CFD Markets News and Forecasts — 29-11-2024

• Friday's session saw NZD/USD rally 0.61% to trade around 0.5930.
• Price action shows recent gains and a recovery to the 20-day SMA, indicating potential for a reversal.
• Indicators look promising and approaching positive areas so the pair may see further upside.

The NZD/USD pair surged by 0.61% on Friday's session, continuing the recovery from last week's lows and reaching 0.5930.

The pair has resumed its upward trajectory, fueled by positive technical indicators. The Relative Strength Index (RSI) has moved near positive territory at around 49, signaling increasing buying pressure and bullish sentiment. Moreover, the Moving Average Convergence Divergence (MACD) indicator displays a rising green histogram, further confirming the bullish momentum.

The Kiwi's pair's recent rally has seen it conquer the 20-day Simple Moving Average (SMA) of 0.5905, signaling potential for a bullish reversal. However, the lingering bearish crossover between the 100-day and 200-day SMAs at 0.6060 raises concerns about the sustainability of the gains. Positive technical indicators, including the RSI and MACD, suggest buying pressure is rising and support bullish momentum..

NZD/USD daily chart

• Gold gains 0.67% in late session, but geopolitical strife keeps it above $2,600 despite monthly losses.
• Escalation in Russia-Ukraine conflict and Middle East tensions underline Gold's safe-haven appeal.
• Market optimism grows for a 25 bps Fed rate cut in December, bolstering Bullion’s short-term prospects.

Gold's price advanced late during the North American session on Friday, up by 0.67%, yet it remains set to print monthly losses of over 3%. Geopolitical risks continue to drive price action with the non-yielding metal fluctuating at around $2,600. The XAU/USD trades at $2,652 after hitting a daily low of $2,634.

Geopolitical tensions eased in the Middle East after Israel and Lebanon agreed to a ceasefire. Nevertheless, both countries accused each other of violating the agreement.

Recently, Sky News Arabia revealed that the Israeli Army announced the bombing of a mobile rocket platform belonging to Hezbollah in southern Lebanon in an air strike.

Gold prices could remain bid after the escalation of the Russia-Ukraine conflict. During the week, Russia attacked Ukraine’s energy infrastructure and threatened to attack with ballistic missiles. Russia’s response is a retaliation to the US and UK authorizing the deployment of missiles manufactured in both countries inside Russia.

In November, Bullion prices were hampered by US President-elect Donald Trump's victory on November 5. Some of his proposals are inflation-prone, like imposing tariffs and cutting taxes.

This bolstered the Greenback, which is set to end November with gains of over 2%, according to the US Dollar Index (DXY). Speculation that the new US administration's fiscal policy is expansionary might prevent the Federal Reserve (Fed) from continuing to lower interest rates.

The choice of Scott Bessent as Treasury Secretary for the upcoming Trump administration calmed the markets and bolstered Gold prices last week. Investors see Bessent as market-friendly, which could moderate harsh Trump trade policies.

Consequently, market participants are optimistic that the Fed will cut rates by 25 basis points at the December meeting. According to the CME FedWatch Tool, the swaps market sees a probability of 66% of such a decision.

Daily digest market movers: Gold price underpinned by lower US real yields

• Gold prices recovered as US real yields dropped seven basis points to 1.92%.
• The US 10-year Treasury bond yield falls six basis points to 4.182%.
• The US Dollar Index (DXY), which tracks the performance of the buck against six currencies, edged down 0.37% at 105.75 on the day. However, it is set to print gains of over 1.79% for the month.
• The latest US GDP figures and the Core Personal Consumption Expenditures (PCE) Price Index hint that the US economy remains robust and that easing policy could need to be paused.
• However, Fed officials seemed convinced that further easing is needed and may cut rates at the December meeting. However, they adopted a more cautious stance, opening the door to pause the easing cycle.
• Data from the Chicago Board of Trade, via the December fed funds rate futures contract, shows investors estimate 24 bps of Fed easing by the end of 2024.

Technical outlook: Gold price climbs but remains below 50-day SMA

Gold prices remain upwardly biased yet contained within the 50 and 100-day Simple Moving Averages (SMAs), each at $2,668 and $2,572, respectively. Buyers need to clear the 50-day SMA so they can test $2,700. On further strength, XAU/USD's next resistance level would be the psychological $2,750 and the all-time high at $2,790.

On the other hand, if sellers drag the non-yielding metal below $2,600, they could target the 100-day SMA, ahead of the November 14 swing low of $2,536.

• Aussie mildly rose to 0.6510 in Friday's session.
• Gains in the Aussie pair are influenced by broad-based US Dollar weakness.
• Aussie finds support but faces pressure from trade war concerns between China and the US.

The AUD/USD pair extends gains for the third straight day on Friday, although it has trimmed a portion of its intraday gains and holds above the 0.6500 psychological threshold. The pair recently reached a multi-day high before retracing some of its intraday gains. The positive momentum in the pair is influenced mainly by broad-based US Dollar weakness.

Despite showing signs of resilience and gaining, the US Dollar remains under pressure against most major currencies. The weakness in the US Dollar is primarily due to dovish comments from Federal Reserve Chairman Jerome Powell, who hinted at a pause in the US interest rate hiking cycle. This has led market participants to speculate that the Fed may not raise interest rates as aggressively as previously anticipated.

Daily digest market movers: Australian Dollar mixed, trade war concerns limit the upside

• AUD/USD is maintaining its upward trend for the third consecutive day despite a slight pullback in intraday gains.
• The AUD/USD pair reversed early gains and trades mixed around 0.6500 amid concerns over the US-China trade war.
• The US is set to unveil further AI chip sanctions against China as early as Monday, which is weighing on the AUD/USD due to risk-off market sentiment.
• This week, the AUD has gained support due to weakness in the USD, despite mixed Australian economic data and a hawkish Reserve Bank of Australia.

AUD/USD technical outlook: Outlook improves as bulls gain momentum, indicators signal further gains ahead

The AUD/USD pair continued to gain ground and approached the 20-day Simple Moving Average (SMA) but faced rejection. However, the outlook remains positive as bullish momentum continues to build.

The AUD/USD pair is likely to find support at the 20-day SMA and the ascending trendline from the August low. On the upside, immediate resistance is at the 50-day SMA and the 0.6600 round figure. A break above this resistance area could lead to further gains toward the 0.6700 mark.

• The Dow Jones finds room to move higher on thin Friday.
• November set to close as the Dow Jones’ best-performing month of the year.
• Another data-laden NFP week looms ahead over the horizon.

The Dow Jones Industrial Average (DJIA) explored territory north of the 45,000 handle for the second time this week. With little on the data docket and Friday’s Post-Thanksgiving holiday trading hours cut short, investors scrambled to push equities into record territory before closing up shop for the weekend. 

Tech stocks, specifically chipmakers, are helping to bolster stock indexes after it was revealed that additional restrictions on the sale of semiconductor goods to China being considered by the Biden administration may not be as stiff as many investors had originally feared. Lacking any other fundamental reasons to sell short, traders are bidding stocks higher for the day as markets continue to brush off renewed threats of wide-reaching tariffs set to be imposed by incoming President-elect Donald Trump in January.

Next week will see a fresh round of employment and labor figures that will draw eyes from all corners of the market. This will culminate in another print of monthly Nonfarm Payrolls (NFP) numbers next Friday. 

Dow Jones news

Equities broadly found higher ground on holiday-shortened Friday, with two-thirds of the Dow Jones printing in the green from the day’s opening bids at the closing bell. Nvidia (NVDA) rallied over 2%, closing north of $138 per share as the chipmaker recovers from a recent downturn. Investors soured on NVDA after it was revealed that the major tech sector player, which is expected to see revenues soar by another 100% YoY in 2025, may see extended gross inflows shrink to a paltry 50% YoY in 2026. NVDA has fallen over 7% from its all-time high of $148.88 set earlier this month, but still up over 1,000% from 2022’s lows near $12.

Dow Jones price forecast

The DJIA continues to find higher ground, vexing traders looking to amass short positions as price action shows little disregard for any precise definition of overbought conditions. The Dow Jones is up nearly 20% YTD, and has closed in the green for all but two of the last 11 consecutive months.

Traders looking to get into an exhaustion play will be looking for an eventual decline to the 50-day Exponential Moving Average (EMA) rising through 43,000, but a long-running pattern of bouncing from the key moving average means they should just get out of the way and follow the crowd into a fresh leg higher.

Dow Jones daily chart

• US Dollar Index falls near 106.00 on a quiet Friday.
• DXY stands soft as US markets open on Black Friday after remaining closed on Thursday.
• The hawkish Fed and strong economic outlook from the US might limit the downside.

The US Dollar Index (DXY), which measures the value of the USD against a basket of currencies, trades near 106.10 with mild losses but trimmed most of its daily losses, which saw the index below 106.00. 

Overall, the US Dollar maintains a bullish outlook, supported by strong economic data and a hawkish Federal Reserve (Fed) stance. Despite profit-taking and geopolitical uncertainty, the uptrend remains intact. 

This week, thin liquidity and market holidays have resulted in reduced trading activity, but the DXY is expected to continue its upward trajectory due to robust US economic growth.

Daily digest market movers: US Dollar stabilises on Friday ahead of the weekend

• The US Dollar Index is currently trading near 106.00 with slight losses.
• The Greenback has recovered since the reopening of US markets on Black Friday.
• The Euro's rally, which pressured the USD, has subsided, influencing the DXY's behavior.
• The Fed’s hawkish stance might continue pushing the index higher.
• This week’s Federal Open Market Committee Minutes suggested that the Fed is in no rush to cut rates. 
• Some participants cautioned that disinflation could take longer than expected. Officials discussed a "technical adjustment" to money market operations.
• According to the CME FedWatch Tool, the odds of a December rate cut have risen to around 66%.

DXY technical outlook: Despite profit-taking, outlook remains bullish

Technical indicators for the DXY suggest a period of consolidation with the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicators hovering around neutral levels. 

Despite a recent dip below the 20-day Simple Moving Average (SMA), the index has quickly recovered, indicating that the uptrend remains intact. Key support is found at 106.00-106.50, while resistance is at 108.00. The overall bullish momentum suggests that the uptrend is likely to continue in the medium term as the US economy remains robust and the Fed is expected to cool down rate cut bets. Traders should monitor the 106.00 level closely as a break below this level could trigger further downside.

• Mexican Peso appreciates 0.59% against US Dollar, poised for strong weekly performance.
• Banxico minutes suggest potential for 50 bps rate cut in December, boosting Peso's outlook.
• President Sheinbaum optimistic about averting Trump's proposed 25% tariffs, bolstering MXN stability.

The Mexican Peso appreciated against the US Dollar during the North American session as the Greenback extended its downfall and is about to hit its most significant weekly loss in three months. Speculation that US President-elect Donald Trump may moderate his trade rhetoric weighed on the American currency. Therefore, the USD/MXN trades at 20.29, down 0.59%.

Mexico’s economic docket was light on Friday, but the Bank of Mexico (Banxico) revealed its November 14 monetary policy meeting minutes on Thursday.

Banxico’s board members voted unanimously to lower rates, and according to the minutes, members agreed that the rate cut cycle “should continue.” Nevertheless, one of the officials suggested “a larger rate adjustment” at the December meeting in light of expectations that core inflation would continue to trend lower.

Even though this opens the door for a 50 bps rate cut at the next meeting, the USD/MXN trended lower after Mexican President Claudia Sheinbaum and US President-elect Donald Trump sustained conversations on Wednesday, calming fears and underpinning the emerging market currency.

