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Forex-novosti i prognoze od 02-12-2024
Federal Reserve Bank of Atlanta President Raphael Bostic said on Monday that he’s undecided on whether an interest-rate cut is needed in the December meeting, but still believes Fed officials should continue lowering rates over the coming months, per Bloomberg.
Key quotes
“The risks to achieving the committee’s dual mandates of maximum employment and price stability have shifted such that they are roughly in balance, so we likewise should begin shifting monetary policy toward a stance that neither stimulates nor restrains economic activity,”
“I’m keeping my options open” over whether he will support a rate reduction when officials gather in Washington Dec. 17-18.”
“None of these trends send a strong signal that the labor market is rapidly deteriorating nor extremely tight.”
“Instead, they suggest that the labor market is cooling in a largely orderly fashion in the face of higher interest rates, a perspective we also hear from our business contacts.”
“There are certainly upside risks to price stability,” Bostic said, but added, “I do not view the recent bumpiness as a sign that progress toward price stability has completely stalled.”
“One of the things that we have seen over the last six or seven years is that there are lots of proposals that get floated around, and they change a lot as you go through.”
Market reaction
The US Dollar Index (DXY) is trading 0.01% lower on the day at 106.38, as of writing.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Federal Reserve Bank of New York President John Williams said on Monday that the Fed officials will likely need to cut the interest rates further to move policy to a neutral stance now that risks to inflation and employment have become more balanced, per Bloomberg.
Key quotes
One could argue a case for skipping a rate cut in December, will be watching data closely to decide.
Policy is restrictive enough that a Dec cut still allows ample scope to slow pace of cuts later if needed.
Forecasts show inflation on the path to 2% in medium term.
Money policy remains 'significantly restrictive’.
Still 'a ways to go' in reducing rate to neutral.
The speed and timing of cuts to be determined by economic conditions.
When I look at a broader range of labor market data, it tells a fairly consistent story over the past year about moderating demand relative to supply.
Recent data on inflation indicate that progress may be stalling.
If policymakers' estimates of the target range at the end of next year are close to correct, then the Committee will most likely be skipping rate cuts multiple times on the way to that destination.
Expects more rate cuts to happen over time.
Monetary policy remains in a restrictive stance.
What the Fed does with policy depends on incoming data.
Outlook for economy and policy remains ‘highly uncertain.’
Expects US GDP at 2.5% this year, might be higher.
Sees unemployment rate between 4%-4.25% over coming months.
Expects US inflation around 2.25% for 2024.
Further progress on inflation may be uneven.
The US economy is in good place, labor market is solid, in balance.
Expects inflation to continue to gradually ebb to 2%.
Job market unlikely to be a source of higher inflation.
Labor market is softer but still pretty solid.
Will need to bring interest rates down over time.
Unclear where neutral rate is right now
Businesses are finding less ability to push through price increases
Direction is toward lower rates over time.
Appropriate for policy to be somewhat restrictive given inflation.
Critical to get inflation back to 2%.
Not seeing any signs of a US recession.
Market reaction
The US Dollar Index (DXY) is trading 0.01% lower on the day at 106.40, as of writing.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
- USD/CAD holds steady around 1.4045 in Tuesday’s early Asian session.
- US ISM Manufacturing PMI rose to 48.4 in November vs. 46.5 prior.
- Canadian Manufacturing PMI climbed to a 21-month high in November.
The USD/CAD pair trades flat near 1.4045 during the early Asian session on Tuesday. However, Trump’s threats of further tariffs and renewed US Dollar (USD) demand could provide some support to the pair. The US JOLTs Job Openings for October are due later on Tuesday. The Federal Reserve’s (Fed) Adriana Kugler and Austan Goolsbee are scheduled to speak.
Data released Monday showed that the US ISM Manufacturing PMI improved to 48.4 in November from 46.5 in October. This reading came in better than the market expectation of 47.5. The Greenback edges higher in an immediate reaction to the upbeat US economic data.
Furthermore, the cautious stance of the US Fed might contribute to the USD’s upside. Fed officials on Mondays made it clear they expect the central bank to continue lowering interest rates over the next year but stopped short of saying they are committed to making the next cut in the December meeting. According to the CME FedWatch Tool, money markets have priced in nearly a 76.0% chance that the Fed will cut rates by a quarter point in December, while there is a 24.0% probability that the policy rate will remain unchanged.
On the Loonie front, the Canadian S&P Global Manufacturing PMI came in stronger than expected in November, rising to 52.0 from 51.1 in October, its highest level since February 2023. This figure was above the market consensus of 50.8. However, US President-elect Donald Trump's tariff threats could exert some selling pressure on the Canadian Dollar (CAD) as Trump threatened to impose a 25% tariff on all Canadian imports.
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
- GBP/USD fell 0.7% on Monday to fall back below 1.2700.
- A lack of UK data left the Greenback front and center.
- US PMI data came in better than expected, but still below contraction level.
GBP/USD backslid below the 1.2700 handle on Monday, kicking off the new trading week by snapping a three-day winning streak and keeping Cable on the low side of the 200-day Exponential Moving Average (EMA). The data docket was clear on the UK side, leaving markets to roil after US Purchasing Managers Index (PMI) figures popped higher but still remained in contraction territory below 50.0.
Another US Nonfarm Payrolls (NFP) week is underway, and the economic calendar is littered with plenty of US jobs preview figures in the runup to Friday’s bumper job additions report. UK data releases are limited this week, although Bank of England (BoE) Governor Andrew Bailey will be making an appearance on Wednesday via a pre-recorded interview at an event hosted by the Financial Times.
US ISM Manufacturing PMI figures rose in November, climbing to a five-month high of 48.4 versus the previous 46.5, over and above the forecast 47.5. Despite the uptick in business expectation survey results, the indicator is still stuck in contraction territory below 50.0, implying the majority of business operators still see declines in overall activity in the coming months.
GBP/USD price forecast
Monday’s declines dragged GBP/USD back below the 1.2700 handle, keeping price action on the bearish side of the 200-day EMA, which is still rolling over into bearish territory near 1.2800. Cable caught a near-term bounce from multi-month lows after declining into 1.2500, but topside momentum remains limited.
GBP/USD daily chart
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- NZD/JPY fell 0.79% on Monday, trading near 88.05.
- After breaking out of a range last week, bears pushed NZD/JPY lower, towards 88.00.
- Indicators continue losing ground but approach oversold conditions which might trigger a period of consolidation.
The NZD/JPY declined by 0.79% to 88.05 on Monday, after breaking out of a clear side-ways range last week. The Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) indicators are losing ground and confirm the selling pressure, and the outlook is now bearish, at least for the short-term.
In that sense, the RSI is in the oversold area, signaling rising selling pressure, while the MACD is also indicating that bearish momentum is increasing. The RSI suggests oversold conditions, may trigger consolidation, but the indicators' continued decline indicates that the downtrend is likely to persist. In case the cross corrects upwards, the bulls might attempt to recover the 89.00 area, and if lucky, they might extend a recovery to 90.00. On the downside, the selling traction is strong enough to continue pushing the pair towards the 85.00-86.00 range if the buyers don’t step in.
NZD/JPY daily chart
- EUR/AUD remains pressured below 50, 100, and 200-day SMAs, holding above 1.6200 for four consecutive days.
- Break above 1.6252 could target 1.6300, with 1.6372 (SMA confluence) as the next resistance zone.
- Downside risk remains intact, with support seen at 1.6159 and major support at 1.5966 if the pair dips below 1.6200.
The EUR/AUD pair remains pressured, yet buyers trimmed some of its earlier losses with the pair hitting a daily low of 1.6159. At the time of writing, the cross-pair trades at 1.6216, down by just 0.12%.
EUR/AUD Price Forecast: Technical outlook
The EUR/AUD consolidates above 1.6200 for the fourth straight day, and despite trading below the 50, 100, and 200-day Simple Moving Averages (SMAs), the pair is neutrally biased.
If EUR/AUD climbs past the 50-day SMA of 1.6252, buyers could challenge the 1.6300 figure. A breach of the latter will expose the confluence of the 100 and 200-day SMAs at 1.6372 before aiming toward 1.6400.
On the other hand, the RBA’s restrictive monetary policy stance favors the downside of EUR/AUD. Therefore, if EUR/AUD drops below 1.6200, the first support would be a December 2 low of 1.6159. On further weakness, the next stop would be major support at the November 22 swing low of 1.5966
EUR/AUD Price Chart – Daily
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.00% | -0.00% | 0.00% | -0.01% | -0.03% | -0.05% | 0.00% | |
| EUR | -0.00% | -0.01% | -0.02% | -0.01% | -0.03% | -0.05% | 0.00% | |
| GBP | 0.00% | 0.00% | 0.02% | -0.01% | -0.03% | -0.04% | 0.02% | |
| JPY | 0.00% | 0.02% | -0.02% | -0.02% | -0.05% | -0.07% | -0.00% | |
| CAD | 0.01% | 0.00% | 0.01% | 0.02% | -0.02% | -0.03% | 0.03% | |
| AUD | 0.03% | 0.03% | 0.03% | 0.05% | 0.02% | -0.02% | 0.05% | |
| NZD | 0.05% | 0.05% | 0.04% | 0.07% | 0.03% | 0.02% | 0.06% | |
| CHF | -0.00% | 0.00% | -0.02% | 0.00% | -0.03% | -0.05% | -0.06% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
- NZD/USD sank by 0.69% on Monday to trade near 0.5885.
- Bulls failed to secure the 20-day SMA after breaking above it, risking the bullish bias.
- Indicators took a step back and might continue losing ground if they do not secure the 20-day SMA.
The NZD/USD pair extended its weakness from a fresh monthly high recorded in the previous week. In Monday's session, the NZD/USD declined by 0.69% to 0.5885. Bulls failed to secure the 20-day Simple Moving Average (SMA) after breaking above it, risking the bullish bias.
Technical analysis of the NZD/USD pair indicates a sideways range, with the Relative Strength Index (RSI) at 46, suggesting rising selling pressure, while the Moving Average Convergence Divergence (MACD) is flat and green, indicating flat buying pressure. Overall, the outlook is mixed, with support levels at 0.5850, 0.5800, and 0.5750, and resistance levels at 0.5900, 0.5950, and 0.6000.
Technical indicators for the NZD/USD pair have taken a step back, signaling a potential shift in momentum. While the pair remains within a range, the failure of bulls to hold above the 20-day SMA poses a risk to the bullish bias. Traders should monitor the mentioned levels as a loss of the 0.5850 area could indicate a continuation of the downtrend.
NZD/USD daily chart
- The Canadian Dollar lost 0.4% to start the trading week.
- Canada saw a better-than-expected print in PMI figures.
- Despite upbeat data, the Loonie continues to struggle.
The Canadian Dollar (CAD) backslid another four-tenths of one percent against the Greenback on Monday. CAD traders pushed down the Loonie against the US Dollar despite an uptick in Canadian Purchasing Managers Index (PMI) figures for November as investors pivot to focus on this week’s US labor data dump that will culminate in another Nonfarm Payrolls (NFP) print on Friday.
