360, and 0.8400.

EUR/GBP daily chart

• GBP/USD struggles after new four-month low, as US PPI data indicates persistent inflation.
• Technical analysis shows potential for further declines, with next key support at 1.2600.
• Recovery targets for GBP/USD include retesting 1.2700 and aiming for the 200-day SMA at 1.2817.

The British Pound posted losses of 0.10% against the US Dollar after US economic data suggested that inflation remains above the Federal Reserve’s 2% goal. Headline PPI rose the most in four months on an annual basis for October, while core PPI accumulated three straight months of higher readings. The GBP/USD trades at 1.2692 after hitting a daily peak of 1.2710.

GBP/USD Price Forecast: Technical outlook

The GBP/USD tumbled to a four-month low of 1.2629 before recovering some ground, yet it traded below its opening price. On its way toward 1.2600, the pair printed a lower low beneath the August 8 daily low of 1.2664, paving the way for further losses. Indicators such as the Relative Strength Index (RSI) hint that further downside is seen.

That said, sellers must clear 1.2629 and the 1.2600 figure. Once achieved the next support would be the May 9 low of 1.2445, before challenging the year-to-date (YTD) low of 1.2299.

Conversely, buyers must lift GBP/USD above 1.2700, followed by the November 13 high at 1.2768. They must reclaim the 200-day Simple Moving Average (SMA) at 1.2817 if surpassed.

GBP/USD Price Chart – Daily

• Silver price gauges an interim cushion near $29.70, more downside looks likely.
• The US Dollar’s rally stalls after the release of the US jobless claims and the PPI data.
• A firm outlook on Trump’s policies will keep the Silver price edgy.

Silver price (XAG/USD) discovers a temporary support near $29.70 in Thursday’s North American session. The white metal finds cushion as the US Dollar (USD) gives up some intraday gains after posting a fresh annual high. The rally in the US Dollar index (DXY), which gauges Greenback’s value against six major currencies, pauses for a while after jumping to near 107.00.

The Greenback faces mild pressure after the release of the US Initial Jobless Claims for the week ending November 8 and the Producer Price Index (PPI) data for October even though the data was USD-positive. Individuals claiming jobless benefits for the first time came in surprisingly lower at 217K than the prior release of 221K, which was expected at 223K.

The headline producer inflation data accelerated to 2.4%, faster than estimates of 2.3% and the September reading of 1.9%. In the same period, the core PPI – which strips off volatile food and energy prices rose by 3.1% than estimates of 3% and the former release of 2.9%. Historically, signs of acceleration in price pressures weigh on market expectations for Federal Reserve (Fed) interest rate cuts, however, the impact is expected to negligible as officials are more worried about stabilizing job market.

For more interest rate cues, investors await Fed Chair Jerome Powell’s speech, which is scheduled at 20:00 GMT.

Meanwhile, the outlook of the Silver price is expected to remain vulnerable as policies of President-elected Donald Trump could limit the Fed’s potential of cutting interest rates aggressively.

Silver technical analysis

Silver price stays on track toward the upward-sloping trendline around $29.00, plotted from the February 28 low of $22.30. The white metal weakened after the breakdown of the horizontal support plotted from the May 21 high of $32.50.

The near-term trend of the Silver price has weakened as the 20-day Exponential Moving Average (EMA) starts declining, which trades around $32.00.

The 14-day Relative Strength Index (RSI) slides to near 40.00. A bearish momentum will trigger if the RSI (14) sustains below the same.

Silver daily chart

• USD/JPY may have formed a broadening formation pattern with bearish potential. 
• The pair has overshot the upper boundary a little but it may be about to start a decline. 

USD/JPY could be overshooting the upper boundary line of a Broadening Formation (BF) price pattern that looks like it has been forming over the last three weeks.

BFs develop when price starts to go sideways but forms higher highs and lower lows with each leg of the unfolding range. 

USD/JPY 4-hour Chart 

BFs occur during periods of high market volatility as has been the case during the formation of the one on USD/JPY which coincides with the US presidential election. 

At a price top the pattern is a sign of a bearish reversal, with an eventual decline below the lower boundary line. 

Assuming USD/JPY has formed the pattern, it has just overshot the upper boundary line. This could either mean the pattern is invalid or not. It is possible the overshoot is a sign of exhaustion and that the price will soon start to decline back down to the lower boundary line at around 151.30. A break below 1.5460 (November 6 high) would probably confirm such a decline.

If the (blue) Moving Average Convergence Divergence (MACD) momentum indicator crosses below its red signal line that will add further weight of evidence to the bearish thesis. 

Eventually price is likely to break below the lower boundary line and start an even deeper decline. If so, it is likely to fall to a point equal to the width of the pattern at its broadest point extrapolated lower.

Alternatively, the pattern may be false and USD/JPY could still be in a strong short and medium-term uptrend. If so, given the principle that “the trend is your friend” it will probably continue higher once the current pullback ends. 

In such a case, a break above 156.25 would likely confirm further upside towards a target at around 157.86 (July 19 high). 

The cards were set well before election night, with evidence overwhelmingly suggesting the melt-up in Gold was underscored by a liquidity vacuum, with the US election being the focal point, TDS’ Senior Commodity Strategist Daniel Ghali notes.

Significantly deeper-than-normal Gold consolidation

“The event risk has unleashed pent-up selling activity, and while price action may screen oversold, liquidations thus far have not been extreme. CTAs have shed only 10% of their max size and could be set to sell an additional -15% of their max size over the coming sessions in a continued downtape.”

“Given simultaneously extreme positioning cues from macro funds (Earth to macro funds!) and Shanghai traders — who are also now selling at their fastest clip in years, clocking in at more than 35t of notional Gold sold into a seasonal demand upswing over the last month — and still lackluster buying activity in physical markets, we expect continued pressure on Gold prices and a significantly deeper-than-normal consolidation.”

“While price action in Silver has remained relatively contained, given its cleaner positioning set-up, the outlook for CTA flows has now notably deteriorated, with our simulations now suggesting incoming selling activity in nearly every scenario for market prices over the coming week, barring a big uptape. Silver might catch-down to Gold before precious metals find a floor.”

Richmond Fed President Thomas Barkin noted that while the Fed has made strong progress so far, there’s still more work to be done to keep the momentum going.

Key Quotes

Bank of England policymaker Catherine Mann argued that the central bank should maintain interest rates at their current level until the upside risks to inflation, including those stemming from the election of Donald Trump as the next US president, subside.

Key Quotes

• Crude Oil support is under pressure as the IEA report adds to the bearish outlook. 
• The monthly report from the IEA bears no change in the narrative for the 2025 outlook. 
• The US Dollar Index rallies further after President-elect Trump secures a majority in both Senate and House.

Crude Oil steadies and consolidates recent losses after the International Energy Agency (IEA) released its monthly report for November on Thursday. The IEA follows the Organization of the Petroleum Exporting Countries (OPEC) outlook released earlier this week and has revised down its 2025 Oil demand forecast. Another downside revision adds more conviction to a bearish outlook on Oil prices in the long term.  

The US Dollar Index (DXY), which tracks the performance of the Greenback against six other currencies, extends gains and reaches a fresh year-to-date high above 107.00. 

In the economic data front, the US Producer Price Index (PPI) for October is not expected to make any waves on Thursday after the US Consumer Price Index (CPI) released on Wednesday fell broadly in line with expectations. All eyes will be on the Federal Reserve (Fed) Chairman Jerome Powell speech, scheduled at 20:00 GMT, with traders looking for clues on the December interest rate cut. 

At the time of writing, Crude Oil (WTI) trades at $67.99 and Brent Crude at $71.80

Oil news and market movers: IEA agrees with OPEC     

• A privately owned Chinese refiner bought West African crude in a rare purchase. Normally, independent processors in China tend to favor imports from Iran and Russia, Bloomberg reports.
• Non-OPEC capacity will be boosted by new offshore conventional projects. Projects in Brazil, Guyana, and Norway are set to add to the already oversupplied market, according to the IEA's monthly Oil Market Report. 
• In its report, the IEA lifted its forecast for this year's oil-demand growth but slightly trimmed next year's estimates, citing the impact of China's economic slowdown on consumption, Bloomberg reports. 

Oil Technical Analysis: Breakout risk at hand

Crude Oil price is starting to show the pattern that precedes a breakout, with lower highs and higher lows. A breakout looks imminent from a purely technical point of view. With all these bearish elements taken into account, a break to the downside seems rather plausible than a pop to the upside. 

On the upside, the 55-day Simple Moving Average (SMA) at $70.25 is the first barrier to consider before the hefty technical level at $73.58, with the 100-day Simple Moving Average (SMA). The 200-day SMA at $76.68  is still quite far off, although it could get tested in case tensions in the Middle East arise. 

On the other side, traders need to look towards $67.12 – a level that held the price in May and June 2023 – to find the first support. In case that level breaks, the 2024 year-to-date low emerges at $64.75, followed by $64.38, the low from 2023.

US WTI Crude Oil: Daily Chart

•  Initial Jobless Claims bettered consensus and increased to 217K.
• Continuing Jobless Claims climbed to 1.873M in the week ending November 1.

US citizens filing new applications for unemployment insurance rose to 217K for the week ending November 8, as reported by the US Department of Labor (DoL) on Thursday. This print came in above initial estimates (223K) and was lower than the previous week's tally of 221K (unrevised).

The report also highlighted a seasonally adjusted insured unemployment rate of 1.2%, while the four-week moving average retreated to 221K, marking a decrease of 6.250K from the prior week’s unrevised average

Moreover, Continuing Jobless Claims went down by 11K to reach 1.873M for the week ending November 1.

Market reaction

The Greenback’s rally remains well in place, although the US Dollar Index (DXY) now corrects lower after hitting new yearly peaks past the 107.00 barrier earlier on Thursday.

The Bureau of Labor Statistics (BLS) reported a 2.4% increase in the headline Producer Price Index (PPI) in October, surpassing expectations. Meanwhile, the Producer Price Index excluding Food and Energy gained by 3.1% YoY.

On a monthly basis, the headline PPI rose by 0.2% vs. a month earlier and 0.3% when stripping Food and Energy costs.

• USD/CHF extends its established bull trend higher. 
• The RSI momentum indicator is flashing overbought suggesting increased risk of a pullback. 

USD/CHF breaks above the 200-day Simple Moving Average (SMA) and extends its short and medium-term uptrend. 

USD/CHF Daily Chart 

Given the technical analysis theory that “the trend is your friend” the odds favor more upside. 

However, the Relative Strength Index (RSI) momentum indicator is overbought which advises long holders not to add to their long positions because of the increased risk of a pullback. If a pullback does evolve it will provide a good opportunity to buy at a lower price and catch the uptrend before it resumes. Any correction is likely to find solid support at the 200-day SMA at around 0.8825-30. 

The pair has surpassed the target at 0.8873 (July 30 swing high) and is on its way to the next target at 0.9050 (July 2 swing high). Another possible target is 0.9000 due to its significance as a round-number and psychological level.  

• EUR/AUD trades sideways around 1.6300 even though the Australian job demand remained slower-than-forecast in October.
• RBA Bullock supports maintaining a restrictive stance until inflation gets under control.
• Trump’s policies are expected to keep the Eurozone economy on the backfoot for a longer term.

The EUR/AUD pair trades in a tight range near the key resistance of 1.6300 in Thursday’s North American session. The cross struggles for the direction even though the Australian Employment data for October came in weaker than expected.

The Australian labor market data showed that the economy added 15.9K new workers, lower than estimates of 25K and from 61.3K in September. The Unemployment Rate came in at 4.1%, in line with expectations and the prior release.

The impact of the weak employment data is expected to nominal on market speculation for the Reserve Bank of Australia's (RBA) interest rate outlook as the bank is more focused on taming price pressures with confidence that the job market remains steady. Also, RBA Governor Michelle Bullock said on Wednesday that interest rates are needed to remain at their current levels until price pressures get under control.

According to economists at Capital Economics, the RBA is expected to consider pivoting to interest rate cuts after the first quarter of 2025.

Meanwhile, Euro’s (EUR) broad underperformance is expected to remain intact as Trump’s protectionist policies are expected to impact the Eurozone’s export sector significantly, being a leading trading partner of the United States (US). Apart from that, market participants are anticipating that the European Central Bank (ECB) will fasten its policy-easing cycle amid fears of price pressures remaining below the bank’s target of 2%.

In the European session, ECB Vice President Luis de Guindos said, “All indicators on core inflation are pointing in the right direction.” He added, “If inflation converges towards our goal, then monetary policy will respond accordingly.”