Earlier on Friday, President Sheinbaum said she is convinced that she would reach a deal with the US to avoid President-elect Trump's threat of 25% tariffs, according to Bloomberg. She added, “I’m convinced we’re going to reach an agreement while defending our sovereignty, with respect for Mexicans and respect for Mexico, with the collaboration that one government should have with another.”

Meanwhile, US data suggests the economy might be slowing faster than expected. Earlier, the Chicago Purchasing Managers Index (PMI) for November tumbled. It was the second monthly decline from September levels.

Daily digest market movers: Mexican Peso appreciates during the week

• Banxico’s board members noted that the Mexican Peso traded broadly, depreciating markedly and exhibiting volatility mainly due to uncertainty about the US election.
• They added that inflation risks are tilted to the upside, mentioning a greater exchange rate depreciation. They acknowledged the inflation outlook still calls for a generally restrictive policy stance.
• Banxico’s members “agreed that Mexico's inflation outlook has been improving, after the significant global shocks of previous years. However, they forewarned that it still faces challenges.”
• In the bank's quarterly report, Banxico Governor Victoria Rodriguez commented that they monitored the recent Peso volatility and added that there has not been a need to intervene in the forex market.
• The quarterly report revealed that Banxico updated its projection for the Mexican economy to grow 1.8% in 2024, up from 1.5%. Nevertheless, the central bank kept its 2025 Gross Domestic Product (GDP) projection at 1.2%.
• The CME FedWatch Tool suggests that investors see a 66% chance of a 25-basis-point (bps) rate cut at the Federal Reserve’s December meeting, up from 59% a day ago.
• Data from the Chicago Board of Trade, via the December Fed funds rate futures contract, shows investors estimate 24 bps of Fed easing by the end of 2024.

Technical outlook: Mexican Peso recovers as USD/MXN falls below 20.40

The USD/MXN remains upwardly biased despite being set to finish the week with losses. Nevertheless, the pair carved a successive series of higher highs and higher lows, suggesting buyers are in charge. If buyers keep the exchange rate above the November 19 swing low of 20.06, this could pave the way for further upside.

The first resistance would be 20.50, followed by the year-to-date (YTD) peak at 20.82. If surpassed, the next stop would be 21.00, ahead of March 8, 2022 peak at 21.46, followed by the November 26, 2021 high at 22.15.

Conversely, if bears drag the exchange rate below 20.06, the next support would be 20.00. On further weakness, bears could challenge the 50-day Simple Moving Average (SMA) at 19.92. Key support levels lie beneath the latter with the 100-day SMA at 19.48 before the psychological 19.00 figure.

• EUR/USD started Friday with hopeful gains, but slumped back into the low side.
• European inflation figures showed contraction on the near end of the curve.
• Core monthly HICP inflation dipped to its lowest level since February.

EUR/USD kicked Friday off with a mild rally into the 1.0600 handle as broader markets took advantage of the US holiday session to sell off the Greenback and bid up riskier assets, but another contraction in key pan-European inflation figures pulled the plug on Fiber bulls. Despite an intraday softening of the Euro’s stance, EUR/USD is poised for its first weekly gain in a month.

According to the Harmonized Index of Consumer Prices (HICP), headline European inflation sank to -0.3% in November, falling from the previous month’s 0.3%. Core HICP inflation also declined to -0.6% MoM compared to the previous print of 0.2%, sending core monthly inflation measures into contraction territory for the third time this year and the lowest print since February.

Annualized HICP inflation ticked higher, with core HICP rising to 2.8% YoY from the previous 2.7%, but the bump in yearly inflation is likely due to previous bumps in the road as the European Central Bank (ECB) grapples with whipsaw inflation prints. ECB officials noted that still-declining inflation metrics bode well for further rate cuts. Still, too-steep of an inflation easing curve is raising investor concerns of a deepening slowdown within the broader European economy.

EUR/USD price forecast

The Euro’s bullish turnaround from two-year lows is already running into trouble as intraday bidding runs aground of the 1.0600 handle. Bullish momentum has achieved a moderate 2.5% recovery from November’s bottom bids near 1.0330, but momentum remains limited. Looking higher up, a rapidly-descending 50-day Exponential Moving Average (EMA) falling through 1.0750 while the 200-day EMA rolls over into bear country near 1.0840.

EUR/USD daily chart

• EUR/CAD rose by 0.26% on Friday.
• A break and close below 1.4800 could signal further bearish momentum in the short term.

The EUR/CAD pair saw a slight uptick in Friday's session, climbing by 0.26% to reach 1.4825. However, despite this modest gain, the pair remains below its 20-day Simple Moving Average (SMA), having recently completed a bearish crossover between the 20 and 200-day SMAs. While buyers attempt to reclaim the 20-day SMA, indicators suggest a struggle, with the Relative Strength Index (RSI) recovering buying pressure and the Moving Average Convergence Divergence (MACD) indicating rising buying pressure and overall bullish momentum.

However, until the pair breaks above 1.4800, the short-term outlook remains negative. The mentioned crossover, combined with momentum not being entirely recovered, suggests that further gains may be limited.

EUR/CAD daily chart

• GBP/USD sees over 1.2% weekly gain but faces resistance near 1.2700, risking pullback to 1.2600.
• Oscillators like RSI suggest growing buyer momentum yet remain below the neutral threshold.
• Break above 1.2700 could target 200-day SMA at 1.2818, with this week’s high at 1.2749 as immediate hurdle.

The Pound Sterling clings to earlier gains yet trades off the weekly highs, which reached around 1.2749 during the European session. At the time of writing, the GBP/USD trades at 1.2684, virtually unchanged.

GBP/USD Price Forecast: Technical outlook

Although the GBP/USD is set for weekly gains of over 1.2%, price action suggests Cable didn’t find acceptance above 1.2700, which could exacerbate a pullback toward the 1.2600 figure. In that outcome, the pair’s next support would be the November 27 daily low of 1.2564, followed by the November 26 low of 1.2506. On further weakness, the November 22 pivot low of 1.2486 is on the cards.

Conversely, if GBP/USD finishes the week above 1.2700, this could pave the way for testing the 200-day Simple Moving Average (SMA) at 1.2818. However, buyers must clear the current week’s peak of 1.2749.

Oscillators such as the Relative Strength Index (RSI) hint that buyers are gathering momentum, even though the RSI remains below its neutral line.

Therefore, in the short-term, the GBP/USD upside is seen if it clears at 1.2700.

GBP/USD Price Chart – Daily

• GBP/JPY has fallen to a trendline for the August rally. 
• The pair is in a downtrend with odds favoring an extension lower. 

GBP/JPY is trying to pierce the trendline for the uptrend since the August lows. If it is successful and decisively breaches the trendline, it will suggest a follow-through lower to a fresh downside target at 186.20, the 61.8% Fibonacci of the down move prior to the trendline (blue rectangle on chart). 

The pair is now in a short and probably medium-term downtrend (since the October 31 high) and according to technical analysis lore trends have a tendency to extend, suggesting the odds favor even more downside to come.

GBP/JPY Daily Chart 

GBP/JPY is making its way down to the next target for the pair at around 189.56, the low of the Right-Angled triangle that formed in late September and early October. 

It is also possible it could bounce from the current level at the trendline which is a support level.

The Relative Strength Index (RSI) is not yet oversold which indicates the pair could still have further to fall before it gets oversold.  

A decisive breach of the trendline would be one accompanied by a long red candlestick that closed near its lows and well clear of the trendline, or three consecutive red candles that breached the level.

• Silver price extends its recovery to near $31.00 as demand for safe-haven asset improves.
• Russia threatens to attack Ukraine with nuclear-capable ballistic missiles.
• The US Dollar recovers with investors focusing on a slew of US economic data.

Silver price (XAG/USD) recovers further to near $31.00 in North American session on Friday. The white metal bounced back on Thursday after posting a fresh 11-week low near $29.60. The asset strengthens as investors fear that Russia could launch a nuclear attack on Ukraine.

Russia threatens a possible nuclear-capable ballistic missile strike on Ukraine, followed by firing a series of Intermediate Range Ballistic Missiles (IRBM) on 17 targets, including defense and energy facilities. The prevailing war between Russia and Ukraine keeps the demand for safe-haven assets intact. This was the second-largest Russian attack on Ukraine, according to Ukraine's energy ministry. Historically, the safe-haven appeal of precious metals such as Silver increases at times of global market uncertainty or heightened geopolitical risks.

In the Middle East, tensions between Israel and Iran have eased, with a ceasefire coming into effect early this week.

Meanwhile, the US Dollar (USD) rebounds strongly as investors shift focus to the United States (US) labor market and business activity data, which will be released next week. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, bounces back after posting a fresh two-week low near 105.60.

Silver technical analysis

Silver price rebounds strongly after sliding to near the upward-sloping trendline around $29.50, which is plotted from the February 29 low of $22.30 on a daily timeframe. Still, the outlook of the Silver price is bearish as a bear cross, represented by 20 and 50-day Exponential Moving Average (EMA) around $31.30, points to an escalation in the downside trend.

The white metal weakened after the breakdown of the horizontal support plotted from the May 21 high of $32.50.

The 14-day Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, suggesting a sideways trend.

Silver daily chart

• EUR/JPY is falling to a key support level after tumbling further on Friday. 
• It could bounce once it touches the level and the RSI is oversold on an intraday basis, cautioning aggressive short-sellers. 

EUR/JPY extends its downtrend since the Halloween peak and is within spitting distance of hitting key support at the September 30 swing low of 158.11 (red dashed line on chart). 

It is now probably in a short-term downtrend and given it is a principle of technical analysis that trends have a tendency to extend themselves, the odds favor EUR/JPY falling to lower lows.

EUR/JPY Daily Chart 

At the September 30 low the pair will probably find its feet and bounce. The Relative Strength Index (RSI) momentum indicator is in the oversold zone (below 30) on an intraday basis. If the pair closes with RSI still in oversold it will be a signal for short-holders not to add to their short positions. The risks of a pullback will also be greater. 

A deeper sell-off could take EUR/JPY down to the trendline at around 157.00 or even all the way to 154.00 – 155.00, the August-September lows. 

• USD/JPY has broken out of a Broadening Formation pattern and is falling towards its target. 
• The pair has probably reversed its short-term trend and risks now lie to the downside, in line with the bearish bias. 

USD/JPY has breached the bottom of a bearish Broadening Formation price pattern and is falling toward the first downside target at 148.54, the 61.8% Fibonacci extrapolation of the height of the pattern extrapolated down.

USD/JPY Daily Chart 

Further bearishness could carry USD/JPY to the next target at 148.24, the September 2, key swing high.

The (blue) Moving Average Convergence Divergence (MACD) momentum indicator is diverging away from its red signal line – a further bearish sign. 

The short-term trend has probably reversed from bullish to bearish after the breakdown. Given it is a principle of technical analysis that trends have a tendency to extend, the odds now favor more weakness in the short-term. 

• EUR/CHF mildly falls on Friday as markets digest Eurozone HICP inflation data for November. 
• The Euro weakens as it does little to change the outlook for interest rates , a key driver of FX valuations. 
• CHF gains marginally on stronger GDP growth data but hamstrung by comments for the SNB’s President Schlegel. 

EUR/CHF edges lower to trade on the 0.9300 handle on Friday after the release of Eurozone inflation data continues to suggest European Central Bank (ECB) members will cut interest rates at their December meeting despite the figures meeting economists’ expectations. Lower interest rates are negative for the Euro (EUR) since they decrease net capital inflows, and this puts pressure on the pair. 

