French President Emmanuel Macron said on Thursday that he will name a new Prime Minister in the coming days whose top priority will be getting a 2025 budget adopted by parliament, per Reuter.
At the time of writing, the EUR/USD pair is trading unchanged on the day to trade at 1.0583.
The Euro is the currency for the 20 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, according to data from the Bank of International Settlements. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% of all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
EUR/USD rose on Thursday, gaining seven-tenths of a percent and clawing back toward the 1.0600 handle. European Retail Sales beat median market forecasts in October, but still fell compared to the previous month. The European Central Bank (ECB) is broadly expected to deliver another quarter-point rate cut next week, and market sentiment is tilting risk-on ahead of Friday’s US Nonfarm Payrolls (NFP) jobs print.
Pan-EU Retail Sales grew by 1.9% YoY in October, beating the forecast 1.7% but still falling back sharply from September’s revised 3.0%. Lagging economic activity figures have sparked a higher pace of rate cuts from the ECB, even in the face of rising inflation metrics. ECB President Christine Lagarde reiterated the ECB’s commitment to bolstering growth by lowering interest rates, claiming on Friday that a near-term bump in European inflation in Q4 will give way and lower again in 2025.
The ECB is widely expected to deliver another 25 bps rate cut next week, and investors are shrugging off recent political turmoil in France. French President Macron has announced he will stubbornly remain the President of France despite a recent no-confidence vote, and will instead select a new Prime Minister in the coming days.
On the US side, Initial Jobless Claims for the week ended November 29 rose to a six-week high of 224K, missing the expected print of 215K and stepping above the previous week’s revised 215K. Challenger Job Cuts in November also rose to 57.727K, but the batch of mid-tier labor data pales in comparison to Friday’s upcoming NFP print. Investors are expecting November’s NFP net jobs additions to rebound to 200K after the previous month’s stumble to 12K. October’s shockingly low print was attributed to layoffs from hurricanes and labor strikes, and investors are hoping for a healthy rebound in job gains.
The EUR/USD daily chart reflects a consolidative phase following a steep downtrend that dominated the pair’s trajectory since mid-July. After peaking near 1.1270, EUR/USD witnessed a pronounced decline, breaking below key support levels, including the 200-day EMA, now at 1.0834, and the psychological 1.0600 mark. This downtrend culminated in a recent low near 1.0450 in late November, which now acts as a critical support level. However, the pair has rebounded in recent sessions, climbing above 1.0500 and showing resilience near the 1.0588 level at the time of writing.
The most recent daily candle stands out with a notable bullish body, reflecting a gain of +0.71% for the session. This candle suggests growing bullish momentum, as the pair has cleared short-term resistance levels near 1.0550, with eyes set on the 1.0600 area. Further gains could see EUR/USD testing the 50-day EMA, currently at 1.0715, a key level that aligns with the November swing high. A break above this confluence zone would likely validate a trend reversal and pave the way for a move back toward the 200-day EMA and beyond.
On the downside, the MACD indicator remains in negative territory, although the histogram is shrinking, signaling waning bearish momentum. A failure to sustain the ongoing recovery could see EUR/USD revisiting the 1.0500 support, with the critical 1.0450 low acting as a key line in the sand for bulls. Traders should watch for a daily close above 1.0600 to confirm the bullish breakout, while bearish pressure would resurface if the pair falls back below 1.0550.
The Euro is the currency for the 20 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, according to data from the Bank of International Settlements. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% of all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
Bank of England (BoE) policymaker Megan Greene said on Thursday that it is still unclear whether higher US tariffs on goods imports proposed by U.S. President-elect Donald Trump would raise or lower UK inflation, per Reuters.
"None of us know exactly what those tariffs might look like. We can't even work out which direction tariffs would push inflation, in particular in the UK and also in the euro zone to some degree."
“Given the structure of the UK mortgage market in particular, I think consumption will take a while to recover, even as rates are coming down just because of the fixed terms of UK mortgages.”
“I think there could be weak consumption for a while in the UK and also across Europe, whereas the US consumer just seems to see no bounds.”
“Services inflation, in particular, has remained stubbornly high.”
“That’s underpinned mostly by wage growth. Wage growth has been coming down as well, but not as quickly as I would have liked.”
The GBP/USD pair is trading 0.06% higher on the day at 1.2758, as of writing.
The Bank of England (BoE) decides monetary policy for the United Kingdom. Its primary goal is to achieve ‘price stability’, or a steady inflation rate of 2%. Its tool for achieving this is via the adjustment of base lending rates. The BoE sets the rate at which it lends to commercial banks and banks lend to each other, determining the level of interest rates in the economy overall. This also impacts the value of the Pound Sterling (GBP).
When inflation is above the Bank of England’s target it responds by raising interest rates, making it more expensive for people and businesses to access credit. This is positive for the Pound Sterling because higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls below target, it is a sign economic growth is slowing, and the BoE will consider lowering interest rates to cheapen credit in the hope businesses will borrow to invest in growth-generating projects – a negative for the Pound Sterling.
In extreme situations, the Bank of England can enact a policy called Quantitative Easing (QE). QE is the process by which the BoE substantially increases the flow of credit in a stuck financial system. QE is a last resort policy when lowering interest rates will not achieve the necessary result. The process of QE involves the BoE printing money to buy assets – usually government or AAA-rated corporate bonds – from banks and other financial institutions. QE usually results in a weaker Pound Sterling.
Quantitative tightening (QT) is the reverse of QE, enacted when the economy is strengthening and inflation starts rising. Whilst in QE the Bank of England (BoE) purchases government and corporate bonds from financial institutions to encourage them to lend; in QT, the BoE stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive for the Pound Sterling.
The USD/CAD pair trades in negative territory around 1.4020 during the early Asian session on Friday. The US Dollar (USD) remains under renewed selling pressure as traders prefer to wait on the sidelines ahead of the US and Canadian labor market reports, which are due later on Friday.
Data released by the US Department of Labor on Thursday showed that the US weekly Initial Jobless Claims for the week ending November 30 rose 9,000 to 224,000, compared to 215,000 (revised from 213,000) in the previous week. This reading came in above the market consensus of 215,000. The Greenback edges lower in an immediate reaction to the US jobless claims data.
The market might turn cautious ahead of the crucial US labor market data, including Nonfarm Payrolls (NFP) and the Unemployment Rate. The NFP is expected to increase by 200,000 jobs in November after rising by 12,000 in October, the lowest number since December 2020. Additionally, the Unemployment Rate is forecasted to rise to 4.2% in November from 4.1% in October.
On the Loonie front, the threat of US trade tariffs might dampen the outlook for Canada's export-dependent economy, which drags the Canadian Dollar (CAD) lower against the USD. "If the U.S. puts tariffs of upwards of 25% on Canada, the main adjustment that would take place would likely be through the currency," said Benjamin Reitzes, Canadian rates & macro strategist at BMO Capital Markets.
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 climbed on Tuesday, bolstered by Bank of England (BoE) Governor Andrew Bailey tipping his hand and revealing a path forward to further rate cuts in 2025. Broad-market investor sentiment remains on the high side, although a fresh round of key US Nonfarm Payrolls (NFM) jobs figures are looming just ahead on Friday.
BoE Governor Bailey noted earlier Thursday that he sees around four rate cuts in 2025, which briefly sent the Pound stumbling during the London market session, but GBP traders quickly recovered their footing and pushed Cable back into the high end for the day. The head of the UK central bank reiterated cautious talking points and reaffirmed a data-dependent stance, helping to keep market expectations on-balance that the BoE will leave rates unchanged on December 19.
Initial Jobless Claims for the week ended November 29 rose to a six-week high of 224K, missing the expected print of 215K and stepping above the previous week’s revised 215K. Challenger Job Cuts in November also rose to 57.727K, but the batch of mid-tier labor data pales in comparison to Friday’s upcoming NFP print. Investors are expecting November’s NFP net jobs additions to rebound to 200K after the previous month’s stumble to 12K. October’s shockingly low print was attributed to layoffs from hurricanes and labor strikes, and investors are hoping for a healthy rebound in job gains.
The GBP/USD daily chart shows the pair trading at 1.2758, attempting to recover after a significant downtrend that began in late July. The pair peaked near 1.3140 in early September, forming a notable resistance level, before selling off sharply to a low around 1.2520 in early November. This bearish momentum was fueled by a breakdown below the 200-day EMA, currently positioned at 1.2836, signaling a shift in sentiment. However, recent price action reveals a rebound, as GBP/USD managed to reclaim the 1.2700 handle and is challenging key technical zones.
The 50-day EMA at 1.2884 and the 200-day EMA overhead act as dynamic resistance, with the pair needing to decisively breach these levels to resume a sustainable bullish trend. On the upside, the 1.2900 area is a critical hurdle, aligning closely with the October swing high. If GBP/USD clears this zone, it may signal a medium-term trend reversal and open the door for a retest of September's highs near 1.3140. Conversely, failure to maintain recent gains could see the pair revisiting the 1.2600 support or even the recent lows near 1.2520.
The MACD indicator underscores this pivotal moment, with the MACD line crossing above the signal line, suggesting growing bullish momentum. However, the histogram remains subdued, pointing to a lack of conviction. Traders should monitor whether this recovery gathers pace, especially with upcoming fundamental catalysts likely to shape the next directional move. A sustained close above the 200-day EMA is critical for bulls, while bears would aim to defend the 1.2900 resistance and push the pair back below 1.2700.
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.
The NZD/JPY cross continued its recovery on Thursday, rising 0.20% to 88.35 as indicators stabilized near oversold conditions. This modest rebound marks a two-day winning streak after the pair fell to the 88.00 region earlier in the week. Despite these gains, the broader outlook remains bearish, with the pair trading well below key resistance levels and moving averages.
Technical indicators signal mixed momentum. The Relative Strength Index (RSI) has edged up but remains near the oversold territory, reflecting limited upside potential. Meanwhile, the Moving Average Convergence Divergence (MACD) shows slightly improving momentum, though its position still confirms bearish pressure. Additionally, the approaching bearish crossover of the 20-day and 100-day Simple Moving Averages (SMA) near the 90.00 threshold may accelerate downward momentum.
On the upside, bulls face immediate resistance at 89.00, with the psychological 90.00 level acting as a significant barrier. Conversely, if selling resumes, the pair could revisit support in the 86.00-85.00 region, where buyers may attempt to slow the downtrend.
The NZD/USD pair edged higher on Thursday, gaining 0.15% to trade near 0.5890. Despite this upward move, the pair continues to face strong resistance at the 20-day Simple Moving Average (SMA), a level that remains unconquered and keeps the broader outlook tilted to the downside.
Technical indicators are offering a mixed picture. The Relative Strength Index (RSI) has gained some ground, moving closer to neutral levels, suggesting slight easing of selling pressure. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram has turned slightly more positive, with green bars hinting at improving momentum. However, neither indicator provides clear signals of a sustained reversal, keeping traders cautious.