• EUR/CHF is trading at the bottom of a Triangle pattern. 
• The pair looks vulnerable to breaking lower. 

EUR/CHF is probing the base of a Triangle pattern it has formed over the last three months (see chart below). It has broken below the bottom of the Triangle on an intraday but not a closing basis. That said, the base seems weakened and vulnerable to finally giving way.  

EUR/CHF Daily Chart

A break below the 0.9339 November 13 low would probably confirm more weakness down to  the next downside target at 0.9132, the 61.8% Fibonacci extrapolation of the height of the Triangle lower. 

The bearish trend prior to the formation of the Triangle (Since May 27) further tips the odds in favor of a downside evolution. 

• The Trump trades rally in the US Dollar is heading into its fifth day of gains. 
• All eyes are on Fed Chairman Powell and his view on the interest rate cut in December.
• The US Dollar index jumps to a fresh year-to-date high at around 107.00. 

The US Dollar (USD) extends the  Trump trade rally for the fifth consecutive trading day with the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, reaching the highest level seen since November 1, 2023, above 107.00. The additional push comes after major news agencies reported on Wednesday evening that the Republicans had secured enough seats for a majority in the House of Representatives after already winning the Senate. Thus, The “Red Sweep” has materialized, and President-elect Donald Trump will face very few issues or struggles to get any package through both political decision bodies. 

The US economic calendar includes the weekly Initial Jobless Claims and the Producer Price Index (PPI) inflation data for October. No big shakeups are expected from the PPI release after the US October Consumer Price Index (CPI) aligned with economist expectations on Wednesday. Instead, expect some nervousness from Federal Reserve (Fed) Chairman Jerome Powell’s speech after several Fed members questioned this week whether a December rate cut is still valid under current market conditions. 

Daily digest market movers: December in the balance

• Macroeconomic data is set to be released at 13:30 GMT on Thursday:
  • Weekly Initial Jobless Claims for the week ending on November 8 are expected to rise to 223,000, following the 221,000 reported in the previous week. 
  • The Producer Price Index (PPI) data for October will be released at the same time:
    • The monthly headline PPI is expected to increase 0.2% from 0.0% previously. The monthly core PPI is expected to accelerate 0.3% compared to 0.2% in September.
    • The yearly headline PPI is expected to surge 2.3% from 1.8% in September. The yearly core PPI is expected to surge 3.0% in October from 2.8% the prior month.
• Two Federal Reserve members and the Fed Chairman itself are set to speak this Thursday:
• At 12:00 GMT, Federal Reserve Governor Adriana Kugler (2024 FOMC voting member) delivers a speech about central bank independence and economic outlook at the Latin American and Caribbean Economic Association 2024 meeting in Montevideo, Uruguay.
• Richmond Fed President Tom Barkin discusses the economy with Jodie W. McLean, secretary of the Real Estate Roundtable board of directors at around 14:00 GMT.
• At 20:00 GMT, Federal Reserve Chair Jerome Powell participates in a panel discussion titled "Global Perspectives" about the economic outlook at an event hosted by the Federal Reserve Bank of Dallas. 
• New York Fed President John Williams closes off this Thursday by delivering keynote remarks on "Intermediating Impact: Making Missing Markets" at a New York Fed event at 21:15 GMT.
• Equities are in a geographically split division, with Asian equities on the backfoot at their close on Thursday, while European and US equities are in the green. 
• The CME FedWatch Tool is pricing in another 25 basis points (bps) rate cut by the Fed at the December 18 meeting by 82.5%. A 17.5% chance is for rates to remain unchanged. While the rate-cut scenario is the most probable, traders have pared back some of the rate-cut bets compared with a week ago.
• The US 10-year benchmark rate trades at 4.46%, just off the high printed at opening at 4.48%.

US Dollar Index Technical Analysis: Where to go from here

The US Dollar Index (DXY) extends gains this week after President-elect Donald Trump will have his presidency with full support from the Senate and the House of Representatives after Republicans secured enough seats. The only element now in the balance is whether December will still have a rate cut, while everything else known is priced in for now. 

From now on, the 107.00 round level comes into play for the rest of the week. A fresh year-to-date high has already been printed. A full one-year high could be reached once 107.35 gets taken out. 

On the downside, a fresh set of support is coming live. The first support is 105.89, the closing level on Tuesday. A touch lower, the pivotal 105.53 (April 11 high) should avoid any downturns towards 104.00 for now. 

US Dollar Index: Daily Chart

• Gold trades substantially lower due to pressure from US political factors.  
• It has weakened nearly 7.0% in November so far as a result of Donald Trump and the Republican’s political gains. 
• XAU/USD breaks through a major trendline and declines to the 100-day SMA.  

Gold (XAU/USD) is trading down 7.0% from its peak so far in November as markets absorb the impact of the seismic shift in US politics that has occurred since the election of former President Donald Trump. 

The precious metal further extends its decline on Thursday, breaking below a major trendline and reaching the $2,540s after the news that the Republican Party has won a majority in the US Congress, which means it now controls the White House, Senate and the House of Representatives. 

Control of the legislature will enable Trump to push through economic policies that the market gauges as inflationary but also broadly positive for the US Dollar (USD). Gold is falling because a stronger US Dollar is negative for the precious metal, which is mainly priced and traded in USD. 

The outlook for interest rates is offsetting this effect, particularly after the release of recent US inflation data. This helped reassure markets that the Federal Reserve (Fed) would push ahead with an expected 25 basis point (bps) (0.25%) interest rate cut at its December meeting. Lower interest rates are generally positive for non-interest paying Gold because they increase its attractiveness in the eyes of investors compared to other assets.   

Gold declines as trend-followers exit and traders turn to other assets

Gold is also suffering due to outflows from Gold Exchange Traded Funds (ETFs), which allow investors to purchase “stocks” in Gold, enabling them to hold the commodity without actually purchasing physical Gold bullion. Gold ETFs shed around $809 million (12 tonnes) net in early November, driven by North American outflows and partially offset by Asian inflows, according to the World Gold Council (WGC) data. 

Part of the reason for the outflow is likely major hedge funds exiting their huge long positions after riding the uptrend to the October record highs. Another could be competition from alternative assets such as Bitcoin (BTC), which is trading above $90,000, at new all-time highs, because of expectations the Trump administration will relax crypto regulation. 

US stocks are also rising as investors anticipate lower corporation tax and looser regulations, boosting company profits, and this might also be diverting funds away from the precious metal. 

Demand for Gold is also falling in China, the world’s largest consumer of the yellow metal, amid an economic slowdown that is expected to accelerate as the new US administration steps up its trade war with the country.  

Gold generally rises as a result of investors seeking safety amid a rise in geopolitical risks. These may now wind down if Donald Trump can hold true to his promises to bring an end to conflicts around the globe. The news that South Korea has made a U-turn on promises to send lethal aid to Ukraine on Thursday, whilst far from reassuring to Ukraine, could be taken as a sign of tentative moves towards de-escalation.   

In the Middle East, meanwhile, although the bombings continue, attempts are being made to agree to a US-led ceasefire in Lebanon before the Biden administration hands over control to Donald Trump’s government. The odds of success, however, remain slim, according to a Reuters report. 

Trump’s appointment of Former Arkansas Governor Mike Huckabee as Ambassador to Israel could further inflame the conflict. Huckabee is a known Zionist and supporter of Israeli Prime Minister Benjamin Netanyahu. He has said he does not support a two-state solution to the Israeli-Palestinian problem and sees the West Bank as belonging to Israel. His appointment could embolden Israel to make more audacious attacks. If so, it could drive safe-haven flows to Gold. 

Technical Analysis: XAU/USD breaks below major trendline and continues south

Gold breaks cleanly through a major trendline and extends its decline. According to technical analysis, the precious metal is now in a short and probably medium-term downtrend, and, given it is a principle of technical analysis that “the trend is your friend,” the odds favor a continuation lower. 

XAU/USD Daily Chart

Gold has now fallen to the next support level and target at around $2,540 and the 100-day Simple Moving Average (SMA). 

A decisive break below the 100 SMA would indicate yet more weakness to the next target at around $2,477 and the July and August highs.  

The precious metal remains in an uptrend on a long-term basis, raising the risk of a reversal higher in line with its broader up cycle. 

• USD/CAD climbs above 1.4000 as Donald Trump would be able to implement policies smoothly.
• Trump’s policies would force the Fed to slow down its rate-cut cycle.
• The BoC is expected to cut interest rates again by 50 bps.

The USD/CAD pair visits the psychological figure of 1.4000 in Thursday’s European session for the first time in more than four years. The Loonie asset strengthens as the US Dollar (USD) extends its rally on firm expectations that President-elected Donald Trump will be able to implement trade and fiscal policies smoothly. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, posts a fresh annual high near 107.00.

Trump vowed in his election campaign that he would raise import tariffs and reduce taxes on corporations and workers, a scenario that will boost economic growth and inflationary pressures. An acceleration in price pressures would limit the Federal Reserve’s (Fed) potential for following an aggressive interest rate cut approach.

Market experts believe that the Fed could pause its policy-easing cycle at the start of the next year. For the December meeting, traders see a 79% chance that the Fed will cut interest rates by 25 basis points (bps) to 4.25%-4.50%, according to the CME FedWatch tool.

For fresh interest rate cues, investors will pay close attention to Fed Chair Jerome Powell’s speech, which is scheduled at 20:00 GMT.

Domestically, the Canadian Dollar (CAD) is also going through a rough time as investors expect the Bank of Canada (BoC) to cut interest rates again by 50 basis points (bps) to 3.25%. This will be the first interest rate cut and the second of a larger-than-usual size in a row.

The Pound Sterling (GBP) is no longer the best performing G10 currency in the year to date, having been bumped into second place by the mighty USD, Rabobank’s FX analyst Jane Foley notes.

GBP continues to hold its own vs. the EUR

“Cable has dropped around 1.7% since the start of last month, mostly reflecting the popularity of Trump trades in the weeks leading up to the US election on November 5. That said, the GBP continues to hold its own vs. the EUR.”

“Indeed, the single currency is the weakest performing G10 currency since the start of last month. We retain our forecast that EUR/GBP is likely to edge to the 0.8150 level on a 12-month view.”

Headline inflation in October climbed to 6.2% yoy vs 5.5% in September. This was the first time inflation rose above the upper end of RBI’s 2-6% target range since August 2023. Food and beverage prices, 46% of the weight in the CPI index, were once again the main driver, mainly due to higher vegetable prices, Commerzbank’s FX analyst Charlie Lay notes.

Few signs of a mark growth slowdown

“Core inflation, which strips out food and energy, was just slightly higher at 3.7% yoy vs 3.5% previously. In the first 10 months of the year, headline inflation averaged 4.9% and core inflation was at 3.4%. The uptick in headline inflation is expected to be transitory as the good monsoon this year should lead to lower vegetable and other food prices into year-end.”

“On the growth front, industrial production in September picked up 3.1% yoy vs -0.1% in August. Encouragingly, capital goods production was firmer at 2.8%, suggesting a supportive investment environment. There were no signs of a slowdown in domestic demand as consumer durable production were firmer at 6.5% yoy.”

“RBI will look beyond the uptick in inflation. Nevertheless, it will cause them to take note push out expectations of a rate cut into H1 2025. This should also provide some support for INR. INR has weakened against the USD since the end of September. This is due to the stronger USD as seen by the weakness in other Asian currencies against the USD. RBI will remain focused on a stable INR, in order not to exacerbate the inflation picture.”

• AUD/USD posts a fresh three-month low near 0.6460 as the US Dollar continues to move higher.
• Trump’s clean sweep will allow him to implement policies without interruption.
• RBA Bullock favored keeping interest rates at their current levels as inflation is still not under control.

The AUD/USD pair extends its downside journey to near 0.6460 in European trading hours on Thursday. The Aussie pair prints a fresh three-month low on multiple headwinds, weak Australian Employment data for October, and the upbeat US Dollar (USD).

Australian labor market data showed that the economy added 15.9K new workers, fewer than estimates of 25K and the former release of 61.3K. A slowdown in the labor demand diminished fears of price pressures remaining persistent for a longer period. The Unemployment Rate remains at 4.1%, as expected.

Though some signs of a slowdown in job growth are visible, the Reserve Bank of Australia (RBA) is less likely to cut interest rates sooner as Governor Michelle Bullock commented on Wednesday that interest rates are needed to remain at their current levels until the central bank get inflation under control.