The Swiss Franc (CHF) meanwhile, gains a mild tailwind after the release of Swiss Gross Domestic Product (GDP) data shows Swiss economic growth outstripped expectations, and accelerated in Q3 on a year-over-year basis. The effect is likely to be blunted, however, with comments from the President of the Swiss National Bank Martin Schlegel, last week, still fresh in traders' minds. Schlegel said that interest rates in Switzerland might fall below zero. Still, EUR/CHF has fallen into negative territory after both sets of data on the back of Swiss Franc outperformance. 

Eurozone inflation data decpetively high

The preliminary Eurozone Harmonized Index of Consumer Prices (HICP) rose 2.3% YoY in November in line with expectations and above the 2.0% of the previous month, according to data released Friday from Eurostat. Core HICP rose by 2.8%, which was also in line with expectations. 

Despite appearing like inflation was rising, several analysts said the elevated November figures were almost entirely due to “base effects”. A base effect relates to the corresponding month of the previous year, if inflation was too low in that month it only requires a small rise for the data to show a large percentage increase in the current year. 

“The increase in headline inflation from 2.0% in October to 2.3% in November was in line with expectations and was almost entirely caused by a base-effects driven by an increase in energy inflation,” said Jack Allen-Reynolds, deputy chief Eurozone economist at Capital Economics. 

The view was shared by Anders Svendsen, chief analyst at Nordea, who said, “Inflation rises on base effects but remains on track to return to the ECB's inflation target in the first part of 2025, allowing the ECB to continue cutting policy rates towards neutral.”

Svendsen goes further to argue that inflation will likely fall to the European Central Bank’s (ECB) 2.0% target more quickly than the ECB is currently forecasting. 

“Markets and the ECB agree that inflation will close in on 2% but disagrees on the timing. We believe the ECB will change its forecast to reflect an earlier return to 2% at its meeting in December. With that outlook, the ECB can continue cutting policy rates to neutral,” he writes. 

Capital’s Allen-Reynolds thinks the November data marginally reduces the chance of the ECB making a double-dose 50 basis points (pbs) (0.50%) cut to rates in December, however, in spite of this, there is still a “good chance” of 50 bps reduction nevertheless, as well as lower rates further down the track. 

“The continued strength of euro-zone services inflation in November reduces the chance that the ECB will cut interest rates by 50 bps in December,” yet adds, “While we think there is a good case for the ECB to cut interest rates by 50bp in December, several influential members of the Governing Council seem opposed to the idea and the strength of services inflation will arguably bolster their case. But if we’re right that services inflation will decline in December and beyond, and that the economy will remain weak, we think bigger cuts will be on the cards sooner or later.”

France's budget woes a drag

A further drag on the Euro is the political risk around the French budget with Prime Minister Michel Barnier struggling to get stringent budget cuts passed through parliament because of his wafer-slim majority. 

The political battle highlights France’s weak fiscal position and has led to the spread in yields between French Government Bonds over German Bunds to widen by 82 bps, indicating outsized risks for French bond-holders.  

“French Prime Minister Michel Barnier will have to make more concessions to the budget bill to prevent the government from falling. Far-right National Rally President Bardella stressed yesterday that “other red lines” remained. In the meantime, French political uncertainty is not spreading to the rest of the Eurozone which limits the drag on EUR.”

CHF vulnerable on SNB rhetoric

EUR/CHF saw limited downside pressure after Swiss GDP data, even though it would have been expected to strengthen CHF. Swiss GDP recorded a 2.0% rise in Q3 YoY, above the 1.8% forecast and the 1.8% previously. QoQ GDP rose 0.4%, in line with expectations and below the revised-down 0.6% of Q2. 

The effect of the data was muted by growing expectations that the Swiss National Bank (SNB) will slash interest rates by 50 bps at its December meeting following comments from SNB President Schlegel in which he warned that negative interest rates cannot be ruled out. 

“The SNB has plenty of room to slash the policy rate as Swiss inflation is tracking below the bank’s Q4 forecast of 1.0%. Market is pricing-in about 60% probability of a 50 bps rate cut to 0.50% at the December 12 meeting,” said Elias Haddad, Senior Markets Strategist at Brown Brothers Harriman (BBH). 

• USD/CAD bounces back from 1.3980 after the Canadian GDP data release, which was broadly weaker than expected.
• The Canadian economy grew by 0.1% in September, slower than estimates of 0.3%.
• A slight rebound in the US Dollar has also prompted the Loonie pair’s recovery.

The USD/CAD pair rebounds after posting a fresh three-day low near 1.3980 in Friday’s North American session. The Loonie pair bounces back as Statistics Canada has reported slower-than-expected Gross Domestic Product (GDP) growth in September month. The agency showed that the Canadian economy expanded by 0.1% after remaining flat in August. Economists expected the economy to have risen by 0.3%

The agency also reported that growth in the third quarter of the year was 0.3%, slower than 0.5% in the previous quarter. Meanwhile, in comparison to the third quarter of the previous year, the GDP growth was 1%, as expected, softer than the 2.2% growth in the second quarter of the current year.

Moderate expansion in the Canadian output is expected to boost expectations of more outsized interest rate cuts by the Bank of Canada (BoC). The BoC reduced its key borrowing rates by 50 bps in October.

Meanwhile, a slight recovery in the US Dollar (USD) has also pushed the Loonie pair higher. The USD recovered some of its intraday losses, suggesting that a near-term low has been formed. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, bounces back after registering a fresh two-week low near 105.60.

The correction in the US Dollar started when United States (US) President-elect Donald Trump nominated Scott Bessent to fill the position of Treasury Secretary. Market participants expect Bessent to execute Trump-stated trade policies strategically and gradually that won’t prompt inflationary pressures swiftly.

• Canada's GDP expanded by 1% in Q3, matching analysts' estimate.
• USD/CAD trades modestly higher on the day above 1.4000.

Canada's Gross Domestic Product (GDP) expanded at an annual rate of 1% in the third quarter, Statistics Canada reported on Friday. This reading followed the 2.2% growth recorded in the second quarter and matched the market expectation.

On a quarterly basis, the Canadian economy grew by 0.3%, while expanding by 0.1% on a monthly basis in September.

Market reaction

USD/CAD edged higher with the immediate reaction to this report and was last seen gaining 0.1% on the day at 1.4028.

• The US Dollar extends this week’s decline on Black Friday. 
• French budget talks are pushing the Euro higher, weighing on the US Dollar Index 
• The US Dollar Index falls below 106.00 and tests the next support level for a rebound. 

The US Dollar (USD) trades softer on Friday on the back of concerns over Europe, with the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, extending this week’s decline and falling below the 106.00 level. 

France’s budget talks are not going well, with Prime Minister Michel Barnier having to consent to too many demands from the far-right National Rally from Marine Le Pen. The budget concerns are sending French yields higher, to levels matching weaker European peripheral countries such as Greece, fueling a stronger Euro over the US Dollar. 

Meanwhile, US financial markets will close early on Friday after Thanksgiving Day. US equity futures are trading flat while the US bond market opens up under thin liquidity. 

Daily digest market movers: Europe in the spotlight for all the wrong reasons

• Far-right National Rally leader Marine Le Pen, who holds outsize leverage in France’s split parliament, gave Prime Minister Michel Barnier until Monday to kneel to her budget demands before she decides whether to topple the government, Bloomberg reports. 
• Prime Minister Barnier already agreed to abandon plans to raise taxes on electricity on Thursday, Reuters reports.
• Equities are mixed, with European equities marginally in the red, while US futures are flat to a touch higher on the day. 
• The CME FedWatch Tool is pricing in another 25 basis points (bps) rate cut by the Fed at the December 18 meeting by 66.3%. A 33.7% chance is for rates to remain unchanged. The Fed Minutes have helped the rate cut odds for December to move higher. 
• The US 10-year benchmark rate trades at 4.22%, falling to this week’s low at the start of this Friday after being closed on Thursday. 

US Dollar Index Technical Analysis: France, the next sick man in Europe

The US Dollar Index (DXY) faces some more selling pressure on Friday, with one of its main components, the Euro, weighing the Index down. With the uprising in French yields and spreads, the rate gap between the US and Europe gets narrower, with the Euro catching up with the US Dollar. Pivotal support levels need to be identified, with the “Trump trade” set to pick up soon again as President-elect Donald Trump takes office in January. 

With this week’s decline in the DXY, former support levels have now turned into resistance. On the upside, 106.52 (April 16 high) is the first level to watch. Should the Dollar bulls reclaim that level, 107.00 (round level) and 107.35 (October 3, 2023, high) are back on target for a retest. 

If the DXY correction continues, the pivotal level at 105.53 (April 11 high) comes into play on Friday as the last man standing before heading into the 104-region. Should the DXY fall all the way towards 104.00, the big figure and the 200-day Simple Moving Average at 104.03 should catch any falling knife formation. 

US Dollar Index: Daily Chart

• US markets trade with limited capacity due to the Thanksgiving aftermath on Friday.
• OPEC+ ministers will meet in person before the delayed Output Policy Meeting scheduled on Thursday. 
• The US Dollar Index retreats further, with French yields narrowing the rate gap between the US and Europe. 

Crude Oil trades in the red and loses around 1% on Friday. However, it is in a continuous tight range with traders on the sidelines awaiting the outcome of the upcoming Organization of the Petroleum Exporting Countries and its allies (OPEC+) meeting on its output policy, which has been delayed to next Thursday. Markets have already priced in a delay in production normalization to the first quarter of 2025. 

The US Dollar Index (DXY), which measures the performance of the US Dollar (USD) against a basket of currencies, eases further on Friday with only a handful of US market participants returning to markets after Thanksgiving Thursday. The weakening of the US Dollar comes with the narrowing of the yield gap between the US and Europe due to French yields spiking higher on political uncertainty. French Prime Minister Michel Barnier has until Monday to propose a severely reduced budget, or the far-right National Rally party of Marine Le Pen threatens to topple the French government if demands are unmet. 

At the time of writing, Crude Oil (WTI) trades at $68.18 and Brent Crude at $72.03.

Oil news and market movers: What to expect from OPEC+

• Saudi Aramco may reduce the official selling price of Arab Light crude by $0.70 per barrel for January sales to Asia, according to the median estimate from  Bloomberg.
• Several OPEC+ ministers will attend the meeting of the Gulf Cooperation Council in Kuwait on Sunday and discuss in person before the Output Policy Meeting scheduled for Thursday. 
• The Crude Oil market continues to face uncertainties around weather, demand, and geopolitical developments, said Charu Chanana, chief investment strategist for Saxo Markets Pte in Singapore, Bloomberg reported.  

Oil Technical Analysis: The unexpected needs to happen

Crude Oil prices are still dragging, facing selling pressure and the risk of more downsides, with a constant reminder in articles and media outlets that there is a supply glut still at hand in the Oil landscape. Markets are already pricing in a simple delay of the inevitable, that supply normalization will happen at one point. The only game-changer that could push Oil prices higher would be when OPEC+ considers deepening production cuts and/or extending them for even a year. 

On the upside, the pivotal level at $71.46 and the 100-day Simple Moving Average (SMA) at $72.13 are the two main resistances. The 200-day SMA at $76.22 is still far off, although it could be tested if tensions intensify further. In its rally towards that 200-day SMA, the pivotal level at $75.27 could still slow down any upticks. 

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 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

• Gold rises on increased haven flows as geopolitical hotspots light up. 
• Israel breaks its ceasefire agreement by attacking Hezbollah, and Putin threatens to use nuclear-capable missiles on Ukraine. 
• XAU/USD is technically crawling up a major trendline but remains vulnerable to breakdowns.