For the bulls to regain control, NZD/USD needs to decisively break above the 20-day SMA, which is currently acting as a key resistance level. Until this level is reclaimed, the outlook will remain bearish. On the downside, any renewed selling pressure could push the pair back towards support at 0.5860 and the psychological 0.5800 level.
The EUR/AUD rallied above key technical resistance levels, such as the 100—and 200-day Simple Moving Averages (SMAs) at around 1.6367-79. The cross-currency pair climbed above the 1.6400 figure, posting gains of 0.38% on Thursday during the North American session.
Currently, the EUR/AUD trades above 1.6400, which could pave the way for challenging the next resistance level, at 1.6600, the October 31 daily peak. Although bullish momentum increased, as seen by the Relative Strength Index (RSI), buyers face stir resistance, which could pave the way for a consolidation.
Buyers must achieve a daily close above 1.6400 and clear the November 6 daily high of 1.6497 before having a chance of testing 1.6600. Otherwise, sellers could step in and drag the exchange rate toward the 50-day SMA at 1.6260, but first, they need to surpass the 1.6300 mark.
In that outcome, the EUR/AUD's next support would be the December 2 swing low of 1.6159, followed by the 1.6100 mark.
The Euro is the currency for the 20 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, according to data from the Bank of International Settlements. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% of all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The AUD/USD holds around 0.6435 on Thursday as the Aussie loses interest amid a backdrop of weak Australian fundamentals. Quarterly GDP growth in Australia underwhelmed traders, fueling speculation that the Reserve Bank of Australia (RBA) may commence rate cuts as early as April 2025.
On the US side, the USD is also trading the red, mainly due to soft labor market data ahead of Friday’s Nonfarm Payrolls (NFP) figures from November.
The AUD/USD pair remains entrenched in a bearish trajectory with technical indicators pointing to continued downside potential.
The daily Relative Strength Index (RSI) remains deep in negative territory, nearing the oversold zone, signaling strong selling momentum. The Moving Average Convergence Divergence (MACD) is firmly below the signal line, reinforcing the prevailing bearish bias. The pair is holding near the critical 0.6400 level, a break of which could open the door for further declines. Any recovery attempts may face stiff resistance at 0.6500, with stronger barriers near 0.6550.
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.
Gold price retreats on Thursday as investors digested the latest US jobless claims data, ahead of the release of November’s Nonfarm Payrolls figures. A jump in US Treasury bond yields weighed on the yellow metal, which dropped 0.85%, trading at $2,626.
XAU/USD dips as US Treasury bond yields rise while traders trim bets that the US Federal Reserve (Fed) will lower borrowing costs by 25 basis points (bps) at the upcoming December meeting. Nevertheless, the mixed US jobs data revealed during the week kept investors uncertain about the outcome of the Fed’s decision.
Earlier, the US Department of Labor revealed that jobless claims for the last week exceeded the consensus, and the week ending on November 23 figures. At the same time, the US Bureau of Economic Analysis announced that the US trade deficit narrowed in October.
Bullion prices were capped by Fed Chair Jerome Powell’s comments on Wednesday. He said the economy remains robust, adding that he feels “very good about where the economy is and where monetary policy is.” Powell commented that the central bank “can afford to be a little more cautious as we try to find neutral.”
According to CME FedWatch Tool data, expectations that the Fed would cut rates at the December 17-18 meeting remain at 70%. However, Fed policymakers remained muted in their support for further easing, as next week’s inflation data would provide additional hints on the status of the distillation process.
Traders eye the release of November’s Nonfarm Payroll figures alongside the University of Michigan Consumer Sentiment.
Gold price remains consolidated after failing to register successive series of higher highs and lower lows, capped by the 50-day Simple Moving Average (SMA) at $2,667 on the upside. On the downside, XAU/USD failed to drop below the $2,620 figure, which could expose the $2,600 figure once cleared.
Momentum suggests that sellers are gathering some steam, as depicted by the recently turned bearish Relative Strength Index (RSI).
With that said, if XAU/USD slumps below $2,600, it will expose the confluence of an upslope support trendline and the 100-day Simple Moving Average (SMA) at $2,580, followed by the November 14 daily low and intermediate support at $2,536.
Conversely, if Gold reclaims $2,650, the next resistance would be the 50-day SMA. Once cleared, the next resistance would be $2,700, followed by the record high of $2,790.
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.
The Greenback came under renewed and marked selling pressure amid uncertain price action in US yields and investors’ steady prudence ahead of the release of the crucial US labour market report on Friday.
The US Dollar Index (DXY) succumbed to fresh downside pressure and broke below the 106.00 support to challenge weekly lows. The Nonfarm Payrolls will be at the centre of the debate seconded by the Unemployment Rate and the advanced Michigan Consumer Sentiment. In addition, the Fed’s Bowman, Goolsbee, Hammack and Daly are all due to speak.
EUR/USD rose to weekly tops and approached the key barrier at 1.0600 the figure. The Industrial Production in Germany is due, along with another estimate of the EMU’s Q3 GDP Growth Rate and the final Employment Change figures.
GBP/USD extended its weekly bullish move and climbed to three-week highs well north of the 1.2700 barrier. The Halifax House Price Index will be published across the Channel.
USD/JPY faded part of the last couple of daily advances, breaching the key 150.00 support. Average Cash Earning will be unveiled in the Japanese docket along with Household Spending and the preliminary readings of the Coincident Index and the Leading Economic Index.
AUD/USD finally saw some respite to the multi-week move lower, managing to reclaim the 0.6450 region. Home Loans and Investment Lending for Homes are next on tap Down Under.
WTI prices added to Wednesday’s downtick and revisited the $68.00 mark per barrel after the OPEC+ delayed its planned oil output hikes until April.
Gold prices came under strong selling pressure and flirted with the $2,620 zone per troy ounce amid rising caution pre-NFP. Silver prices left behind two daily advances in a row and put the $31.00 zone per ounce to the test on Thursday.
The EUR/USD pair extended its rebound on Thursday, rising to 1.0560 and breaking above the key 20-day Simple Moving Average (SMA). This move follows two consecutive days of gains as buyers gained momentum after defending the psychological support at 1.0500 earlier in the week. The pair's break above the SMA marks a significant improvement in the short-term outlook, although risks still linger.
Technical indicators are beginning to show signs of recovery. The Relative Strength Index (RSI) has risen further in negative territory, suggesting improving momentum but still signaling caution. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator shows rising green bars, indicating growing bullish momentum. While these developments are encouraging for the bulls, a sustained recovery is yet to be fully confirmed.
Traders will now watch whether EUR/USD can maintain its position above the 20-day SMA. Immediate resistance lies at 1.0580, followed by the 1.0600 psychological level. On the downside, a failure to hold above 1.0560 could see the pair revisiting support at 1.0530 and potentially retesting the 1.0500 level.
The Dow Jones Industrial Average (DJIA) fell back slightly on Thursday, easing down around 150 points and keeping price action in a tense standoff with the 45,000 major price handle. Markets are coiling ahead of Friday’s upcoming Nonfarm Payrolls (NFP) report, and investors are growing uneasy after a batch of missed expectations in preview labor figures.
Overall market sentiment remains firmly bullish, keeping equities close to record highs. Clear signs of an economic slowdown remain elusive, preventing traders from pivoting firmly into a risk-off stance. Still, a murky policy outlook for 2025 has bulls second-guessing sky-high valuations. Incoming President Donald Trump favors a policy stance that could reignite inflation pressures, sacrifice economic stability, and send government budgets spiraling. However, that’s a long way off, and markets are holding onto hopes that Trump’s pro-market stance and distaste for regulation will help offset downside pressures on business earnings.
Initial Jobless Claims for the week ended November 29 rose to a six-week high of 224K, missing the expected print of 215K and stepping above the previous week’s revised 215K. Challenger Job Cuts in November also rose to 57.727K, but the batch of mid-tier labor data pales in comparison to Friday’s upcoming NFP print. Investors are expecting November’s NFP net jobs additions to rebound to 200K after the previous month’s stumble to 12K. October’s shockingly low print was attributed to layoffs from hurricanes and labor strikes, and investors are hoping for a healthy rebound in job gains.
Most of the Dow Jones equity board is rising on Thursday, with equities overall bidding into positive territory, however key losses in overweighted securities are dragging the Dow Jones into the low side for the day. Unitedhealth Group (UNH) sank 4% to $586 per share after the CEO of Unitedhealth’s insurance unit was assassinated in New York this week. Salesforce (CRM) also eased down 2%, falling to $360 per share as the heavily overvalued stock sheds some weight. CRM has been swept up along with the broader AI craze gripping tech stocks and single-handedly driving the market’s equities rally, but some investors are beginning to caution that they would like to see some evidence of CRM’s revenue margins expand as a result of AI incorporation in the company’s platform.
The Dow Jones is grinding into a near-term sideways pattern as daily candlesticks struggle to find momentum in either direction. The major equity index is grappling with the 45,000 handle, but a meaningful downside pullback has yet to materialize after the DJIA found fresh record highs last week.
Traders looking to catch another leg higher will be looking for a fresh retracement to the 50-day Exponential Moving Average (EMA) rising through 43,300. A deep pullback to the last swing low near the 42,000 key level is unlikely to materialize, but represents a significant discount compared to recent price action, and could spark a steep rebound.
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.
The Mexican Peso extends its winning streak to three consecutive days and appreciates against the US Dollar following the release of weak US jobs data. Traders shrugged off hawkish comments by Federal Reserve (Fed) Chair Jerome Powell, which failed to boost the Greenback. The USD/MXN trades at 20.18, down 0.49%.
Mexico’s economic schedule remains absent, yet Irene Espinosa, Deputy Governor of the Bank of Mexico (Banxico), crossed the wires. She said approving a 12% increase in the minimum wage for 2025 would exert upward pressure on inflation. Espinosa added that she remains open regarding the December 19 monetary policy decision, adding that she would assess whether core inflation continues its downward trend and services inflation remains below 5%.
In the US, the Department of Labor reported that Initial Jobless Claims for the week ending November 30 exceeded forecasts, hinting at a slight deterioration of the jobs market. Other data revealed that October’s trade deficit narrowed, according to the US Bureau of Economic Analysis.
On Wednesday, Powell indicated that the US economy's recent strength allows the Fed to proceed cautiously with interest rate cuts. He noted that the balance between their dual mandate — maximum employment and stable prices — is currently well-aligned, suggesting no urgency for rate reductions.
Ahead this week, Mexico’s schedule will feature the release of automobile production data. The docket will feature Fed speakers and Nonfarm Payrolls (NFP) figures in the US.
The USD/MXN has fallen for the third consecutive day and isn’t finding acceptance near the 20.50 figure. In the short term, momentum shifted slightly bearish, with the Relative Strength Index (RSI) piercing below its neutral line. Therefore, the exotic pair might test the 20.00 figure.