Canada’s S&P Global Manufacturing PMI for November came in above expectations, printing at a nearly two-year high. However the upswing in manufacturing data has done little to stem the tide of middling economic reports from Canada in recent weeks, and broader markets shrugged at the one-off print.
Daily digest market movers: 21-month high in Canadian PMI sparks little interest in CAD
- The Canadian Dollar lost 0.4% against the Greenback, keeping USD/CAD bolstered above 1.4000.
- Canadian PMI figures for November rose to a 21-month high of 52.0, beating the forecast decline to 50.8 from October’s 51.1.
- Despite the upbeat business activity survey results, the Loonie still shed weight against the US Dollar, falling back into familiar lows.
- Broader markets are set for a week full of US labor preview data before Friday’s US NFP print.
- Canadian labor and wages data also slated for Friday will get swamped out by US jobs numbers.
Canadian Dollar price forecast
With the Canadian Dollar (CAD) continuing to slump into the low side, USD/CAD has been pushed back into near-term highs. The Loonie-Dollar pair is catching intraday support just north of the 1.4000 handle, snapping a three-day win streak that saw the CAD gain comparatively little ground.
USD/CAD daily chart
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
Federal Reserve (Fed) Board of Governors member Christopher Waller noted on Monday that while he is less than enthusiastic about a recent upswing in headline inflation figures, Governor Waller reiterated that he sees no reason to shift stance measurably as a result. The Fed Governor took a potshot at markets that have been extraordinarily twitchy regarding single-month inflation data from one print to the next, saying that he sees no reason to 'overreact' to near-term inflation figures.
Key highlights
I lean toward supporting a cut in December.
Still a ways to go in reducing policy rate to neutral, expects rate cuts to continue over the next year.
Monetary policy remains significantly restrictive.
The direction of policy rate over medium term is clearly down.
Recent data have raised concerns that inflation progress is stalling meaningfully above 2%.
I am less pleased about uptick in inflation, but don't want to overreact.
The labor market is finally in balance, we should aim to keep it that way.
Average inflation targeting framework was very backward looking and blew up very quickly.
- Gold price drops pressured by Trump's tariff threats against BRICS nations, rising US bond yields.
- US ISM Manufacturing PMI hits a six-month high, contributing to a stronger Dollar, limits Gold's gains.
- Mixed signals from Fed officials on rate cuts keep markets cautious; December FOMC meeting closely watched.
Gold prices slump as the last month of the year begins. They edge lower, weighed down by a strong US Dollar sponsored by Trump’s harsh rhetoric on BRICS countries and some easing of geopolitical tensions. The XAU/USD trades at $2,635, down 0.58%.
The golden metal extended its losses after Trump warned BRICS countries that moving away from the Greenback could make them face 100% tariffs “and should expect to say goodbye to selling into the wonderful U.S. Economy,” he added.
Once Monday’s Asian session got underway, XAU/USD plunged to a daily low of $2621 before recovering some ground, but the jump in US Treasury bond yields and the US Dollar Index (DXY) capped Gold’s advance.
Data-wise, the US economic docket featured the release of the ISM Manufacturing PMI for November, which rose to its highest reading since June. Earlier, S&P Global announced that manufacturing activity in the United States (US) improved, indicating that the economy remains robust.
After the data, the Atlanta Fed GDP Now for Q4 2024 rose from 2.69% to 3.16% after the ISM data release.
Atlanta Fed President Raphael Bostic crossed the wires. Bostic stated he’s undecided on whether a cut this month is needed, but he believes that interest rates should continue to be lowered over the following months. He said that rates should be at a reasonable level that “neither stimulates nor restrains economic activity,” adding that he’s keeping his options open.
In the meantime, the CME FedWatch Tool shows that the odds for a 25-basis point rate cut stand at 63%, down from 66% last Friday. This suggests the December 17-18 meeting would be live.
Regarding geopolitics, US officials are concerned the Lebanon ceasefire could unravel, according to Axios. The White House is concerned that the fragile ceasefire in Lebanon could unravel after Israel and Hezbollah exchanged fire in recent days.
This week, the US economic docket will feature Fed speakers, including Chairman Jerome Powell, the JOLTs Job Openings for October, S&P and ISM Services PMI surveys, and Nonfarm Payroll figures.
Daily digest market movers: Gold price undermined by higher US real yields
- Gold prices dive as US real yields climbed one and a half basis points to 1.936%.
- The US 10-year Treasury bond yield rose almost two basis points to 4.196%.
- The US Dollar Index (DXY), which tracks the buck's performance against six currencies, edged up 0.63% at 106.44 on the day.
- The ISM Manufacturing PMI in November rose from 46.5 to 48.4, exceeding forecasts of 47.5. The S&P Global Manufacturing PMI for the same period increased from 48.5 to 49.7, above the 48.8 expected by the consensus.
- 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 for a pause in 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 retreats deeper below 50-day SMA
Gold’s uptrend remains intact, though buyers could not decisively clear the 50-day Simple Moving Average (SMA) of $2,669. Further consolidation lies ahead, as depicted by the Relative Strength Index (RSI) hovering around the 50 neutral line.
That said, if XAU/USD cleared the 50-day SMA, key resistance levels would be exposed, like $2,700, the $2,750 figure, 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.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
- AUD/USD declined by 0.93% to 0.6453 on Monday.
- The Aussie remains pressured by US-China trade war concerns and USD strength.
- Strong US data has also helped the USD over the session.
The AUD/USD pair opened the week on a negative note, declining by 0.93% to 0.6455 in Monday's session, snapping a three-day winning streak. This shift in sentiment can be attributed to the fundamental outlook deteriorating in the market due to geopolitical tension and economic uncertainties weighing on investor confidence.
US President-elect Donald Trump’s threats against countries interested in using the BRICS currency by imposing tariffs has raised fears of a trade war between the US and China and turned the market mood sour. On the data front, US ISM PMI data has also fueled the USD’s rise.
Daily digest market movers: Australian Dollar weakens against USD, markets digest US data
- The ISM Manufacturing PMI rose to 48.4 in November from 46.5 in October, signaling a softer contraction in the manufacturing sector.
- The Employment Index rose to 48.1 from 44.4, indicating a slight improvement in hiring activity.
- The Prices Paid Index declined to 50.3 from 54.8, reflecting a moderation in input cost pressures.
AUD/USD technical outlook: Upside remains limited below the 20-day SMA
The AUD/USD pair snapped a three-day winning streak on Thursday, getting rejected by the 20-day SMA. Although the pair has recovered some ground, as long as it doesn't conquer this level, the upside will be limited. The RSI indicator is still below the neutral 50, while the MACD is also negative, both suggesting that bearish pressure is still intact.
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
The Greenback rose to three-day highs amid a strong resurgence of the bid bias, supported by Trump’s threats of further tariffs along with political concerns in France.
Here is what you need to know on Tuesday, December 3:
The US Dollar Index (DXY) advanced past the 106.70 level against the backdrop of mixed US yields across the curve and a widespread sell off in the risk complex. The US labour market takes centre stage with the release of the JOLTs Job Openings for the month of October, seconded by the RCM/TIPP Economic Optimism Index, and the weekly report on US crude oil inventories by the API. In addition, the Fed’s Goolsbee and Kugler are expected to peak.
EUR/USD came under increased selling pressure and broke below 1.0500 in response to rising political unrest in France. The ECB’s Cipollone is due to speak.
GBP/USD mirrored its risky peers and reversed a multi-day positive streak, approaching the 1.2600 region. The BRC Retail Sales Monitor will be the only data release across the Channel.
USD/JPY ended the day with a modest decline following an initial advance to the 150.70 zone. The JGB 10-year Auction will be the only event on the local docket.
AUD/USD made a sharp U-turn and breached the key 0.6500 support to hit new multi-day lows on Monday. Next on the Australian docket will be the Q3 Current Account results, along with the Ai Group Industry Index and the final Judo Bank Services PMI.
WTI could not sustain earlier gains and ended the day near the $68.00 mark per barrel as traders kept assessing the geopolitical scenario as well as the health of the US economy.
Prices of Gold set aside four consecutive days of losses and briefly flirted with the $2,620 mark per troy ounce amid the stronger US Dollar and mixed US yields. Silver prices followed suit and left behind two straight days of gains.
- The US Dollar Index soars above 106.50 on Monday.
- DXY surges higher driven by Trump's warnings on tariffs against BRICS nations
- Strong November ISM manufacturing PMI helps the USD.
The US Dollar Index (DXY), which measures the value of the USD against a basket of currencies, has surged above the 106.50 level on Monday, the first trading session in December. This move higher has been driven by several factors, including news that US President-elect Donald Trump favors imposing tariffs on goods from Brazil, Russia, India, China and South Africa and other nations interested in joining a future BRICS currency. Strong PMI data from November from the ISM has also helped the DXY get a boost.
Daily digest market movers: US Dollar gains nearly 1% at the start of the week
- News of Donald Trump planning to impose tariffs on countries who intend to join the BRICS currency has strengthened the US Dollar.
- On the data front, the ISM Manufacturing Purchasing Managers Index (PMI) increased to 48.4 in November, signifying a milder rate of contraction in the US manufacturing sector compared to October's value of 46.5.
- The Employment Index within the PMI survey rose to 48.1 in November from 44.4 in October, indicating an improvement in job creation within the manufacturing sector.
DXY technical outlook: Upward trajectory likely to continue with resistance at 108.00
Technical indicators, including the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD), are signalling that the recent period of consolidation for the Greenback may be coming to an end.
In that sense, the 108.00 level could be re-tested. In addition, the recovery of the 20-day Simple Moving Average (SMA) has improved the short- term outlook.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- The Dow Jones grappled with the low end to kick off the trading week.
- US PMI activity figures came in better than expected, but still in contraction territory.
- Markets are gearing up for another print of key NFP jobs figures this week.
The Dow Jones Industrial Average (DJIA) knocked lower on Monday, falling off-balance after US Purchasing Managers Index (PMI) figures came in better than anticipated but showed US business activities are still on the low side of expectations. The Dow Jones recovered into an off-kilter stance, grappling with the day’s opening bids, but the major equity index is still tilted toward the downside just south of the 45,000 handle.
US ISM Manufacturing PMI business activity survey results rose to a five-month high of 48.4 in November, rising from October’s print of 46.5 and beating the median market forecast of 47.5. Despite the upswing in indexed respondent expectations, ISM Manufacturing PMI figures have remained below the key 50.0 level since April, keeping investors leery about the strength of the broader US economy below the surface figures.
ISM Services PMI figures for November will print later in the week, and there is plenty of preview data in US employment figures before Friday’s Nonfarm Payrolls (NFP) print. JOLTS Job Openings for the month of October will print on Tuesday, with ADP Employment Change slated for Wednesday. Weekly Initial Jobless Claims will round out the labor preview prints on Thursday.
Dow Jones news
Despite an overall upbeat tone in equities on Monday, most of the Dow Jones index was stuck in red territory for the day. Two-thirds of the DJIA is set to end Monday lower than they started, with losses led by Amgen (AMGN), which fell 1.6%, backsliding to $278 per share. Declines in the banking sector also sent JPMorgan (JPM) lower, which eased 1.3% to fall below $250 per share.