Meanwhile, the US Dollar adds more gains as President-elected Donald Trump locks both United States (US) houses, the Senate and the House of Representatives, a scenario that will allow Republicans to implement policies smoothly. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, rises vertically to near the key resistance of 107.00, the highest level seen in more than a year. In the election campaign, Trump vowed to raise import tariffs and lower taxes.

Going forward, investors will focus on Federal Reserve (Fed) Chair Jerome Powell’s speech for fresh guidance on interest rates. According to the CME FedWatch tool, the central bank is expected to cut interest rates by 25 basis points (bps) to 4.25%-4.50% in the December meeting.

This evening, European time, the Mexican central bank (Banxico) will announce its regular interest rate decision - anything other than another 25bp cut would be a big surprise. The fact that monetary policy is still likely to be far too restrictive given the weakening real economy speaks in favour. In recent months it has become increasingly clear that Banxico has probably left the key interest rate at a (too high) level for too long, as the real economy has apparently been posting fairly solid growth figures for a long time and inflation has not approached the target, Commerzbank’s FX analyst Michael Pfister notes.

A cautious Banxico is certainly a good sign for the peso

“But that has now changed. Instead of growing at over 3% year-on-year, as in 2023, the Mexican economy is likely to grow at half that rate this year. The surprisingly strong economic growth in the third quarter, which was partly distorted by special factors, cannot hide this. Banxico is likely to take a similar view, which is why it is further reducing the degree of monetary tightening today.”

“The fact that Banxico has not yet made any larger interest rate cuts despite this restrictive monetary policy is probably due to the rather stubborn inflation. Although the core rate has recently continued its disinflationary trend, the headline rate has recently risen slightly. Banxico may therefore also revise its fourth-quarter forecast slightly upwards today.”

“A cautious Banxico is certainly a good sign for the peso, but the central bank can do little to change the circumstances that favour a weaker peso. Therefore, one should not hold out too much hope that today's decision will be able to stop the current depreciation trend.”

USD/SGD extended its bull run, tracking moves in broad USD. Pair was last at 1.3475 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Risk skewed to the upside

“Trend is your friend and trump trade is the trend for now. Risks remain skewed to the upside. Daily momentum is mild bullish while RSI rose. Risk skewed to the upside.”

“Resistance at 1.3520 levels. Support at 1.3340 (200 DMA), 1.3290 (61.8% fibo retracement of Jun high to Oct low). S$NEER was last at 1.25% above model-implied mid.”

Australia's labor market cooled slightly last month, with only around 16,000 new jobs created in October, less than analysts had expected, according to the Bloomberg consensus. At the same time, the unemployment rate remained unchanged at 4.1%, but only because the participation rate fell slightly from 67.2 to 67.1%, Commerzbank’s FX analyst Volkmar Baur notes.

AUD to weaken in the coming months

“Despite the slowdown though, the level at which the labor market is operating remains very robust. The number of new jobs created has fallen below the pre-pandemic average of around 22,000 - but one should not read too much into a single figure. The three-month average is still above 40,000 new jobs.”

“And unemployment, at 4.1%, remains well below pre-pandemic levels, with the participation rate continuing to be very high. The unemployment rate for young people aged 15-19, who tend to be more sensitive to the business cycle, has even fallen to its lowest level in a year.”

“The Reserve Bank of Australia should feel vindicated in its hawkish stance earlier in the month when it left the cash rate unchanged at 4.35%. The market continues to take a similar view, pricing in the first rate cut only in the middle of next year. In my view, the risk is therefore more towards an earlier economic slowdown and a faster rate cut. The AUD should therefore tend to weaken in the coming months.”

For the second day in a row, CNY fix came in much stronger than expected. USD/CNH was last at 7.2596, OCBC’s FX analysts Frances Cheung and Christopher Wong note.  

Bullish momentum on daily chart

“Policymakers attempt to convey a message that recent spot USD/CNH move is close to testing policymakers' threshold of tolerance for CNH weakness.

“On one hand, the strong fix may serve as a deterrence against further weakening in RMB but on the other, trump trade momentum may mean that USD/CNH remains better bid on dips. Given a strong USD trend, policymakers can only slow pace of RMB depreciation at best.”

“For USD/CNH to reverse trend, the USD needs to ease. Bullish momentum on daily chart intact while RSI is near overbought conditions. Resistance at 7.2750 levels. Support at 7.22, 7.20 (200 DMA).”

The future US president will appoint Elon Musk (together with Vivek Ramaswamy) to head a new office for government efficiency (independent of the Office of Management and Budget). Mr. Musk had announced during the election campaign that he would cut the US federal government's spending by $2 trillion (i.e. by almost a third). It doesn't take a rocket scientist to realize that this would have catastrophic economic consequences for the US economy, Commerzbank's Head of FX and Commodity Research Ulrich Leuchtmann notes.

USD consequences of an expansive monetary policy reaction to prevail

“Just recently, Mr. Musk celebrated the takeover of a media company very publicly, demonstrating that he does not believe in a gradual, cautious approach. The optimist might argue that Musk should behave more cautiously in view of the fact that it is now a serious matter for a country of 335 million people. But I don't trust him to take that intellectual step. Perhaps it is precisely this point that distinguishes the Westphalian pessimist from the currently optimistic currency market.”

“Furthermore, one could argue that the proposals that Musk and Ramaswamy will develop will only be proposals. The US President and the US Congress stand before implementation in actual policy. But one might wonder why such an agency is being set up at all if its proposals (which Musk and Ramaswamy will certainly not keep to themselves) will not be implemented. In this case, the president would appear to be indecisive and establishment-like – exactly what he does not want to be.”

“Incidentally, it would be quite clever to use such a radical austerity program to create a USD-positive argument. After all, this would significantly reduce the capital requirements of the US Treasury and thus of the US economy as a whole. US T-Notes would become scarce again and thus expensive. However, I think that the USD consequences of an inevitable expansive monetary policy reaction would likely prevail, at least initially.”

The Eurozone economy expanded by 0.4% in the quarter to September of 2024, according to the second estimate released by Eurostat on Thursday.

The preliminary reading showed that GDP in the 26 nations union rose by 0.4% in the same period.

The bloc’s GDP  rose at an annual rate of 0.9% in Q3 vs the initial estimate of 0.9% while aligning with the market expectations.

Meanwhile, the Eurozone Employment Change for Q3 came in at 0.2% QoQ and 1.0% YoY.

Further, the old continent’s Industrial Production fell by 2.0% MoM and 2.8% YoY in September, missing the market consensus.

EUR/USD reaction to the Eurozone data

EUR/USD is miring in yearly lows on the mixed Eurozone data and was last seen trading at 1.0519, down 0.42% on the day. 

• The Pound Sterling posts a fresh over four-month low near 1.2660 against the US Dollar on confirmation that Trump will control both US houses.
• An expected acceleration in US inflation keeps the Fed on course to cut interest rates in December.
• Investors await Fed Powell and BoE Bailey’s speeches in the North American session.

The Pound Sterling (GBP) refreshes over a four-month low below the round level of 1.2700 against the US Dollar (USD) in Thursday’s London session. The GBP/USD pair extends its downside for the fifth consecutive trading day as the US Dollar (USD) continues to gain on optimism over the United States (US) economic outlook, fuelled by headlines that President-elected Donald Trump and the Republican Party will control both the US Senate and the House of Representatives, according to the Associated Press.

This “clean sweep” will allow Donald Trump to execute his protectionist and expansionary policies without interruption. Trump vowed to raise import tariffs by 10% universally and lower taxes on corporations and workers in his election campaign.

Market participants believe that lower taxes and higher import tariffs will result in a high-inflation environment, a scenario that would limit the Federal Reserve’s (Fed) potential to cut interest rates aggressively. Markets currently highly anticipate a 25 basis points (bps) interest rate cut that will push borrowing rates lower to 4.25%-4.50% in December, according to the CME FedWatch tool. Market expectations for the Fed to cut interest rates again next month strengthened after the October Consumer Price Index (CPI) data released on Wednesday showed that inflationary pressures rose in line with estimates.

In Thursday’s US economic calendar, investors will focus on Fed Chair Jerome Powell’s speech, Initial Jobless Claims data for the week ending November 8, and the Producer Price Index (PPI) data for October for fresh guidance on interest rates.

Daily digest market movers: Pound Sterling to be influenced by BoE Bailey’s speech

• The Pound Sterling exhibits a mixed performance against its major peers and is notably weak against the US Dollar on Thursday ahead of Bank of England (BoE) Governor Andrew Bailey’s speech at 21:00 GMT. Bailey is expected to provide cues about whether the BoE will cut interest rates again in December and the potential consequences of Trump’s policies on the United Kingdom (UK) economy.
• In his last interaction with the media in the press conference after the decision to reduce interest rates by 25 bps to 4.75% last week, Bailey said that the policy-easing cycle would be more gradual as Labour’s first budget could increase inflationary pressures and economic growth.
• Investors will also pay close attention to the outlook of inflation in the services sector, a closely tracked indicator by BoE officials for decision-making on interest rates. The Service inflation is expected to remain sticky as the Average Earnings data rose more than expected in the three months ending September. 
• Meanwhile, BoE external policy member Catherine Mann said in a panel discussion organized by BNP Paribas on Wednesday that the progress in the disinflation process could slow down as energy prices are more likely to rise than fall and highlighted inflation in the service sector as "pretty sticky," Bloomberg reported. Investors should note that Mann is an outspoken hawk who voted to leave interest rates unchanged at 5% in last week’s monetary policy meeting.

Technical Analysis: Pound Sterling tests August’s low

The Pound Sterling extends its losing streak against the US Dollar for the fifth trading day on Thursday and declines to near the August low of 1.2665 after establishing below the 200-day Exponential Moving Average (EMA), which trades around 1.2855.

A bearish momentum has kicked in with the 14-day Relative Strength Index (RSI) sustaining below 40.00.

Looking down, the round-level support of 1.2600 will be a major cushion for Pound Sterling bulls. On the upside, the Cable will face resistance near the 200-day EMA

The Euro (EUR) extended its move lower amid broad USD strength while political uncertainties in Germany is not helping. EUR was last seen at 1.0521 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Risks remain skewed to the downside

“Elsewhere EU-UST yield differentials continued to widen, validating EUR’s ‘fair value’ relative to yield differentials. Daily momentum is bearish while RSI fell. Risks remain skewed to the downside. Next support at 1.0450/1.05 levels. Resistance at 1.06, 1.0740 (76.4% fibo fibo retracement of 2024 low to high), 1.0780 (21 DMA).”

“On German politics, the minority government faces economic and diplomatic challenges. PM Scholz is seeking confidence vote earlier on 16 Dec instead of 15 Jan – but is expected to lose. Snap elections likely planned for 23 Feb.”

“Overall, EUR should continue to bear the brunt of the US election outcome. Trump presidency will result in shifts in US foreign, trade policies. The potential 20% tariff (if implemented) can hurt Europe where growth is already slowing, and that US is EU’s top export destination.”

Yesterday's US inflation figures provided little new information, with all figures coming in as expected: The headline rate rose by 0.2% and the core rate by 0.3% month-on-month, Commerzbank’s FX analysts Michael Pfister notes.

USD honeymoon period is not expected to last forever

“The US Dollar (USD) weakened slightly after the release, as the core rate was closer to the rounding limit of 0.2%, but the move was hardly worth mentioning. In the short term, the figures are unlikely to dissuade the Fed from cutting rates again in December. For that to happen, the figures would have to surprise on the upside; after all, policymakers believe that monetary policy is still far too restrictive.”

“On the other hand, the figures were unlikely to necessitate a major rate cut of 50 basis points. In short, the figures provided little news for monetary policy in the coming months. Political factors are more important for the US Dollar at the moment. Yesterday afternoon, the USD continued to make gains. It was difficult to identify a clear reason for this, but it is possible that Trump's announcements that he will choose hardliners for many of the positions is causing further euphoria.”

“This would also make other election announcements more likely, which would lead to higher inflation in the medium term. At the moment, the market is only focusing on the USD-positive factors of these election promises and ignoring the potential problems. However, this honeymoon period should not be expected to last forever.”

• GBP/JPY remains under pressure ahead of a speech by BoE Governor Andrew Bailey scheduled for Thursday.
• The Pound Sterling may gain support due to increasing concerns among BoE officials about persistent price pressures.
• BoJ’s Uchida urged financial institutions and authorities to be prepared for sudden deposit outflows due to digitalization and technological advancements.

GBP/JPY edges lower after posting gains in the previous session, hovering around 197.50 during European trading hours on Thursday. Traders await a speech from Bank of England (BoE) Governor Andrew Bailey at the annual financial and professional services dinner later in the day.