If sellers push the exchange rate below the November 19 low of 20.06, the 20.00 mark would be up for grabs. If cleared, the pair will extend its downtrend, challenging the 50-day Simple Moving Average (SMA) at 19.99. A breach of the latter will expose the 100-day SMA at 19.61 before the psychological 19.00 figure.
Conversely, key resistance levels would be exposed if USD/MXN climbs past 20.50. Up next is the year-to-date peak at 20.82, followed by the 21.00 mark. On further strength, the pair will challenge the March 8, 2022 peak at 21.46, followed by the November 26, 2021 high at 22.15.
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 US Dollar (USD) is under significant selling pressure on Thursday as markets gear up for the release of November's United States (US) Nonfarm Payrolls (NFP) data on Friday. The Greenback’s decline has been driven by weaker-than-expected labor market signals, including a sharp rise in Initial Jobless Claims and an increase in layoffs reported by the November Challenger Job Cuts data.
Friday’s NFPs from November will set the pace of the USD’s price dynamics for the next sessions.
The US Dollar Index (DXY) broke below its 20-day Simple Moving Average (SMA), marking a critical technical setback that has weakened its short-term outlook. Indicators such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) are nearing negative territory, underscoring the growing bearish momentum.
Key support levels now lie at 105.50 and 105.00, while resistance may emerge at 106.50 and 107.00. With the DXY losing steam, market participants will closely watch Friday's NFP data for any signs of reversal or further deterioration.
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 the Bank for International Settlements. 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.
Reports that OPEC+ has kicked the can on its plans to return unwanted barrels back to markets by three months will keep crude oil prices from falling further in the imminent term, but the drag from energy supply risk premia will persist nonetheless, TDS’ Senior Commodity Strategist Daniel Ghali notes.
“Our return decomposition framework points to few tailwinds from supply risk premia this session, despite this supportive announcement, corroborating our view.”
“Resurgent geopolitical risks are key to supply-side tailwinds, which adds focus on a potential return of President-elect Trump's 'maximum pressure' policy on Iranian crude exports, and on geopolitical risks in the Middle East which remain at their highest levels since at least the Gulf War.”
“Alternatively, could China have a surprise in store? Our tracking of Shanghai traders' positions in base metals continues to point to notable long acquisitions heading into the December Economic Work Conference, leading to speculation that reports and media leaks could surprise to the upside.”
The EUR/USD shrugged off political turmoil in France and edged up by over 0.60% on Thursday. US jobs data came weaker than expected, while investors expect the release of US Nonfarm Payrolls figures on Friday. The pair trades at 1.0578 after bouncing off daily lows of 1.0505.
The US Department of Labor revealed that Initial Jobless Claims for the week ending November 30 rose by 9k to 224k, above the median estimate of 215k. The 4-week moving average stood at 218.3k.
At the same time, the US Bureau of Economic Analysis (BEA) revealed that the US trade deficit in October narrowed to $-73.8 billion from $-83.8 billion in the previous month.
The EUR/USD extended its gains following the data release, clearing the 1.0540 area and rising to a daily peak of 1.0589 before paring some of its gains.
Despite this, Euro bulls are not out of the woods yet, as the French Government lost a no-confidence vote for the first time since 1962. Prime Minister Michel Barner was ousted with 331 votes in favor of his removal. Despite this, the existing Government will remain in place, as under the French constitution, a new election can’t happen until a year after the last one, until the summer of 2025.
The Euroarea revealed that Retail Sales in October exceeded the median estimate of 1.7%, which came at 1.9% YoY but below September’s 3% increase. On a monthly basis, sales dropped from 0.5% to -0.5%, well below expectations of a -0.3% contraction.
On Wednesday, Federal Reserve Chair Jerome Powell was “slightly hawkish,” adding that the economy remains in good shape, that the balance between achieving the central bank’s dual mandate is balanced, and that there is no urgency to cut rates.
This week, the docket will feature nonfarm payroll figures for November, which are expected to show that the economy added 200K jobs while the unemployment rate is expected to rise to 4.2%.
Despite recovering some ground, EUR/USD buyers need to drive the exchange rate above 1.0600. If they fail to do so, it will exacerbate a retest of the weekly lows of 1.0460, hit on Monday. But first, traders will face 1.0500, and if those two levels are cleared, a re-test of the yearly low of 1.0331 is on the cards.
Otherwise, if EUR/USD extends its gains past 1.0600, the next major resistance would be the June 26 swing low of 1.0666.
The Euro is the currency for the 20 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, according to data from the Bank of International Settlements. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% of all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
Gold's price performance was exceptionally strong, with scarce historical analogies available for such a strong performance outside of a USD bear market and with a concurrently strong year in equity markets, TDS’ Senior Commodity Strategist Daniel Ghali notes.
“Gold's performance stemmed from a wild swing in investor positioning - morphing from underinvested at the start of the year to an extreme position size by US election night; alongside extreme physical market buying activity in the first half of the year, underscored by strong central bank increases.”
“Today, tailwinds from many of these underlying drivers have subsided. Following brief but significant liquidations, macro funds have reacquired a significant portion of their extreme position size, leading to renewed positioning vulnerabilities. And, this time around, a continued downtape.”
The USD/JPY pair ticks lower to near 150.50 in Thursday’s North American session after the release of the United States (US) Initial Jobless Claims data for the week ending November 29, which came in higher-than-expected. The report showed that individuals claiming jobless benefits for the first time were 224K, higher than estimates the former release of 215K.
Higher jobless claims renewed fears of subdued job demand and punished the US Dollar Index (DXY) by pushing it lower below the key support of 106.00. Meanwhile, investors await key US Nonfarm Payrolls (NFP) data for November to get a clear picture of the current labor market status.
Economists expect the US economy to have added 200K fresh workers, significantly higher than 12K in October. The NFP report stated that payroll employment estimates in some industries were affected by the hurricanes last month. The Unemployment Rate is estimated to have increased to 4.2% from the former release of 4.1%.
Investors will also pay close attention to the US Average Hourly Earnings data to get cues about the current status of wage growth. Higher wage growth drives consumer spending, which could boost inflation and refresh fears of price pressures remaining persistent, a scenario that could weigh on Federal Reserve (Fed) dovish bets for the December meeting.
According to the CME FedWatch tool, there is a 74% chance that the Fed will reduce its key borrowing rates by 25 basis points (bps) to 4.25%-4.50%, while the rest favors leaving them unchanged at their current levels.
Meanwhile, the Japanese Yen (JPY) weakens across the board as a dovish commentary from Bank of Japan (BoJ) board member Toyoaki Nakamura raised doubts over the central bank’s capacity to hike interest rates further. Nakamura said that he is not confident about the sustainability of wage growth and doubts over inflation staying above 2% from fiscal 2025 onward.
US citizens filing new applications for unemployment insurance rose to 224K for the week ending November 29, as reported by the US Department of Labor (DoL) on Thursday. This print came in above initial estimates (215K) and was higher than the previous week's tally of 215K (revised from 213K).
The report also highlighted a seasonally adjusted insured unemployment rate of 1.2%, while the four-week moving average was 218.25K, marking an increase of 0.750K from the prior week’s revised average.
Moreover, Continuing Jobless Claims went down by 23K to reach 1.871M for the week ending November 22.
The Greenback remains on the defensive, reversing Wednesday’s small advance, and prompting the US Dollar Index (DXY) to retreat to the sub-106.00 zone, or three-day lows.
The AUD/USD pair ticks higher to near 0.6440 but remains trades inside Wednesday’s trading range in North American trading hours on Thursday. The Aussie pair gains slightly as the United States (US) Initial Jobless Claims data for the week ending November 29 remained higher than expected. The data showed that individuals claiming jobless benefits were 224K, higher than estimates and the prior release of 215K.
The US Dollar Index (DXY), which gauges Greenback's value against six major currencies, slides below 106.00. The next move in the US Dollar will be projected the US Nonfarm Payrolls (NFP) data for November, which will be released on Friday.
Investors will pay close attention to the US official labor market data to get fresh cues about whether the Fed will cut interest rates again in its policy meeting on December 18. The Fed started its policy-easing cycle in September as officials were worried about deteriorating labor demand but were confident about inflation remaining on a sustainable path towards the bank’s target of 2%.
According to the CME FedWatch tool, there is a 77% chance that the Fed will reduce interest rates by 25 bps to 4.25%-4.50%, while the rest support leaving them unchanged.
The US NFP report is expected to show that the economy added 200K jobs. Economists estimate the Unemployment Rate to have accelerated to 4.2% from the former reading of 4.1%.
Meanwhile, the outlook of the Australian Dollar (AUD) has weakened as the Reserve Bank of Australia (RBA) is expected to start reducing interest rates from the April meeting next year. RBA dovish bets were bolstered by weak Australian Q3 Gross Domestic Product (GDP) data.
The near-term trend of the AUD/USD pair is bearish as the 20-day Exponential Moving Average (EMA), which trades around 0.6500 is declining.
The 14-day Relative Strength Index (RSI) slides below 40.00, suggesting a strong bearish momentum.
More downside towards the August low of 0.6348 and the round-level support of 0.6300 would appear if the Aussie breaks below Wednesday’s low of 0.6400.
On the flip side, a decisive recovery above the November 25 high of 0.6550 will drive the asset towards the round-level resistance of 0.6600, followed by the September 11 low of 0.6622.
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 Pound Sterling (GBP) is a moderate outperformer on the session, gaining a little over 0.5% on the softer US Dollar (USD), Scotiabank’s Chief FX Strategist Shaun Osborne notes.
“That can perhaps be attributed more to positioning and technicals than fundamental developments. The only data of note released today was a slightly better-than-forecast Construction PMI for November (55.2). BoE MPC member Greene is speaking later in the session.”
“Officials have been consistent on their outlook for policy, suggesting cautious cuts at a pace of one per quarter is the base case for 2025—a little more dovish than markets are currently pricing.”
“Grinding gains for the pound this week leave cable trading comfortably above 1.27. The short-term pattern of trade that has developed over the past month suggests a potential inverse Head & Shoulders which may trigger a further GBP rise (towards 1.30) on a move above the 1.2770 neckline trigger. Support is 1.2655.”
The Euro (EUR) is nudging a little higher following yesterday’s successful noconfidence motion in the French government. The motion brought an end to PM Barnier’s short tenure, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
“President Macron must now try and find another PM who can appeal to a broader swathe of parliament and get a budget approved. That’s no easy task. But, for now, local bonds have stabilized (outperforming OATs have closed the yield gap over 10Y Bunds by around 3bps today), helping give the EUR a modest boost.”
“Positive short-term price action yesterday and moderate gains through the low 1.05s today give the EUR a shot at extending a little higher to test key resistance and potential bull trigger at 1.0590. Support is 1.0465/70.”
The Canadian Dollar (CAD) is little changed again on the session so far. PM Trudeau promises more spending to help lift economic growth in the fall economic update, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
“Markets have been comfortable holding the CAD in a tight range above 1.40 since the start of the week and that may spill over into next week, ahead of the Bank of Canada decision on the 11th. Swaps are pricing in a little more risk of an aggressive rate cut (41bps) next week which will keep the CAD tone defensive.”