Gold (XAU/USD) stages a bigger rebound on Friday and enters the $2,660s during the European session. A rise in safe-haven flows due to a breakdown in the Israel – Hezbollah ceasefire agreement is one of the catalysts, as is Russian President Vladimir Putin’s warning Russia could launch nuclear-capable missiles at Ukraine.  

Gold rallies as safe-haven demand increases

Gold experienced a drop in price of nearly 3.0% Monday on rumors Israel and Hezbollah were close to reaching a ceasefire agreement. An eventual deal emerged with both sides agreeing to a 60-day cessation of hostilities. 

Gold is rebounding on Friday, however, after the ceasefire fell apart following a strike by the Israeli airforce on Hezbollah targets in southern Lebanon, who they claim were violating the ceasefire agreement. 

Geopolitical risks have further ratcheted up in Ukraine after Russia left over a million inhabitants without electricity following widespread strikes on Wednesday night. 

While speaking at a conference in Kazakhstan on Thursday, Putin said “he would consider further launches of Russia’s new Oreshnik medium-range ballistic missile, first fired at Ukraine’s Dnipro region last week,” according to CNN. Oreshnik’s have nuclear capability. 

Gold supported by reduced risks of a US-Mexico trade war 

Diminishing tariff fears could also be impacting Gold price after reports that US President-elect Donald Trump and Mexican President Claudia Sheinbaum had a constructive phone conversation on Wednesday. This suggests a lower risk of a costly trade war between the two countries. 

The implementation of higher tariffs had been viewed as inflationary for the US and expected to keep interest rates elevated. This, in turn, would be negative for non-interest-paying assets like Gold. However, now many commentators are saying that Trump’s threat to put a 25% tariff on Mexican imports is probably more a negotiating tactic than anything else and, therefore, unlikely to materialize. 

US Dollar edges lower, aiding Gold

A further factor supporting Gold on Friday is a weaker US Dollar (USD). The Dollar Index (DXY), which measures its value against a trade-weighted index of peers, has edged down during trading on Friday. This is positive for Gold, which is mainly priced and traded in USD.

Gold’s recovery on Thursday was partly spurred by increased bets the Fed would cut interest rates by 25 basis points (bps) at its December meeting, and whilst the expectations remain about the same, odds have not further increased as we draw to the end of the week.

The market-based probability of a rate hike is 66%, according to the CME FedWatch tool. This leaves a 34% chance the Fed will leave interest rates unchanged.  

Technical Analysis: XAU/USD recovers along major trendline

Gold extends its recovery along a major trendline and is now entering the fourth day in a row of gains. The trendline reflects the precious metal’s long-term uptrend. 

XAU/USD Daily Chart

Gold’s short-term trend is unclear, but it is in a medium and long-term uptrend. Given the maxim that “the trend is your friend,” the odds still favor an eventual continuation higher. 

A break above $2,721 (Monday’s high) would be a bullish sign and give the green light to a continuation higher. The next target would be at $2,790, matching the previous record high.

Alternatively, a decisive break below the major trendline would likely lead to further losses, probably to the $2,536 November lows. Such a move would confirm the short-term trend as bearish. 

A decisive break would be one accompanied by a long red candlestick that broke cleanly through the trendline and closed near its low – or three red candlesticks in a row that broke below the line. 

• NZD/USD clings to recovery above 0.5900 triggered by the US Dollar’s correction.
• Investors await a string of US employment-related economic indicators.
• This week, the RBNZ cut interest rates by 50 bps to 4.25%.

The NZD/USD pair holds gains above the round-level support of 0.5900 in Friday’s European session. The Kiwi pair strengthens as the US Dollar Index (DXY) extends its correction after diving below the key support of 106.00 and posts a fresh two-week low near 105.60. However, it manages to recover some losses but is on track to close the week with an almost 1.5% decline.

The US Dollar (USD) weakens as the investors trim so-called ‘Trump Trades’ after United States (US) President-elect Donald Trump nominated Scott Bessent to fill the position of Treasury Secretary. Market participants expect Bessent to execute Trump-stated trade policies strategically and gradually with an intention to avoid a lethal trade war.

Going forward, investors will focus on a slew of US employment-linked data and the ISM Manufacturing and Services PMI data for November, which will be released next week. The array of economic data will influence market expectations for the Federal Reserve’s (Fed) monetary policy action in December.

According to the CME FedWatch tool, the likelihood for the Fed to cut interest rates by 25 basis points (bps) to 4.25%-4.50% in the December meeting is 66% while the rest supports leaving them unchanged.

Meanwhile, the New Zealand Dollar (NZD) performs strongly even though market participants expect the Reserve Bank of New Zealand (RBNZ) to cut interest rates again by 50 bps in its next monetary policy meeting in February 2025 after reducing by the same margin on Wednesday.

RBNZ Governor Adrian Orr kept doors for an outsize interest rate cut open but the decision will depend on economic conditions. Orr was confident about a further decline in inflationary pressures.

• The Mexican Peso has paused after rallying on easing fears about tariffs from the US and a trade war. 
• The Mexican Trade Surplus grew in October and the economy is growing at a higher pace than expected. 
• Technically, USD/MXN unfolds a down leg within its range.

The Mexican Peso (MXN) seesaws between tepid gains and losses in its most-traded pairs on Friday as it stabilizes after the previous day’s rally. This came on the back of easing tariff fears after President-elect Donald Trump described his phone call with Mexican President Claudia Sheinbaum as “wonderful”, adding, “She has agreed to stop migration through Mexico.”  

Mexican Peso recovers as trade-war tensions ease

The Mexican Peso rebounded on Thursday as fears subsided that Donald Trump would go ahead with his threat to place 25% tariffs on goods entering America from Mexico. 

President Claudia Sheinbaum’s counter-threat to raise tariffs on US imports if Trump went ahead, as well as widespread unease in the investment community about the negative consequences of such a trade war on the US economy, could indicate Trump could take a more cautious approach. Many commentators have dismissed his threats as negotiation tools to get a better trade deal out of his close neighbors rather than literal pledges.   

Official data on Thursday showed that Mexico recorded its first Trade Surplus in five months in October, of $370 million. This compared positively to the $370 million deficit recorded a year ago and was well up on the $579 million Trade Deficit in September. Of non-Oil exports, those directed to the US grew by 13.9%, while exports to the rest of the world rose by 11.6%, according to data from INEGI. 

Banxico releases the Minutes from November meeting

The Bank of Mexico (Banxico) released the Minutes from its November meeting on Thursday. These showed that the board voted unanimously to cut interest rates to 10.25% in November compared to September when there was one dissenter, Banxico member Jonathan Heath. 

The Banxico’s minutes were similar to those of September. However, they revealed a slightly more upbeat assessment of the Mexican economy. 

The November meeting Minutes reported that, “Most members pointed out that during the third quarter of 2024, according to timely information, domestic productive activity is estimated to have grown at a higher rate than in the previous three quarters, when it remained practically stagnant.” 

This compared to the September Minutes, when it was recorded that  “All members agreed that Mexico's economic activity is undergoing a period of weakness. The majority indicated that it has registered a visible loss of dynamism since the last quarter of 2023.” 

In regards to inflation, it was noted in the November Minutes that headline inflation had risen. 

“All members noted that headline inflation increased in October. They pointed out that this

was due to the increase in non-core inflation, while core inflation continued declining,” recorded the November 14 meeting Minutes. 

In September, members were overall positive about the downward trajectory of inflation in the economy. 

“Most members agreed that Mexico's inflation outlook has been improving, after the significant

global shocks of previous years. However, they forewarned that it still faces challenges,” said the report. 

A chart included in the November Minutes showing the future trajectory of Banxico’s prime interest rate based on Mexican TIIE Swaps, suggested a less steep decline in the future compared to September. 

Given that maintaining elevated interest rates is positive for a currency because it increases net foreign capital inflows, the new shallower descent described in November should constitute an underpinning positive factor for MXN. 

Technical Analysis: USD/MXN descending within range  

USD/MXN unfolds a down leg within the mini range (green and red dashed lines on the chart below) formed during November. 

USD/MXN 4-hour Chart 

USD/MXN is probably range-bound in the short term as it oscillates within this mini range. In the medium and long term, however, it is still in an uptrend within a rising channel. 

The pair is likely to continue trading up and down within the parameters of its range. The current move bottomed at 20.20 on Wednesday, but it could go even lower to support at either the 20.06 lows of wave B, the major trendline in the 19.90s, or support in the 19.70s (red dashed line). 

The move is supported by the (blue) Moving Average Divergence Convergence (MACD) momentum indicator, which has entered negative territory – a bearish sign. 

On the other side, a decisive break above the top of the range at 20.80 would be required to signal the start of a more bullish short-term trend in line with longer-term up cycles. 

• USD/CAD finds an interim cushion near 1.3980, investors await Canadian monthly and Q3 GDP data.
• The Canadian economy is estimated to have grown by 1% compared to same quarter of the precious year, slower than Q2 growth of 2.1%.
• The US Dollar could rebound, given its strong fundamental outlook.

The USD/CAD pair discovers some support near 1.3980 in Friday’s European session. The Loonie pair gauges cushion as the US Dollar (USD) rebounds after posting a fresh two-week low, with the US Dollar Index (DXY) getting some buying interest near 105.60.

The Greenback faces an intense sell-off this week after rallying for almost 12 weeks as the nomination of Scott Bessent for the role of United States (US) Treasury Secretary by President-elect Donald Trump forced traders to trim so-called ‘Trump Trades’.

Bessent’s comments in his interview with the Financial Times (FT) last weekend indicated that he will focus on enacting Trump’s economic agenda without hampering geopolitical harmony. He also favored a reduction in fiscal deficit to 3% Gross Domestic Product (GDP), a scenario that won’t be inflationary for the US economy.

However, market experts are confident about the US Dollar’s outlook. Analysts at Brown Brothers Harriman said in a note, “The US dollar falls against other major currencies as end-of-month portfolio rebalancing weighs on the currency.” They added, “The more favorable US economic outlook relative to other major economies suggests the fundamental dollar uptrend is intact.”

Think tanks of financial markets are upbeat over the US economic outlook, given its strong GDP growth and potential Trump tariff policy, which would boost demand for domestically-produced goods and services.

In Friday’s session, investors await Canada’s September month and Q3 GDP data, which will be published at 13:30 GMT. The Canadian GDP is estimated to have grown by 0.3% after remaining flat in August. On a year-on-year basis, the economy is expected to have expanded by 1% slower than 2.1% growth in the previous quarter of this year.

Weak GDP numbers would boost expectations for the Bank of Canada (BoC) to cut interest rates again by 50 basis points (bps) in the December monetary policy meeting. The BoC also reduced its key borrowing rates by 50 bps in October.

• The Pound Sterling rises to near 1.2750 against the US Dollar as the latter weakens amid holiday mood in the US. 
• The US Dollar is preset to end the week on a negative note.
• Investors expect the BoE policy-easing cycle will be slower than in the US.

The Pound Sterling (GBP) refreshes a two-week high near 1.2750 against the US Dollar (USD) in Friday’s European session. The GBP/USD pair strengthens as the US Dollar extends this week’s decline in a thin volume trading day due to the Thanksgiving holidays. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, corrects further and posts a fresh more than two-week low near 105.60.

The US Dollar is on course to end the week with a near 1.5% decline. The correction in the US Dollar started on Monday after United States (US) President-elect Donald Trump nominated seasoned hedge fund manager Scott Bessent to fill the position of Treasury Secretary.