However, the downside of the Pound Sterling (GBP) could be restrained due to rising concerns among BoE officials about persistent price pressures. On Wednesday, BoE Monetary Policy Committee external member Catherine Mann participated in a panel at the BNP Paribas Global Market Conference, where she noted that monetary policy is affecting inflation more quickly than economic theory suggests. This allows the central bank to hold off on significant interest rate cuts for now.

The Japanese Yen (JPY) continues to face pressure as political uncertainty in Japan raises concerns about the Bank of Japan's (BoJ) rate-hike plans. Additionally, worries over the potential impact of US President-elect Donald Trump's proposed trade tariffs on the Japanese economy are further undermining the JPY.

On Thursday, BoJ Deputy Governor Shinichi Uchida highlighted the need for financial institutions and authorities to be prepared for sudden deposit outflows due to digitalization and technological advances.

BoJ’s Uchida also noted the growing presence of non-bank financial institutions, which now account for nearly half of global financial intermediation. As the relationship between non-bank financial institutions and the banking sector strengthens, any deterioration in the non-bank sector could ripple through the entire financial system via market channels.

Silver prices (XAG/USD) fell on Thursday, according to FXStreet data. Silver trades at $29.82 per troy ounce, down 1.58% from the $30.30 it cost on Wednesday.

Silver prices have increased by 25.32% since the beginning of the year.

The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 85.61 on Thursday, up from 84.95 on Wednesday.

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USD is likely to edge higher; any advance is unlikely to break above 7.2600. In the longer run, the level to monitor now is 7.2800; the next resistance above 7.2800 is at 7.3115, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

The next resistance above 7.2800 is at 7.3115

24-HOUR VIEW: “USD rose sharply two days ago. Yesterday, we highlighted that ‘The rapid rise is deep in overbought territory, but there is no sign of a pullback just yet.’ We added, ‘Overall, it appears that USD is likely to trade in a range today, probably between 7.2200 and 7.2500.’ Although USD then traded in a wider range of 7.2137/7.2490, it closed largely unchanged at 7.2415 (-0.03%). Despite trading in a range, there has been a slight increase in momentum. Today, USD could edge higher, but as momentum is not strong, any advance is unlikely to break above 7.2600. The major resistance at 7.2800 is not expected to come into view. Support is at 7.2330, followed by 7.2150.”

1-3 WEEKS VIEW: “We have held a positive USD view since late last week. As we tracked the advance, we indicated yesterday (13 Nov, spot at 7.22470) that ‘The level to monitor is 7.2800 and the next resistance above 7.2800 is at 7.3115.’ There is no change in our view. Overall, only a breach of 7.2000 (no change in ‘strong resistance’ level) would mean that the upward pressure has faded.”

European Central Bank (ECB) Vice President Luis de Guindos said on Thursday that “all indicators on core inflation are pointing in the right direction.”

Additional quotes

The US Dollar (USD) dipped post-CPI (which came in largely in line with estimates) but the dip was short-lived. Bullish momentum eventually saw USD trading fresh highs for the year. DXY was last at 106.70 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Daily momentum is bullish

“Price action demonstrates how markets are still adjusting their expectations with regards to Fed cycle (as more Fedspeaks come), inflation in light of Red sweep outcome and Trump’s policies. More nomination is coming through and the narrative is that Trump may hit the ground running in Jan 2025, unlike in 2016 when he was less prepared. Tariff risk and Trump policy uncertainty may continue to keep Trump trade (i.e. long USD, short CNH) supported in the interim.”

“On Fedspeaks overnight, Logan calls that policymakers should more at a slow pace given uncertainties about how restrictive monetary policy is. Schmid also sounded a note of caution saying that it remains to be seen how much further interest rates will decline or where they might eventually settle. He also warned about higher government debt may weigh on growth and drive rates up and depth of eventual Fed cut remains undetermined. More Fedspeaks are lined up this week, including Powell (Fri).”

“Daily momentum is bullish while RSI rose. Near term risks skewed to the upside. Resistance here at 106.50 levels (2024 high) before 107, 107.40 (2023 high). Support at 105.60 (76.4% fibo), 104.50/60 levels (21DMA, 61.8% fibo retracement of 2023 high to 2024 low). For the day, PPI is due.”

Momentum remains robust; the US Dollar (USD) could break above 156.00 but might not be able to maintain a foothold above this level. In the longer run, increase in momentum suggests further USD strength towards 156.00, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Increase in momentum suggests further USD strength

24-HOUR VIEW: “USD surged two days ago. Yesterday, we noted that ‘upward momentum is robust,’ and we expected USD to ‘continue to rise, potentially reaching 155.45.’ We highlighted, that ‘On the downside, any pullback is likely to stay above 154.00, with minor support at 154.35.’ Our view strong USD view was validated, as after dropping briefly to 154.33 during NY session, USD soared to 155.62. Momentum remains robust, and this will likely outweigh the overbought conditions. That said, while USD could break above 156.00 today, it might not be able to maintain a foothold above this level. On the downside, support levels are at 155.10 and 154.70.”

1-3 WEEKS VIEW: “We turned positive in USD yesterday (13 Nov), when it was at 154.70. We pointed out ‘the increase in momentum suggests further USD strength towards 156.00.’ We added, ‘To keep the momentum going, USD must remain above the ‘strong support’ level, currently at 153.35.’ USD then rose to 155.62. There is no change in our view. Should USD break above 156.00, the next technical objective will be at 157.00. The ‘strong support’ level has moved higher to 154.00 from 153.35.”

• The Mexican Peso is resuming its downtrend after Republicans have won a majority in Congress. 
• This will augment their power to push through radical fiscal and immigration policies that could be detrimental to the Peso. 
• USD/MXN closes in on the November high after rebounding from the base of a rising channel. 

The Mexican Peso (MXN) resumes the slide in its key pairs on Thursday after briefly pausing on Wednesday following the release of US inflation data. Republicans winning a majority in the US Congress is weighing on the Peso as it gives the party a “clean sweep” of the Presidency, the US Senate, and the House of Representatives. This will augment its power to push through policies, many of which the market is assessing as directly negative to the Peso (or positive for the US Dollar (USD)). 

A more immediate bearish factor for the Peso comes in the form of market expectations that the Bank of Mexico (Banxico) will cut its main interest rate by 25 basis points (bps) (0.25%) to 10.25% at its meeting on Thursday. In a Reuters survey, 19 out of 20 economists said they expected Banxico to cut by 0.25% at the meeting, according to Christian Borjon Valencia, Editor at FXStreet. 

Mexican Peso faces headwinds from US protectionism 

The Mexican Peso continues to face broader headwinds from the prospect of increased US protectionism under the leadership of President-elect Donald Trump. The imposition of tariffs on Mexican imports and the threat to deport millions of illegal workers who regularly send remittances home are both likely to reduce demand for the Peso.

The Peso steadied on Wednesday amid US Dollar weakness after the US Consumer Price Index (CPI) in October aligned with economists’ expectations. This solidified expectations that the US Federal Reserve (Fed) will cut interest rates by a quarter of a percent (25 bps) at its meeting in December. This, in turn, restrained the strength of the US Dollar since lower interest rates reduce foreign capital inflows – and gave the Peso some breathing space. 

Comments from Mexican Finance Minister Marcelo Ebrard further supported the MXN after he said on Wednesday that the level of Foreign Direct Investment (FDI) in Mexico likely hit a new record high of $35.732 billion in 2024, according to El Financiero. Ebrard also hit back at suggestions from Canada’s Prime Minister of Ontario, Doug Ford, that the US and Canada should sign their own private free trade deal, saying that it was better for the Canadian economy to include Mexico, thereby maintaining the current USMCA tripartite agreement.

Technical Analysis: USD/MXN closes in on November high

USD/MXN resumes its rally within a rising channel after a brief pause. The short-term trend is bullish, and given the technical analysis saying that “the trend is your friend,” the odds favor a continuation higher. 

USD/MXN Daily Chart 

USD/MXN is also in an uptrend on a medium and long-term basis, adding weight to the move higher. A break above 20.80 (November 6 high) would confirm a higher high and an extension of the bullish trend. The next upside target lies at 21.00 (round number, upper boundary of channel), where buyers could start to meet resistance. 

Yesterday's current account data, despite some surprises, especially in the Czech Republic, where higher dividends offset a strong surplus in previous months, remained without much reaction in the markets, ING’s FX analyst Frantisek Taborsky notes.

Global dynamics are the primary driver for trading

“Poland's data showed a shrinking current account surplus in recent months and our economists debated the reasons. Romania's third-quarter GDP data was released this morning with an acceleration from 0.9% to 1.1% YoY, below market expectations. Later today we will also see the first estimate in Poland, where we expect a slowdown from 2.9% to 2.5% YoY, below market expectations.”

“Markets took advantage of the pause in the USD rally yesterday, giving Central and Eastern Europe (CEE) currencies some relief. However, the USD quickly resumed its rally following the release of US inflation numbers, which we believe will put renewed pressure on CEE currencies today. Local factors are not significantly influencing trading at the moment, with global dynamics being the primary driver.”

“Besides GDP data, today’s calendar includes government bond auctions in Poland and Hungary, which will test the market post-US election. In Poland, the last auction before the election showed weak demand, and today’s auction will test the risk-off sentiment ahead of the election or due to the deteriorating local fiscal situation. In Hungary, while elevated yields should attract market interest, uncertainty about the National Bank of Hungary and high EUR/HUF remains a concern.”

Further New Zealand Dollar (NZD) weakness appears likely; any decline may not reach the major support at 0.5850. In the longer run, likelihood of NZD dropping to 0.5850 has increased, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

NZD weakness appears likely

24-HOUR VIEW: “Yesterday, when NZD was at 0.5925, we held the view that NZD ‘is likely to trade with a downward bias towards 0.5900.’ We were also of the view that ‘a sustained break below 0.5900 is unlikely.’ The anticipated weakness exceeded our expectations, as NZD dropped to a low of 0.5876, closing at 0.5882 (-0.76%). Further weakness appears likely today, but oversold conditions suggest any decline may not reach the major support at 0.5850 (there is another support at 0.5865). On the upside, a breach of 0.5920 (minor resistance is at 0.5905) would mean that NZD is not weakening further.”

1-3 WEEKS VIEW: “We revised our view from neutral to negative yesterday (13 Nov, spot at 0.5925), indicating that ‘Despite the slight increase in momentum, the risk for NZD appears to have shifted to the downside.’ However, we noted that ‘it is too early to tell if the major support at 0.5850 is within reach.’ NZD subsequently dropped to 0.5876. The increase in momentum indicates that the likelihood of NZD dropping to 0.5850 has also increased. To maintain the buildup in momentum, NZD must remain below the ‘strong resistance’ at 0.5955 (level was at 0.5975 yesterday).”

Australia released jobs figures for October overnight. Employment rose by 16k, less than expected and marking a slowdown from September’s strong 61k print. At the same time, unemployment was unchanged at 4.1% with the participation rate edging 0.1% lower, ING’s FX analyst Francesco Pesole notes.

Return to the 0.6550 level is possible in AUD/USD

“The Australian dollar was not really impacted by the release and continues to trade in line with the broader dollar dynamics. Interestingly, EUR/AUD is more than 1% weaker since election night, a signal that markets currently prefer to price in greater risks for the eurozone than for China (and by extension its proxies) when it comes to Trump’s expected agenda.”

“Should a USD correction materialise in the next few days, we suspect AUD could rally more than other peers, as the latest data and policy communication still point to no rush by the Reserve Bank of Australia to turn dovish and markets may retain a relatively sanguine view on Antipodeans when compared to European currencies. We think a return to the 0.6550 level is possible in AUD/USD in the near term.”

• NZD/USD drops to over a three-month low as the USD buying remains unabated.
• The Trump trade optimism and elevated US bond yields lift the USD to the YTD top.
• Bets for aggressive RBNZ rate cuts and a potential US-China trade war weigh on Kiwi.

The NZD/USD pair prolongs its recent downward trajectory witnessed over the past week or so and drops to its lowest level since August 5, closer to mid-0.5800s on Thursday. Spot prices, however, rebound a few pips during the first half of the European session, though any meaningful recovery still seems elusive in the wake of broad-based US Dollar (USD) strength. 

Investors remain hopeful that US President-elect Donald Trump's policies will boost economic growth and the proposed plan to hike tariffs on imports could accelerate inflation. This, in turn, might force the Federal Reserve (Fed) to pause its easing cycle. Moreover, the US Consumer Price Index (CPI) released on Wednesday pointed to a slower progress toward bringing inflation down and could result in fewer rate cuts next year. This remains supportive of elevated US Treasury bond yields and lifts the USD to a fresh year-to-date (YTD) peak. 