“PM Trudeau promised more spending to help lift economic growth in the fall economic update, although there are no indications from the government when the statement will be delivered.”
“Spot ranges are compressing but weakening trend momentum suggests more sideways range trading in the short run between support at 1.4030 and resistance at 1.4090/00.”
The US Dollar (USD) is trading a little softer overall in quiet trade. Overnight news is relatively limited and the softer USD tone rather reflects the decline in US yields seen yesterday, a modest relief rally for the EUR and some JPY gains on the back of mixed/slightly hawkish comments from the BoJ’s Nakamura last night, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
“The policymaker, who resides on the more dovish side of the board, expressed some doubt about the sustainability of wage gains in Japan but also stated that he was not objecting to a rate hike. Pricing for the December 19th meeting picked up marginally again to reflect 9-10bps of expected tightening. Japan releases Labour Cash Earnings and Household spending data tonight.”
“Fed Chair Powell commented yesterday that the Fed was ‘not quite there’ on inflation and that policymakers can afford to be “cautious” as the Fed tries to find neutral. The comments prompted a very minor—and short-lived—rally in Dec FOMC swaps but had little impact on the USD. Markets continue to price 18-19bps of easing risk for this month’s Fed decision. Friday’s US NFP data may be more formative for market thinking on the rate outlook.”
“Technical trends in the DXY are ledging a little softer today. The charts show the DXY leaning a little harder on bull trend support (106.06) that has guided the market high through Q4 so far. Loss of support here may see the index run lower to test key short-term support at 105.35. The index has traded at a slightly larger premium to (spread-based) value since the election; estimated DXY equilibrium currently sits at 104.67. US data reports today include Trade and weekly claims. The Fed’s Barkin speaks on the outlook at 12.15ET.”
The US Dollar (USD) trades marginally softer on Thursday as the dust settles over the French political drama. With the French government led by Prime Minister Michel Barnier out of the way, French President Emmanuel Macron begins the search for a new prime minister. In the US side, Federal Reserve (Fed) Chairman Jerome Powell warned that the US debt is on an unsustainable path and needs to be addressed.
On the economic data front, a calmer calendar is ahead compared to that of the past few days. the main elements will be the weekly Jobless Claims and the Challenger Job Cuts for November, as well as the Trade Balance data. Employment-related data could be important ahead of the Nonfarm Payrolls print on Friday.
Challenger Job Cuts, released by Challenger, Grey & Christmas monthly, provides information on the number of announced corporate layoffs by industry and region. The report is an indicator used by investors to determine the strength of the labor market. Usually, a high reading is seen as negative (or bearish) for the US Dollar (USD), while a low reading is seen as positive (or bullish).
Read more.Next release: Thu Dec 05, 2024 12:30
Frequency: Monthly
Consensus: -
Previous: 55.597K
The US Dollar Index (DXY) is turning into a snooze fest, not set to wake up before the US Jobs report on Friday. With some lighter US data, only headline risk could take place in an otherwise calm Thursday. With the tight range in the US Dollar Index, the nearby levels at 106.52 and 105.53 remain pivotal to watch.
On the upside, 106.52 (April 16 high) still remains the first resistance to look at after failing to close above it this week after several attempts. Should the US Dollar bulls reclaim that level, 107.00 (round level) and 107.35 (October 3, 2023, high) are back on target for a retest.
Looking down, 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
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 the Bank for International Settlements. 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.
USD/CNH continues to ease away from recent high as policymakers keep a strong grip on the daily fix, setting it even lower at 7.1879 vs. 7.1934 (yesterday). Pair was last at 7.2736.
“USD/CNH eased away from recent high as policymakers keep a strong grip on the daily fix, setting it even lower at 7.1879 vs. 7.1934 (yesterday). This is despite USD trading largely rangebound.”
“Fixing pattern continues to suggest that PBoC is doing whatever it takes to not only restraint the RMB from over-weakening but also to guide its bias and direction. Tariff may hurt RMB when it happens but that may be a story for 2025 after Trump inauguration. Meantime, we would keep a look out for the CEWC meeting on 11-12 Dec.”
“Daily momentum is flat while RSI shows signs of turning from near-overbought conditions. Corrective pullback not ruled out. Support here at 7.2460 (21 DMA). Resistance at 7.32, 7.3450 levels.”
With another trade war looming, China is going to dig deeper into its pockets to stimulate demand and likely to keep its growth target at c.5% for 2025; budget deficit may be widened to 3.5% of GDP. 2025 growth forecast is maintained at 4.5%, as stimulus should partially offset higher tariffs, Standard Chartered’s economists note.
“President-elect Trump announced higher tariffs on Mexico, Canada and China even before his inauguration. We think it is now unrealistic for China to continue to count on external demand to ride out the housing market correction. Net exports’ contribution to GDP growth could turn negligible in 2025 from over 1ppt in 2024, according to our estimate. We do not think the authorities will respond to tariff increases with substantial CNY devaluation, and expect consumption-enabling policy stimulus to mitigate the tariff impact.”
“The December Central Economic Work Conference (CEWC) will likely set a pro-growth policy tone. An ambitious growth target is likely to be adopted to anchor market expectations and change the deflationary mindset. We expect the official budget deficit to be widened to 3.5% of GDP in 2025 from 3.0% in 2024, and a 25-30% increase in central and local special bond issuance to finance additional spending and facilitate bank recapitalisation and the local debt swap programme. We estimate that a positive fiscal impulse would boost growth by 0.3-0.5ppt. The central bank appears prepared to inject sufficient liquidity to absorb the expected surge in government bond supply, and moderately cut policy rates to prevent a rise in real interest rates.”
“We expect the government to introduce more measures to boost housing demand and contain supply, including deploying additional resources to support ‘whitelist’ projects and curtail housing inventory. We estimate that a moderation in the property investment decline to 5% in 2025 from c.10% in 2024 would reduce the growth drag by c.0.3ppt.”
USD/JPY traded firmer, in line with our caution for rebound risks not ruled out in the near term, and the pair was last at 150.15, OCBC’s FX analysts Frances Cheung and Christopher Wong notes.
“BoJ Nakamura said it is important for BoJ to exercise care when it makes adjustments to policy aimed at rolling back the degree of monetary easing. Probability of BoJ hike in Dec MPC dropped to 36.3% from 57.3% a week ago. We are still looking for BoJ to hike.”
“Price-related data, labour market development, wage growth expectations continue to reinforce the view that BoJ is likely to proceed with another hike, sooner rather than later. Direction of travel for USD/JPY remains skewed towards the downside as Fed cuts and BoJ hikes. The risk is a slowdown in pace of respective policy normalisation.”
“Bearish momentum on daily chart shows signs of fading while RSI shows rose from near oversold conditions. Still see some rebound risks in the near term. Bias to sell rallies. Resistance at 150.70, 151.20 (50 DMA), 152 levels (200 DMA). Support at 149.50, 148.80 levels (100 DMA).”
US Dollar (USD) is expected to trade in a 7.2630/7.2930 range. In the longer run, upward momentum has slowed with sharp pullback; a breach of 7.2630 would mean that USD is not rising further, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
24-HOUR VIEW: “On Tuesday, USD soared to a high of 7.3145. Yesterday (Wednesday), we stated that ‘despite being deeply overbought, the advance appears to have enough momentum to retest the 7.3145 level before a more sustained pullback can be expected.’ We added, ‘the next resistance at 7.3300 is not expected to come under threat.’ However, USD pulled back from a high of 7.3060, reaching a low of 7.2673. USD closed at 7.2789 (-0.27%). The decline appears to be running ahead of itself, and USD is unlikely to weaken much further. Today, we expect USD to trade in a 7.2630/7.2930 range.”
1-3 WEEKS VIEW: “We turned positive in USD two days (03 Dec, spot at 7.2880), indicating the ‘rapid increase in momentum could lead to USD rising to 7.3115.’ After USD surpassed the 7.3115 level, we highlighted yesterday (04 Dec, spot at 7.2975) that ‘momentum remains strong, and now that USD has broken above 7.3145, the next significant resistance level is at 7.3678, last year’s high.’ We did not expect the subsequent sharp pullback that reached a low of 7.2673. Upward momentum has slowed with the pullback. From here, if USD breaks below 7.2630 (no change in ‘strong support’ level), it would mean that it is not rising further.”
The Australian Dollar (AUD) traded lower. AUD/USD was last seen at 0.6438 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong notes.
“3Q GDP missing estimate was the trigger. Markets have moved to fully price in a 25bp rate cut at Apr meeting and there were also light chatters that RBA may even need to move earlier at the Feb meeting. Tariff worries, slowing global growth concerns and anticipation for earlier RBA cuts are some factors that may undermine AUD in the short term, unless USD reverses lower.”
“Mild bullish momentum faded while RSI fell. Risks remain skewed to the downside. Support at 0.64, 0.6350 (2024 low). AUD would need to reclaim above 0.6510 to nullify AUD bears for now.”
Gold price (XAU/USD) trades in a tight range around $2,650.00 in Thursday’s European session. The precious metal struggles for a direction as investors have sidelined ahead of the United States (US) Nonfarm Payrolls (NFP) data for November, which will be released on Friday.
The labor market data will significantly influence market expectations for the likely interest rate decision by the Federal Reserve (Fed) in its monetary policy meeting on December 18. Currently, financial market participants expect the Fed to cut interest rates by 25 basis points (bps) to 4.25%-4.50%, according to the CME FedWatch tool.
Economists expect the US economy to have added 200K fresh workers, significantly higher than 12K in October. The NFP report stated that payroll employment estimates in some industries were affected by the hurricanes last month. The Unemployment Rate is estimated to have increased to 4.2% from the former release of 4.1%. Investors will also pay close attention to the US Average Hourly Earnings data to get cues about the current status of wage growth.
The downside in the Gold price is expected to remain well-supported amid tensions between Russia and Ukraine. Historically, the appeal of the Gold price has strengthened amid heightening geopolitical tensions.
Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, ticks down to near 106.20. 10-year US Treasury yields advance to near 4.21%.
Gold price trades back and forth near the upward-sloping trendline around $2,650, which is plotted from the February low of $1,984.00 on a daily timeframe. The precious metal wobbles near the 20-day Exponential Moving Average (EMA) around $2,650.00.
The 14-day Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, suggesting a sideways trend.
Looking down, the November low of $2,536.87 will be the key support for Gold price bulls. On the upside, the October high of $2,790 will act as key resistance.
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.
Pullback from the high could extend below 149.65 before stabilisation can be expected. In the long run, US Dollar (USD) weakness appears to have stabilised; it is likely to trade in a range of 148.65/152.00 for now, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
24-HOUR VIEW: “USD plummeted to 148.63 on Tuesday, and then rebounded quickly. In early Asian trade yesterday, we indicated that ‘the brief drop did not result in any increase in momentum, and we continue to expect USD to trade in a range, probably between 148.80 and 150.30.’ Instead of trading in a range, USD soared to 151.22, pulling back to close at 150.60. The pullback from the high could extend below 149.65 before stabilisation can be expected. USD is unlikely to threaten the major support at 148.65. Resistance levels are at 150.80 and 151.20.”