Elsewhere on the Dow Jones, Amazon (AMZN) found extra room on the upside as Black Friday and Cyber Monday shoppers pile into the online retail platform.
Dow Jones price forecast
Bullish moment has drained out of daily candlesticks on the Dow Jones, with price action battling for a foothold just below 45,000. The major equity index tested the key major handle several times this week, but bidders have run out of gas in the near-term. Despite easing buying pressure, downside momentum remains incredibly limited, with sellers struggling to make headway back toward 44,500.
Some form of a pullback should be expected on the charts after the Dow Jones put in its best single-month performance of 2024 in November. The DJIA rose over 7.5% MoM, taking the Dow to nearly a 20% gain YTD.
Dow Jones daily chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
- Mexican Peso drops 0.37% as November Business Confidence in Mexico worsens, signaling economic slowdown.
- A Banxico survey shows inflation likely to stay below 4%, but the economy will miss expectations of growth above 2% in 2024.
- US Dollar supported by stronger ISM Manufacturing PMI and Trump’s tariff threats, overshadowing weak economic data.
The Mexican Peso begins December on the back foot against the Greenback. The Peso is down by 0.37% amid a busy economic calendar on both sides of the border. Mexico’s economic docket featured Business Confidence for November, while the US schedule showed that business activity continued to improve despite remaining in contractionary territory. The USD/MXN trades at 20.44.
The Instituto Nacional de Estadistica Geografia e Informatica revealed the Business Confidence Index in the manufacturing sector, which dipped and posted its worst reading since September 2024. Following that data release, the Bank of Mexico (Banxico) revealed its latest monthly survey of economists, including forecasts from 40 analysts.
Most economists suggest that headline inflation will remain below 4%, while core inflation is expected to continue its downtrend and stall in 2025. The economy is expected to slow further, with the Gross Domestic Product (GDP) forecasted to end the year below 2.00%, as foreseen in Q2 2024. The USD/MXN exchange rate is expected to remain above the 20.00 figure by the end of the year.
In the US, the ISM Manufacturing PMI in November improved compared to October, exceeding estimates. In the same tenure was the S&P Global index, revealed earlier, yet both readings, despite showing improvement, remained in contractionary territory.
Despite this, the US Dollar remained also underpinned by Donald Trump’s warning to BRICS countries that creating a new currency or moving away from the US Dollar as a means of payment could face 100% tariffs, “and should expect to say goodbye to selling into the wonderful U.S. Economy,” he added.
Ahead this week, Mexico’s schedule will feature the release of jobs data, gross fixed investment, and automobile production. In the US, the docket will feature Fed speakers, the JOLTs Job Openings for October, S&P and ISM Services PMI surveys, and Nonfarm Payroll figures.
Daily digest market movers: Mexican Peso undermined by dovish Banxico stance
- Banxico’s November survey shows that analysts estimate inflation at 4.42% in 2024 and 3.84% in 2025. Underlying inflation figures will remain at 3.69% in 2024 and 2025. GDP is forecasted at 1.55% and 1.23% for 2024 and 2025, respectively, and the USD/MXN exchange rate at 20.22 for the rest of the year and 20.71 in 2025.
- Last week, according to November's meeting minutes, Banxico hinted they’re willing to consider bigger rate cuts. One member noted, “Considering the current levels of core inflation and the expectation that it will continue declining, a larger rate adjustment could be considered at the next monetary policy meeting.”
- The latest Citi Mexico survey showed that most economists estimate Banxico will cut rates by 25 basis points at the December meeting. Analysts project the economy will grow 1.5% in 2024 and 1% in 2025.
- The ISM Manufacturing PMI in November rose from 46.5 to 48.4, exceeding forecasts of 47.5. The S&P Global Manufacturing PMI for the same period increased from 48.5 to 49.7, above the 48.8 expected by the consensus.
- The CME FedWatch Tool suggests that investors see a 64% chance of a 25-basis-point (bps) rate cut at the Federal Reserve’s December meeting, down from 66% last Friday.
- Data from the Chicago Board of Trade, via the December Fed funds rate futures contract, shows investors estimate 16 bps of Fed easing by the end of 2024.
Mexican Peso technical outlook: USD/MXN rallies past 20.35 as Peso weakens
The USD/MXN uptrend remains intact despite consolidating at around 20.20 for the last eight consecutive trading days. Although the pair has carved a series of higher highs and higher lows, buyers must clear the 20.50 psychological figure to target 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.
On the other hand, sellers pushing the USD/MXN below 20.00 could pave the way to test the 50-day Simple Moving Average (SMA) at 19.95, with key support levels exposed, like the 100-day SMA at 19.61, before the psychological 19.00 figure.
Mexican Peso FAQs
The Mexican Peso (MXN) is the most traded currency among its Latin American peers. Its value is broadly determined by the performance of the Mexican economy, the country’s central bank’s policy, the amount of foreign investment in the country and even the levels of remittances sent by Mexicans who live abroad, particularly in the United States. Geopolitical trends can also move MXN: for example, the process of nearshoring – or the decision by some firms to relocate manufacturing capacity and supply chains closer to their home countries – is also seen as a catalyst for the Mexican currency as the country is considered a key manufacturing hub in the American continent. Another catalyst for MXN is Oil prices as Mexico is a key exporter of the commodity.
The main objective of Mexico’s central bank, also known as Banxico, is to maintain inflation at low and stable levels (at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%). To this end, the bank sets an appropriate level of interest rates. When inflation is too high, Banxico will attempt to tame it by raising interest rates, making it more expensive for households and businesses to borrow money, thus cooling demand and the overall economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.
Macroeconomic data releases are key to assess the state of the economy and can have an impact on the Mexican Peso (MXN) valuation. A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only does it attract more foreign investment but it may encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this strength comes together with elevated inflation. However, if economic data is weak, MXN is likely to depreciate.
As an emerging-market currency, the Mexican Peso (MXN) tends to strive during risk-on periods, or when investors perceive that broader market risks are low and thus are eager to engage with investments that carry a higher risk. Conversely, MXN tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- The EUR/USD fell by more than 1% to open the week.
- The 1.0500 mark is gone and the pair fell further below the 20-day SMA.
- Indicators suggest that the selling momentum may have more room to go.
The EUR/USD pair kicked off the week with a sharp decline, falling over 1% and decisively breaking below the psychological 1.0500 mark. This move also pushed the pair further beneath the 20-day Simple Moving Average (SMA) which has acted recently as a strong resistance.
The technical indicators align with the bearish outlook, suggesting that further downside may be in play. The Relative Strength Index (RSI) is pointing downward at 37, inching closer to oversold territory but still indicating room for more selling pressure. Meanwhile, the MACD histogram is printing lower green bars, reinforcing the view that bearish momentum is strengthening.
The break below 1.0500 and the technical indicators suggest that the pair is poised for further losses unless a significant reversal catalyst emerges. Traders will be closely watching the 1.0450 and 1.0430 levels for signs of potential stabilization or a continuation toward 1.0400.
EUR/USD daily chart
- The ISM Manufacturing PMI report showed ongoing contraction in business activity in November.
- The US Dollar Index stays in positive territory above 106.50.
The business activity in the US manufacturing sector continued to contract, albeit at a softer pace in November, with the ISM Manufacturing PMI rising to 48.4 from 46.5 in October. This reading came in better than the market expectation of 47.5.
The Employment Index of the PMI survey edged higher to 48.1 from 44.4 in the same period and the Prices Paid Index retreated to 50.3 from 54.8. Finally, the New Orders Index improved to 50.4 from 47.1.
Market reaction
The US Dollar Index preserves its bullish momentum following the PMI report and was last seen rising 0.83% on the day above 106.50.
- GBP/USD declines over 0.50%, with sellers targeting further lows after breaking past 1.2644.
- Bearish momentum confirmed by RSI; GBP faces key supports at 1.2600 and 1.2486.
- Potential recovery hinges on surpassing resistance at 1.2700 and 1.2818 (200-day SMA).
The Pound Sterling tumbled over 0.50% against the Greenback on Monday, as the latter recovered from last week’s losses, remaining bid on Monday. At the time of writing, the GBP/USD trades at 1.2659, dropping after reaching a daily high of 1.2735.
GBP/USD Price Forecast: Technical outlook
The GBP/USD downtrend remains intact, and it could be threatened if buyers clear the 200-day Simple Moving Average (SMA) at 1.2818. Sellers must clear the November 28 daily low of 1.2644 before extending their drop to 1.2600. A breach of the latter will expose the latest major support at 1.2486, the November 22 swing low, followed by the current year’s low of 1.2299.
Conversely, if GBP/USD clears the 1.2700 figure, the first resistance would be the 1.2800 figure, followed by the 200-day SMA at 1.2818. Once those two levels are surpassed, it would emerge 1.2900 and the 50-day SMA as next key resistance at 1.2943.
The momentum remains bearish, as depicted by the Relative Strength Index (RSI), which aims to be lower at the beginning of December.
GBP/USD Price Chart – Daily
British Pound PRICE Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.94% | 0.81% | 0.16% | 0.58% | 0.93% | 0.90% | 0.79% | |
| EUR | -0.94% | -0.17% | -0.77% | -0.34% | 0.08% | -0.03% | -0.13% | |
| GBP | -0.81% | 0.17% | -0.63% | -0.17% | 0.25% | 0.15% | 0.02% | |
| JPY | -0.16% | 0.77% | 0.63% | 0.43% | 0.81% | 0.77% | 0.57% | |
| CAD | -0.58% | 0.34% | 0.17% | -0.43% | 0.50% | 0.32% | 0.19% | |
| AUD | -0.93% | -0.08% | -0.25% | -0.81% | -0.50% | -0.11% | -0.27% | |
| NZD | -0.90% | 0.03% | -0.15% | -0.77% | -0.32% | 0.11% | -0.11% | |
| CHF | -0.79% | 0.13% | -0.02% | -0.57% | -0.19% | 0.27% | 0.11% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
- EUR/JPY is in a downtrend but it has reached oversold levels according to the RSI.
- The pair is closing in on key support and could find its feet and pullback.
EUR/JPY extends its decline on Monday but reaches oversold levels. The pair is in a short and medium-term downtrend since the October 31 peak, and given the technical analysis dictum that “the trend is your friend” the odds favor more downside to come.
However, according to the Relative Strength Index (RSI) the pair is in the oversold zone (below 30) and this means short-holders should not add to their positions. It indicates there is a higher probability of a pullback occurring and prices recovering.
EUR/JPY Daily Chart
AUD/USD has almost reached support at around 156.50 from the trendline formed by joining the August and September lows. There is a strong possibility the pair could stall at the line and consolidate.
A deeper sell-off, however, could take EUR/JPY down to 154.00 – 155.00, at the actual August-September lows.
- AUD/USD gaps open on Monday and declines.
- The pair is in a sideways range and will probably continue oscillating.
- Gaps have a habit of getting filled, suggesting an up leg will eventually develop within the range.