The New Zealand Dollar (NZD), on the other hand, is undermined by rising bets for more aggressive interest rate cuts by the Reserve Bank of New Zealand (RBNZ). This, along with the disappointment over China's fiscal stimulus and looming US-China trade war, weighs on antipodean currencies, including the Kiwi, and contributes to the offered tone surrounding the NZD/USD pair. The downfall could further be attributed to some follow-through technical selling following the overnight sustained break and close below the 0.5900 round-figure mark.

This, in turn, suggests that the path of least resistance for the NZD/USD pair is to the downside and supports prospects for an extension of the recent sharp downfall from the YTD peak touched in September. Hence, any attempted recovery could be seen as a selling opportunity and runs the risk of fizzling out rather quickly. Traders now look to the US economic docket, featuring the usual Weekly Initial Jobless Claims and the Producer Price Index (PPI). This will be followed by Fed Chair Jerome Powell's speech, which should influence the USD.

The Australian Dollar (AUD) is expected to edge lower, possibly reaching 0.6460. The major support at 0.6440 is likely out of reach. In the longer run, AUD is likely to decline further; the levels to monitor are 0.6460 and 0.6440, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Major support at 0.6440 is likely out of reach

24-HOUR VIEW: “We noted yesterday that AUD ‘is under mild downward pressure.’ We held the view that it ‘could drift lower, but a sustained break below 0.6500 appears unlikely.’ While we got the directional view correct, AUD fell more than expected to 0.6481. Despite the relatively sharp decline, downward momentum has not increased by much. Today, we expect AUD to edge lower, possibly reaching 0.6460. The major support at 0.6440 is likely out of reach. To maintain the momentum, AUD must not break above 0.6530, with minor resistance at 0.6510.”

1-3 WEEKS VIEW: “Yesterday (13 Nov, spot at 0.6530), we highlighted that the recent price action has resulted in ‘a tentative buildup in momentum.’ We also highlighted that ‘To decline in a decisive manner, AUD must break and remain below 0.6500.’ AUD subsequently fell to 0.8481, closing at 0.6485. Although momentum has not increased much, AUD is likely to decline further. The two levels to monitor are 0.6460 and 0.6440. We will view AUD negatively as long as 0.6550 (‘strong resistance’ level was at 0.6600 yesterday) is not breached.”

The wide short-term swap rate spread between USD and EUR is justifying a good deal of the ongoing EUR/USD selloff. However, with other market factors added to estimating the near-term fair value of EUR/USD – such as equities and commodity prices – there are signs of a growing risk premium in excess of 1.5%. Does that imply a 1.5%+ correction higher in EUR/USD is due? Not necessarily, ING’s FX analyst Francesco Pesole notes.

EUR/USD upside correction is plausible

“We strongly believe that since 5 November we have entered a phase where a euro-negative risk premium will become the new normal given the risks to the eurozone associated with Trump’s foreign/trade agenda. From that perspective, and looking at historical dynamics, a 1.5% risk premium would still be rather contained, as that can easily amount to 4%+ should markets price in more geopolitical and/or protectionism-related risks.”

“For now, we believe some sort of EUR/USD upside correction is plausible, but we still believe markets will take the opportunity to sell the rallies in the pair, and a long-lasting return above 1.070 does not seem likely.”

“Today’s eurozone calendar includes the first revision of 3Q EZ GDP and employment figures, as well as the minutes of the October ECB meeting. Those could include a few dovish hints, although markets may still want to see more evidence of a slowdown in data or a lower inflation print before pricing in a 50bp cut in December.”

Weakness in GBP has not stabilised, but the major support at 1.2665 could still be out of reach for now. In the longer run, downward momentum has surged; the next technical target is at 1.2665, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

The next technical target is at 1.2665

24-HOUR VIEW: “After GBP plummeted to 1.2719 on Tuesday, we indicated yesterday (Wednesday) that GBP ‘is expected to continue to decline, but it remains to be seen if the major support at 1.2665 is within reach today.’ Our view was not wrong, as GBP dropped to 1.2687 before recovering slightly to close at 1.2709 (-0.29%). Although the weakness has not stabilised, downward momentum has slowed a tad. This, combined with oversold conditions suggests 1.2665 may still be out of reach for now. Resistance is at 1.2735; a breach of 1.2765 would indicate that the weakness has stabilised.”

1-3 WEEKS VIEW: “Two days ago (12 Nov, spot at 1.2870), we highlighted that the ‘Slight buildup in momentum indicates GBP is likely to edge lower, but 1.2800 is expected to provide significant support.’ Following GBP sharp plunge below 1.2800, we indicated yesterday (13 Nov, spot at 1.2735) that ‘The next technical target is at 1.2665.’ We pointed out, ‘We will continue to expect GBP to weaken as long as 1.2845 (‘strong resistance’ level) is not breached.’ There is no change in our view, but the ‘strong resistance’ level has moved lower to 1.2820 from 1.2845. Looking ahead, if GBP breaks below 1.2665, the next level to watch is 1.2615.”

Key FX advice for 2025 is not to overthink US Dollar (USD) strength and to trust the general direction of a stronger USD on the back of Trump’s domestic and trade agenda. This week’s price action has given us a taste of what’s to come in FX markets in this second Trump term, with brief dollar corrections taken as an opportunity to enter structural USD longs at more attractive levels, ING’s FX analyst Francesco Pesole notes.

Jerome Powell to speak in Dallas

“The House has finally – and unsurprisingly – been called for the Republicans, confirming Trump will be able to control all levers of government at least until the mid-term elections in 2026. Meanwhile, cabinet appointments have so far been dominated by Trump’s loyalists, which is a shift from the first term that likely implies a more centralised decision-making process around the president’s figure. One minor potential setback for Trump was John Thune’s election as Republican Senate leader.”

“Despite our view that the dollar will stay strong throughout next year, the very short-term picture still looks a bit more nuanced as long dollar positioning is starting to look quite stretched and a wider (albeit not long-lived) dollar correction could be on the cards. One catalyst might be today’s PPI numbers, which have a greater relevance for the core CPE – the Fed’s preferred measure of inflation. Expectations are for a re-acceleration in headline PPI from 0.0% to 0.2% MoM, with the core measure flat at 0.2% MoM.”

“Another big event today is the speech by Fed Chair Jerome Powell in Dallas. The focus will be on the economic outlook, and there is a Q&A where he may be asked about the latest inflation figures and implications of protectionism for monetary policy. Also here, the risks are skewed to the downside for the dollar given stretched positioning, as Powell may want to shy away from linking Trump’s expected policies and the Fed’s decisions. That could be read as a slightly dovish message and prompt some repricing lower in a USD OIS curve that is quite conservatively only pricing in 50bp of easing by mid-2025. A positioning-led correction in USD may fail to take DXY back below 106.0, and interest in buying the dollar dips will likely emerge soon.”

• Silver price depreciates as risk-sensitive assets advance due to improving risk-on sentiment.
• The dollar-denominated Silver faces challenges as the US Dollar surges to its highest level since November 2023.
• Higher yields exert downward pressure on non-yielding assets like Silver.

Silver price (XAG/USD) extends its losses to two-month lows, trading around $29.90 per troy ounce during the European hours on Thursday. This downside of the safe-haven Silver is attributed to improving risk sentiment since Donald Trump’s election victory last week.

The US Dollar (USD), equities, and cryptocurrencies are advancing as markets anticipate strong growth and higher inflation under the incoming Trump administration. The proposed policies could drive increased investment, spending, and labor demand, raising inflation risks.

The dollar-denominated Silver faces challenges due to solid US Dollar (USD). The US Dollar Index (DXY), which measures the value of the US Dollar against its six major peers, holds steady around 106.60, its highest level since November 2023.

The US Dollar also gains support from rising US Treasury yields, with the 2-year and 10-year yields standing at 4.29% and 4.46%, respectively, at the time of writing. Additionally, these higher yields are exerting downward pressure on non-yielding assets like Silver.

The non-interest-bearing assets like Silver might have received downward pressure from less dovish remarks by Federal Reserve (Fed) officials on Wednesday. St. Louis Fed President Alberto Musalem remarked that ongoing inflationary pressures make it challenging for the Fed to maintain a course of rate cuts. Musalem shifted focus to the robustness of the US labor market, aiming to ease concerns about inflation's resistance to the Fed's efforts to reduce it.

Federal Reserve Bank of Kansas City President Jeffrey Schmid highlighted potential challenges in the journey toward lowering interest rates. Schmid also criticized market participants who continue to hold out hope for a return to near-zero rates, calling their expectations unrealistic.

The Euro (EUR) could drop below the 1.0555 low; deeply oversold conditions suggest 1.0500 is unlikely to come under threat. In the longer run, EUR is still expected to weaken; the 1.0500 level may not come into view so soon, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

The 1.0500 level may not come into view so soon

24-HOUR VIEW: “Two days ago, we expected EUR to weaken, but we were of the view that ‘the major support at 1.0600 could be out of reach.’ After EUR dropped to a low of 1.0594, we indicated yesterday that ‘barring a break above 1.0660, EUR could decline further to 1.0585 before stabilisation can be expected.’ We added, ‘This time around, the next major support at 1.0555 is likely out of reach.’ During NY session, EUR popped briefly to 1.0653, and then plummeted to 1.0555. EUR closed on a weak note at 1.0563 (-0.56%). Despite being deeply oversold, the weakness still has not stabilised. That said, the potential for any further decline could be relatively limited. From here, EUR could dip below 1.0555 but the next major support at 1.0500 is unlikely to come under threat. On the upside, a breach of 1.0610 (minor resistance is at 1.0590) would suggest the weakness in EUR has stabilised.”

1-3 WEEKS VIEW: “We have maintained a negative EUR view since late last week. As we tracked the decline, we highlighted yesterday (13 Nov, spot at 1.0620) that ‘downward remains strong, and the focus is at 1.0555.’ We pointed out that ‘The next technical objective below 1.0555 is at 1.0500.’ EUR fell and reached 1.0555 in NY trade. While we continue to expect a weaker EUR, note that after declining sharply for a few days, conditions are deeply oversold, and 1.0500 may not come into view so soon. Overall, only a breach of 1.0670 (‘strong resistance’ level was at 1.0705 yesterday) would mean that EUR is not weakening further.”

Australia’s seasonally adjusted unemployment rate came in unchanged at 4.1% in Oct, in line with the consensus estimate, UOB Group’s economist Lee Sue Ann notes.

RBA near-term cut seems unlikely

“The unemployment rate held steady at 4.1% for a third straight month in Oct, and Reserve Bank of Australia (RBA) Governor Michele Bullock warned that the jobs market remained tight despite a gradual slowdown in hiring.”

“Separately, the Wage Price Index (WPI) remained unchanged at 0.8% q/q in 3Q24, below market forecasts for a 0.9% q/q rise. Annual pay growth slowed to 3.5% for 3Q24, from 4.1% in 2Q24.”

“It now looks increasing likely that the RBA will only deliver the first rate cut in 1Q25. We will wait for Oct inflation data due 27 Nov before finalising our forecasts for the OCR.”

• EUR/CAD may navigate the region around the psychological level of 1.4700.
• The 14-day RSI indicates sustained bearish momentum, hovering slightly above the 30 level.
• The cross may test the area near the “pullback resistance” around the 1.4870 level.

EUR/CAD extends its losing streak to a fifth consecutive session, trading near the 1.4770 level during early European trading hours on Thursday. Daily chart technical analysis points to waning short-term momentum, with the nine-day Exponential Moving Average (EMA) positioned below the 14-day EMA.

Meanwhile, the 14-day Relative Strength Index (RSI), a widely used indicator for gauging overbought or oversold conditions, is currently just above the 30 mark. This suggests ongoing bearish momentum without confirming a fully oversold condition.

If the RSI falls below 30, traders may look for signs of an upward correction. A rebound from oversold levels could drive the pair back toward the 1.4800-1.4850 range, where sellers may once again challenge the strength of any recovery attempt.

On the downside, key support is positioned at 1.4700, a level of particular significance for technical traders. This support could either act as a buffer, potentially slowing further decline, or, if decisively broken, reinforce the bearish trend. A break below 1.4700 could open the door for EUR/CAD cross to approach its seven-month low of 1.4587.

On the upside, EUR/CAD faces initial resistance around 1.4870, a level that previously served as support but has now become “pullback resistance.” A move above this “throwback” level could suggest cautious bullish sentiment emerging among traders.