1-3 WEEKS VIEW: “We have held a negative USD view for two weeks now. Yesterday (04 Dec, spot at 149.65), we highlighted that ‘for USD to continue to decline, it must break and close below 148.65, which is acting as a significant support level now.’ We added, ‘should USD break above 150.80 (‘strong resistance’ level), it would indicate that the weakness in USD has stabilised.’ USD subsequently soared to a high of 151.22, breaking above our ‘strong resistance’ level. The USD weakness appears to have stabilised. The current price movements are likely the early stages of a range trading phase, probably between 148.65 and 152.00.”
French lawmakers have voted. Both the left and right wings united to reach a combined vote of 331, well above the 288 simple majority needed. PM Barnier has lost a vote of no-confidence. In Germany, chancellor Scholz is expected to call for a vote of confidence on 11 Dec and the Bundestag will vote on 16 Dec. EUR/USD was last at 1.0527, OCBC’s FX analysts Frances Cheung and Christopher Wong notes.
“Mr Barnier and cabinet will likely have to resign, and the government goes into caretaker mode. As no legislative elections can be held until 1 year after the last elections (held in July this year), snap election is not possible. The next focus is on Germany. To survive the vote, Scholz would need to receive the support of an absolute majority of 367 votes. But in the event, he fails, then Germany is likely to make way for elections on 23 Feb 2025.”
“And despite the political uncertainties, the EUR has refused to trade much lower. We believe a lot of known negatives are already in the price of EUR – slowing growth momentum, political fallout, ECB cut expectations, etc. EUR bears need a new catalyst to break lower, failing which, shorts could be frustrated.
“We still caution for the risk of short squeeze on any Euro-area positive news or poor US data catalyst. EUR still holds above its lows. Daily momentum is mild bullish while RSI remains flat. Consolidation likely. Resistance at 1.0570 (21 DMA), 1.0610 and 1.0670 (38.2% fibo retracement of Oct high to Nov low). Support at 1.0450 levels before 1.0330.”
Crude Oil is consolidating at around $68.50 on Thursday after Wednesday’s losses ahead of the decision from OPEC+ meeting that is taking place at the time of writing. OPEC+ members are convening online to discuss a delay of the production normalization amidst sluggish demand and oversupply coming from non-OPEC+ countries. Market expectations are for at least a delay of three months, so OPEC+ will need to overdeliver in order to get that promised floor in Oil prices.
The US Dollar Index (DXY) – which measures the performance of the US Dollar (USD) against a basket of currencies – is softening in very calm markets as the dust settles on the French political uncertainty after its government fell on Wednesday. Traders are sitting on their hands ahead of Friday’s Nonfarm Payrolls release, the last one of the year. Overnight, Fed Chairman Jerome Powell kept his cards close to his chest on the odds for a December rate cut, while commenting that the US debt is becoming unsustainable and needs to be addressed.
At the time of writing, Crude Oil (WTI) trades at $68.50 and Brent Crude at $72.30.
Crude Oil price might be undergoing a gruesome disappointment if OPEC+ is unable to overdeliver on market expectations. With several analysts penciling in a delay between three to six months, OPEC+ is forced to at least deliver a 6 months production normalization delay. Preferably even longer, with anything less than 6 months set to push Oil prices further down ahead of President-elect Donald Trump’s presidency.
With the leg lower this week, the 55-day Simple Moving Average (SMA) at $70.17 triggered a firm rejection on Wednesday. Should the OPEC+ communication be able to initiate a spike, look for $71.46 with the 100-day SMA at $71.65 as thick resistance. In case Oil traders can plough through that level, $75.27 is up next on the topside as pivotal level.
On the other side, traders see $67.12 – a level that held the price in May and June 2023 – rapidly nearing. In case that breaks, the 2024 year-to-date low emerges at $64.75, followed by $64.38, the low from 2023 will quickly be tested for more downside.
US WTI Crude Oil: Daily Chart
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.
The NZD/USD pair bounces back to near 0.5880 in Thursday’s European session after a three-day losing spree. The Kiwi pair rebounds as the US Dollar (USD) drops due to weaker-than-expected United States (US) ISM Services PMI data for November.
Wednesday’s Services PMI data showed that activities in the services sector expanded at a slower-than-expected pace to 52.1 from 56.0 in October. Economists expected the Service PMI at 55.5.
At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades cautiously near the key support of 106.00.
Going forward, the next move in the USD will be guided by the US Nonfarm Payrolls (NFP) data for November, which will be released on Friday. Economists expect that the US economy added 200K fresh workers. The Unemployment Rate is estimated to have accelerated to 4.2% from 4.1% in October.
The official labor market data will significantly influence market speculation for the Federal Reserve’s (Fed) likely interest rate path. Meanwhile, the comments from Fed Chair Jerome Powell at the New York Times DealBook Summit on Wednesday indicated that officials could have the comfort of becoming cautious on interest rate cuts, assuming that the economic growth is stronger than what the central bank had anticipated in September.
In the New Zealand (NZ) region, the expectations of more large-size interest rate cuts from the Reserve Bank of New Zealand (RBNZ) would keep the New Zealand Dollar’s (NZD) outlook bearish. The RBNZ has already reduced its Official Cash Rate (OCR) to 4.25% and is expected to cut by 50 basis points (bps) in its policy meeting on February 19.
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.
Eurozone’s Retail Sales rose at an annual rate of 1.9% in October after increasing by a revised 3.0% in September, the official data released by Eurostat showed on Thursday. The data beat the market consensus of +1.7%.
On a monthly basis, Retail Sales in the old continent dropped by 0.5% in the same period, compared to September’s +0.5% while missing the estimated 0.3% decline.
The mixed Eurozone data fails to deter Euro buyers. At the time of writing, the EUR/USD pair is trading 0.18% higher on the day at 1.0530.
The New Zealand Dollar (NZD) is expected to trade in a 0.5830/0.5890 range. In the longer run, NZD is expected to trade in a 0.5830/0.5930 range, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
24-HOUR VIEW: “Our view for NZD to trade in a 0.5860/0.5900 range was incorrect. Instead of trading in a range, NZD dropped to 0.5830, recovering to close lower by 0.52% at 0.5852. Despite the decline, there has been no significant increase in momentum. Today, we expect NZD to trade in a 0.5830/0.5890 range.”
1-3 WEEKS VIEW: “Our most recent narrative was from last Thursday (28 Nov, spot at 0.5895), wherein ‘the current price movements are likely part of a range trading phase,’ and NZD is expected to ‘trade between 0.5840 and 0.5950.’ Although NZD broke below 0.5840 yesterday and dropped to a low of 0.5830, downward momentum has not increased much. NZD must close and stay below 0.5830 before a sustained decline can be expected. Currently, it does not appear to have enough momentum to break clearly below 0.5830. Meanwhile, we continue to expect NZD to trade in a range, albeit within a lower range of 0.5830/0.5930.”
The National Bank of Poland (NBP) left rates unchanged at 5.75% on Wednesday. The accompanying NPB statement did not bring much fresh news. Although, it probably shows a slightly less dovish tone than in November, ING’s FX analyst Chris Turner notes.
“As we discussed in our FX Daily yesterday, given market pricing, today's NBP press conference may be neutral or slightly hawkish in our view compared to market expectations. After yesterday's statement, rates sold off by roughly 5-7bp, supporting a stronger PLN. EUR/PLN quickly reached yesterday's 4.280 level and we believe the press conference may add further support to PLN, on the other hand, current valuations seem stretched at current levels.”
“In the Czech Republic, wage growth surprised to the upside yesterday and significantly exceeded the Czech National Bank forecast. Also in line with our expectations, the CNB Governor delivered a hawkish message and hinted that a pause in the cutting cycle is near and may be for a longer period.”
“Our economist's forecast of a pause in the cutting cycle in December and February is becoming very likely, which was also reflected in EUR/CZK moving below 25.200. Here we see some room for CZK to strengthen towards 25.100, and similar to PLN we see more tactical gains here.”
According to the latest Bank of England (BoE) Decision Maker Panel (DMP) quarterly survey released on Thursday, “one-year ahead expected CPI inflation by the UK companies rose by another 0.1 percentage points to 2.7% in the quarter to December.”
Inflation expectations for the year ahead seen at 2.7% in Q4 versus the previous 2.6%.
Inflation expectations for three years ahead are seen at 2.6% in Q4, unchanged from the previous quarter.
Expected wage growth for the year ahead seen at 4.0% in Q4 versus 4.1% previous.
The survey is one of the most closely watched by members of the BoE's Monetary Policy Committee (MPC).
The Pound Sterling pays little heed to the UK businesses’ inflation expectations, as GBP/USD gains 0.15% on the day to trade near 1.2718, at the press time.
The weakness in the Australian Dollar (AUD) could retest the 0.6400 level before stabilization is likely. In the longer run, risk for AUD has shifted to the downside; the 0.6380 level is expected to provide significant support, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
24-HOUR VIEW: “When AUD was at 0.6480 yesterday, we noted that ‘the underlying tone still appears to be a bit soft, and there is room for AUD to test 0.6440.’ We pointed out, ‘a clear break below this level still seems unlikely.’ We did not expect AUD to plummet to a low of 0.6399. Not surprisingly, conditions are oversold. However, with no signs of stabilisation just yet, AUD could retest the 0.6400 level. This time around, a clear break below this level seems unlikely. The next support at 0.6380 is not expected to come into view. To keep the oversold momentum going, AUD must remain below 0.6460, with minor resistance at 0.6445.”
1-3 WEEKS VIEW: “In our most recent narrative from last Thursday (28 Nov, spot at 0.6495), we highlighted that “the current price movements are likely part of a consolidation phase.” We expected AUD to ‘consolidate between 0.6440 and 0.6550 for the time being.’ Yesterday, in a sudden move, AUD plunged to 0.6399 before closing at 0.6430 (-0.88%). Although the rapid increase in momentum suggests the risk has shifted to the downside, any decline is expected to face significant support at 0.6380. To sustain the increase in momentum, AUD must not break above the ‘strong resistance’ level, currently at 0.6490.”
USD/JPY is edging lower this morning as Bank of Japan (BOJ) dove Toyoaki Nakamura says that he's not averse to a rate hike. The Japanese Yen (JPY) is performing well on the crosses as the prospect of a BoJ rate hike stands at odds with monetary easing underway elsewhere in the G10, ING’s FX analysts Chris Turner notes.
“This follows much market oscillation on whether the BoJ would pull the trigger on a rate hike this month. We think it will and that tomorrow's October Japanese wage data will support that call.”