AUD/USD is falling within a range encompassed by the green (ceiling) and red (floor) dashed lines on the chart below.
AUD/USD 4-hour Chart
At the start of trading on Monday the pair opened a gap between between 0.6515 and 0.6524 (green rectangle). It has been selling off ever since.
AUD/USD will probably eventually fill the gap since technical analysis theory says that “the market abhors a gap”. This means gaps do not tend to remain open. When they occur within a sideways market they usually close more quickly.
It is possible the Aussie pair might fall to the region of the range lows in the 0.6440s first before recovering and filling the open gap.
Alternatively it may stop falling before it reaches the bottom of the range and recover. At the moment there are no signs of the selling letting up.
The (blue) Moving Average Convergence Divergence (MACD) indicator has crossed below its red signal line, which is a sell signal and reinforces the case for price falling towards the range lows.
- USD/JPY pulls back after breaking out of a bearish price pattern.
- The pair is still in a bear trend, however and likely to continue lower.
USD/JPY pulls back after breaking out of a bearish Broadening Formation (BF) pattern and pulls back to the 50-day Simple Moving Average (SMA). The pair is probably in a short-term downtrend which is more likely than not to extend.
The first downside target lies at 148.54, the 61.8% Fibonacci extrapolation of the height of the pattern extrapolated lower.
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 which is bearish and has fallen below the zero line on an intraday basis. If it closes below zero then it will increase the bearishness of the indicator reading.
- Gold is trading lower on Monday after President-elect Donald Trump threatened the BRICS nations with 100% tariffs.
- Trump warned he would use the tariffs if BRICS tried to replace the USD with its own currency.
- The US Dollar rises, weighing on Gold, although increased geopolitical risk provides supportive inflows into the yellow metal.
Gold (XAU/USD) falls and trades in the $2,630s on Monday due to a stronger US Dollar (USD). However, the downside is limited as geopolitical risks remain elevated, driving continued safe-haven demand for the precious metal.
Gold pulls back at the start of the trading week after President-elect Donald Trump threatened to raise 100% tariffs on the BRICS trading bloc of nations if they go ahead with plans to replace the USD with their own currency.
His comments strengthened the US Dollar, which tends to negatively impact Gold since the precious metal is mainly priced and traded in USD.
Gold pulls back on Trump spat with BRICS
Gold weakens about 0.80% at the time of writing on Monday after Donald Trump issued a warning to the BRICS emerging-market trading bloc that he will place 100% tariffs if they go ahead with plans to replace the US Dollar with their own currency.
“The idea that the BRICS Countries are trying to move away from the Dollar while we stand by and watch is OVER,” Trump posted on Truth Social on Saturday afternoon. “We require a commitment from these Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty US Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful U.S. Economy,” he added.
The BRICS – which includes Brazil, Russia, India, China, South Africa, Egypt, Iran, the United Arab Emirates, and Ethiopia – has been steadily reducing its reliance on the USD as a medium of exchange, using the currencies of its members instead.
It has even been suggested that it could develop its own Gold-backed BRICS currency for trading purposes, replacing the Dollar altogether.
Some BRICS countries, such as China and India, have also been hoarding Gold. This may be because they want to launch a Gold-backed currency to replace the US Dollar.
Trump’s warning threatens to derail their plans if members become fearful of the fallout of a global trade war with the US, and this could also be weighing on Gold price.
Gold underpinned by haven flows
On the other side, Gold continues to benefit from an elevated level of geopolitical risk, which drives safety inflows and acts as a counterweight to the depressing influence of Trump’s word hail.
Despite agreeing to a ceasefire last week, the Lebanese authorities reported an Israeli military drone strike on a bulldozer carrying out fortification work at an army base on the Syrian border on Monday. Furthermore, in Gaza, an Israeli strike killed another 15 people, according to Reuters.
In Syria, civil war has erupted, bringing yet more instability to the region, with Turkish-backed rebel forces taking Syria’s second city, Aleppo.
Meanwhile, French government bonds are continuing their sell-off in Europe, reaching levels last seen over a decade ago during the sovereign debt crisis. This comes amid increased political risk as the government tries to get a controversial Budget passed.
French Prime Minister Michel Barnier’s minority government wants to bring the deficit down by making spending cuts but risks being ousted in a vote of no confidence led by the French far-right National Rally party, which is pushing back against the proposed spending cuts.
Technical Analysis: XAU/USD declining within sideways market
Gold trades along a major trendline as it continues its overall range-bound development.
XAU/USD 4-hour Chart
Gold’s short-term trend is sideways, and given the maxim that “the trend is your friend,” the odds favor a continuation of the current mode.
Within this sideways market, the chart looks poised to go lower. The fall from the November 25 high looks incomplete, and despite support from the trendline, more downside seems likely. A break below $2,605 (November 26 low) would confirm a follow-through lower towards the range lows in the $2,530s.
The (blue) Moving Average Convergence Divergence (MACD) indicator is also crossing below its red signal line, providing a sell signal. The general shape of the indicator could indicate further downside on the cards, supporting the bearish near-term outlook.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
- EUR/USD declines on Monday as the French government faces a potential vote of no confidence.
- The US Dollar strengthens due to Donald Trump’s threat to hit BRICS countries with 100% tariffs.
- Dovish commentary from ECB’s Martin Kazaks adds to the negative sentiment around the Euro.
EUR/USD is trading over half a percent lower on Monday, with a single Euro (EUR) buying about 1.0500 US Dollars (USD) as New York awakes to the sound of alarm clocks and scent of coffee.
The pair is falling as a political crisis threatens to overturn the French government, weighing on the Euro whilst President-elect Donald Trump gives the Dollar a boost by threatening to impose tariffs on BRICS nations unless they give up their search for an alternative to the Dollar.
The Single Currency is depreciating as France faces a political crisis of a gravity not seen since 1962. Michel Barnier’s minority government could face a vote of no confidence as attempts to get a controversial Budget through parliament.
Due to lacking an overall majority, Barnier relies on the backing of the French Far right National Rally (NR) party but they have demanded major concessions to the Budget, curbing the austerity of the original plan which sought to reign in government spending and narrow the country’s relatively wide deficit.
Barnier has until Monday to yield to NR's demands or face the possibility of a no-confidence motion toppling his government.
The panic is leading international investors to steer clear of European equities, reducing demand for the Euro, according to Reuters. This, in turn, is weighing on EUR/USD.
The US Dollar meanwhile, is rallying across the board after Donald Trump threatened the BRICS trading bloc with 100% tariffs unless it dropped the pursuit of a replacement currency.
BRICS – which includes Brazil, Russia, India, China, South Africa, Egypt, Iran, the United Arab Emirates, and Ethiopia – has been steadily reducing its reliance on the USD as a medium of exchange, using the currencies of its members instead, whilst mulling an alternative reserve currency of its own.
“The idea that the BRICS Countries are trying to move away from the Dollar while we stand by and watch is OVER,” Trump posted on Truth Social on Saturday afternoon. “We require a commitment from these Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty US Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful U.S. Economy,” he added.
EUR/USD faces further downside pressure after comments from European Central Bank governing council member Martins Kazaks on Monday, suggested he was in favor of making further cuts to Eurozone interest rates.
“In my view, rate cuts must continue,” said Kazaks, adding, “we see that the inflation problem will soon end.”
The expectation of lower interest rates is negative for the Euro since it reduces foreign capital inflows.
- The US Dollar rises after Donald Trump threatens BRICS with tariffs and increasing political concerns in France about the stability of the government.
- A political fallout in the Eurozone could trigger more inflows from the Euro to the Greenback.
- The US Dollar Index spikes back above 106.00, though it faces a key level ahead at 106.52.
The US Dollar (USD) gains on Monday, paring back Friday’s losses, driven by Donald Trump’s promise to impose tariffs on BRICS countries if they stop using the USD and amid increasing French political turmoil, which is weighing on the Euro (EUR).
In a post on Saturday, the US President-elect said he would impose a 100% tariff on the BRICS if the group decides to move away from trading using the USD. “We require a commitment from these Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful U.S. Economy,” he said.
Investors are also punishing the EUR – the main currency within the DXY US Dollar Index basket – on the back of failed budget talks in France and increasing chances that a no-confidence vote against the current prime minister is approved. Finance Minister Antoine Armand said on Bloomberg television over the weekend that France will not be blackmailed on far-right demands from the National Rally (NR) of Marine Le Pen, which is asking for changes in the budget bill. The NR President Jordan Bardella said on Monday that its party will trigger a no-confidence vote mechanism “unless there is a last-minute miracle,” Reuters reports.
A no-confidence vote could take place as early as Wednesday, and if successful it could bring the French government down.
Meanwhile, the US economic calendar is set to kick off with an eventful Monday ahead, with the Institute for Supply Management (ISM) releasing its Manufacturing PMI numbers for November.
Daily digest market movers: ISM kicks off packed week
- In a televised interview over the weekend, French Finance Minister Antoine Armand said on Bloomberg television that the French government will not be held hostage by the far-right party of Marine Le Pen. By pushing back on the additional demands from the National Rally party, the French government could fall as a no-confidence vote will get enough votes if Marine Le Pen’s party backs the vote with its majority.
- At 14:45 GMT, S&P Global will release the final reading for November of its Manufacturing Purchase Managers Index (PMI) survey. The expectation is for a steady 48.8, unchanged from the preliminary reading.
- Near 15:00 GMT, the Institute for Supply Management (ISM) will release its November PMI data for the Manufacturing Sector. The headline PMI is set to tick up to 47.5, from 46.5, but still stuck in contraction territory. The Prices Paid index, a leading indicator of inflation, is expected to tick up to 55.2 from 54.8.
- Near 20:15 GMT, Federal Reserve Governor Christopher Waller delivers a speech about the US economic outlook at the American Institute for Economic Research Monetary Conference in Washington DC.
- At 21:30 GMT, Federal Reserve Bank of New York President John Williams delivers keynote remarks and participates in a Q&A session at an event organized by the Queens Chamber of Commerce in New York.
- Equities in Europe and the US Futures are not really happy with the turn of events in France. Losses are contained though, by less than 0.50% on average.
- The CME FedWatch Tool is pricing in another 25 basis points (bps) rate cut by the Fed at the December 18 meeting by 67.1%. A 32.9% chance is for rates to remain unchanged. The Fed Minutes helped the rate cut odds for December to move higher.
- The US 10-year benchmark rate trades at 4.21%, rather steady for the start of the week and above the 4.16% seen last week on Friday.
US Dollar Index Technical Analysis: France could spread out
The US Dollar Index (DXY) is seeing a flight from across the Atlantic Ocean, with investors pulling out some investments out of Europe and into the US. A potential fall of the French government could quickly spill over into Germany, where Prime Minister Olaf Scholz position is hanging by a threadahead of the 2025 elections. All this political uncertainty could block investment opportunities, with investors favoring the equity-supportive Trump administration that is set to take over in January.
On the upside, 106.52 (April 16 high) is the first level to watch and looks ready to be tested already this Monday. 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.