If EUR/CAD breaks above 1.4870, the focus would then shift to the nine-day EMA at 1.4884 and the 14-day EMA at 1.4922. These EMAs act as dynamic resistance points that would need to be surpassed for any substantial bullish momentum to gain traction.

EUR/CAD: Daily Chart

• EUR/USD sinks to near 1.0530 as the US Dollar extends its rally as Republicans win both houses in the US.
• The US inflation accelerated expectedly in October, which boosted expectations of an interest rate cut in December.
• Investors await Fed Jerome Powell’s speech on Thursday for fresh interest rate guidance.

EUR/USD posts a fresh annual low near 1.0530 in European trading hours and extends its losing streak for the fifth trading day on Thursday. The major currency pair has faced an intense sell-off as the US Dollar (USD) continues to enjoy upside momentum, being one of the major beneficiaries of President-elected Donald Trump’s win in the United States (US) presidential election. The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, climbs to near 106.80, the highest level seen since November 1, 2023.

It will be easy for Trump to implement the agenda of lower taxes on businesses and workers, as well as high import tariffs, as Republicans have ensured control of the Senate and the House of Representatives, according to the Associated Press. 

An increase in import tariffs would increase the demand for domestically produced goods and services, which would boost inflationary pressures that limit the potential of the Federal Reserve (Fed) to cut interest rates faster and deeper.

The Greenback rose sharply on Wednesday after the release of the US Consumer Price Index (CPI) data for October. The inflation report showed that price pressures grew expectedly on a monthly as well as annual basis, boosting expectations of interest rate cuts in the December meeting. According to the CME FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points (bps) to 4.25%-4.50% next month increased to 83% from 59% a day before.

In Thursday’s session, investors will pay close attention to Fed Chair Jerome Powell’s commentary in a panel discussion hosted by the Federal Reserve Bank of Dallas at 20:00 GMT. Market participants would like to know his stance on December’s monetary policy decision and the impact of Trump's policies in the medium and longer term.

On the economic front, investors will focus on the US Initial Jobless Claims for the week ending November 8 and the Producer Price Index (PPI) data for October, which will be published at 13:30 GMT.

Daily digest market movers: EUR/USD faces pressure on firm ECB dovish bets

• EUR/USD remains on the backfoot amid Euro’s (EUR) more than a week-long underperformance against its major peers. The Euro faces pressure from Trump’s victory in the US presidential election and the collapse of the three-party coalition government in Germany after Chancellor Olaf Scholz sacked Finance Minister Christian Linder on November 6.
• The implementation of Trump’s tariffs on the Eurozone is expected to dent its export sector significantly, which could weaken its overall Gross Domestic Product (GDP) growth and result in further depreciation in the Euro.
• Big banks, including JPMorgan and Deutsche Bank, reckon a drop to parity could happen, depending on the extent of tariffs. Tax cuts could also fuel US inflation and limit Federal Reserve interest rate cuts, making the Dollar potentially more attractive than the Euro, Reuters reported.
• Meanwhile, expectations for the European inflation remaining under control have prompted expectations of more interest rate cuts by the European Central Bank (ECB). ECB Governing Council Member and Bank of Finland Governor Olli Rehn commented on Tuesday that the Deposit Rate could decline the so-called neutral rate in the first half of 2025. According to the ECB staff, the neutral rate is around 2% or 2.25%.

Technical Analysis: EUR/USD sees support near 1.0500

EUR/USD slides to its lowest since November 1, 2023, near 1.0530. The major currency pair weakened after breaking below the April 16 low of 1.0600. The outlook of the shared currency pair has become bearish as all short to long-term Exponential Moving Averages (EMAs) are declining. 

The 14-day Relative Strength Index (RSI) drops to nearly 30.00, adding to evidence of more weakness in the near term.

Looking down, the pair is expected to find a cushion near the psychological support of 1.0500. On the flip side, the round-level resistance of 1.0700 will be the key barrier for the Euro bulls.

FX option expiries for Nov 14 NY cut at 10:00 Eastern Time via DTCC can be found below.

EUR/USD: EUR amounts

• 1.0550 1.1b
• 1.0600 1.4b
• 1.0650 2.5b
• 1.0750 1.7b
• 1.0850 1.3b

GBP/USD: GBP amounts     

• 1.2665 438m
• 1.3080 576m

USD/JPY: USD amounts                     

• 154.50 884m
• 155.00 593m
• 156.50 596m

USD/CHF: USD amounts     

• 0.8660 600m

AUD/USD: AUD amounts

• 0.6500 479m
• 0.6600 444m

USD/CAD: USD amounts       

• 1.4000 825m

• EUR/JPY edges higher to near 164.40 in Thursday’s early European session. 
• Further consolidation cannot be ruled out amid the neutral RSI indicator. 
• The key resistance level emerges at the 164.95-165.00 region; the initial support level is located at 163.64.

The EUR/JPY cross gains traction to around 164.40 during the early European trading hours on Thursday. A lack of clear direction regarding the timing of a rate hike from the Bank of Japan (BoJ) weighs on the Japanese Yen (JPY) against the Euro (EUR). 

Traders brace for the flash Eurozone Gross Domestic Product (GDP) number for the third quarter (Q3), which is due later on Thursday, along with the speech from the European Central Bank (ECB) President Christine Lagarde.

Technically,  EUR/JPY hovers around the key 100-period Exponential Moving Averages (EMA) within the descending trend channel on the 4-hour chart. The cross could resume the upside if it can break above the 100-period EMA. However, further consolidation cannot be ruled out as the Relative Strength Index (RSI) stands near the midline, suggesting the neutral momentum of the cross.

The crucial resistance level for EUR/JPY emerges in the 164.95-165.00 zone, representing the upper boundary of the descending trend channel and the psychological level. Any follow-through buying could see a rally to 166.00, the high of November 7. 

On the downside, the low of November 13 at 163.64 acts as an initial support for the cross. Decisive trading below the mentioned level could expose 162.90, the lower limit of the trend channel. Extended losses could pave the way to 162.00, the low of October 21 and the round number. 

EUR/JPY 4-hour chart

Here is what you need to know on Thursday, November 14:

Following a subdued performance on Wall Street on Wednesday, Asian markets turned south amid persistent worries over China’s economy, despite the recent stimulus measures rolled out to spur growth.

Markets also remained unnerved amid sticky US inflation figures, which raised concerns over the prospects of future interest rate cuts by the US Federal Reserve (Fed). US CPI rose 2.6% annually in October, coming in higher than the 2.4% growth in September while meeting the forecast. The annual core CPI inflation steadied at 3.3% in the same period vs. 3.3% expected. Monthly figures also aligned with the estimates.

Additionally, waning Trump trades optimism adds to the dour market mood as we head into the European session. However, the US Dollar continues to extend the rally following Donald Trump’s election victory. The Greenback received a fresh boost alongside the US Treasury bond yields after the Associated Press (AP) called the House race with Republicans winning the majority.

US President-elect Trump’s policies on trade and taxes are seen as inflationary and supportive of the USD, Treasury bond yields, etc. The Greenback stands tall near yearly highs against its major rivals even after the inflation data ramped up bets on a December rate cut. The market’s pricing for such a move next month now stands at about 83%, the CME Group’s FedWatch Tool shows, compared with around 63% seen before the data release.

The attention now turns toward the US Producer Price Index (PPI) and Jobless Claims data while speeches from several Fed policymakers, including Chairman Jerome Powell, will hog the limelight as investors look out for more cues on the Fed’s easing trajectory.

Across the FX board, the Japanese Yen emerged as the main laggard in Asia as USD/JPY refreshed four-month highs above 156.00. The uncertainty over the Bank of Japan (BoJ) rate hikes and the unabated USD demand.

AUD/USD remains at the losing end, trading at its weakest in three months near 0.6460. The Australian labor data showed some cooldown in the job market. Ahead of the Aussie jobs data release, Reserve Bank of Australia (RBA) Governor Michele Bullock said that monetary policy was sufficiently restrictive and would remain at current levels until the bank was confident inflation was easing.

NZD/USD tracks the downside in all commodity currencies, with USD/CAD back on the 1.4000 level for the first time since May 2020. WTI Oil extends its losing streak amid risk aversion and demand concerns from China. The US oil is challenging the $68 threshold, as of writing.

EUR/USD stays vulnerable, sitting at yearly troughs near 1.0550. Traders await ECB-speak and a bunch of Eurozone economic data releases for fresh trading impetus ahead of the US events.

GBP/USD struggles at around 1.2700 as investors continue to prefer the US currency. All eyes remain on BoE policymaker Catherine Mann’s and Governor Andrew Bailey’s appearances due later in the day.

Gold keeps its downside momentum intact, flirting with two-month lows below $2,560. Buyers must defend the critical support near $2,545, the confluence of the 100-day Simple Moving Average (SMA) and the September 18 low.

• EUR/AUD tests an immediate barrier at a nine-day EMA at 1.6308 level near the upper boundary of the descending channel.
• An emergence of the bullish bias is possible If the 14-day RSI rises above 50 level.
• The primary support appears at its three-week low of 1.6163.

The EUR/AUD cross gains ground for the third consecutive day, trading near the 1.6300 mark during the Asian session on Thursday. On the daily chart, there are signs that the momentum may be shifting from bearish to bullish as the cross attempts to break above the descending channel pattern.

The 14-day Relative Strength Index (RSI) remains just below the 50 level, indicating continued bearish momentum, though a shift could be on the horizon. If the 14-day RSI rises above 50, it would signal the emergence of bullish sentiment.

On the upside, the EUR/AUD cross tests the immediate resistance at the nine-day Exponential Moving Average (EMA) at the 1.6308 level, aligned with the upper boundary of the descending channel. A breakout above this channel could weaken the bearish bias and support the cross to navigate the region around its two-month high of 1.6600, which was recorded on November 1.

In terms of support, the EUR/AUD cross would meet support at its three-week low of 1.6163, which was recorded on November 7. A break below this level could reinforce the bearish bias and lead the cross to approach the “throwback support” at the psychological level of 1.6000.

EUR/AUD: Daily Chart

• EUR/GBP trades with mild losses around 0.8310 in Thursday’s early European session. 
• BoE Chief Economist Pill sounded cautious on rate cuts. 
• ECB’s Rehn said the December cut is likely with disinflation on track. 

The EUR/GBP cross trades with mild negative bias near 0.8310 during the early European session on Thursday. The flash Eurozone Gross Domestic Product (GDP) number for the third quarter (Q3) will be released later on Thursday. The Bank of England (BoE) Governor Andrew Bailey and the European Central Bank (ECB) President Christine Lagarde are scheduled to speak later on the same day. 

The UK Unemployment Rate rose more than expected to 4.3% for the three months ending in September, weighing on the Pound Sterling (GBP). ”The higher (UK) unemployment rate could see the market start to price in a higher chance of a rate cut from the Bank of England (BoE) next month," noted XTB analysts.

However, the Bank of England Chief Economist Pill remains cautious, saying that wage growth “remains quite sticky” at elevated levels and is “hard to reconcile with the UK inflation target.” Pill further stated, “We have seen a substantial disinflation in the UK economy, and that has allowed monetary policy restriction to be reduced. 

The hawkish remarks from the BOE might cap the downside for the GBP for the time being. Traders await the speech from the BoE's Bailey on Thursday for some hints about the UK interest rate outlook. 

The ECB policymaker Olli Rehn said on Tuesday that additional interest rate cuts are coming and the deposit rate could hit the so-called neutral level in the first half of next year. The expectation that the ECB is likely to deliver more rate cuts than the BoE might undermine the Euro (EUR) in the near term. 

Markets have fully priced in a 25 basis points (bps) rate cut then, as well as a nearly 20% chance of a larger 50 bps move. Looking ahead, investors will keep an eye on the ECB's President Christine Lagarde’s speech on Thursday.

• USD/CHF continues gaining positive traction amid relentless USD buying.
• The Trump trade optimism and elevated US bond yields underpin the USD.
• Technical buying above the 200-day SMA contributes to the positive move.

The USD/CHF pair builds on the previous day's breakout momentum above a technically significant 200-day Simple Moving Average (SMA) and gains traction for the fifth successive day on Thursday. This also marks the sixth day of a positive move in the previous seven and lifts spot prices to the 0.8875 region, or the highest level since July 24 during the Asian session. 

The US Dollar (USD) prolongs the post-US election rally and jumps to a fresh year-to-date (YTD) peak, and turns out to be a key factor acting as a tailwind for the USD/CHF pair. Investors remain optimistic that US President-elect Donald Trump's policies will spur growth and believe that expected protectionist tariffs could stimulate inflation. This might force the Federal Reserve (Fed) to pause its easing cycle, which continues to underpin the Greenback. 