Investors watered down the so-called ‘Trump trades’ after financial market participants regarded Bessent as a “safe pair of hands”. In an interview with the Financial Times (FT) last weekend, Bessent said he will focus on enacting Trump’s tariffs but will be “layered in” gradually, a scenario that would maintain geopolitical steadiness. Also, Bessent preferred to reduce the budget deficit to 3% of Gross Domestic Product (GDP), a move that will maintain fiscal discipline.

Going forward, the US Dollar will be guided by market expectations for the Federal Reserve (Fed) interest rate action in the December meeting and next year. According to the CME FedWatch tool, the probability that the Fed will cut interest rates by 25 bps to the 4.25%-4.50% range in the December meeting is 66%, while the rest supports leaving them unchanged. For 2025, traders price in a 75-bps interest rate reduction by the year-end, Reuters reported.

Daily digest market movers: Pound Sterling gains on gradual BoE rate cut prospects

• The Pound Sterling gains against its major peers on Friday, except the Japanese Yen (JPY), which is outperforming across the board as market expectations for the Bank of Japan (BoJ) to raise interest rates in December have escalated.
• The British currency rises as investors expect the Bank of England (BoE) to cut interest rates more gradually, given the higher inflation in the United Kingdom (UK) economy, especially in the services sector. UK’s inflation report for October showed that the annual core Consumer Price Index (CPI) – which excludes volatile items – accelerated to 3.3%, and the service inflation rose by 5%. Inflation in the services sector is closely tracked by BoE officials for decision-making on the interest rate policy.
• This week, BoE Deputy Governor Clare Lombardelli warned about risks of inflation remaining higher than the bank’s forecast, where wage growth normalizes at 3.5%-4% and the Consumer Price Index (CPI) around 3% rather than 2%, in her speech at King's Business School on Monday.

Technical Analysis: Pound Sterling refreshes two-week high'

The Pound Sterling posts a fresh two-week high near 1.2750 against the US Dollar on Friday. The GBP/USD pair extends its upside after breaking above the November 20 high of 1.2714 but struggles to sustain above the 20-day Exponential Moving Average (EMA), which trades around 1.2725. The recovery move in the Cable was initiated after finding buying interest near the upward-sloping trendline around 1.2550 earlier this week, which is plotted from the October 2023 low around 1.2040. Before that, the pair had a one-sided fall from more than a two-year high above 1.3400.

The 14-day Relative Strength Index (RSI) rebounds after turning oversold. However, the downside bias is still intact.

Looking down, the pair is expected to find a cushion near the upward-sloping trend line around 1.2600, followed by the psychological support of 1.2500. On the upside, the 200-day EMA around 1.2830 will act as key resistance.

The Eurozone Harmonized Index of Consumer Prices (HICP) increased at an annual rate of 2.3% in November after reporting a 2.0% growth in October, the official data released by Eurostat showed Friday. The reading matched the market forecast of 2.3% in the reported period.

The Core HICP rose 2.8% YoY in November, a tad quicker than the 2.7% increase in October and met the 2.8% estimate.

On a monthly basis, the bloc’s HICP dropped 0.3% in November compared to October’s 0.3% acceleration. The core HICP inflation came in at -0.6% MoM in the same period versus October’s 0.2%.

The European Central Bank’s (ECB) inflation target is 2.0%. The old continent’s HICP inflation data significantly impacts the market’s pricing of the ECB's future interest rate cuts.

Key details from the Eurozone inflation report (via Eurostat)

EUR/USD reaction to the Eurozone inflation report

Mixed Eurozone inflation data have little to no impact on the Euro, with EUR/USD defending bids near 1.0560 as of writing. The pair is up 0.05% on the day.

Most recent article: Silver price today: Silver falls, according to FXStreet data

Silver prices (XAG/USD) rose on Friday, according to FXStreet data. Silver trades at $30.66 per troy ounce, up 1.29% from the $30.27 it cost on Thursday.

Silver prices have increased by 28.85% 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 86.73 on Friday, down from 87.23 on Thursday.

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

The latest monthly Consumer Expectations Survey by the European Central Bank showed on Friday that Eurozone inflation is seen slightly higher for the year ahead in October.

Key takeaways

Market reaction

EUR/USD is off the weekly highs of 1.0597, currently trading 0.22% higher on the day at 1.0578 as of writing.

• AUD/USD attracts buyers for the third straight day amid a modest USD weakness. 
• Geopolitical risks and trade war concerns keep a lid on further gains for the Aussie.
• Bets for slower Fed rate cuts limit the USD losses and contribute to capping the pair.

The AUD/USD pair trims a part of intraday gains to a multi-day top and trades just above the 0.6500 psychological mark during the first half of the European session on Friday, up for the third consecutive day. 

The US Dollar (USD) struggles to capitalize on Thursday's modest gains and touches a fresh two-week low amid bets for another 25 basis points interest rate cut by the Federal Reserve (Fed) in December. This is seen as a key factor lending support to the AUD/USD pair, though bulls seem reluctant amid worries that US President-elect Donald Trump's tariff plans could trigger a US-China trade war. 

Meanwhile, the US Personal Consumption Expenditure (PCE) Price Index released on Wednesday showed that the progress in lowering inflation stalled in October. This comes on top of the growing market conviction that Trump's expansionary policies will boost inflation, which should restrict the Fed from easing its policy further. This helps limit the USD losses and caps the AUD/USD pair. 

Apart from this, persistent geopolitical tensions stemming from the protracted Russia-Ukraine war warrant some caution before placing aggressive bullish bets around the risk-sensitive Aussie. In the absence of any relevant market-moving economic data from the US on Friday, the AUD/USD pair remains at the mercy of the USD price dynamics and seems poised to end the week on a flattish note. 

That said, the official Chinese PMIs, due for release over the weekend, will play a key role in influencing sentiment surrounding the China-proxy Australian Dollar (AUD). The focus will then shift to important US macro data scheduled at the beginning of a new month, including the closely watched Nonfarm Payrolls (NFP) report, and the third quarter Australian GDP growth figures next week.

• WTI may find support as traders assess reports that Israel and Hezbollah exchanged accusations of breaching the ceasefire agreement.
• Russian President Putin warned of a possible nuclear-capable ballistic missile strike on Ukraine.
• Traders seek clarity on the production strategy of the OPEC+ at the rescheduled meeting on December 5.

West Texas Intermediate (WTI) Oil price retraces its recent gains, trading around $68.40 per barrel during the early European hours on Friday. However, this downside of the crude Oil prices could be restrained as markets assess reports that Israel and Hezbollah exchanged accusations of breaching the ceasefire agreement.

Additionally, reports suggest that Russian President Vladimir Putin warned of a possible nuclear-capable ballistic missile strike on Ukraine, following Moscow's recent large-scale attacks on key energy infrastructure.

Traders remained cautious, seeking clarity on the production strategy of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) after a four-day postponement of a key meeting. At the rescheduled meeting on December 5, the alliance will deliberate on whether to proceed with restoring supplies or extend production cuts into 2025 to avoid oversupplying the global market.

Markets are keeping a close watch on upcoming US data for insights into the Federal Reserve's (Fed) monetary policy outlook. Rising borrowing costs in the United States (US), the world’s largest Oil consumer, weigh on economic activity, subsequently reducing Oil demand.

On Wednesday, US core PCE prices for October met expectations, keeping investor hopes alive for another rate cut in December. However, other data indicated a resilient economy, suggesting that the Fed may take a cautious approach in the coming year.

According to the CME FedWatch Tool, futures traders are now pricing in a 66.5% probability of a 25 basis point rate cut in December, up from 55.9% a week ago. However, they expect the Fed to keep rates unchanged during its January and March meetings.

• EUR/USD climbs to near 1.0580 as the US Dollar extends its correction.
• Investors await the preliminary Eurozone HICP data for November, which will influence the ECB’s likely interest rate cut size prospects.
• ECB’s Villeroy keeps hopes of an outsize interest rate cut in December on the table.

EUR/USD posts a fresh weekly high near 1.0580 in the European session on Friday ahead of the flash Eurozone Harmonized Index of Consumer Prices (HICP) data for November, which will be published at 10:00 GMT. The inflation report is expected to show that the annual headline and core HICP – which excludes volatile food and energy prices – accelerated to 2.3% and 2.8%, respectively.

Investors will pay close attention to the inflation report to get fresh cues about the European Central Bank’s (ECB) likely interest rate cut size in the December meeting. The ECB has already reduced its Deposit Facility Rate by 75 basis points (bps) to 3.25% this year.

Traders expect the ECB to cut its key borrowing rates at least by 25 bps in the December meeting. For 2025, traders see the ECB cutting interest rates in every meeting through June, pushing the Rate on Deposit Facility lower to 1.75% by the year-end, according to Reuters.

Market speculation for the ECB to cut interest rates by a larger-than-usual size of 50 bps is upbeat as officials are worried about growing economic risks. The two largest economies of the Eurozone, Germany and France, are going through a rough phase due to political uncertainty, a scenario that slows down government spending activities.

Also, weak German Retail Sales data for October points to economic stagnation. Month-on-month Retail Sales contracted by 1.5% after rising 1.2% in September. Economists expected the Retail Sales data, a key measure of consumer spending, to decline at a slower pace of 0.3%. On year, the consumer spending measure rose by 1%, slower than estimates of 3.2% and the prior release of 3.8%.

ECB Governing Council member and Governor of Bank of France François Villeroy de Galhau kept the option of an outsize interest rate cut on the table in his speech on Thursday. “Seen from today, there is every reason to cut on December 12. Optionality should remain open on the size of the cut, depending on incoming data, economic projections, and our risk assessment,” Villeroy said.

Daily digest market movers: EUR/USD advances as US Dollar corrects further

• EUR/USD gains as the US Dollar (USD) extends its downside in a holiday-truncated week. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, extends its correction below 106.00 on Friday. The USD Index started correcting on Monday after United States (US) President-elect Donald Trump nominated Scott Bessent, a veteran hedge-fund manager, for the role of Treasury Secretary.
• Financial markets anticipated that Bessent would enact Trump’s economic agenda without disrupting external relations and fiscal discipline. “The objective of enacting tariffs will be “layered in gradually and the budget deficit will be reduced to 3% of Gross Domestic Product (GDP) by slashing spending, a move that won’t result in higher inflation than feared,” Bessent said in an interview with the Financial Times (FT) last weekend.
• On the monetary policy front, market experts expect the Federal Reserve (Fed) to be cautious about interest rate cuts as the core Personal Consumption Expenditures Price Index (PCE) data, the Fed’s preferred inflation gauge, accelerated in October. The probability that the Fed will cut interest rates by 25 bps to the 4.25%-4.50% range in the December meeting is 66%, while the rest supports leaving them unchanged, according to the CME FedWatch tool.
• In Friday’s session, the US Dollar is expected to remain sideways as US markets will open for limited hours on account of Thanksgiving holidays. For the next week, investors should brace for high volatility as a slew of employment and economic data will be published.

Technical Analysis: EUR/USD rises to near 1.0600

EUR/USD extends its upside to near 1.0580 on Friday. The recovery in the major currency pair appears to be a mean-reversion move, which could extend to near the 20-day Exponential Moving Average (EMA) around 1.0600. Still, the broader outlook would remain bearish as all short-to-long-term day EMAs are declining, pointing to a downside trend.

The 14-day Relative Strength Index (RSI) rebounded after conditions turned oversold and climbed above 40.00, suggesting that the bearish momentum has faded. However, the bearish trend has not been extinguished.

Looking down, the November 22 low of 1.0330 will be a key support for Euro bulls. On the flip side, the 50-day EMA near 1.0747 will be the key barrier.

