Forex-novosti i prognoze od 08-11-2024

• The NZD/USD got rejected by the 20-day SMA by the fourth time this week.
• Technical indicators point to increasing selling pressure and decreasing buying pressure.
• A breakout from the 0.5940-0.6030 range will confirm a bearish outlook.

In Friday's session, the NZD/USD declined by 1.05% to 0.5960, continuing its downward trend as the pair got rejected by a third time this week by the 20-day Simple Moving Average (SMA).

The Relative Strength Index (RSI) is currently at 40 and in negative territory, indicating that selling pressure is rising. The RSI's slope is declining sharply, suggesting that selling pressure is increasing. The Moving Average Convergence Divergence (MACD) is also showing a mixed outlook, with the histogram being green but decreasing, indicating that buying pressure is declining.

The NZD/USD pair faced a third rejection from the 20-day Simple Moving Average (SMA), indicating strong selling pressure. This rejection has pushed the pair lower, suggesting that the downtrend is likely to continue. The multiple rejections of the 20-day SMA highlight the strength of the resistance level and the inability of buyers to break through it. As a result, traders can expect further downside momentum in the near term.

NZD/USD daily chart

• NZD/JPY extends downtrend, breaking below key support.
• Technical indicators suggest further downside potential.
• The overall picture sees the pair stuck in a side-ways trading channel.

In Friday's session, the NZD/JPY declined by 1.20% to 91.00, continuing its bearish momentum. This break below the crucial 91.00 support level and the convergence of the 20 and 100-day Simple Moving Averages (SMAs) further confirms the strength of the selling pressure.

The analysis of technical indicators reveals a bearish outlook. The Relative Strength Index (RSI) has fallen into the negative territory and is declining sharply, indicating increasing selling pressure. The Moving Average Convergence Divergence (MACD) is also indicating rising selling momentum, as the histogram is red and rising.

Based on these observations, the NZD/JPY pair is expected to continue its downward trajectory. The initial support level to watch is 90.80, followed by 90.50 and then 90.30. On the upside, the first resistance level is 91.50, followed by 91.80 and 92.00.

NZD/JPY daily chart

• Silver trades below 50-day SMA at $31.37; $30.84 support is key for preventing deeper pullback.
• Bearish momentum persists with RSI in seller’s territory, favoring near-term downside.
• A close above $31.50 needed for bullish recovery, targeting $31.75 and potentially $32.00.

Silver retreated from two-day highs of $32.00 and tumbled below the 50-day Simple Moving Average (SMA) at $31.37 late in the North American session. This was weighed down by a strong US Dollar underpinned by former President Donald Trump’s victory. At the time of writing, the XAG/USD trades at $31.29, down 2.29%.

XAG/USD Price Forecast: Technical outlook

Silver's price uptrend remains in play despite posting solid losses. The fall of US Treasury yields kept the grey metal from falling further, but a decisive break below the November 6 low of $30.84 could exacerbate a deeper pullback. In that outcome, the next support would be the 100-day SMA at $30.27, followed by the September 5 high turned support at $29.17.

For a bullish resumption, the XAG/USD must close above the $31.50 area. This could pave the way to challenge the July 11 high at $31.75. A breach of the latter will expose $32.00, followed by May’s 20 peak at $32.51.

Momentum is bearish in the near term, as shown by the Relative Strength Index (RSI), breaching its neutral line into the seller's area.

XAG/USD Price Chart – Daily

• The Canadian Dollar shed 0.4% against the Greenback on Friday.
• Canada saw a worse-than-expected print in net new jobs additions in October.
• Average Canadian wages also rose, maintaining upward pressure on inflation expectations.

The Canadian Dollar flubbed a near-term technical recovery on Friday, slumping back into familiar lows against the Greenback. The Loonie remains under pressure as the Bank of Canada (BoC) continues to keep downward pressure on interest rates in the face of lagging employment figures, though the Canadian central bank is quickly running out of runway as rising wages keep inflation expectations simmering in the background.