Meanwhile, the US consumer inflation data released on Wednesday reaffirmed bets that the Fed would deliver a third interest rate cut in December against the backdrop of a softening labor market. That said, slower progress toward bringing inflation down could result in fewer rate cuts next year. Adding to this, hawkish remarks by several Fed officials keep the US Treasury bond yields elevated near a multi-month top and further offer support to the buck. 

Market participants now look forward to the US economic docket – featuring the release of the usual Weekly Initial Jobless Claims data and the Producer Price Index (PPI). The focus, however, will remain glued to Fed Chair Jerome Powell's speech later during the US session, which will be scrutinized for cues about the future rate-cut path. This will play a key role in influencing the USD price dynamics and provide some meaningful impetus to the USD/CHF pair.

Bank of Japan (BoJ) Deputy Governor Shinichi Uchida said on Thursday, “financial institutions, authorities must be ready for any sudden outflow of deposits given digitalization, advances in it.”

Additional quotes

Market reaction

At press time, USD/JPY holds the renewed upside above 156.00 following these comments, up 0.39% on the day.

• The USD/CAD pair may approach the upper boundary of the ascending channel at the 1.4080 level.
• Traders may anticipate a potential downward correction if the 14-day RSI surpasses the 70 mark.
• The immediate support appears at the nine-day EMA at 1.3943 level followed by the 14-day EMA at the 1.3917 level.

The USD/CAD pair gains ground for the fifth successive day, trading around 1.4010 during the Asian session on Thursday. On the daily chart, the analysis indicates that the pair moves upwards within an ascending channel pattern, suggesting an ongoing bullish bias.

The 14-day Relative Strength Index (RSI), a widely used indicator for spotting overbought or oversold conditions, is currently just under the 70 level. This suggests ongoing bullish momentum without yet signaling an overbought state. If the 14-day RSI surpasses 70, traders may anticipate a potential downward correction. A pullback from overbought levels could push the pair back toward the 1.4000-1.3950 range.

On the upside, the USD/CAD pair could test the area near the upper boundary of the ascending channel at the 1.4080 level. A breakout above this channel could strengthen the prevailing bullish trend and propel the pair toward 1.4173, the next key resistance level reached in May 2020.

In terms of support, the USD/CAD pair could test immediate support around the nine-day Exponential Moving Average (EMA) at the 1.3943 level, followed by the 14-day EMA at the 1.3917 level. A break below these EMAs could cause the weakening of the bullish bias and put downward pressure on the pair to test the lower boundary of the ascending channel at the 1.3860 level.

USD/CAD: Daily Chart

• GBP/USD trades in negative territory for the fifth consecutive day near 1.2685 in Thursday’s Asian session. 
• US inflation rose to 2.6% YoY in October, as expected. 
• Investors await the BoE’s Governor Andrew Bailey speech on Thursday. 

The GBP/USD pair extends the decline to near 1.2685 during the Asian trading hours on Thursday. A rally in the US Dollar (USD) to the highest level since November 2023 weighs on the major pair. The Bank of England (BoE) Governor Andrew Bailey is set to speak later on Thursday. 

Data released by the US Department of Labor Statistics on Wednesday showed that the US Consumer Price Index (CPI) came in line with expectations, rising by 2.6% YoY in October. Meanwhile, the core CPI, which excludes the more volatile food and energy categories, climbed by 3.3% YoY in October, mating with the estimation. The markets expect the US Federal Reserve (Fed) to keep on track to reduce rates at their next meeting in December. 

“No surprises from the CPI, so for now the Fed should be on course to cut rates again in December. Next year is a different story, though, given the uncertainty surrounding potential tariffs and other Trump administration policies,” noted Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. 

Fed officials remain cautious on rate cuts. On Wednesday, Dallas Fed President Lorie Logan said that the US central bank should proceed cautiously on further interest rate cuts to keep from inadvertently reigniting inflation. Additionally, St. Louis Fed President Alberto Musalem stated that sticky inflation figures make it difficult for the US central bank to continue to ease rates. Traders raise their bet on another quarter-percentage-point rate cut in December, albeit at a slower pace, through mid-2025.

On the UK’s front, the BoE policymaker Catherine Mann said monetary policy is impacting inflation more quickly than economic theory suggests, allowing the central bank to wait before making big cuts to interest rates. Traders have fully priced in only two quarter-point rate cuts by the end of 2025, which would put the BoE lag behind other major central banks. 

Traders will take more cues from the BoE’s Bailey speech later on Thursday for fresh impetus. Less dovish comments from the UK central bank could underpin the Pound Sterling (GBP) against the GBP. 

• Gold price remains under heavy selling pressure amid the continuation of the Trump trade.
• The optimism over stronger US economic growth lifts the USD to a fresh YTD top on Thursday.
• Rising US bond yields also contribute to driving flows away from the non-yielding yellow metal.

Gold price (XAU/USD) attracts sellers for the fifth successive day and drops to its lowest level since September 19, around the $2,559-2,558 region during the Asian session on Thursday. The US Dollar (USD) prolongs its post-election rally and climbs to a fresh year-to-date (YTD) peak amid hopes that US President-elect Donald Trump's policies will spur growth. This, in turn, is seen as a key factor that continues to weigh heavily on the USD-denominated commodity. 

Meanwhile, investors believe that expected protectionist tariffs from the new Trump administration could boost inflation and force the Federal Reserve (Fed) to pause its easing cycle. Moreover, US data released on Wednesday pointed to slower progress toward bringing inflation down and could result in fewer rate cuts next year. This remains supportive of elevated US Treasury bond yields and also contributes to driving flows away from the non-yielding Gold price.

Apart from this, a generally positive tone across the global equity markets exerts additional pressure on the safe-haven precious metal and supports prospects for a further downward move. Traders now look forward to the release of the US Producer Price Index (PPI) for short-term opportunities. The focus, however, will remain on Fed Chair Jerome Powell's speech, which could offer cues about the future rate-cut path and provide a fresh impetus to the Gold price. 

Gold price continues losing ground as the Trump trade boost USD and US bond yields

• The US Bureau of Labor Statistics reported on Wednesday that the headline US Consumer Price Index (CPI) rose 0.2% in October and by 2.6% over the last twelve months.
• The core gauge – which excludes the more volatile food and energy categories—increased by 0.3% last month and by 3.3% as compared to the same time period last year. 
• The data reaffirmed market bets that the US Federal Reserve would deliver a third interest rate cut in December against the backdrop of a softening labor market.
• According to CME Group's FedWatch Tool, the probability of another 25-basis-points rate cut at the next FOMC meeting shot to over 80% from less than 60% on Tuesday. 
• Commenting on the report, Dallas President Lorie Logan said that the central bank has made a great deal of progress bringing down inflation, but should proceed cautiously.
• St. Louis Fed President Alberto Musalem noted that the risk of inflation moving higher has risen and that sticky inflation makes it difficult for the central bank to continue to ease rates. 
• Kansas Fed President Jeffrey Schmid made a rare appearance and said it remains to be seen how much more the US central bank will cut rates, and where they may settle.
• US President-elect Donald Trump's pledges of tax cuts and increased tariffs on imports could accelerate inflation, limiting the scope for the Fed to cut rates going forward.
• The Trump trade optimism keeps the yield on the 10-year US government bond elevated near a multi-month top and lifts the US Dollar to the highest level since November 2023.
• Thursday's US economic docket features the release of the usual Weekly Initial Jobless Claims and the Producer Price Index, ahead of Fed Chair Jerome Powell's appearance. 

Gold price now seems vulnerable, could test the $2,542-2,538 support confluence 

From a technical perspective, the overnight breakdown below the $2,600 mark, which coincided with the 38.2% Fibonacci retracement level of the June-October rally, was seen as a fresh trigger for bearish traders. This, along with negative oscillators on the daily chart, suggests that the path of least resistance for the Gold price remains to the downside and supports prospects for a fall towards the $2,542-2,538 confluence support. The said area comprises the 100-day Simple Moving Average (SMA) and the 50% Fibo. level, which if broken will set the stage for an extension of the recent sharp pullback from the all-time peak and expose the $2,500 psychological mark.

On the flip side, attempted recovery moves might now confront resistance near the Asian session high, around the $2,580 area, ahead of the $2,600 round figure. A sustained strength beyond the latter might prompt a short-covering rally towards the $2,630-2,632 static barrier, which if cleared should pave the way for a move towards the next relevant hurdle near the $2,660 region.

• EUR/USD falls to 1.0546 on Thursday, the lowest since November 2023.
• Eurozone Gross Domestic Product is anticipated to report 0.4% QoQ in the third quarter.
• Traders will likely observe US October Producer Price Index data later in the North American session.

EUR/USD extends its decline for the fifth consecutive day, trading near 1.0550, marking fresh yearly lows during Thursday's Asian session. This downside of the pair is mainly attributed to the strengthening US Dollar (USD), driven by "Trump trades."

Traders await the release of Gross Domestic Product (GDP) data for the Eurozone on Thursday, with the third-quarter GDP figure expected to confirm a preliminary growth estimate of 0.4% quarter-over-quarter. Meanwhile, the year-over-year GDP is forecast to show a modest 0.9% growth for Q3, indicating a lackluster economic performance in the region.

The focus will shift to European Central Bank (ECB) President Christine Lagarde, who is expected to deliver remarks at the Choiseul Sovereignty Awards 2024 ceremony in Paris, France. Meanwhile, Fed Chair Jerome Powell will be in the spotlight during a panel discussion titled "Global Perspectives," hosted by the Federal Reserve Bank of Dallas.

The US Dollar Index (DXY), which tracks the value of the US Dollar against six major peers, remains steady around 106.60, its highest level since November 2023, supported by rising US Treasury yields. As of now, the 2-year and 10-year US Treasury yields are at 4.31% and 4.47%, respectively.

The US Consumer Price Index (CPI) rose by 2.6% year-over-year in October, matching market expectations, following a 2.4% increase in the previous month. The monthly CPI held steady at 0.2% MoM as expected. Meanwhile, the core CPI, which excludes the more volatile food and energy sectors, met market expectations, holding at 0.3% MoM and 3.3% on an annualized basis.

• NZD/USD loses ground due to "Trump trades" and less dovish comments from Fed officials.
• Fed's Alberto Musalem stated that persistent inflationary pressures force the Fed to halt its rate-cutting strategy.
• RBNZ expects to deliver a bumper 75 basis point rate cut in November as the inflation rate eases.

NZD/USD extends its decline for the third consecutive day, trading near 0.5870, marking a three-month low during Thursday's Asian session. The pair's downward movement is largely due to the strengthening US Dollar (USD), fueled by "Trump trades" and less dovish remarks from Federal Reserve (Fed) officials following US inflation data. 

The US Dollar Index (DXY), which measures the value of the US Dollar against its six major peers, holds steady around 106.60, its highest level since November 2023, supported by rising US Treasury yields. At the time of writing, the 2-year and 10-year US Treasury yields are at 4.31% and 4.47%, respectively.

On Wednesday, St. Louis Fed President Alberto Musalem remarked that ongoing inflationary pressures make it challenging for the Fed to maintain a course of rate cuts. Musalem shifted focus to the robustness of the US labor market, aiming to ease concerns about inflation's resistance to the Fed's efforts to reduce it. Meanwhile, Kansas City Fed President Jeffrey Schmid emphasized the potential hurdles in the path toward lowering interest rates.

The US Consumer Price Index (CPI) rose by 2.6% year-over-year in October, matching market expectations, following a 2.4% increase in the previous month. Meanwhile, the core CPI, which excludes the more volatile food and energy sectors, climbed by 3.3%, in line with forecasts.

The Reserve Bank of New Zealand (RBNZ) is anticipated to announce a more substantial 75 basis point rate cut later this month as the inflation rate eases to its lowest level since Q1 2021 in the third quarter. A 50 basis point cut has already been fully priced in by markets.

However, the Food Price Index in New Zealand remained steady at 1.2% year-over-year in October, marking the highest level since February. On a monthly basis, food prices dropped by 0.9% in October, following a 0.5% increase the previous month.

Traders are now focusing on the upcoming US October Producer Price Index (PPI) data, scheduled for release on Thursday. Market participants are also looking ahead to the release of Industrial Production and Retail Sales data for October from China, New Zealand's largest trading partner, which is due on Friday.

• Silver remains under some selling pressure on Thursday and retests October's swing low. 
• The technical setup favors bearish traders and supports prospects for additional losses.
• Any attempted recovery could still be seen as a selling opportunity and remain capped.