“The yen is performing well on the crosses as the prospect of a BoJ rate hike stands at odds with monetary easing underway elsewhere in the G10. This week's events in Korea have also added to the safe-haven buying of the yen. We are bullish on the dollar, but should tomorrow's US NFP data disappoint, dollar weakness should be most visible in USD/JPY.”
“However, a weaker EUR/JPY looks the cleaner trend here and a cross rate like SEK/JPY has already hit the target we put out as part of our calls for 2025.”
The Pound Sterling (GBP) gains against its major peers on Thursday amid firm expectations that the Bank of England (BoE) will follow a gradual approach while lowering its key borrowing rates compared to other central banks.
BoE Governor Andrew Bailey said on Wednesday that interest rates should be cut “gradually” in a Financial Times (FT) Global Boardroom event, adding that the progress in taming price pressures is holding up. "This sort of disinflation process is now well embedded,” Bailey said.
However, Bailey also emphasized that the central bank has still some work to do to bring inflation down below the bank’s target of 2%. Bailey added that price pressures have ticked up after returning to the bank’s target, a scenario that was already anticipated by the BoE.
When asked about the interest-rate path ahead, Bailey said he sees four interest-rate cuts next year. The initial reaction from his commentary was negative for the Pound Sterling, but the currency managed to recover strongly as some of Bailey’s comments also pointed to caution. While the BoE Governor didn’t offer any cues about the decision in the monetary policy meeting on December 19, traders expect the BoE to leave interest rates unchanged at 4.75%.
In Thursday’s session, investors will focus on BoE Monetary Policy Committee (MPC) external member Megan Greene’s commentary at the Global Boardroom event organized by the Financial Times (FT), which is scheduled at 17:00 GMT.
The Pound Sterling jumps to near 1.2740 against the US Dollar in European trading hours on Thursday. The GBP/USD pair wobbles near the 20-day Exponential Moving Average (EMA) around 1.2715. However, the outlook remains bearish as the pair stays below the 200-day Exponential Moving Average, which trades around 1.2825.
The 14-day Relative Strength Index (RSI) has rebounded after turning oversold on November 22. However, the downside bias is still intact.
Looking down, the pair is expected to find a cushion near the upward-sloping trendline around 1.2500, which is plotted from the March 2023 low near 1.1800. On the upside, the 200-day EMA will act as key resistance.
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.
Silver prices (XAG/USD) fell on Thursday, according to FXStreet data. Silver trades at $31.24 per troy ounce, down 0.17% from the $31.29 it cost on Wednesday.
Silver prices have increased by 31.28% since the beginning of the year.
Unit measure | Silver Price Today in USD |
---|---|
Troy Ounce | 31.24 |
1 Gram | 1.00 |
The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 84.60 on Thursday, down from 84.70 on Wednesday.
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.
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US Dollar slips modestly after ISM services data underwhelmed expectations. The Dollar Index (DXY) was last at 106.15, OCBC’s FX analysts Frances Cheung and Christopher Wong notes.
“Focus is still on labour market related data, initial jobless claims tonight and more importantly, payrolls tomorrow. There is a good chance Nov NFP rebounds sharply after hurricanes and major strikes have likely distorted Oct NFP. Consensus is looking for +215k print. We caution that a lower print could see USD bears return.”
“Daily momentum is mild bearish though RSI is flat. Consolidation likely intra-day. Key support at 106.20 (21 DMA) if broken may see bearish momentum gather traction. Next support at 105.40 levels (38.2% fibo), 104.00/40 (50, 200 DMAs). Resistance at 106.50, 107.20.”
The USD/CAD pair struggles to capitalize on its weekly gains registered over the past three days and attracts some sellers during the first half of the European session on Thursday. Spot prices slide closer to mid-1.4000s in the last hour, though any meaningful downfall still seems elusive ahead of the crucial monthly employment details from the US and Canada on Friday.
Heading into the key data risk, a modest US Dollar (USD) downtick is seen as a key factor exerting some downward pressure on the USD/CAD pair. That said, rebounding US Treasury bond yields, bolstered by expectations for a less dovish Federal Reserve (Fed), acts as a tailwind for the Greenback. Apart from this, subdued Crude Oil prices ahead of the OPEC+ meeting could undermine the commodity-linked Loonie and contribute to limiting losses for the USD/CAD pair.
Meanwhile, hawkish remarks from several FOMC members, including Fed Chair Jerome Powell, suggested that the US central bank will adopt a cautious stance on cutting rates. Adding to this, speculations that US President-elect Donald Trump's policies will reignite inflation might force the Fed to stop cutting rates or possibly raise them again. This assists the US Treasury bond yields to stage a modest bounce after their lowest closing levels in more than a month on Wednesday.
Crude Oil prices, on the other hand, struggle to gain any meaningful traction on the back of concerns over slowing oil demand, especially China – the world's top importer. That said, the worsening Russia-Ukraine conflict and increasing tensions in the Middle East, along with expectations that the OPEC+ will further delay plans to increase production until at least the second quarter of 2025, act as a tailwind for the commodity, though fail to influence the Canadian Dollar (CAD).
Traders now look to the release of the US Weekly Initial Jobless Claims data, which, along with the US bond yields, will drive the USD demand and provide some impetus to the USD/CAD pair later during the North American session. Apart from this, Oil price dynamics should contribute to producing short-term opportunities. The mixed fundamental backdrop, meanwhile, warrants some caution for aggressive traders and before positioning for any firm near-term direction.
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 briefly sold off and then recovered after Bank of England (BoE) Governor Andrew Bailey seemed to confirm that the bank was looking at four rate cuts over the next year. EUR/GBP to stay gently offered, ING’s FX analyst Chris Turner notes.
“Elsewhere, GBP:USD briefly sold off and then recovered after Bank of England Governor Andrew Bailey seemed to confirm that the BoE was looking at four rate cuts over the next year, with the market only pricing three. However, those remarks did look a bit 'technical' – in that they merely confirmed what the BoE had been using in its models for its forecasts.”
“Expect EUR/GBP to stay gently offered and look out for inflation expectations at 1030CET today and a speech by BoE hawk, Megan Greene, at 18CET.”
The French government suddenly leaves the scene fueling the political crisis yet again, ING’s FX analyst Chris Turner notes.
“Weak business investment means that France will only grow by 0.6% next year. Add in Germany contracting at 0.2% next year and eurozone GDP for the year comes in at just 0.7% – thanks to southern Europe! We see the ECB cutting rates to 1.75% next year. This should keep short-dated EUR:USD rate spreads near 200bp in favour of the dollar all year and, as Barry Eichengreen says, bring EUR/USD close to parity.”
“In terms of eurozone data today, we should see a downward correction in eurozone retail sales. We are still minded that short-term resistance at 1.0550 may be the extent of the EUR/USD recovery and see a case that EUR/USD hovers near 1.0500 over the coming days – given there seems to be more than $5bn of 1.0500 FX option strikes at that level expiring over the coming week.”
The Pound Sterling (GBP) could test the 1.2725 level before a pullback is likely; the major resistance at 1.2750 is unlikely to come under threat. In the longer run, outlook for GBP has turned neutral; it is likely to trade between 1.2580 and 1.2750, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
24-HOUR VIEW: “After Tuesday’s price movements, we noted yesterday that ‘there has been no increase in either downward or upward momentum.’ We were of the view that EUR ‘is likely to trade in a 1.2630/1.2705 range.’ In London trade, GBP dropped briefly to 1.2630. GBP then rose to 1.2722 in NY trade, closing at 1.2702, higher by 0.23% for the day. Upward momentum has increased slightly. Today, GBP could test the 1.2725 level before a pullback is likely. The major resistance at 1.2750 is unlikely to come under threat. On the downside, support levels are at 1.2680 and 1.2660.”
1-3 WEEKS VIEW: “Two days ago (03 Dec), when GBP was at 1.2660, we revised our outlook from positive to neutral. We indicated that GBP ‘is likely to trade in a range, probably between 1.2580 and 1.2750.’ Our view remains unchanged.”
The Dollar Index (DXY) is slightly softer after yesterday's release of the ISM Services index disappointed consensus and made an 18 December Fed rate cut more likely, ING’s FX analyst Chris Turner
“A column in the Financial Times was titled: 'A turning point for the dollar is coming' which sounds alarming for dollar bulls such as ourselves. But the majority of the article focused on why the dollar would strengthen first and then only soften in the medium term after the Fed had to slow tariff-induced inflation with rate hikes and then presumably cut rates into a recession too. That sounds like a bear story for the dollar in late 2026 at the earliest and possibly 2027.”
“Our view is that 2025 will be a year in which Donald Trump pumps more air into the dollar bubble. Indeed, some customers ask whether there will be some kind of 1985 Plaza-style accord to weaken the dollar. We see a low likelihood of that, but perhaps only in 2026 or 2027. History books recall that the Plaza Accord only came in four years after Ronald Reagan's expansionary policies.”
“Back to the short term and the US data calendar is light today. Weekly initial jobless claims have been staying very low recently, but tomorrow's NFP jobs data will have a much bigger say in where the dollar goes next. Events in Europe are keeping the DXY trade-weighted dollar relatively bid despite the drop in short-dated US rates. Again we would expect good dollar demand to emerge should it trade sub-106.”
Further range trading in Euro (EUR) appears likely, with an expected range of 1.0480/1.0550. In the longer run, EUR is expected to trade in a range for now, most likely between 1.0430 and 1.0580, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
24-HOUR VIEW: “EUR traded in a 1.0479/1.0535 range on Tuesday. Yesterday (Wednesday), we indicated that ‘The relatively quiet price action provides no fresh clues, and we continue to expect EUR to trade in a range, most likely between 1.0480 and 1.0535.’ While EUR subsequently traded in a wider range of 1.0471/1.0544, it closed largely unchanged for the second day in a row (1.0510, +0.01%). There has been no increase in either downward or upward momentum, and further range trading seems likely. Expected range for today: 1.0480/1.0550.”
1-3 WEEKS VIEW: “Our latest narrative was from two days ago (03 Dec, spot at 1.0500), wherein ‘instead of a rebound, EUR is expected to trade in a range for now, most likely between 1.0430 and 1.0580.’ EUR traded in a range over the past couple of days, and there is no change in our view.”
EUR/USD ticks higher and strives to stay above 1.0500 in European trading hours on Thursday. The major currency pair gains slightly as investors attempt to move forward from the already anticipated collapse of a mere three-month-long Michel Barnier’s government after losing a no-confidence vote proposed by the Far Right and Left-wing coalition.
The demolition of the French government has put the economy into a much deeper crisis by limiting its capacity to tame the burgeoning fiscal deficit. Far-right and left-wing lawmakers backed a no-confidence motion against Barnier after claiming the budget from his government was “flawed and harmful” to French people. The budget in question proposed €60 billion in tax increases and spending cuts aimed at addressing France’s ballooning deficit, according to Firstpost.
Before the no-confidence vote, Barnier appealed to lawmakers, "This reality will not disappear by the magic of a motion of censure." He added the budget deficit would come back to haunt whichever government comes next.