However, warnings for a knee-jerk reaction need to be issued. In case of a downturn, the pivotal level at 105.53 (April 11 high) comes into play 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 Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- Oil prices stabilize on Monday as OPEC+ gathers online on Thursday to decide on extending production curbs.
- Iranian official Afshin Javan accuses OPEC+ of the current dire outlook for Oil prices and consumption in 2025.
- The US Dollar Index rallies as Trump threatens BRICS with tariffs and the Euro struggles due to France’s budget situation.
Crude Oil is still trading in a tight range on Monday, similar to levels seen last week, ahead of the most crucial OPEC+ meeting ahead of 2025 to be held on Thursday. Before the gathering, Iranian official Afshin Javan threw the cat among the pigeons by issuing an opinion piece pointing to OPEC+ as the culprit for the current low prices. The main takeaway of the opinion piece was that OPEC+ has kept oil prices elevated for too long, financing its competitors to boost cheaper alternatives.
The comments will likely be discussed and promise heated debates ahead of Thursday’s online meeting, in which OPEC+ is set to convene on the extension of its production curbs.
Meanwhile, the US Dollar Index (DXY) – which measures the performance of the US Dollar (USD) against a basket of currencies – is rolling through markets. The index gains ground after Trump said over the weekend that he would impose tariffs if BRICS countries tried to replace the USD with their own reserve currency.
The Euro (EUR), the main currency in the DXY basket, is struggling due to increasing odds of the French government falling as early as this week as Marine Le Pen threatened to support a no-confidence vote against the current prime minister unless the government accepts some of its demands about the budget. French Finance Minister Antoine Armand said Monday on Bloomberg television that France will not be held hostage, but markets have started to price in this political turmoil by punishing France’s sovereign debt.
At the time of writing, Crude Oil (WTI) trades at $68.41 and Brent Crude at $72.35.
Oil news and market movers: Iran calls out what everyone knows
- Afshin Javan, the No. 2 official in the Iranian delegation to OPEC+, published an opinion piece on November 26 that got picked up by Bloomberg on Monday. OPEC+ faces a supply glut largely of its own making following several years of production cuts. “This strategy in support of prices has effectively encouraged higher supply outside the group, particularly on the part of the US,” he said.
- Poland has shut down part of the Druzhba pipeline after detecting a leak, Bloomberg reported on Sunday, citing Polish media and the local firefighting service that responded to the leak report.
- OPEC+ is set to meet on Thursday online to discuss what to do with its production curbs for 2025.
Oil Technical Analysis: OPEC+ is seeing internal struggle
Crude Oil prices are stuck in a tight range as it appears that the OPEC+ theater is starting to fall apart. With the outlash from Iran, a heated discussion could be taking place on Thursday. Still, in terms of production curbs, OPEC+ can do little to tweak expectations, so the chances for more downturn in Oil prices are bigger than those for an upturn.
On the upside, the pivotal level at $71.46 and the 100-day Simple Moving Average (SMA) at $72.01 are the two main resistances. The 200-day SMA at $76.18 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
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
Most recent article: Silver price today: Silver falls, according to FXStreet data
Silver prices (XAG/USD) fell on Monday, according to FXStreet data. Silver trades at $30.27 per troy ounce, down 1.09% from the $30.61 it cost on Friday.
Silver prices have increased by 27.22% since the beginning of the year.
| Unit measure | Silver Price Today in USD |
|---|---|
| Troy Ounce | 30.27 |
| 1 Gram | 0.97 |
The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 87.07 on Monday, up from 86.75 on Friday.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
(An automation tool was used in creating this post.)
- The Pound Sterling falls on Monday against the US Dollar after Donald Trump threatened BRICS with 100% tariffs, supporting the Greenback.
- Trump said he would impose tariffs if the trading group tried to replace the US Dollar with their own reserve currency.
- Technically, GBP/USD remains in an uptrend, within which it is undergoing a correction.
The Pound Sterling (GBP) pulls back below the 1.2700 mark on Monday after more invective from President-elect Donald Trump bolsters the US Dollar (USD).
In a post on social media, Trump railed against the BRICS trading bloc’s plans to replace the US Dollar with their own currency. If the emerging-market trading bloc goes ahead, warned Trump, he would hit them with 100% tariffs.
The GBP/USD pair bounces briefly, however, following the release of UK house price data that showed dwellings’ prices rose more than expected in November, as this provided support to the Pound Sterling.
Pound Sterling pulls back after Trump throws BRICS
The GBP/USD pair is trading lower on Monday after rising quite strongly in the previous week, when it clocked gains of 1.71%.
The pair is falling after Donald Trump threatened to impose 100% tariffs on the BRICS trading bloc of nations, which includes Brazil, Russia, India, China, South Africa, Egypt, Iran, the United Arab Emirates and Ethiopia. Trump said he would impose the tariffs if the group goes ahead with plans to replace the US Dollar as their main medium of exchange.
“The idea that the BRICS Countries are trying to move away from the Dollar while we stand by and watch is OVER,” Trump posted on Truth Social on Saturday afternoon. “We require a commitment from these Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful U.S. Economy,” he added.
Pound Sterling gets bump from UK house prices
GBP/USD recovered some lost ground after the release of Nationwide Housing Prices early on Monday showed a rise of 3.7% YoY in November, beating estimates of 2.4% and the previous month’s 2.4% YoY rise.
On a seasonally-adjusted monthly basis, Nationwide House Prices rose 1.2% – well above the 0.2% expected and 0.1% previous estimate.
UK Money and Lending data out on Friday, meanwhile, showed a fall in Consumer Credit in October. Mortgage Approvals, however, unexpectedly rose.
The overall takeaway, according to economists at advisory service Capital Economics, was that the data suggested “downside risks” to UK economic growth in Q4.
“October’s money and lending figures suggest that Budget worries prompted households to become more cautious with their borrowing and saving,” said Capital in a note. “Today’s data release adds a bit further downside risk to our Q4 GDP growth forecast of +0.4% q/q,” it added.
GBP/USD and outlook for interest rates
In terms of the outlook for interest rates – a major driver of currency valuations – the Pound Sterling and the US Dollar are well-matched.
Both the Bank of England (BoE) and the US Federal Reserve (Fed) are seen as likely to cut interest rates at their December policy meetings as inflation in both countries eases.
The swaps market is pricing a probability of around 60% that the BoE will cut interest rates by 0.25% at their December meeting, according to Brown Brothers Harriman (BBH). The US futures market, meanwhile, is pricing in around a 67% probability of a same-sized cut at their December meeting, according to the CME FedWatch tool.
This could limit volatility for GBP/USD as lower interest rates would be bearish for both currencies since they reduce foreign capital inflows.
Technical Analysis: GBP/USD pulls back within uptrend
GBP/USD pulls back below the 1.2700 level and finds support in the 1.2660s. The pair remains within a short-term uptrend, which is still intact despite Monday’s losses. Since it is a principle of technical analysis that “the trend is your friend” the odds continue to favor an extension of this trend higher.
GBP/USD 4-hour Chart
A break above 1.2750 would probably activate the next upside target at around 1.2824, where the (green) 200-period Simple Moving Average (SMA) is situated.
A continuation lower, however, could take the pair down to support at 1.2671, the mid-November lows.
The blue Moving Average Convergence Divergence (MACD) indicator has crossed below its red signal line, suggesting more weakness to come.
The medium-term trend is still bearish, indicating a risk to the downside, whilst the longer-term trend – it could be argued – is still probably bullish, further complicating the picture.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Here is what you need to know on Monday, December 2:
The US Dollar (USD) gathers strength against its major rivals to begin the month of December. The US economic calendar will feature Construction Spending for October and ISM Manufacturing PMI data for November. During the European trading hours, Sentix Investors Confidence for December and the Unemployment Rate figure for October from the Euro area will be watched closely by market participants.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.47% | 0.28% | 0.41% | 0.24% | 0.08% | 0.25% | 0.40% | |
| EUR | -0.47% | -0.23% | -0.05% | -0.22% | -0.30% | -0.21% | -0.04% | |
| GBP | -0.28% | 0.23% | 0.17% | 0.01% | -0.06% | 0.02% | 0.16% | |
| JPY | -0.41% | 0.05% | -0.17% | -0.18% | -0.30% | -0.14% | -0.08% | |
| CAD | -0.24% | 0.22% | -0.01% | 0.18% | 0.00% | 0.02% | 0.14% | |
| AUD | -0.08% | 0.30% | 0.06% | 0.30% | 0.00% | 0.08% | 0.22% | |
| NZD | -0.25% | 0.21% | -0.02% | 0.14% | -0.02% | -0.08% | 0.16% | |
| CHF | -0.40% | 0.04% | -0.16% | 0.08% | -0.14% | -0.22% | -0.16% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Over the weekend, US President-elect Donald Trump wrote on Truth Social that BRICS nations would face 100% tariffs if there were to create a new currency to replace the USD. "There is no chance that the BRICS will replace the US Dollar in international trade, and any country that tries should wave goodbye to America," he said. After losing more than 1.5% in the previous week, the USD recovers early Monday and stays in positive territory above 106.00 in the European morning. Meanwhile, US stock index futures trade in negative territory, pointing to a cautious market mood at the start of the week.
During the Asian trading hours, the data from Australia showed that Retail Sales rose by 0.6% on a monthly basis in October. This reading followed the 0.1% increase recorded in September and came in better than the market expectation for a growth of 0.3%. AUD/USD largely ignored this data and was last seen moving sideways slightly above 0.6500.
EUR/USD closed the day in positive territory above 1.0500 on Friday and registered weekly gains. The pair corrects lower early Monday and fluctuates in the red below 1.0550.
After rising more than 1.5% last week, GBP/USD edges lower and trades at around 1.2700 in the European morning. The data from the UK showed that Nationwide Housing Prices rose 1.2% on a monthly basis in November.
Gold posted gains on Friday but failed to preserve its recovery momentum at the beginning of the week. At the time of press, XAU/USD was trading below $2,630, losing nearly 1% on the day.
USD/JPY extended its slide on Friday and lost more than 3% for the week. The pair rebounds toward 150.50 in the European morning, gaining nearly 0.5% on the day.
BRICS FAQs
The BRICS is the acronym denoting the grouping of Brazil, Russia, India, China and South Africa. The name was created by Goldman Sachs’ economist Jim O’Neill in 2001, years before the alliance between these countries was formally established, to refer to a group of developing economies that were predicted back then to lead the global economy by 2050. The bloc is seen as a counterweight to the G7, the group of developed economies formed by Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.
The BRICS is a bloc which intends to give voice to the so-called “Global South”. The alliance tends to have similar views on geopolitical and diplomatic issues, but still lacks a clear economic integration as the governing systems and cultural divergence between its members is significant. Still, it holds yearly summits at the highest level, coordinates multilateral policies and has implemented initiatives such as the creation of a joint development bank. Egypt, Ethiopia, Iran and the United Arab Emirates joined the group in January 2024.
The five founding members of the BRICS alliance account for 32% of the global economy measured at purchasing power parity as of April 2023, according to data from the International Monetary Fund. This compares with the 30% of the G7 group.