Canada reported a much lower than expected print in Net Change in Employment in October, entirely missing the mark as job gains continue to wither. Canadian Average Hourly Wages also rebounded, reminding investors of Canada’s ongoing battle with still-high inflation expectations despite overall price growth well outpacing wages across the gamut of timeframes.

Daily digest market movers: Canadian Dollar backslides on missed jobs growth

• Canadian Net Change in Employment rose by a scant 14.5K in October, missing the forecast 25K and well below September’s 46.7K print.
• Average Hourly Wages also grew 4.9% YoY in October, rebounding from September’s slowdown to 4.5%.
• With wages back on the rise, inflation expectations are likely to remain elevated, crimping the BoC’s hopes to single-handedly restart Canada’s growth engine using steep interest rate cuts.
• The US Consumer Sentiment Index also rose on Friday, with November chalking in an upswing to 73.0 in aggregated consumer survey results. Markets anticipated a much more moderate upswing to 71.0 from the previous 70.5.
• Despite a wider miss in Canada’s jobs figures for October, the Canadian Unemployment Rate held steady at 5.5% versus the forecast uptick to 6.6%. However, the on-balance Unemployment Rate print is likely due to long-term unemployed workers dropping out of the unemployment reference period as the Canadian Labor Force Participation Rate continues to sink below 65%.
• Canada’s LFPR last printed at 64.8%, and hasn’t been this low since the global recovery from the COVID pandemic in mid-2020.

Canadian Dollar price forecast: Loonie remains sticky near familiar lows

The Canadian Dollar (CAD) continues to churn chart paper close to medium-term lows against the US Dollar. USD/CAD marched to 14-month highs near 1.3960 earlier in November, and a sputtering technical recovery in the Canadian Dollar coupled with a broad-market strengthening of the Greenback has kept the pair bolstered north of the 1.3900 handle.

USD/CAD daily chart

• Gold declines as Trump’s win reduces political risk; focus on potential inflationary policies.
• US Dollar recovery pressures Bullion despite lower Treasury yields.
• Powell signals gradual rate adjustments, leaving Fed’s future path open amid economic strength.

Gold prices had fallen on Friday as the Greenback stages a recovery despite falling US Treasury yields. Traders continued to digest Donald Trump’s victory in the US election, and they reduced their exposure on the so-called “Trump trade” due to uncertainty over tariffs. The XAU/USD trades at $2,688, down over 0.67%.

US equities extended their gains, shrugging off election jitters, which were the main drivers of the Bullion’s advance. However, risk over US politics has faded, and market participants would look toward Trump’s policies.

Following his victory, the US Dollar strengthened, even though investors expect a less dovish Federal Reserve (Fed). Some of Trump’s policies are seen as inflation prone, which would exert pressure on the US central bank.

On Thursday, the Fed reduced interest rates, acknowledging a strong economy, a cooling labor market, and an evolving disinflation process. However, Fed officials commented that inflation “remains somewhat elevated” despite approaching the 2% target.

Fed Chair Jerome Powell failed to provide forward guidance on monetary policy and kept his options open at upcoming meetings. He emphasized that the Fed could afford to take its time to lower rates due to the strong economy. He acknowledged that policy remains restrictive, even after today’s rate cut, as officials aim to bring rates to neutral levels.

The US economic schedule featured the release of the University of Michigan (UoM) Consumer Sentiment for November, which crushed October’s final reading. The same report revealed Americans mixed views on inflation expectations in the short and long term.

Next week, the US economic docket will influence Gold’s path. Traders will eye comments from Federal Reserve officials, along with key data releases on consumer and producer inflation and retail sales.

Daily Digest Market Movers: Gold price slumps as data boosts the Greenback

• Gold prices fell as US real yields, which inversely correlate against Bullion, had recovered and climbed two basis points to 1.978%.
• The US Dollar Index (DXY), which tracks the buck’s performance against six peers, rallies 0.70% to 105.09 on Friday. Yields, particularly the 10-year benchmark note coupon, fall two basis points to 4.30%.
• The preliminary November reading for UoM Consumer Sentiment rose from 70.5 to 73.0, marking a 3.5% increase. Survey Director Joanne Hsu noted, “While current conditions saw minimal change, the expectations index surged across all aspects, hitting its highest level since July 2021.”
• One-year inflation expectations dipped slightly, from 2.7% to 2.6%, while the five-year outlook inched up from 3.0% to 3.1%.
• According to the Chicago Board of Trade’s December fed funds futures contract, investors currently expect around 24.5 basis points of Fed easing by year-end.