French political turmoil has complicated the road ahead for the already-troubled Eurozone, which is facing severe downside risks to economic growth due to weak demand and potential tariffs once the new US administration of President-elect Donald Trump takes office. Meanwhile, monthly German Factory Orders declined in October but at a slower-than-expected pace. The economic data contracted by 1.5% after rising 7.2% in September. Economists expected the Factory Orders data to have declined by 2%.
European Central Bank (ECB) President Christine Lagarde also warned about growing risks to the trading bloc in her testimony before the Parliamentary Committee on Wednesday. “The medium-term economic outlook is uncertain, however, and dominated by downside risks," Lagarde said. "Geopolitical risks are elevated, with growing threats to international trade," she added.
On the interest rate outlook, Lagarde sticked to her data-dependent approach. However, traders expect that the ECB will cut its Deposit Facility Rate by 25 basis points (bps) to 3% at its December 12 meeting.
EUR/USD continues to wobble around the psychological figure of 1.0500. However, the outlook of the major currency pair remains bearish as all short-to-long-term day EMAs are declining, pointing to a downside trend.
The 14-day Relative Strength Index (RSI) rebounded after conditions turned oversold and climbed above 40.00, suggesting that the bearish momentum has faded. However, the bearish trend has not been extinguished.
Looking down, the November 22 low of 1.0330 will be a key support for Euro bulls. On the flip side, the 50-day EMA near 1.0750 will be the key barrier for the Euro bulls.
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.
Here is what you need to know on Thursday, December 5:
The US Dollar (USD) Index continues to stretch lower toward 106.00 early Thursday after posting small losses for the second consecutive day on Wednesday. The US economic calendar will feature weekly Initial Jobless Claims and Goods Trade Balance data for October. During the European trading hours, Eurostat will publish Retail Sales figures for October.
While participating in a moderated discussion at the New York Times DealBook Summit, in New York on Wednesday, Federal Reserve (Fed) Chairman Jerome Powell reiterated that the US economy is in a "remarkably good shape." He further explained that they are trying to be in a middle place where the policy is less restrictive, so inflation can fall but not damage the labor market. These comments failed to trigger a noticeable market reaction. Nevertheless, Wall Street's main indexes registered strong daily gains and the benchmark 10-year US Treasury bond yield retreated below 4.2%, making it difficult for the USD Index to gain traction. Early Thursday, US stock index futures trade virtually unchanged.
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the Japanese Yen.
USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
---|---|---|---|---|---|---|---|---|
USD | 0.40% | 0.10% | 0.09% | 0.57% | 1.10% | 0.82% | 0.31% | |
EUR | -0.40% | -0.34% | -0.28% | 0.19% | 0.80% | 0.42% | -0.04% | |
GBP | -0.10% | 0.34% | 0.02% | 0.52% | 1.14% | 0.78% | 0.27% | |
JPY | -0.09% | 0.28% | -0.02% | 0.46% | 1.04% | 0.75% | 0.18% | |
CAD | -0.57% | -0.19% | -0.52% | -0.46% | 0.69% | 0.25% | -0.25% | |
AUD | -1.10% | -0.80% | -1.14% | -1.04% | -0.69% | -0.37% | -0.88% | |
NZD | -0.82% | -0.42% | -0.78% | -0.75% | -0.25% | 0.37% | -0.47% | |
CHF | -0.31% | 0.04% | -0.27% | -0.18% | 0.25% | 0.88% | 0.47% |
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).
Bitcoin gathered bullish momentum during the Asian trading hours on Thursday and surged to a new record-high above $100,000. President-elect Donald Trump confirmed on Wednesday that he has nominated Patomak Global Partners CEO Paul Atkins, who is a widely known crypto advocate, to replace Gary Gensler as the next Chairman of the Securities & Exchange Commission (SEC).
Bank of Japan (BoJ) board member Toyoaki Nakamura said on Thursday that he is not against rate hikes but added that the decision should be data-dependent. "There will be plenty of data coming out before BoJ’s December meeting including Tankan, so want to scrutinize them in deciding whether rate hike would be appropriate," Nakamura noted. After rising more than 0.5% on Wednesday, USD/JPY stays on the back foot early Thursday and was last seen trading below 150.00.
The data from Germany showed that Factory Orders declined by 1.5% on a monthly basis in October. This reading followed the 7.2% increase recorded in September and came in slightly better than the market expectation for a decrease of 2%. EUR/USD clings to small gains above 1.0500 after failing to make a decisive move in either direction on Wednesday.
GBP/USD continues to edge higher and trades above 1.2700 after closing in positive territory on Wednesday.
Gold benefited from falling US Treasury bond yields and posted marginal gains on Wednesday. Nonetheless, XAU/USD remains stuck in a relatively tight channel at around $2,650 in the European morning on Thursday.
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
According to the official data published by the Federal Statistics Office on Thursday, Germany's Factory Orders declined in October, suggesting that the German manufacturing sector resumed its downward trajectory.
Over the month, contracts for goods ‘Made in Germany’ fell by 1.5% in October after the revised 7.2% jump reported in September. Data beat the estimates of a 2.0% decrease.
Germany’s Industrial Orders rose 5.7% year-on-year (YoY) in October, compared to the revised growth of 4.2%.
The Euro holds gains after strong German data, with the EUR/USD higher by 0.23% on the day at 1.0533, as of writing.
The Silver price (XAG/USD) drifts lower to around $31.20, snapping the two-day winning streak during the early European session on Thursday. The cautious stance on cutting rates by the Federal Reserve (Fed) weighs on the white metal.
Federal Chair Jerome Powell said on Wednesday that the US economy’s strength means the US central bank can afford to be a little more cautious” about decisions on rate moves. Joseph Brusuelas, chief economist at RSM US, noted that he doesn’t expect further rate cuts after the December meeting until March 2025 at the earliest.
The rising bets of less aggressive Fed rate cuts could support the Greenback and undermine the USD-denominated commodity price. The markets are now pricing in a 76% chance that the central bank would cut rates by a quarter point at its December 17-18 meeting, according to the CME FedWatch tool.
On the other hand, the silver market is expected to experience a supply deficit for the fourth consecutive year due to robust demand. This, in turn, might provide some support to the Silver price. Carsten Fritsch, a precious metals analyst at Commerzbank, said, “Silver demand for photovoltaics has more than doubled in the last three years and now almost equals the demand for bars and coins.” Fritsch added that the rising industrial demand is likely to boost physical silver demand this year, reaching its second-highest level after 2022.
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.
FX option expiries for Dec 5 NY cut at 10:00 Eastern Time via DTCC can be found below.
EUR/USD: EUR amounts
GBP/USD: GBP amounts
USD/JPY: USD amounts
USD/CHF: USD amounts
AUD/USD: AUD amounts
USD/CAD: USD amounts
Bank of Japan (BoJ) board member Toyoaki Nakamura said on Thursday that “I am not against rate hikes but feel the decision should be data-dependent."
There will be plenty of data coming out before BoJ’s December meeting including Tankan, so want to scrutinize them in deciding whether rate hike would be appropriate.
Japan's economy still at recovery, rather than expansionary, phase.
Should not have any preset idea on when to raise interest rates.
The GBP/USD pair trades with a mild positive bias for the third straight day and holds steady just above the 1.2700 mark during the Asian session on Thursday. Spot prices, however, lack bullish conviction and remain below the weekly high touched on Monday.
The US Dollar (USD) extends its sideways consolidative price move as traders opt to wait on the sidelines ahead of the release of the US Nonfarm Payrolls (NFP) report on Friday. This, in turn, is seen as a key factor acting as a tailwind for the GBP/USD pair. That said, expectations for a less dovish Federal Reserve (Fed) trigger a modest bounce in the US Treasury bond yields and act as a tailwind for the Greenback.
Investors now seem convinced that US President-elect Donald Trump's tariff plans and expansionary policies will boost inflation. Moreover, comments from a slew of influential FOMC members on Wednesday, including Fed Chair Jerome Powell, suggested that the US central bank will adopt a cautious stance on cutting rates. This leads to a modest recovery in the US Treasury bond yields and acts as a tailwind for the USD.
Apart from this, persistent geopolitical risks stemming from the worsening Russia-Ukraine conflict and trade war fears further offer support to the safe-haven buck. The British Pound (GBP) bulls, meanwhile, remain on the sidelines in the wake of Bank of England (BoE) Governor Andrew Bailey's expected four interest rate cuts in 2025. This further contributes to capping the GBP/USD pair and warrants caution for bulls.
Moving ahead, traders now look forward to the release of the UK Construction PMI for some impetus ahead of the usual Weekly Initial Jobless Claims data from the US later during the early North American session. The immediate market reaction, however, is more likely to be limited as the focus remains glued to the closely-watched US monthly employment details, which will guide Fed policymakers on their next policy decision.
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.
Gold prices fell in India on Thursday, according to data compiled by FXStreet.
The price for Gold stood at 7,210.99 Indian Rupees (INR) per gram, down compared with the INR 7,218.56 it cost on Wednesday.
The price for Gold decreased to INR 84,107.55 per tola from INR 84,195.87 per tola a day earlier.
Unit measure | Gold Price in INR |
---|---|
1 Gram | 7,210.99 |
10 Grams | 72,109.88 |
Tola | 84,107.55 |
Troy Ounce | 224,287.00 |
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 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.)
West Texas Intermediate (WTI) US Crude Oil prices remain under some selling pressure for the second straight day on Thursday and have now reversed a major part of weekly gains. The commodity trades below mid-$68.00s, down 0.30% for the day during the Asian session, though the downside remains cushioned ahead of the OPEC+ meeting later today.
Reports suggest that the cartel will further delay plans to increase production until at least the second quarter of 2025 amid concerns over slowing oil demand, especially China – the world's top importer. Furthermore, the worsening Russia-Ukraine conflict and increasing tensions in the Middle East keep geopolitical risks premium in play, which, in turn, could act as a tailwind for Crude Oil prices.
Meanwhile, the official data released by the Energy Information Administration (EIA) on Wednesday showed that US oil inventories shrank more than expected, by 5.07 million barrels in the final week of November. Moreover, signs of US economic resilience, and hopes that US President-elect Donald Trump's expansionary policies will boost fuel demand, should limit losses for Crude Oil prices.
Traders might also refrain from placing aggressive directional bets and opt to wait for the release of the US Nonfarm Payrolls (NFP) report. The closely watched employment details will play a key role in influencing market expectations about the Federal Reserve's (Fed) rate-cut path. This, in turn, will influence the US Dollar (USD) price dynamics and provide a fresh impetus to Crude Oil prices.
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.
The Indian Rupee (INR) remains weak near a record low on Thursday despite interventions by the Reserve Bank of India (RBI). The strong US Dollar (USD) demand, worries over India's economic growth and significant outflows from Indian portfolios following Donald Trump's strength in the US Presidential elections exert some selling pressure on the INR.