• EUR/GBP loses ground due to the reduced likelihood of another BoE’s interest rate cut this year.
• BoE Lombardelli requires clearer signs of easing inflationary pressures before considering further rate cuts.
• German Retail Sales rose by 1.0% YoY in October and fell drastically short of the expected 3.2% and previous 3.8% readings.

EUR/GBP extends its losses for the fourth consecutive session, trading around 0.8310 during the Asian hours on Friday. The Pound Sterling (GBP) appreciates as traders have been scaling back their bets for another interest rate cut by the Bank of England (BoE) this year after data released last week showed that the underlying price growth in the UK gathered speed in October.

On Monday, during a speech at King’s Business School, BoE Deputy Governor Clare Lombardelli stressed the need for clearer signs of easing inflationary pressures before considering further rate cuts. Lombardelli also warned of the risks associated with inflation staying above the BoE’s target. She highlighted concerns about wage growth stabilizing at 3.5%-4.0% and the Consumer Price Index (CPI) lingering around 3% instead of the 2% target, which could present significant policy challenges.

Economic data releases remain sparse for the United Kingdom (UK), with a similarly light calendar expected in the coming week. The Bank of England’s (BoE) latest Financial Stability Report will drop on markets early during Friday’s upcoming US market session. The release is overwhelmingly unlikely to drive much momentum in Cable markets.

European Central Bank (ECB) policymakers have voiced concerns over the Eurozone's slowing economic growth, heightening expectations of a rate cut in December. However, uncertainty persists regarding the size of the potential reduction, as the market remains divided.

Traders are now closely watching Friday’s release of the Eurozone Harmonized Index of Consumer Prices (HICP) data. Core HICP inflation is projected to edge up to 2.8% YoY in November, compared to 2.7% in October. This uptick could complicate matters for ECB officials, many of whom have recently sought to reassure investors of more rate cuts despite rising inflationary pressures.

Here is what you need to know on Friday, November 29:

The US Dollar (USD) stays under selling pressure on Friday, with the USD Index dropping to its weakest level in over two weeks below 106.00. The US economic calendar will not feature any high-tier data releases and financial markets in the US will close early. Harmonized Index of Consumer Price (HICP) data from the Eurozone and third-quarter Gross Domestic Product (GDP) data from Canada will be watched closely by investors.

Following the Thanksgiving Day holiday, US stock index futures gain traction early Friday and the benchmark 10-year US Treasury bond yield continues to push lower toward 4.2%, making it difficult for the USD to find demand.

During the Asian trading hours, the data from Japan showed that the Tokyo Consumer Price Index rose by 2.6% on a yearly basis in November, up sharply from the 1.8% increase recorded in October. Other data revealed that the Unemployment Rate edged higher to 2.5% in October from 2.4% and the annual Industrial Production contracted by 2.6%. After posting small gains on Thursday, USD/JPY turned south early Friday and was last seen trading at its lowest level since late October near 150.00, losing about 1% on the day.

Following Thursday's indecisive action, EUR/USD benefits from the renewed USD weakness and rises toward 1.0600 in the European morning on Friday. The data from Germany showed on Thursday that the Consumer Price Index (CPI) declined by 0.2% on a monthly basis in November's flash estimate, matching the market expectation.

GBP/USD gains traction in the European morning and trades in positive territory above 1.2700. The pair remains on track to snap an eight-week losing streak.

Canada's GDP is forecast to expand at an annual rate of 1% in the third quarter after growing 2.1% in the second quarter. Following the upsurge seen earlier in the week, USD/CAD closed the previous two days in negative territory. The pair extends its slide early Friday and trades below 1.4000.

Gold gathers bullish momentum amid retreating US T-bond yields and trades above $2,660 in the European morning on Friday, rising about 1% on the day. 

• AUD/JPY tumbles to near 97.75 in Friday’s early European session, losing 0.73% on the day. 
• The negative outlook of the cross remains in play, but further consolidation cannot be ruled out amid oversold RSI condition. 
• The first downside target to watch is 97.45; the immediate resistance level is seen at 98.76. 

The AUD/JPY cross attracts some sellers to around 97.75 during the early European trading hours on Friday. The Japanese Yen (JPY) gains momentum after data released on Friday showed that Japan’s Tokyp Consumer Price Index (CPI) accelerated for the first time in three months, supporting the case for another interest rate hike by the Bank of Japan (BoJ) in December. 

According to the 4-hour chart, the bearish sentiment of AUD/JPY remains intact as the cross holds below the key 100-period Exponential Moving Average (EMA). The downward momentum is supported by the Relative Strength Index (RSI), which stands below the midline. Nonetheless, the oversold RSI condition indicates that further consolidation cannot be ruled out before positioning for any near-term AUD/JPY depreciation.

The initial support level for the cross emerges near the lower limit of the Bollinger Band at 97.45. Further south, the next contention level is seen at 96.60, the low of September 4. The additional downside filter to watch is 96.00, the low of September 19 and the psychological level. 

On the bright side, the first upside barrier for the cross is located at 98.76, the high of November 28. Any follow-through buying above this level could pave the way to the 99.00 round mark. Further north, the next hurdle is seen at 99.49, the low of November 19. The 100.00 psychological appears to be a tough nut to crack for the bulls. 

AUD/JPY 4-hour chart

• The US Dollar Index receives downward pressure from optimism in bond market.
• 2-year and 10-year bond yields depreciate to 4.21% and 4.23%, respectively.
• US data indicated a resilient economy, suggesting that the Fed may adopt caution in 2025.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six other major currencies, falls below 106.00 during the Asian hours on Friday, with 2-year and 10-year bond yields standing at 4.21% and 4.23%, respectively, at the time of writing.

The US Dollar faces downward pressure as US Treasury yields decline, driven by rising bond prices following President-elect Donald Trump’s appointment of Wall Street veteran and fiscal conservative Scott Bessent as the next US Treasury Secretary.

Markets are closely monitoring upcoming US data for further clues about the Federal Reserve's (Fed) monetary policy direction. On Wednesday, US core PCE prices for October met expectations, keeping investor hopes alive for another rate cut in December. However, other data indicated a resilient economy, suggesting that the Fed may take a cautious approach in the coming year.

The latest Federal Open Market Committee's (FOMC) Meeting Minutes for the policy meeting held on November 7, indicated that policymakers are adopting a cautious stance on cutting interest rates, citing easing inflation and a robust labor market.

According to the CME FedWatch Tool, futures traders are now pricing in a 66.5% probability of a 25 basis point rate cut in December, up from 55.9% a week ago. However, they expect the Fed to keep rates unchanged during its January and March meetings.

FX option expiries for Nov 29 NY cut at 10:00 Eastern Time via DTCC can be found below.

EUR/USD: EUR amounts

• 1.0400 1b
• 1.0470 1.2b
• 1.0475 919m
• 1.0485 1.6b
• 1.0500 2.4b
• 1.0525 972m
• 1.0600 2.6b
• 1.0650 1.8b

USD/JPY: USD amounts                     

• 150.00 485m
• 152.00 500m
• 153.00 937m

USD/CAD: USD amounts       

• 1.3900 514m

• USD/CHF edges lower to around 0.8815 in Friday’s early European session. 
• The rising expectation that the Fed might slow its rate-cutting cycle could support the USD. 
• Switzerland’s third-quarter GDP growth report will be the highlight on Friday. 

The USD/CHF pair loses ground to near 0.8815 during the early European session on Friday, weighed by the softer US Dollar (USD) broadly. Traders await Switzerland’s Gross Domestic Product (GDP) for the third quarter (Q3), which is due later on Friday. 

The Greenback weakens as the profit-taking sets in before a long Thanksgiving weekend. The encouraging US economic data and the cautious stance from the US Federal Reserve (Fed) might support the USD in the near term. The FOMC Minutes released on Tuesday showed that Fed officials see interest rate cuts ahead but at a gradual pace as inflation eases and the labor market remains strong.

Switzerland’s third-quarter GDP report will take center stage on Friday. The Swiss economy is expected to expand by 0.4% QoQ in Q3, compared to 0.7% growth in the second quarter. On an annual basis, the Swiss GDP is estimated to remain steady at 1.8% in Q3. In case of a weaker-than-expected outcome, this could undermine the Swiss Franc (CHF) and act as a tailwind for USD/CHF.

Elsewhere, Russia on Thursday unleashed its second big attack on Ukraine's energy infrastructure this month, triggering deep power cuts across the country. An escalation in the Russia-Ukraine war could boost the safe-haven currency like the CHF against the Greenback.

• Silver price extends its gains due to the rising Russia-Ukraine conflict.
• Russian President Vladimir Putin issued a warning about a potential nuclear-capable ballistic missile strike on Ukraine.
• The demand for the dollar-denominated Silver increases due to the subdued US Dollar.

Silver (XAG/USD) continues its upward trend for the second consecutive session, hovering around $30.70 during the Asian trading hours on Friday. This rally in Silver price is largely driven by escalating geopolitical tensions. Reports suggest that Russian President Vladimir Putin warned of a possible nuclear-capable ballistic missile strike on Ukraine, following Moscow's recent large-scale attacks on key energy infrastructure.

Meanwhile, a ceasefire between Israel and the Lebanese militant group Hezbollah was successfully maintained on Wednesday, thanks to a deal brokered by the United States and France. This truce has enabled residents to begin returning to their homes. However, Israel is still engaged in military operations against Hamas in the Gaza Strip.

Furthermore, the weakening of the US Dollar (USD) is making dollar-denominated Silver more affordable for buyers with foreign currencies, boosting its demand. Additionally, the US bond market has strengthened after US President-elect Donald Trump selected Wall Street veteran and fiscal conservative Scott Bessent as the US Treasury Secretary.

Markets are closely monitoring upcoming US data for further clues about the Federal Reserve's (Fed) monetary policy direction. On Wednesday, US core PCE prices for October met expectations, keeping investor hopes alive for another rate cut in December. However, other data indicated a resilient economy, suggesting that the Fed may take a cautious approach in the coming year.

According to the CME FedWatch Tool, futures traders are now pricing in a 66.5% probability of a 25 basis point rate cut in December, up from 55.9% a week ago. However, they expect the Fed to keep rates unchanged during its January and March meetings.

• EUR/USD attracts fresh buying on Friday as the USD slides to over a two-week low.
• Reduced bets for a jumbo ECB rate cut underpin the Euro and also support the pair.
• Traders now look to the flash Eurozone consumer inflation figures for some impetus.

The EUR/USD pair regains positive traction following the previous day's modest downtick and climbs back closer to the weekly top during the Asian session on Friday. Spot prices, however, remain below the 1.0600 mark, which if cleared decisively should set the stage for an extension of the recent recovery from a two-year low touched last Friday.

The US Dollar (USD) struggles to capitalize on Thursday's modest gains and touches a fresh two-week low amid bets for another 25 basis points interest rate cut by the Federal Reserve (Fed) in December. This, in turn, is seen as a key factor lending support to the EUR/USD pair, though bulls seem reluctant ahead of the Eurozone consumer inflation figures. The data could offer hints on the European Central Bank's (ECB) next policy move, which, in turn, will drive demand for the shared currency and determine the next leg of a directional move for the currency pair. 

In the meantime, hawkish comments from ECB's Isabel Schnabel earlier this week, which forced investors to scale back their bets for a more aggressive easing in December, underpins the shared currency and acts as a tailwind for the EUR/USD pair. The markets, however, are still pricing in a small chance for a 50 bps rate cut next month. The expectations were lifted by the release of flash German consumer inflation figures on Thursday, which rose less than expected in November. This, in turn, warrants some caution before placing fresh bullish around the pair. 