There has been increasing speculation about the BRICS alliance creating a currency backed by some sort of commodity like Gold. The proposal is meant to reduce the use of the dominant US Dollar in cross-border economic exchanges. In the BRICS’ 2023 summit, the group stressed the importance of encouraging the use of local currencies in international trade and financial transactions between the members of the bloc as well as their trading partners. The group also tasked finance ministers and central bank governors “to consider the issue of local currencies, payment instruments and platforms” for this purpose. Even if the bloc’s de-dollarization strategy looks clear, the creation and implementation of a new currency seems to have a long way to go.
- GBP/USD trades in the negative territory around 1.2700 in Monday’s early European session.
- The negative outlook of the pair remains intact below the 100-day EMA, with a bearish RSI indicator.
- The first downside target to watch is the 1.2600 psychological level; the immediate resistance level is seen at 1.2834.
The GBP/USD pair tumbles to near 1.2700 during the early European session on Monday, pressured by the firmer US Dollar (USD) broadly. The US President-elect Donald Trump's tariff threats, the rising geopolitical tensions in West Asia and the rising expectation for less aggressive Fed rate cuts support the Greenback and act as a headwind for GBP/USD. The release of US ISM Manufacturing Purchasing Managers Index (PMI) data will be the highlight on Monday.
Technically, the negative view of GBP/USD prevails, with the price holding below the key 100-day Exponential Moving Average (EMA) on the daily chart. The downward momentum of the major pair is reinforced by the 14-day Relative Strength Index (RSI), which stands below the midline around 44.40.
The initial support level for GBP/USD emerges at the 1.2600 psychological level. Sustained bearish momentum could drag the major pair to the lower limit of the Bollinger Band at 1.2445. A break below this level could push prices lower toward 1.2331, the low of April 23.
On the bright side, the first upside barrier is located at 1.2834, the low of November 6. Extended gains above this level could pave the way for a test of the 1.2890-1.2900 zone, representing the round mark and the 100-day EMA. The psychological level and the upper boundary of the Bollinger Band of 1.3000 appear to be a tough nut to crack for bulls.
GBP/USD daily chart
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
European Central Bank (ECB) policymaker Martins Kazaks said on Monday, “in my view, rate cuts must continue.”
He added that “we see that the inflation problem will soon end.”
Market reaction
The above comments fail to affect the Euro , as EUR/USD loses 0.48% on the day to trade near 1.0525, at the press time.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.49% | 0.35% | 0.50% | 0.27% | 0.18% | 0.36% | 0.43% | |
| EUR | -0.49% | -0.18% | 0.03% | -0.22% | -0.23% | -0.12% | -0.02% | |
| GBP | -0.35% | 0.18% | 0.17% | -0.03% | -0.04% | 0.06% | 0.12% | |
| JPY | -0.50% | -0.03% | -0.17% | -0.23% | -0.29% | -0.11% | -0.13% | |
| CAD | -0.27% | 0.22% | 0.03% | 0.23% | 0.06% | 0.10% | 0.15% | |
| AUD | -0.18% | 0.23% | 0.04% | 0.29% | -0.06% | 0.10% | 0.15% | |
| NZD | -0.36% | 0.12% | -0.06% | 0.11% | -0.10% | -0.10% | 0.08% | |
| CHF | -0.43% | 0.02% | -0.12% | 0.13% | -0.15% | -0.15% | -0.08% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
FX option expiries for Dec 2 NY cut at 10:00 Eastern Time via DTCC can be found below.
EUR/USD: EUR amounts
- 1.0550 828m
- 1.0600 847m
- 1.0625 2.3b
- 1.0700 1.5b
GBP/USD: GBP amounts
- 1.3000 790m
USD/JPY: USD amounts
- 150.00 705m
- 152.00 590m
- 152.50 490m
AUD/USD: AUD amounts
- 0.6500 404m
- WTI drops to near $68.25 on a stronger USD in Monday’s early European session.
- Improved Chinese economic data and geopolitical risks might cap the WTI’s downside.
- Oil traders brace for the OPEC+ meeting on Thursday for fresh impetus.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $68.25 on Monday. The WTI price edges lower as the stronger US Dollar (USD) broadly drags the USD-denominated commodity price lower.
US President-elect Donald Trump's statement that he will impose tariffs has led to fears that it could slow the pace of the Federal Reserve's (Fed) easing cycle, boosting the USD. The rise of the USD against other currencies generally lowers oil demand by making oil more expensive for those who use foreign currencies. According to the CME FedWatch Tool, the money markets have priced in a nearly 67.1% chance that the Fed will cut rates by a quarter point in December, while there is a 32.9% probability that the policy rate will remain unchanged.
The encouraging Chinese economic data released on Monday could provide some support to the black gold, as China is a major consumer of crude oil in the global market. China’s Caixin Manufacturing PMI jumped to 51.5 in November versus 50.3 in October, beating the estimation of 50.5. This growth was driven by the increase in foreign orders since February 2023 and exports.
Furthermore, heightened geopolitical tensions in West Asia raise concerns about supply disruptions from the region, which might lift the WTI price. Iran extended its support to the Syrian government after insurgents took control of Syria’s Aleppo city.
Looking ahead, Oil traders will keep an eye on the OPEC+ (Organization of the Petroleum Exporting Countries, and allies) meeting on Thursday to discuss output policy for 2025. The meeting was originally scheduled for Sunday. "An indefinite delay may be the best case for oil prices, given that earlier rounds of delays by a month or so have failed to drive higher oil prices in line with what OPEC+ intended,” said Tony Sycamore, IG's Sydney-based market analyst.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- AUD/USD attracts some sellers on Monday amid a goodish pickup in the USD demand.
- Bets for slower Fed rate cuts lift the US bond yields higher and lend support to the USD.
- US-China trade war concerns further contribute to driving flows away from the Aussie.
The AUD/USD pair starts a new week/month on a weaker note and slides back below the 0.6500 psychological mark during the Asian session, snapping a three-day winning streak. Moreover, the fundamental backdrop supports prospects for the resumption of the recent downtrend witnessed over the past two months or so.
Worries about the second wave of the US-China trade war after US President-elect Donald Trump takes office in January drive some haven flows towards the US Dollar (USD) and undermine the China-proxy Australian Dollar (AUD). In fact, Trump has pledged big tariffs against America’s three biggest trading partners – Mexico, Canada and China. Furthermore, Trump threatened a 100% tariff on the so-called 'BRICS' nations – Brazil, Russia, India, China, and South Africa – if they replace the USD with another currency for international transactions.
Meanwhile, the growing market conviction that Trump's tariff plans could push consumer prices higher and restrict the Federal Reserve (Fed) from easing its monetary policy further triggers a fresh leg up in the US Treasury bond yields. Apart from this, persistent geopolitical risks stemming from the protracted Russia-Ukraine war assist the safe-haven USD in staging a recovery from a nearly three-week low touched on Friday. This overshadows the Reserve Bank of Australia's (RBA) hawkish stance and does little to lend support to the Aussie.
Data released over the weekend showed that China’s official Manufacturing Purchasing Managers' Index (PMI) edged up to 50.3 in November from 50.2, while the NBS Non-Manufacturing PMI eased to 50.0 during the reported month from 50.2 in October. Adding to this, China's Caixin Manufacturing PMI jumped to 51.5 in November from 50.3. Moreover, investors remain hopeful that the government will introduce more stimulus to bolster domestic demand. This, however, fails to impress bulls or provide any respite to the AUD/USD pair.
The aforementioned fundamental backdrop suggests that the path of least resistance for spot prices is to the downside, though traders might refrain from placing aggressive bets ahead of key US macro data scheduled at the beginning of a new week. This week's busy US economic docket kicks off with the release of the ISM Manufacturing PMI, which might influence the USD and allow traders to grab short-term opportunities. The focus, however, remains glued to the closely watched US jobs data, or the Nonfarm Payrolls (NFP) report on Friday.
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
“At some point, policy needs to be driven by upcoming risks rather than being backward-looking,” European Central Bank (ECB) Chief Economist Phillip Lane said in a Financial Times (FT) interview on Monday.
Additional quotes
But that is once we are sure inflation is in line to hit 2% target.
There is a little bit of distance to go in that regard.
Services inflation needs to come down further.
Once disinflation process is completed, monetary policy needs to be forward-looking.
As data dependence falls down in priority, the new challenge will be to assess incoming risks.
That will still be done on a meeting-by-meeting basis.
Market reaction
EUR/USD was last seen trading 0.48% lower on the day at 1.0525.
- Gold price meets with heavy supply on Monday and snaps a four-day winning streak.
- Rebounding US bond yields help revive the USD demand and weigh on the commodity.
- Trade war concerns and geopolitical risks do little to lend support to the XAU/USD.
Gold price attracts heavy selling at the start of a new week/month and drops to the $2,623-2,622 area during the Asian session, snapping a four-day winning streak amid a goodish pickup in the US Dollar (USD) demand. Expectations that US President-elect Donald Trump's tariff plans could reignite inflationary pressures and limit the scope for the Federal Reserve (Fed) to cut interest rates trigger a fresh leg up in the US Treasury bond yields. This, in turn, assists the USD to stage a solid bounce from a nearly three-week low touched on Friday and turns out to be a key factor driving flows away from the non-yielding yellow metal.
The markets, however, are still pricing in a greater chance that the US central bank will lower borrowing costs later this month. This, along with persistent geopolitical risks stemming from the protracted Russia-Ukraine war and conflicts in the Middle East, helps limit losses for the safe-haven Gold price. Traders also seem reluctant and opt to wait for this week's important US macro releases, including the closely watched Nonfarm Payrolls (NFP) report, for cues about the Fed's rate-cut path. This, in turn, will play a key role in influencing the USD price dynamics and determining the next leg of a directional move for the XAU/USD.
Gold price is pressured by rising US bond yields and a strong pickup in the USD demand
- The US Dollar staged a goodish recovery from its lowest level since November 12 touched last Friday amid a fresh leg up in the US Treasury bond yields and weighs on the Gold price at the start of a new week/month.
- Investors seem convinced that US President-elect Donald Trump's tariff plans could trigger the second wave of trade wars and push consumer prices higher, forcing the Federal Reserve to stop cutting rates.
- In a critical post over the weekend, Trump threatened a 100% tariff on BRICS nations – Brazil, Russia, India, China, and South Africa – if they replace the USD with another currency for international transactions.
- Ukrainian President Volodymyr Zelenskyy has stated that he is willing to give up occupied Ukrainian territory to Russia, albeit with some conditions, in order to reach a ceasefire agreement and achieve peace.
- Russian and Syrian jets have carried out a series of air strikes on Syrian rebels led by the jihadi group Hayat Tahrir al-Sham, who took over most of Aleppo in a shock offensive on Saturday and entered the city of Hama.
- China’s official Manufacturing Purchasing Managers' Index (PMI) edged up to 50.3 in November from 50.2, while the NBS Non-Manufacturing PMI eased to 50.0 during the reported month from October’s 50.2.
- China's Caixin Manufacturing Purchasing Managers' Index (PMI) jumped to 51.5 in November after recording 50.3 in October amid hopes that the government will introduce more stimulus to bolster domestic demand.