Silver (XAG/USD) attracts some follow-through selling during the Asian session on Thursday and drops to its lowest level since September 19 in the last hour. Bearish traders now await a sustained break below the $30.00 psychological mark before positioning for an extension of the recent sharp retracement slide from a 12-year peak touched last month.

The overnight close below the 50% Fibonacci retracement level of the August-October rally and a subsequent break through the 100-day Simple Moving Average (SMA) for the first time since September could be seen as a fresh trigger for bearish traders. Moreover, oscillators on the daily chart have been gaining negative traction and are still away from being in the oversold zone. This, in turn, suggests that the path of least resistance for the XAG/USD remains to the downside and supports prospects for a further depreciating move. 

The white metal might then accelerate the fall towards the 61.8% Fibo. level, around the $29.65-$29.60 region. The downward trajectory could extend further towards the $29.20-$29.15 area before the XAG/USD eventually breaks below the $29.00 mark and tests a technically significant 200-day SMA, currently pegged near the $28.65 zone.

On the flip side, any meaningful recovery attempt might now confront a stiff barrier near the $30.60 region (50% Fibo. level). Some follow-through strength, however, could trigger a short-covering rally and allow the XAG/USD to reclaim the $31.00 mark, though the momentum is more likely to remain capped near the $31.20 support-turned-resistance. The latter should act as a key pivotal point, which if cleared decisively will suggest that the commodity has formed a near-term bottom and pave the way for additional gains.

Silver daily chart

• The Japanese Yen continues losing ground amid the BoJ rate-hike uncertainty.
• The bullish USD contributes to the USD/JPY pair’s move-up to a multi-month top.
• The JPY bears shrug off the possibility of an intervention by Japanese authorities.

The Japanese Yen (JPY) remains on the back foot against its American counterpart for the fourth consecutive session as of Thursday and slides to the lowest level since July 24 during the Asian session.  Although Japan's Producer Price Index (PPI) rose by the fastest annual pace in more than a year during October, investors seem convinced that the domestic political uncertainty will make it difficult for the Bank of Japan (BoJ) to hike interest rates again. Apart from this, growing concerns over the possibility that US President-elect Donald Trump will impose high tariffs and their impact on the Japanese economy continue to undermine the JPY.

Meanwhile, expectations that expansionary policies from the incoming Trump administration could stimulate inflation keep the US Treasury bond yields elevated near a multi-month top, which further seems to undermine the lower-yielding JPY. Adding to this, the continuation of the so-called Trump trade lifts the US Dollar (USD) to its highest level since November 2023 and acts as a tailwind for the USD/JPY pair. That said, intervention fears could limit the JPY losses. This, along with bets for another 25-basis-points (bps) rate cut by the Federal Reserve (Fed) in December, bolstered by the US inflation data on Wednesday, might cap the pair. 

Japanese Yen selling remains unabated amid doubts over BoJ’s rate-hike plans and relentless USD buying

• A rise in Japan's wholesale inflation in October complicates the Bank of Japan's (BoJ) decision regarding the timing of a potential interest rate hike amid mounting domestic economic concerns. 
• The Japanese government is reportedly making arrangements to compile a supplementary budget to fund a stimulus package to help low-income households and offset rising prices.
• Masato Kanda, now a special advisor to Japan's Prime Minister Shigeru Ishiba, said that authorities will act appropriately against excess movements in the FX market.
• The US Bureau of Labor Statistics reported on Wednesday that the headline US Consumer Price Index (CPI) rose by 0.2% in October and by 2.6% over the last twelve months.
• Meanwhile, the core CPI — which excludes the more volatile food and energy categories — recorded an increase of 3.3% as compared to the same time period last year. 
• The data did not change expectations that the US Federal Reserve would deliver a third interest rate cut in December against the backdrop of a softening labor market.
• The continuation of the so-called Trump trade keeps the US Treasury bond yields elevated near a four-month peak and lifts the US Dollar to a fresh year-to-date high. 
• Traders now look forward to the release of the usual US Weekly Initial Jobless Claims data and the US Producer Price Index (PPI) for short-term opportunities. 
• The focus will then shift to Fed Chair Jerome Powell's speech, which should influence the USD/JPY pair ahead of the Prelim Q3 GDP print from Japan on Friday.

USD/JPY could climb further towards the next relevant hurdle near the 156.55-156.60 region

From a technical perspective, the recent breakout through the 61.8% Fibonacci retracement level of the July-September decline and the subsequent close above the 155.00 psychological mark on Wednesday favor bullish traders. Moreover, oscillators on the daily chart are holding comfortably in positive territory and are still away from being in the overbought zone. This, in turn, suggests that the path of least resistance for the USD/JPY pair remains to the upside. Hence, some follow-through strength beyond the 156.00 mark, towards testing the next relevant hurdle near the 156.55-156.60 area, looks like a distinct possibility. The upward trajectory could extend further towards the 157.00 round figure en route to the 157.30-157.35 supply zone.

On the flip side, the Asian session low, around the 155.35-155.30 region, now seems to protect the immediate downside ahead of the 155.00 mark. A sustained break below the latter might prompt some technical selling and drag the USD/JPY pair to the 154.55-154.50 intermediate support en route to the 154.00 round figure and the 153.80 support. This is followed by support near the 153.45 region, which if broken decisively might shift the near-term bias in favor of bearish traders.

• The Indian Rupee remains steady near a record low in Thursday's Asian session. 
• Equity outflows and persistent strength in the USD drag the INR lower. 
• Investors await India’s October WPI Inflation on Thursday ahead of the US PPI data release. 

The Indian Rupee (INR) holds steady near its all-time low on Thursday. The continued withdrawal of foreign funds, sluggishness in domestic stock markets, and a rally in the US Dollar Index (DXY) exert some selling pressure on the local currency. 

Nonetheless, lower crude oil prices and the routine interventions by the Reserve Bank of India (RBI) might help limit the INR's losses and keep volatility muted in the near term. Later on Thursday, investors will monitor India’s Wholesale Price Index (WPI) Inflation for October. On the US docket, the Producer Price Index (PPI) for October, weekly Initial Jobless Claims and Fedspeak will be the highlights later in the day. 

Indian Rupee remains weaker amid foreign fund outflows and a strong US Dollar

• Overseas investors withdrew nearly $3 billion from Indian stocks in November, adding to the $11 billion of outflows in October. Indian equity indexes have fallen over 9% since their peak in late September.
• The US Consumer Price Index (CPI) rose by 2.6% YoY in October, in line with expectations, according to the US Department of Labor Statistics on Wednesday.
• The core CPI, which excludes the more volatile food and energy categories, climbed by 3.3% YoY in October, matching prior forecasts.
• Kansas Fed President Jeffrey Schmid stated on Wednesday that the Fed’s interest-rate cuts to date acknowledge its growing confidence that inflation is headed down but gave no steer on how many more rate cuts he feels may be appropriate, per Reuters. 
• St. Louis Fed President Alberto Musalem noted on Wednesday that sticky inflation figures make it difficult for the US central bank to continue to ease rates. 
• Dallas Fed President Lorie Logan said on Wednesday that the central bank should move slowly with additional rate cuts to avoid unintentionally stoking inflation. 

USD/INR’s bullish outlook remains in play, but overbought conditions linger

The Indian Rupee trades flat on the day. The USD/INR pair holds above the key 100-day Exponential Moving Average (EMA) on the daily timeframe, suggesting the uptrend is more likely to resume than to reverse. However, further consolidation cannot be ruled out before positioning for any near-term USD/INR appreciation as the 14-day Relative Strength Index (RSI) exceeds 70, indicating an overbought condition.

The first upside barrier for USD/INR is seen at 84.50. Sustained trading above this level potentially takes the pair to the 85.00 psychological level and beyond.

On the flip side, the resistance-turned-support level at 84.32 acts as an initial support for the pair. A breach of the mentioned level could see a drop to the 84.05-84.10 region, representing the lower limit of the trend channel and the high of October 11. The next contention level to watch is 83.86, the 100-day EMA. A decisive break below this level could mark the start of a downtrend.

• The Australian Dollar receives support from the hawkish comments from the RBA Governor Michele Bullock.
• Australia’s seasonally adjusted Unemployment Rate held steady at 4.1% in October for the third consecutive month.
• Traders are now shifting their focus to the US October Producer Price Index (PPI) data, set to be released on Thursday.

The Australian Dollar (AUD) breaks its four-day losing streak against the US Dollar (USD) following the key economic data release on Thursday. Australia's Consumer Inflation Expectations dropped to 3.8% in November, down from 4.0% in the previous month, reaching the lowest level since October 2021.

Australia’s seasonally adjusted Unemployment Rate remained steady at 4.1% in October for the third consecutive month, in line with market expectations. However, Employment Change showed only 15.9K new jobs added in October, falling short of the anticipated 25.0K.

Reserve Bank of Australia (RBA) Governor Michele Bullock stated on Thursday that current interest rates are sufficiently restrictive and will remain so until the central bank is confident about inflation trends. Bullock noted the uncertainty surrounding potential actions by the US Federal Reserve and emphasized that the RBA will avoid making any hasty decisions.

The US Dollar (USD) hovers around 106.53, its highest level since November 2023, driven by "Trump trades" and October's US Consumer Price Index (CPI) data. Donald Trump’s victory in last week’s US presidential election fueled expectations of potentially inflationary tariffs and other measures from his upcoming administration, giving a strong boost to the Greenback.

Australian Dollar receives support from hawkish comments from RBA bullock

• Federal Reserve (Fed) Bank of St. Louis President Alberto Musalem commented on Wednesday that persistent inflation challenges make it difficult for the Fed to continue easing rates. Musalem redirected attention to the overall strength of the US labor market, seeking to alleviate concerns about inflation's resistance to the Fed's downward pressure efforts.
• Federal Reserve Bank of Kansas City President Jeffrey Schmid highlighted potential challenges in the journey toward lowering interest rates. Schmid also criticized market participants who continue to hold out hope for a return to near-zero rates, calling their expectations unrealistic.
• US Consumer Price Index (CPI) increased by 2.6% year-over-year in October, in line with market forecasts. Meanwhile, the core CPI, which excludes the more volatile food and energy components, rose by 3.3% as expected.
• Australia's Prime Minister Anthony Albanese shared in a radio interview on Wednesday that he discussed trade with US President-elect Donald Trump during a phone call last week. Albanese informed Trump that the United States holds a trade surplus with Australia and emphasized that it is in Washington's best interest to "trade fairly" with its ally. Meanwhile, the defense minister underscored Australia's significant investment in security.
• Matthew Hassan, Senior Economist at Westpac, noted "Consumers are feeling less pressure on their family finances, are no longer worried about further interest rate rises, and are increasingly confident in the economic outlook."
• Last week, China's latest stimulus measures fell short of investor expectations, further dampening demand prospects for Australia’s largest trading partner and weighing on the Australian Dollar. China announced a 10 trillion Yuan debt package designed to alleviate local government financing pressures and support struggling economic growth. However, the package stopped short of implementing direct economic stimulus measures.
• Morgan Stanley divides the Trump administration's macroeconomic policies into three key areas: tariffs, immigration, and fiscal measures. The report predicts that tariff policies will be prioritized, with an anticipated immediate imposition of 10% tariffs globally and 60% tariffs specifically on China.
• On Thursday, Federal Reserve Chair Jerome Powell stated he doesn’t anticipate Trump’s potential return to the White House impacting the Fed’s near-term policy decisions. “We don’t guess, speculate, and we don’t assume what future government policy choices will be,” Powell noted after the bank decided to lower interest rates by 25 basis points to a range of 4.50%-4.75%, as expected.

Australian Dollar trades below 0.6500 due to short-term downward pressure

The AUD/USD pair trades near 0.6490 on Thursday. An analysis of the daily chart indicated short-term downward pressure, with the pair remaining below the nine-day Exponential Moving Average (EMA). Additionally, the 14-day Relative Strength Index (RSI) is below the 50 mark, reinforcing a bearish outlook.

The AUD/USD pair may find support near the psychological level of 0.6400. A break below this level could increase downward pressure, potentially leading the pair to approach the yearly low of 0.6348, last reached on August 5.

On the upside, immediate resistance is seen at the psychological level of 0.6500. A break above this could push the AUD/USD pair toward the nine-day EMA at 0.6550, followed by the 14-day EMA at 0.6573. Clearing these EMAs may propel the pair toward its three-week high of 0.6687, with the next psychological target at 0.6700.

AUD/USD: Daily Chart

On Thursday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.1966, as compared to the previous day's fix of 7.1991 and 7.2326 Reuters estimates.