Furthermore, expectations that US President-elect Donald Trump's expansionary policies will boost inflation and limit the scope for the Fed to cut rates further, along with geopolitical risk, might help limit losses for the safe-haven buck. This further makes it prudent to wait for strong follow-through buying and acceptance above the 1.0600 mark before positioning for an extension of the EUR/USD pair's multi-day-old uptrend. Nevertheless, spot prices remain on track to snap a three-week losing streak and end on a positive note heading into the weekend.

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

The price for Gold stood at 7,226.99 Indian Rupees (INR) per gram, up compared with the INR 7,173.99 it cost on Thursday.

The price for Gold increased to INR 84,294.86 per tola from INR 83,676.01 per tola a day earlier.

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

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

• GBP/USD prolongs its multi-day-old uptrend and climbs to a two-week high on Friday.
• Reduced bets for a December BoE rate cut lend support to the pair amid a softer USD.
• Geopolitical risks and trade war fears could limit the USD fall and cap gains for the pair. 

The GBP/USD pair gains some follow-through positive traction during the Asian session on Friday and touches a two-week top, around the 1.2715 region in the last hour. Spot prices have now rallied over 200 pips from the weekly trough and look to build on the recent recovery from sub-1.2500 levels, or the lowest since May 2024 touched last Friday amid subdued US Dollar (USD) demand.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, struggles to capitalize on the overnight modest gains and languishes near a two-week low amid bets for another interest rate cut by the Federal Reserve (Fed) in December. In fact, the current market pricing indicates a 70% chance that the US Central Bank will lower borrowing costs by 25 basis points next month. This, along with the recent decline in the US Treasury bond yields, keeps the USD bulls on the defensive and turns out to be a key factor acting as a tailwind for the GBP/USD pair. 

Meanwhile, traders have been scaling back their bets for another interest rate cut by the Bank of England (BoE) this year after data released last week showed that the underlying price growth in the UK gathered speed in October. This further contributes to the British Pound's (GBP) relative outperformance against its American counterpart and validates the positive outlook for the GBP/USD pair. However, a combination of factors might hold back traders from placing aggressive bearish bets around the USD and cap any meaningful appreciating move for the currency pair. 

The US PCE data released on Wednesday showed that the progress in lowering inflation in the US stalled in October. Moreover, investors now seem convinced that US President-elect Donald Trump's expansionary policies will boost inflation. This comes on top of hawkish FOMC meeting minutes earlier this week, which revealed that the Committee could pause its easing of the policy rate if inflation remained elevated. Apart from this, geopolitical risks and trade war fears could benefit the Greenback's relative safe-haven status and cap the upside for the GBP/USD pair.

• NZD/USD tests the descending channel’s upper boundary at the 0.5920 level.
• The bullish sentiment would be confirmed once the 14-day RSI breaks above the 50 mark.
• 14- and nine-day EMAs at 0.5892 and 0.5883, respectively, act as immediate supports.

NZD/USD recovers from its recent losses, trading around 0.5910 during the Asian session on Friday. A closer look at the daily chart suggests a potential shift in momentum from a bearish to a bullish bias, as the pair has broken above the descending wedge pattern. Simultaneously, another descending channel pattern has formed, and a breakout above this channel would further strengthen the bullish outlook.

Additionally, NZD/USD has moved above both the nine- and 14-day Exponential Moving Averages (EMAs), indicating strength in short-term price momentum. However, the 14-day Relative Strength Index (RSI) remains below the 50 level, suggesting that the prevailing bearish sentiment is still in play. A move above the 50 level would confirm a shift to bullish sentiment. 

On the upside, NZD/USD is testing the upper boundary of the descending channel pattern at the 0.5920 level. A break above this level could pave the way for the pair to target the psychological 0.6000 level, followed by minor resistance at 0.6038. 

Immediate support for NZD/USD lies at the 14- and nine-day EMAs at 0.5892 and 0.5883, respectively. A break below these levels could exert downward pressure on the pair, with the next key "throwback support" level of 0.5850, followed by a two-year low at 0.5772, last seen in November 2023.

NZD/USD: Daily Chart

• Gold price catches fresh bids on Friday amid trade war fears and geopolitical tensions.
• The USD languishes near a two-week low and offers further support to the XAU/USD pair.
• Bets for slower rate cuts by the Fed might keep a lid on the non-yielding yellow metal. 

Gold price (XAU/USD) spikes to a four-day top, around the $2,662-2,663 area during the Asian session on Friday as geopolitical risks and trade war fears continue to boost demand for safe-haven assets. Adding to this, bets that the Federal Reserve (Fed) will lower borrowing costs again in December and the recent decline in the US Treasury bond yields offer additional support to the non-yielding yellow metal.

Meanwhile, the US Dollar (USD) languishes near a two-week low amid the prospects for more rate cuts by the Fed and turns out to be another factor benefiting the Gold price. That said, the US Personal Consumption Expenditure (PCE) Price Index pointed to stalling inflation progress, suggesting that the Fed might slow its rate-cutting cycle. This could act as a tailwind for the USD and cap gains for the XAU/USD. 

Gold price continues to attract haven flows amid concerns about Trump’s tariff plans and Russia-Ukraine war

• Russian President Vladimir Putin said Russia may use its new hypersonic missile to attack decision-making centres in Ukraine in response to the latter's firing of Western missiles at its territory.
• US President-elect Donald Trump earlier this week pledged to impose tariffs on all products coming into the US from Canada, Mexico and China, which, in turn, could trigger trade wars. 
• The US Dollar struggles to capitalize on Thursday's modest gains as traders now see a 70% chance that the Federal Reserve will cut interest rates at the next policy meeting in December.
• Minutes from the November FOMC meeting released earlier this week revealed that committee members were divided over how much farther they may need to cut interest rates.
• The PCE data showed on Wednesday that the progress in lowering inflation in the US stalled in October. Investors also seem convinced that Trump's policies will boost inflation.
• This suggests that the Fed may proceed cautiously, fueling uncertainty over the outlook for interest rates in 2025 and limiting any further decline in the US Treasury bond yields. 
• The benchmark 10-year US Treasury yield touched a two-week low on Wednesday on hopes that Trump's Treasury Secretary nominee, Scott Bessent, will want to control US deficits.
• There isn't any relevant market-moving economic data due for release on Friday and US stock markets will close early in observance of the Thanksgiving holiday. 

Gold price intraday breakout momentum above the $2,650 confluence stalls near 50% retracement level

From a technical perspective, an intraday breakout above the $2,649-2,650 confluence hurdle – comprising the 100-hour Simple Moving Average (SMA) and the 38.2% Fibonacci retracement level of the weekly decline – was seen as a key trigger for bulls. The subsequent move up, however, stalls near the $2,663-2,664 region, which coincides with the 50% retracement level and should act as a pivotal point. Some follow-through buying has the potential to lift the Gold price to the $2,677 region, or the 61.8% Fibo. level, en route to the $2,700 round figure.

On the flip side, the $2,650 confluence resistance breakpoint now seems to protect the immediate downside, below which the Gold price could slide back to the $2,633 area (23.6% Fibo. level) and the overnight swing low, around the $2,620 region. The next relevant support is pegged near the monthly trough, around the $2,605 region. Some follow-through selling below the $2,600 mark should pave the way for deeper losses towards the 100-day SMA, currently pegged near the $2,573 area, en route to the monthly low, around the $2,537-2,536 region.

• The Indian Rupee weakens near a record low in Friday’s Asian session. 
• A negative trend in domestic equities and rising USD demand from importers weigh on the INR. 
• India’s Federal Fiscal Deficit for October and GDP growth data for Q2 FY25 will be released later on Friday. 

The Indian Rupee (INR) extends its decline near its all-time low on Friday. The rise in US Treasury bond yields, the month-end US Dollar (USD) demand and Foreign Portfolio Investors (FPIs) selling domestic equities exert some selling pressure on the local currency. Despite these challenges, the Reserve Bank of India (RBI) is likely to routinely intervene in the foreign exchange (forex) market by selling USD to prevent the INR from depreciating amidst global volatility.

Later on Friday, India's Federal Fiscal Deficit for October and Gross Domestic Product (GDP) growth data for the July-September 2024 quarter (Q2 FY25) will be in the spotlight. If the GDP report shows a stronger-than-expected outcome, this could help limit the INR's losses. 

Indian Rupee seems vulnerable amid multiple headwinds

• Foreign investors withdrew nearly $1.4 billion from Indian equities on Thursday, preliminary exchange data showed, spurring a 1.5% fall in the BSE Sensex index. These investors took out $11 billion from Indian equities last month. 
• India's Gross Domestic Product (GDP) growth is estimated to align with the RBI's target of 7.0% for the second quarter of FY25.
• India's economy is likely to grow at its slowest pace in one and a half years in the three months to the end of September as weak consumption offsets a strong recovery in government spending, according to a Reuters poll.
• The RBI is set to hold interest rates on December 6 due to a sharp rise in consumer inflation, per Reuters. 
• The markets now see nearly a 66.5% chance that the Fed will cut rates by a quarter point in December, up from 55.7% before the PCE data, according to the CME FedWatch Tool.

USD/INR maintains the bullish sentiment in the longer term

The Indian Rupee softens on the day. The strong uptrend of the USD/INR pair prevails, with the price holding above the key 100-day Exponential Moving Average (EMA) on the daily timeframe. The 14-day Relative Strength Index stands above the midline near 62.90, suggesting that the support is likely to hold rather than break. 

In the bullish case, the crucial resistance level emerges at the 84.50-84.55 region. Consistent trading above this level could attract enough momentum traders to push USD/INR to the 85.00 psychological mark. 

On the flip side, sustained trading below the lower limit of the trend channel of 84.27 could open the possibility of a retest of 83.96, the 100-day EMA. A break below the mentioned level could lead to a downside breakout. The next support level to watch is 83.65, the low of August 1. 

• EUR/JPY loses ground as the Japanese Yen strengthens following Tokyo CPI Data for November.
• Tokyo's core inflation rose by 2.2% YoY, against the expected 2.1% increase, and marked the highest inflation reading in three months.
• Eurozone Core HICP inflation is anticipated to rise 2.8% YoY in November, compared to 2.7% increase in October.

The EUR/JPY pair loses momentum, trading around 158.80 during Friday's Asian session, as the Japanese Yen (JPY) gains strength. This follows the release of Japan's Tokyo Consumer Price Index (CPI) data for November, which exceeded expectations.

Headline Tokyo CPI rose by 2.6% year-over-year in November, a significant increase from 1.8% in October. Similarly, the Tokyo CPI excluding Fresh Food and Energy climbed 2.2% YoY, compared to 1.8% previously, and surpassed the market consensus of 2.1%.

In November, Tokyo's core CPI increased by 2.2% year-on-year, up from 1.8% in October. This rise surpassed market expectations of a 2.1% increase and marked the highest inflation reading in three months. Tokyo's inflation data is closely watched as a leading indicator for national price trends, with nationwide CPI figures usually released about three weeks later.

The core CPI has remained above the Bank of Japan’s (BoJ) 2% target, fueling expectations for a potential near-term rate hike. BoJ Governor Kazuo Ueda reaffirmed that the central bank would continue raising rates if inflation stays on course to sustainably achieve the 2% target.

European Central Bank (ECB) policymakers have voiced concerns over the Eurozone's slowing economic growth, heightening expectations of a rate cut in December. However, uncertainty persists regarding the size of the potential reduction, as the market remains divided.