- This week's important US macroeconomic releases, starting with the ISM Manufacturing PMI later this Monday, will be looked for interest rate cuts, which, in turn, will drive the USD and the non-yielding XAU/USD.
Gold price seems vulnerable; one-week-old ascending channel breakdown in play
From a technical perspective, an intraday slide below the lower boundary of a nearly one-week-old descending channel could be seen as a key trigger for bearish traders. Moreover, oscillators on daily/4-hour charts have again started gaining negative traction and suggest that the path of least resistance for the Gold price is to the downside. Hence, a subsequent fall back towards last week's swing low, around the $2,605 region, looks like a distinct possibility. Some follow-through selling below the $2,600 mark would expose the 100-day Simple Moving Average (SMA), currently pegged near the $2,575 region.
On the flip side, the ascending trend-channel support breakpoint, around the $2,642-2,643 area, might now act as an immediate hurdle ahead of the $2,652 static resistance and last Friday's swing high, around the $2,665 region. Some follow-through buying should allow the Gold price to reclaim the $2,700 round-figure mark and extend the positive move further towards the $2,721-2,722 supply zone. The latter should act as a pivotal point, which if cleared decisively will suggest that the recent corrective decline from the all-time peak touched in October has run its course and pave the way for a further appreciating move.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Gold prices fell in India on Monday, according to data compiled by FXStreet.
The price for Gold stood at 7,158.86 Indian Rupees (INR) per gram, down compared with the INR 7,226.77 it cost on Friday.
The price for Gold decreased to INR 83,499.88 per tola from INR 84,291.67 per tola on friday.
| Unit measure | Gold Price in INR |
|---|---|
| 1 Gram | 7,158.86 |
| 10 Grams | 71,588.90 |
| Tola | 83,499.88 |
| Troy Ounce | 222,667.20 |
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.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
(An automation tool was used in creating this post.)
- NZD/USD softens to near 0.5895 in Monday’s European session.
- China's Caixin Manufacturing PMI grew more than expected in November.
- The US ISM Manufacturing PMI is due later on Monday.
The NZD/USD pair trades on a softer note around 0.5895 on Monday during the Asian trading hours. The expectation of another rate cut by the Reserve Bank of New Zealand (RBNZ) in February 2025 and Trump tariff threats continue to undermine the pair. The US ISM Manufacturing Purchasing Managers' Index (PMI) for November will be in the spotlight later on Monday.
The RBNZ Governor Adrian Orr hinted during the press conference last week that another double cut would be possible in February 2025, citing the context of growth in New Zealand. This, in turn, drags the Kiwi lower against the US Dollar (USD) for the time being. Furthermore, Trump has pledged a 25% tariff on all products from Mexico and Canada and an additional 10% tariff on goods from China. The tariffs could lead to a global trade war and may impact the New Zealand economy as China is New Zealand's largest trading partner.
Data released by Caixin Insight Group and S&P Global showed on Monday that the Chinese Manufacturing PMI rose to 51.5 in November versus 50.3 in October, beating the estimation of 50.5. However, the upbeat economic data failed to boost the NZD against the USD amid the cautious mood.
Traders await the fresh catalysts from the US ISM Manufacturing PMI data on Monday, which is forecasted to improve to 47.5 in November from 46.5 in October. Later this week, the Fed speakers might offer some hints about the US interest rate policy outlook, along with the US employment report for November.
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- USD/CAD catches aggressive bids on Monday amid a goodish pickup in the USD demand.
- Bets for a slower Fed rate-cutting cycle and rebounding US bond yields underpin the USD.
- Rising Oil prices do little to benefit the Loonie or hinder the pair’s intraday positive move.
The USD/CAD pair regains strong positive traction at the start of a new week and climbs to the 1.4040 area during the Asian session, snapping a three-day losing streak amid a goodish pickup in the US Dollar (USD) demand.
US President-elect Donald Trump's tariff plans could push consumer prices higher and set the stage for the Federal Reserve (Fed) to stop cutting rates. This, in turn, triggers a fresh leg up in the US Treasury bond yields and assists the USD in staging a goodish recovery from a nearly three-week low touched on Friday, which, in turn, is seen as a key factor acting as a tailwind for the USD/CAD pair.
In fact, Trump threatened a 100% tariff on the so-called 'BRICS' nations – Brazil, Russia, India, China, and South Africa. Adding to this, Trump's pledged big tariffs against America’s three biggest trading partners – Mexico, Canada and China – overshadows a modest uptick in Crude Oil prices. This, in turn, does little to lend any support to the commodity-linked Loonie or hinder the USD/CAD pair's move up.
The aforementioned fundamental backdrop suggests that the path of least resistance for spot prices is to the upside, though traders might refrain from placing aggressive bets ahead of this week's important US macro data. The US ISM Manufacturing PMI is due for release later this Monday and might provide some impetus. The focus, however, remains on the crucial Nonfarm Payrolls (NFP) report on Friday.
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
- The Indian Rupee weakens in Monday’s early Asian session.
- Persistent portfolio outflows and weak domestic macroeconomic data undermine the INR.
- Investors brace for the HSBC India Manufacturing PMI and US ISM Manufacturing PMI, which are due later on Monday.
The Indian Rupee (INR) remains under some selling pressure on Monday after reaching an all-time low in the previous session. Donald Trump's victory in the US Presidential election sparked a wave of Greenback strength and dragged the INR lower. Additionally, the weaker-than-expected Gross Domestic Product (GDP) data for the July-September quarter could spark fresh outflows from stocks, weighing on the local currency.
Donald Trump threatened 100% tariffs on BRICS nations, including India, if they went ahead with developing their common currency to replace the USD. Meanwhile, India has been cautious in its ambitious move to de-dollarise even as the United States recently became India's leading trading partner.
Investors await the HSBC India Manufacturing Purchasing Managers' Index (PMI) for November, which is estimated to ease to 57.3 from 57.5 in October. On Friday, the Reserve Bank of India (RBI) interest rate decision will be in the spotlight. Goldman Sachs analysts expect the Indian central bank to maintain the repo rate and policy stance unchanged but sound cautious on food inflation and acknowledge the moderation in growth. On the US docket, the ISM Manufacturing PMI will be released later on Monday.
Indian Rupee seems vulnerable amid unabated foreign fund outflows, downbeat GDP data
- India’s real GDP growth slumped to a seven-quarter low of 5.4% in the July to September 2024 quarter from a 6.7% growth in the first quarter (Q1). The RBI forecast GDP growth of 6.8% in Q2.
- "Despite the sharp slowdown in GDP growth, we maintain our view of a pause by the RBI next week given elevated inflation and an uncertain global environment," noted Upasna Bhardwaj, chief economist at Kotak Mahindra Bank.
- US President-elect Donald Trump said on Saturday that the BRICS Countries should use the US Dollar (USD) as their reserve currency and threatened to impose a 100% tariff if they supported another currency to replace the USD, per BBC.
- The US ISM Manufacturing PMI is expected to improve to 47.5 in November from 46.5 in October.
USD/INR maintains a strong uptrend in the longer term
The Indian Rupee trades weaker on the day. Technically, the constructive outlook of the USD/INR pair remains in play on the daily chart as the pair holds above the key 100-day Exponential Moving Average (EMA). The upward momentum is supported by the 14-day Relative Strength Index, which is located above the midline near 65.85, suggesting the path of least resistance is to the upside.
Bullish candlesticks and sustained trading above the ascending trend channel at 84.55 could lead USD/INR to the 85.00 psychological mark.
On the downside, bearish candlesticks below the lower limit of the trend channel of 84.28 could drag the pair back to 83.96, the 100-day EMA. If there’s enough bearish momentum, USD/INR could head for 83.65, the low of August 1.
Indian Rupee FAQs
The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee.
The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference.
Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee.
Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
- The Japanese Yen weakens against the USD and is weighed down by a combination of factors.
- Rebounding US bond yields and a positive risk tone drive flows away from the safe-haven JPY.
- A strong pickup in the USD demand contributes to USD/JPY’s move back above mid-150.00s.
The Japanese Yen (JPY) drifts lower against its American counterpart at the start of a critical week and reverses a part of Friday's strong move up to the highest level since October 21. The US Treasury bond yields regain positive traction in reaction to US President-elect Donald Trump's threatened 100% tariffs on BRICS nations. This, in turn, helps revive the US Dollar (USD) demand and turns out to be a key factor driving flows away from the lower-yielding JPY.
Apart from this, the underlying bullish tone around the equity markets further undermines demand for the safe-haven JPY. That said, persistent geopolitical tensions and rising bets for another interest rate cut by the Bank of Japan (BoJ) in December should limit deeper JPY losses. Traders might also refrain from placing aggressive directional bets and opt to wait for this week's important US macro releases, starting with the ISM Manufacturing PMI later this Monday.
Japanese Yen attracts fresh sellers as rising US bond yields revive USD demand; BoJ rate hike bets could limit losses
- US President-elect Donald Trump threatened a 100% tariff on the so-called 'BRICS' nations – Brazil, Russia, India, China, and South Africa – if they replace the US Dollar with another currency for international transactions.
- This comes on top of Trump's pledge to impose big tariffs against America’s three biggest trading partners – Mexico, Canada and China – and adds to market concerns about the second wave of a global trade war.
- Investors now seem convinced that Trump's tariff plans and expansionary policy could push consumer prices higher, setting the stage for the Federal Reserve to stop cutting interest rates or possibly raise them again.
- The prospects for a less dovish Fed trigger a fresh leg up in the US bond yields, which assists the USD to recover from a near three-week low and is seen driving flows away from the lower-yielding Japanese Yen.
- Friday's stronger consumer inflation figures from Tokyo, Japan's capital, signaled that the underlying inflation is gaining momentum and backed the case for another rate hike by the Bank of Japan in December.
- BoJ Governor Kazuo Ueda said on Saturday that the next interest rate hikes are nearing in the sense that economic data are on track, though he would like to see what kind of momentum the fiscal 2025 Shunto creates.
- Japan's Ministry of Finance reported this Monday that Capital Spending rose 8.1% year-on-year in the third quarter, signaling that strong domestic demand was underpinning the fragile economic recovery.
- Russian and Syrian jets have carried out a series of air strikes on Syrian rebels led by the jihadi group Hayat Tahrir al-Sham, who took over most of Aleppo in a shock offensive on Saturday and also entered the city of Hama.
- Ukrainian President Volodymyr Zelenskyy has stated that he is willing to give up occupied Ukrainian territory to Russia, albeit with some conditions, in order to reach a ceasefire agreement and achieve peace.
- China’s official Manufacturing Purchasing Managers' Index (PMI) edged up to 50.3 in November from 50.2, while the NBS Non-Manufacturing PMI eased to 50.0 during the reported month from October’s 50.2.
- China's Caixin Manufacturing Purchasing Managers' Index (PMI) jumped to 51.5 in November after recording 50.3 in October amid hopes that the government will introduce more stimulus to bolster domestic demand.
- Investors now look to this week's important US macro releases, including the closely watched US monthly employment details (NFP) report, for cues about the Fed's future rate-cut path and some meaningful impetus.