Nonetheless, the lower crude oil prices could help limit the local currency’s losses as India is the world’s third-largest oil consumer. Investors will monitor the US weekly Initial Jobless Claims and Goods Trade Balance reports, which will be published later on Thursday. On Friday, all eyes will be on the RBI interest rate decision and the highly anticipated Nonfarm Payrolls (NFP) data.
The Indian Rupee edges lower on the day. The USD/INR pair maintains the uptrend on the daily timeframe, with the pair holding above the key 100-day Exponential Moving Average (EMA). However, further consolidation cannot be ruled out as the pair makes higher highs, but the 14-day Relative Strength Index (RSI) makes lower highs, indicating bearish divergence. This suggests that the trend is weakening and the upward direction might reverse in the near term.
The first resistance level to watch is near the all-time high of 84.77. Extended bullish candlesticks could pave the way to the 85.00 psychological mark, followed by 85.50.
On the flip side, any follow-through selling below the resistance-turned-support at 84.60 could expose 84.22, the low of November 25. The potential support level is seen at 84.02, the 100-day EMA.
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.
Gold price (XAU/USD) drifts lower during the Asian session on Thursday, albeit it remains confined in a familiar range held over the past week or so amid mixed fundamental cues. The overnight hawkish remarks by FOMC members, including Federal Reserve (Fed) Chair Jerome Powell, reaffirmed expectations that the US central bank will take a cautious stance on cutting rates. This assists the US Treasury bond yields to rebound slightly from their lowest closing levels in more than a month and turns out to be a key factor undermining the non-yielding yellow metal.
Apart from this, the prevalent risk-on environment is seen exerting some downward pressure on the safe-haven Gold price. That said, persistent geopolitical tensions stemming from the worsening Russia-Ukraine conflict and concerns about US President-elect Donald Trump's tariff plans could act as a tailwind for the XAU/USD. Furthermore, the lack of any meaningful US Dollar (USD) buying should contribute to limiting losses for the commodity. Traders might also opt to wait for the release of the US Nonfarm Payrolls (NFP) report on Friday before placing directional bets.
From a technical perspective, this week's breakdown below a multi-day-old ascending channel was seen as a key trigger for bearish traders. That said, neutral oscillators on daily/4-hour charts make it prudent to wait for some follow-through selling below the recent trading range support, around the $2,630 area, before positioning for further losses. The subsequent downfall has the potential to drag the Gold price below the weekly swing low, around the $2,622-2,621 region, towards the $2,600 mark. The downward trajectory could extend further towards the 100-day Simple Moving Average (SMA), currently pegged near the $2,581 area, en route to the November monthly trough, around the $2,537-2,536 region.
On the flip side, the $2,655 area might continue to act as an immediate barrier ahead of last Friday's swing high, around the $2,666 region. Some follow-through buying, leading to a subsequent strength beyond the $2,677-2,678 hurdle, should allow the Gold price to aim to reclaim the $2,700 round figure. Any further move up, however, is likely to confront stiff resistance near the $2,721-2,722 supply zone, which if cleared decisively might shift the bias in favor of bulls and pave the way for some meaningful appreciating move in the near term.
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.
The NZD/USD pair recovers some lost ground to around 0.5865 amid a modest decline in the US Dollar (USD) during the Asian trading hours on Thursday. However, the weakening of the Greenback might be limited amid the cautious stance of the Federal Reserve (Fed). Traders will keep an eye on the US weekly Initial Jobless Claims on Thursday ahead of the highly anticipated Nonfarm Payrolls (NFP) data.
Financial markets anticipate the US Fed to reduce its benchmark interest rate by another quarter percentage point from its current target range of 4.5%-4.75%. The Fed policymaker cut a combined three-quarters of a point at its September and November meetings. However, several Fed officials have expressed some concern about the recent uptick in the inflation rate, indicating a cautious approach to policy as they watch the data. This, in turn, might lift the USD and act as a headwind for the pair.
The Fed’s Beige Book survey released on Wednesday suggested that US economic activity increased slightly in November after little change in preceding months, and US businesses grew more upbeat about demand prospects. Additionally, Fed Chair Jerome Powell said that the US economy is in better shape than expected, allowing Fed officials to potentially slow the pace of interest-rate cuts ahead.
On the other hand, the Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr signalled the likelihood of further monetary easing in the near future. The dovish remarks from the RBNZ policymaker and lacklustre domestic economic data undermine the Kiwi. Traders have priced in a nearly 68% possibility of a 25 basis points (bps) rate cut in February 2025.
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.
Raw materials | Closed | Change, % |
---|---|---|
Silver | 31.269 | 0.88 |
Gold | 2649.51 | 0.27 |
Palladium | 976.71 | 0.68 |
The Japanese Yen (JPY) edges higher against its American counterpart during the Asian session on Thursday and moves away from the weekly low touched on the previous day. Signs that the underlying inflation in Japan is gaining momentum continue to fuel expectations that the Bank of Japan (BoJ) will hike interest rates again in December. Adding to this, persistent geopolitical risks, trade war fears, and the overnight decline in the US Treasury bond yields further benefit the lower-yielding JPY.
That said, Wednesday's hawkish remarks by a slew of influential FOMC members, including Federal Reserve (Fed) Chair Jerome Powell, acts as a tailwind for the US bond yields and the US Dollar (USD). This, along with the prevalent risk-on environment, might keep a lid on any meaningful appreciation for the safe-haven JPY and lend some support to the USD/JPY pair. Traders might also refrain from placing aggressive directional bets ahead of the US Nonfarm Payrolls (NFP) report on Friday.
From a technical perspective, the USD/JPY pair showed resilience below the 100-day Simple Moving Average (SMA) earlier this week and the subsequent recovery from its lowest level since October 11 supports prospects for additional gains. That said, oscillators on the daily chart are holding in negative territory and are still far from being in the oversold zone. This, in turn, suggests that any further move up beyond the overnight swing high, around the 151.20-151.25 region, is likely to remain capped near the 152.00 mark. The latter coincides with the very important 200-day SMA and should act as a key pivotal point. A sustained strength beyond will suggest that the recent corrective decline from a multi-month high touched in November has run its course and shift the bias in favor of bullish traders.
On the flip side, weakness below the 150.00 psychological mark now seems to find decent support near the 149.55-149.50 horizontal zone. The next relevant support is pegged near the 149.00 mark ahead of the 100-day SMA, currently around the 148.80 region. A sustained break and acceptance below the latter will be seen as a fresh trigger for bearish traders and drag the USD/JPY pair to the 148.10-148.00 region en route to the 147.35-147.30 zone and the 147.00 round figure.
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.
According to Reuters, an adviser to US President-elect Donald Trump said on Thursday that he “wants to implement an Israel-Gaza cease-fire deal Gaza without delay and before January 20.
No further details are available on the same.
The US Dollar Index (DXY) was last seen trading at 106.36, modestly flat on the day.
Bank of Japan (BoJ) board member Toyoaki Nakamura said on Thursday that “Personally (he is) not confident about the sustainability of wage growth.”
We are at critical phase where we must check many data, cautiously adjust degree of monetary support in accordance of improvement in the economy.
Hopes of the US soft landing heightening but there are signs of economic slowdown.
Japan's economy recovering moderately although showing some weak signs.
Japan's consumption lacks momentum.
I personally see chance inflation may miss 2% from fiscal 2025 onward.
My growth forecast is below board median due to chance consumers may hold off on spending, capex may be postponed.
Japan's economy has yet to move on course for a stable growth path.
Structural changes in Japan's economy required inflation to stably hit 2%, which will take a significant amount of time.
Smaller firms' profitability, pass-through of rising cost, progress made in capex and wage hikes, households' spending are among key factors i will look at.
Adjustment to easy monetary policy will proceed gradually, as the economy is expected to head toward a growth path.
USD/JPY pares losses on these dovish comments, currently trading at 150.42, still down 0.11% on the day.
On Thursday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.1879, as compared to the previous day's fix of 7.1934 and 7.2664 Reuters estimates.
The Australian Dollar (AUD) remains under selling pressure on Thursday. The disappointing Australian economic data and rising expectations for an early interest rate cut by the Reserve Bank of Australia (RBA) drag the Aussie lower. Additionally, the concerns about potential tariffs on imports from President-elect Donald Trump might contribute to the AUD’s downside.
Traders will monitor the US weekly Initial Jobless Claims and Goods Trade Balance on Thursday for fresh impetus. Any signs of softer US labour market data could weaken the Greenback and help limit the pair’s losses. On Friday, all eyes will be on the US Nonfarm Payrolls (NFP) report for November.
The Australian Dollar trades on a softer note on the day. The negative outlook of the AUD/USD pair remains in play, characterized by the price holding below the key 100-day Exponential Moving Average (EMA) on the daily timeframe. The 14-day Relative Strength Index (RSI) stands below the 50-midline near 37.70, supporting the downward movement of the pair in the near term.
Sustained bearish momentum below 0.6325 could draw in enough sellers to 0.6285, the low of October 3, 2023. Any follow-through selling could see a drop to the 0.6200 psychological mark.
On the upside, any follow-through buying above the upper boundary of the trend channel of 0.6512 could pave the way to 0.6626, the 100-day EMA. Consistent trades above the mentioned level could pave the way to 0.6687, the high of November 7.
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.
Australia’s trade surplus increased to 5,953M MoM in October versus 4,500M expected and 4,609M in the previous reading, according to the latest foreign trade data published by the Australian Bureau of Statistics on Thursday.
Further details reveal that Australia's Exports rose by 3.6% MoM in October from a fall of 4.7% (revised from -4.3%) seen a month earlier. Meanwhile, Imports increased by 0.1% MoM in October, compared to a 2.8% decline (revised from -3.1%) seen in September.
At the press time, the AUD/USD pair is down 0.23% on the day to trade at 0.6425.
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.
Index | Change, points | Closed | Change, % |
---|---|---|---|
NIKKEI 225 | 27.53 | 39276.39 | 0.07 |
Hang Seng | -3.86 | 19742.46 | -0.02 |
KOSPI | -36.1 | 2464 | -1.44 |
ASX 200 | -32.6 | 8462.6 | -0.38 |
DAX | 215.39 | 20232.14 | 1.08 |
CAC 40 | 47.86 | 7303.28 | 0.66 |
Dow Jones | 308.51 | 45014.04 | 0.69 |
S&P 500 | 36.61 | 6086.49 | 0.61 |
NASDAQ Composite | 254.21 | 19735.12 | 1.3 |
Pare | Closed | Change, % |
---|---|---|
AUDUSD | 0.64293 | -0.8 |
EURJPY | 158.297 | 0.74 |
EURUSD | 1.05089 | 0.04 |
GBPJPY | 191.27 | 0.93 |
GBPUSD | 1.26986 | 0.25 |
NZDUSD | 0.58488 | -0.47 |
USDCAD | 1.40733 | 0.07 |
USDCHF | 0.88445 | -0.19 |
USDJPY | 150.619 | 0.69 |
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