Traders are now closely watching Friday’s release of the Eurozone Harmonized Index of Consumer Prices (HICP) data. Core HICP inflation is projected to rise by 2.8% YoY in November, compared to 2.7% in October. This uptick could complicate matters for ECB officials, many of whom have recently sought to reassure investors of more rate cuts despite rising inflationary pressures.

• The Japanese Yen rallied in reaction as a stronger Tokyo CPI lifted BoJ rate hike bets.
• The USD languishes near a two-week low and contributes to USD/JPY’s decline.
• The technical setup backs prospects for a further decline infr the major currency pair.

The Japanese Yen (JPY) strengthens across the board following the release of strong November consumer inflation figures from Tokyo, Japan’s capital, which backs the case for another Bank of Japan (BoJ) interest rate hike in December. Apart from this, geopolitical risks stemming from the Russia-Ukraine war, concerns about US President-elect Donald Trump's tariff plans and a slight deterioration in the global risk sentiment drive haven flows towards the JPY. 

Meanwhile, the recent downfall in the US Treasury bond yields, which followed Scott Bessent's nomination as the US Treasury secretary, turns out to be another factor benefiting the lower-yielding JPY. The US Dollar (USD), on the other hand, languishes near a two-week low amid bets that the Federal Reserve (Fed) will cut rates in December and contributes to the USD/JPY pair's slide below the 150.00 psychological mark or the lowest level since October 21. 

The Japanese Yen strengthens in the wake of speculations for a December BoJ rate hike

• The Statistics Bureau of Japan reported on Friday that the headline Tokyo Consumer Price Index (CPI) surged 2.6% year-on-year in November as compared to 1.8% in the previous month.
• Meanwhile, core CPI, which excludes volatile fresh food items, rose 2.2% YoY and a gauge that strips out both energy and fresh food costs also climbed by 2.2% during the reported month. 
• A separate report showed Japan's Unemployment Rate edged higher as expected, to 2.5% in October and Retail Sales grew 1.6% YoY as compared to 0.5% in September and 2.2% expected. 
• Adding to this, Japan's Industrial Production registered strong growth of 3% in October as compared to 1.6% in the previous month, though the reading was short of the 3.9% rise anticipated. 
• Nevertheless, stronger inflation figures continue to fuel speculations that the Bank of Japan (BoJ) will hike interest rates again at its next monetary policy meeting in December. 
• Adding to this, worries that US President-elect Donald Trump's trade tariffs will affect the global economy and the protracted Russia-Ukraine war weigh on the market sentiment. 
• The US bond investors cheered the nomination of Scott Bessent, who is seen as a fiscal conservative and will likely want to keep a leash on US deficits, as the US Treasury Secretary. 
• This keeps the benchmark 10-year US Treasury bond yields and the US Dollar depressed near a two-week low, which is seen exerting additional pressure on the USD/JPY pair. 

USD/JPY seems vulnerable; breakdown below 38.2% Fibo. and 150.00 mark in play

From a technical perspective, an intraday breakdown below the 38.2% Fibonacci retracement level of the September-November rally and the 150.00 mark could be seen as a key 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, supports prospects for a further near-term depreciating move for the USD/JPY pair, towards the next relevant support near the 149.45 region. The downward trajectory could extend further to the 148.00 neighborhood, or the 50% retracement level.

On the flip side, the previous monthly trough, around the 150.45 zone, now seems to act as an immediate hurdle ahead of the 152.00 mark. The latter coincides with the very important 200-day Simple Moving Average (SMA) support breakpoint and should act as a key pivotal point. A sustained strength beyond might trigger a short-covering rally towards the 152.65-152.70 intermediate hurdle en route to the 153.00 round figure and the 153.30-153.35 congestion zone.

• WTI price trades sideways around $68.85 in Friday’s early Asian session. 
• The ongoing Russia/Ukraine conflict highlighted risks to Russian oil supplies, which might lift the WTI price. 
• OPEC+ postpones its next meeting on output policy to December 5 from December 1. 

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $68.85 on Friday. The WTI price steadies as the escalation in the Russia/Ukraine conflict offsets a less aggressive rate cut expectation from the Federal Reserve (Fed).

Oil traders will closely monitor the developments in the Russia/Ukraine conflict. Any signs of escalation could raise concerns about energy supplies, particularly winter gas flows to Central and Eastern Europe, boosting the WTI price. On Thursday, Russian President Vladimir Putin said that if Ukraine gets nuclear weapons, Russia will use all means of destruction. 

Wednesday’s US economic data suggested that the progress on lowering inflation appears to have stalled in recent months, which could diminish the expectation for the Federal Reserve (Fed) to cut interest rates in 2025. However, they expect the Fed will leave rates unchanged at its meetings in January and March. It’s worth noting that slower-than-expected rate reductions would keep borrowing costs high, which could slow economic activity and lower oil demand. 

The Organization of the Petroleum Exporting Countries and its allies (OPEC+) postponed its December meeting, fueling speculation about delayed production hikes and supply adjustments. OPEC+, which accounts for about half of world oil output, is scheduled to meet on December 5 after delaying its earlier meeting. 

Key considerations include whether to prolong the voluntary production cuts of 2.2 million barrels per day slated to phase out in December. Reports suggest members are considering delaying planned output increases for January amid persistent demand uncertainties. A further delay has mostly been factored into oil prices already, said Suvro Sarkar at DBS Bank. "The only question is whether it's a one-month pushback, or three, or even longer.”

• The Australian Dollar receives support from hawkish comments from RBA Governor Michele Bullock.
• The AUD may struggle as the United States may introduce further AI chip sanctions against China on Monday.
• The US Dollar may regain its ground as the Fed remains cautious about cutting rates following robust recent inflation data.

The Australian Dollar (AUD) extends its winning streak for the third successive session on Friday following the hawkish comments from Reserve Bank of Australia (RBA) Governor Michele Bullock. However, the AUD/USD pair may face downward pressure as the United States (US) is set to unveil additional measures on Monday aimed at curbing China’s ability to advance in artificial intelligence technology.

RBA Governor Bullock stated on Thursday that Australia’s core inflation remains “too high” to contemplate interest rate cuts in the near future. She emphasized that there is still progress to be made before inflation returns sustainably to the target level, according to Bloomberg.

The downside of the US Dollar (USD) may be limited, as the Federal Reserve (Fed) is expected to remain cautious about cutting interest rates following robust inflation data released on Wednesday. The report revealed strong consumer spending growth in October but also indicated little progress in reducing inflation, prompting the Fed to stay vigilant.

Australian Dollar receives support from hawkish RBA Governor Bullock

• Australia's Private Sector Credit increased by 0.6% month-over-month in October, exceeding market expectations of 0.5%, which had been the rate for the past three months. This represents the strongest monthly growth since June. On an annual basis, credit rose by 6.1%, up from the previous 5.8% increase.
• On Thursday, Australia's total new capital expenditure rose by 1.1% quarter-on-quarter in the third quarter, surpassing market expectations of a 0.9% increase and rebounding from a 2.2% decline in the previous quarter.
• The US Personal Consumption Expenditures (PCE) Price Index increased by 2.3% year-over-year in October, up from 2.1% in September. Meanwhile, the core PCE Price Index, which excludes volatile food and energy prices, rose by 2.8%, slightly higher than the 2.7% recorded the previous month. Both figures aligned with market expectations, indicating steady inflationary pressure within the economy.
• The latest Federal Open Market Committee's (FOMC) Meeting Minutes for the policy meeting held on November 7, indicated that policymakers are adopting a cautious stance on cutting interest rates, citing easing inflation and a robust labor market.
• Bloomberg reported that US President-elect Donald Trump is expected to appoint Jamieson Greer as the US Trade Representative on Tuesday. Greer’s nomination highlights the central role of tariffs in Trump’s economic strategy.
• The Australian Dollar faced challenges due to dampened market sentiment following President-elect Donald Trump's announcement of a 10% increase in tariffs on all Chinese goods entering the United States.
• Chicago Fed President Austan Goolsbee indicated on Tuesday that the Fed will likely continue lowering interest rates toward a neutral stance that neither stimulates nor restricts economic activity. Meanwhile, according to Bloomberg, Minneapolis Fed President Neel Kashkari highlighted that it remains appropriate to consider another rate cut at the Fed’s December meeting.

Technical Analysis: Australian Dollar hovers around 0.6500, nine-day EMA

The AUD/USD pair trades near 0.6500 on Friday, with bearish momentum strengthening based on technical analysis. The pair remains within a descending channel, and the 14-day Relative Strength Index (RSI) stays below 50, signaling persistent negative sentiment.

On the downside, the AUD/USD pair may revisit its four-month low of 0.6434, marked on November 26. A breach of this level could pave the way toward the yearly low of 0.6348, last reached on August 5. Additional support is found near the descending channel's lower boundary around 0.6300.

The immediate resistance lies at the nine-day Exponential Moving Average (EMA) at 0.6502, followed by the 14-day EMA at 0.6513. Further resistance is positioned near the channel's upper boundary at 0.6530. A clear breakout above these levels could set the stage for a move toward the four-week high of 0.6687.

AUD/USD: Daily Chart

On Friday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.1877, as compared to the previous day's fix of 7.1894 and 7.2244 Reuters estimates.

Russian President Vladimir Putin issued a series of military threats towards Ukraine and reiterated earlier statements that the US and other European allies now have "direct involvement" in Ukraine's conflict with Russia during a press conference in the Kazakhstan capital city, per Sky news.

Putin said that If Ukraine becomes a nuclear power, Russia will use all means of destruction.

In reaction to Ukrainian long-range attacks on Russian territory using Western weaponry, Russia is seeking targets in Ukraine, including "decision-making centres" in Kyiv, noted Vladimir Putin.

Market reaction 

At the time of writing, the gold price (XAU/USD) is trading 0.08% lower on the day to trade at $2,638.  

• USD/JPY weakens to near 150.95 in Friday’s early Asian session, down 0.35% on the day. 
• The hotter Japan’s Tokyo CPI data could support the case for a BoJ rate hike at its December meeting.
• The cautious stance of the Fed might cap the pair’s downside. 

The USD/JPY pair loses traction to around 150.95 during the early Asian session on Friday. The Japanese Yen (JPY) edges higher after the hotter-than-expected Japan’s Tokyo Consumer Price Index (CPI) inflation report for November. 

Data released by the Statistics Bureau of Japan on Friday showed that the headline Tokyo Consumer Price Index (CPI) climbed by 2.6% YoY in November, compared to 1.8% in the previous month. Meanwhile, the Tokyo CPI ex Fresh Food, Energy rose by 2.2% YoY in November versus 1.8% prior. Tokyo CPI ex Fresh Food increased 2.2% YoY in November, compared to a 1.8% increase in October, and was above the market consensus of 2.1%. 

The core CPI has stayed above the Bank of Japan’s (BoJ) 2% target and kept alive market expectations for a near-term interest rate hike. This, in turn, boosts the JPY and creates a headwind for USD/JPY. BoJ Governor Kazuo Ueda stated the Japanese central bank will keep raising rates if inflation remains on track to stably hit 2% as it projects.

On the other hand, Wednesday's US PCE data indicated that the progress on lowering inflation appears to have stalled in recent months, which could diminish the expectation for the Federal Reserve (Fed) to cut interest rates in 2025. This might trigger a modest bounce in the US bond yields, which provides some support to the Greenback. The markets are now pricing in nearly 62.8% odds that the Fed will cut rates by a quarter point in December, up from 55.7% earlier this week, according to the CME FedWatch Tool.