USD/JPY might struggle to capitalize on the positive move and remain capped near the 200-day SMA pivotal resistance
From a technical perspective, any further move up is likely to confront stiff resistance near the 151.00 round-figure mark amid negative oscillators on the daily chart. A sustained strength beyond, however, could trigger a short-covering rally and lift the USD/JPY pair to the 151.65 intermediate hurdle en route to the 152.00 mark. The latter represents the very important 200-day Simple Moving Average (SMA) and should act as a key pivotal point. Some follow-through buying will suggest that the recent corrective pullback from a multi-month top has run its course and shift the near-term bias back in favor of bullish traders.
On the flip side, the 150.00 psychological mark now seems to protect the immediate downside ahead of Friday's swing low, around the 149.45 region. Some follow-through selling has the potential to drag the USD/JPY pair further towards the 149.00 round figure en route to the next relevant support 147.60-147.55 support and the 148.00 mark (50% retracement level of the September-November rally).
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
| Raw materials | Closed | Change, % |
|---|---|---|
| Silver | 30.596 | 1.29 |
| Gold | 2655.25 | 0.62 |
| Palladium | 984.93 | 0.6 |
- EUR/USD loses momentum to near 1.0530 in Monday’s Asian session.
- Eurozone's inflation rose to 2.3% YoY in November.
- The cautious stance of the Fed provides some support to the USD and acts as a headwind for EUR/USD.
The EUR/USD pair faces some selling pressure to around 1.0530 amid the firmer US Dollar (USD) during the early Asian trading hours on Monday. Investors will closely monitor the speech by the European Central Bank’s (ECB) President Christine Lagarde and the release of the US ISM Manufacturing Purchasing Managers' Index (PMI), which is due later on Monday.
Inflation in the Eurozone, as measured by the Harmonized Index of Consumer Prices (HICP), rose to 2.3% YoY in November from 2.0% in October, in line with market expectations. This figure overreached the ECB 2.0% target. Meanwhile, the Core HICP climbed by 2.8% YoY in November, compared to 2.7% in the previous reading, which was also in line with expectations.
Market participants have fully priced in a 25 basis points (bps) rate cut from the ECB in December, which would signify the bank’s fourth rate reduction this year. However, expectations of a substantial 50 bps reduction have been dwindling since last month, with slight enhancements in the Eurozone’s tepid growth forecast. The expectation that the ECB will cut interest rates at their December meeting exerts some selling pressure on the Euro (EUR).
On the other hand, the cautious stance of the US Federal Reserve (Fed) might continue to underpin the Greenback. Fed Chair Jerome Powell highlighted that “the economy is not sending any signals that we need to be in a hurry to lower rates. Powell added that “the strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.” The markets now see nearly a 65.4% odd that the Fed will cut rates by a quarter point in December, according to the CME FedWatch Tool.
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
China's Caixin Manufacturing Purchasing Managers' Index (PMI) jumped to 51.5 in November after recording 50.3 in October, the latest data showed on Monday.
The market forecast was for a 50.5 figure in the reported month.
AUD/USD reaction to China’s PMI data
At the time of writing, AUD/USD is trading 0.35% lower on the day at 0.6501.
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
- GBP/USD kicks off the new week on a weaker note amid the emergence of some USD buying.
- Trump's tariff threats, geopolitical risks and bets for a less aggressive Fed easing boost the USD.
- Diminishing odds for a December BoE rate cut could offer support to the GBP and the major.
The GBP/USD pair attracts some sellers on the first day of a new week and reverses a major part of Friday's positive move to mid-1.2700s, or a nearly three-week high. The intraday slide drags spot prices back below the 1.2700 mark in the last hour and is sponsored by a goodish pickup in the US Dollar (USD) demand.
Against the backdrop of persistent geopolitical risks, worries about the second wave of trade war after US President-elect Donald Trump takes office in January drive some haven flows towards the Greenback and exert some pressure on the GBP/USD pair. In fact, Trump threatened a 100% tariff on the so-called 'BRICS' nations – Brazil, Russia, India, China, and South Africa – if they replace the USD with another currency for international transactions.
Trump has also promised big tariffs against America’s three biggest trading partners – Mexico, Canada and China. This could push consumer prices higher and set the stage for the Federal Reserve (Fed) to stop cutting interest rates or possibly raise them again. Apart from this, the cautious market mood turns out to be another factor that assists the safe-haven buck in recovering a part of last week's heavy losses to its lowest level since November 12.
The downside for the GBP/USD pair, however, seems limited on the back of reduced bets for another interest rate cut by the Bank of England (BoE) this year. Data released recently showed that the underlying price growth in the UK gathered speed and accelerated sharply to the 2.3% YoY rate in October. This suggests that the BoE will move cautiously, which could underpin the British Pound (GBP) and lend some support to the currency pair.
Traders might also refrain from placing aggressive directional bets ahead of this week's important US macro data scheduled at the beginning of a new month, starting with the ISM Manufacturing PMI later this Monday. The market focus, however, will be on the critical US monthly employment details, popularly known as the Nonfarm Payrolls (NFP) report on Friday. This might provide cues about the Fed's rate cut path and influence the USD price dynamics.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.47% | 0.40% | 0.41% | 0.32% | 0.27% | 0.42% | 0.37% | |
| EUR | -0.47% | -0.11% | -0.05% | -0.13% | -0.10% | -0.02% | -0.08% | |
| GBP | -0.40% | 0.11% | 0.04% | -0.02% | 0.02% | 0.09% | 0.00% | |
| JPY | -0.41% | 0.05% | -0.04% | -0.08% | -0.09% | 0.06% | -0.09% | |
| CAD | -0.32% | 0.13% | 0.02% | 0.08% | 0.11% | 0.11% | 0.03% | |
| AUD | -0.27% | 0.10% | -0.02% | 0.09% | -0.11% | 0.07% | -0.01% | |
| NZD | -0.42% | 0.02% | -0.09% | -0.06% | -0.11% | -0.07% | -0.06% | |
| CHF | -0.37% | 0.08% | -0.01% | 0.09% | -0.03% | 0.01% | 0.06% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Bank of Japan (BoJ) Governor Kazuo Ueda said on Saturday that the next interest rate hikes are "nearing in the sense that economic data are on track, per Reuters.
Key quotes
"I would like to see what kind of momentum the fiscal 2025 shunto (spring wage negotiation) creates.”
"There is a big question mark left on the outlook for U.S. economic policy.”
“We will adjust the degree of monetary easing at the appropriate time if we become confident or certain that the economy will move as forecasted by our economic and price outlook — particularly that the underlying inflation rises toward 2%.”
The next rate hike is “nearing in the sense that economic data are on track.”
Market reaction
At the time of writing, the USD/JPY pair is trading around 150.26, up 0.42% on the day.
Bank of Japan FAQs
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
The People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead on Monday at 7.1865, as compared to Friday's fix of 7.1877.
Australia’s Retail Sales, a measure of the country’s consumer spending, climbed 0.6% MoM in October, compared to a rise of 0.1% in September, the official data published by the Australian Bureau of Statistics (ABS) showed on Monday.
The reading came in above the market expectations of a 0.3% growth.
Market reaction to Australia’s Retail Sales data
At the time of writing, the AUD/USD pair is down 0.37% on the day at 0.6500.
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
US President-elect Donald Trump wrote on his social media platform, Truth Social, on Saturday, demanding the BRICS countries use the US Dollar (USD) as their reserve currency and threatened to impose a 100% tariff if they supported another currency to replace the USD, per BBC.
The statement comes as Trump steps up his tariff threats after he announced plans to impose a 25% tariff on Mexico and Canada and an extra 10% tariff on China over illegal migration and drug trafficking into the United States.
Market reaction
At the time of writing, the US Dollar Index (DXY) is trading around 106.10, up 0.35% on the day.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
| Index | Change, points | Closed | Change, % |
|---|---|---|---|
| NIKKEI 225 | -141.03 | 38208.03 | -0.37 |
| Hang Seng | 56.65 | 19423.61 | 0.29 |
| KOSPI | -48.76 | 2455.91 | -1.95 |
| ASX 200 | -8.1 | 8436.2 | -0.1 |
| DAX | 200.72 | 19626.45 | 1.03 |
| CAC 40 | 55.86 | 7235.11 | 0.78 |
| Dow Jones | 188.59 | 44910.65 | 0.42 |
| S&P 500 | 33.64 | 6032.38 | 0.56 |
| NASDAQ Composite | 157.69 | 19218.17 | 0.83 |
- Gold price trades in negative territory near $2,645 in Monday’s early Asian session.
- Trump trades and the Fed’s cautious stance undermine the yellow metal price.
- The geopolitical risks might help limit Gold’s losses.
Gold price (XAU/USD) edges lower to around $2,645 during the early Asian session on Monday. A recovery in the US Dollar broadly weighs on the precious metal. However, persistent geopolitical tensions could cap the downside for XAU/USD.
The yellow metal declined 3% in November, its worst monthly loss since September 2023. A victory of Donald Trump in the US Presidential election in November fuelled expectations that the Federal Reserve (Fed) would adopt a cautious approach to further rate cuts, which boost the Greenback and drag the USD-denominated Gold lower.
Nonetheless, the escalating geopolitical tensions could boost the Gold price, a traditional safe-haven asset. Russian and Syrian jets have carried out air strikes on Syrian rebels who are advancing through the country after seizing its second-largest city, per Reuters. "Persistent global uncertainties continue to drive demand for gold as a safe-haven asset," Ole Hansen, head of commodity strategy at Saxo Bank, said in a note.
Traders brace for the US ISM Manufacturing Purchasing Managers' Index (PMI) on Monday for fresh impetus. The Manufacturing PMI is projected to rise to 47.5 in November from 46.5 in the previous reading. On Friday, the attention will shift to the US Nonfarm Payrolls (NFP) for November.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
| Pare | Closed | Change, % |
|---|---|---|
| AUDUSD | 0.65249 | 0.57 |
| EURJPY | 158.334 | -0.9 |
| EURUSD | 1.05818 | 0.33 |
| GBPJPY | 190.649 | -0.76 |
| GBPUSD | 1.27445 | 0.51 |
| NZDUSD | 0.59278 | 0.66 |
| USDCAD | 1.39908 | -0.11 |
| USDCHF | 0.88022 | -0.28 |
| USDJPY | 149.593 | -1.27 |
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Izvršenje trgovinskih operacija sa finansijskim instrumentima upotrebom marginalne trgovine pruža velike mogućnosti i omogućava investitorima ostvarivanje visokih prihoda. Međutim, takav vid trgovine povezan je sa potencijalno visokim nivoom rizika od gubitka sredstava. Проведение торговых операций на финанcовых рынках c маржинальными финанcовыми инcтрументами открывает широкие возможноcти, и позволяет инвеcторам, готовым пойти на риcк, получать выcокую прибыль, но при этом неcет в cебе потенциально выcокий уровень риcка получения убытков. Iz tog razloga je pre započinjanja trgovine potrebno odlučiti o izboru odgovarajuće investicione strategije, uzimajući u obzir raspoložive resurse.
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