XAU/USD Technical Outlook: Gold price tumbles with sellers eyeing $2,650

Gold price retreats from two-day peak near $2,700, a crucial level which was broken on Wednesday and buyers had remained unable to crack. If sellers keep holding firm and send prices below the November 6 low of $2,652, look for a push to challenge $2,639, ahead of testing the October 10 low of $2,603.

On the other hand, if Gold clears $2,700, buyers would eye the 20-day SMA at $2,718, ahead of $2,750, followed by the October 23 high at $2,758.

Momentum remains neutral as the Relative Strength Index (RSI) fluctuates around its neutral line, a sign that XAU/USD might lack clear direction and consolidate.

• AUD/USD falls as the USD regains strength.
• RBA holds rates steady but remains hawkish, citing inflation risks.
• The Fed's neutral outlook suggests caution regarding future rate cuts.

The AUD/USD pair declined by 1.25% to 0.6600 on Friday, continuing its downtrend. The renewed strength of the US Dollar weighs on the pair despite improved risk sentiment. However, the hawkish stance of the Reserve Bank of Australia (RBA) and expectations of additional Chinese stimulus could support the Aussie.

The AUD/USD pair experienced volatility amid the recent US presidential election and RBA's monetary policy stance. Trump's election victory initially triggered a decline in the Aussie, but the RBA's hawkish stance stabilized the currency. The RBA's emphasis on restrictive interest rates and positive signs from China have provided support.

Daily digest market movers: Australian Dollar declines amid renewed US Dollar strength after FOMC meeting

• The Fed acknowledged economic expansion but noted easing labor market conditions and elevated inflation, maintaining a neutral outlook.
• Powell stated that the central bank will continue reducing its balance sheet and follow a data-dependent policy-making approach.
• Earlier in the week, the AUD/USD pair rose after the RBA left interest rates unchanged but signaled a hawkish stance, emphasizing the need for restrictive policy to combat inflationary pressure.
• RBA Governor Michelle Bullock reiterated the necessity of maintaining steady interest rates until the economy moderates more than anticipated.
• As the RBA doesn’t fully embrace cuts, the downside for the AUD/USD might be limited. However, the economic strength on the US is a thing to follow as it might continue pushing the pair down.

AUD/USD technical outlook: AUD/USD turns bearish after failing to capitalize on SMA convergence

The Relative Strength Index (RSI) is at 46, in negative territory, and declining sharply. The Moving Average Convergence Divergence (MACD) is flat and red, suggesting that selling pressure is flat. The overall outlook for the AUD/USD is bearish.

The AUD/USD pair's failure to surmount the convergence of the 200 and 20-day Simple Moving Averages (SMAs) at approximately 0.6630 signaled a resumption of its downtrend. This technical development led to a decline toward the 0.6600 support level, indicating further bearish momentum. The inability to break above the key resistance at 0.6630 suggests that the pair may continue its downward trajectory in the near term.

• Dow Jones tapped 44,000 for the first time ever on Friday.
• Equities are extending a near-term bullish push to wrap up the trading week.
• UoM sentiment survey results came in much better than expected.

The Dow Jones Industrial Average (DJIA) rose into fresh all-time highs on Friday, clipping into 44,000 as stocks lean firmly bullish to close out a record week. The Dow had its best week since October of 2023, rising nearly 5% and piercing record bids three days in a row.

The University of Michigan (UoM) Consumer Sentiment Index rose to 73.0 in November, overshooting the expected print of 71.0 and climbing further above October’s 70.5 as polled consumers tilt cautiously optimistic regarding the everall state of the US economy. On the downside, 5-year Consumer Inflation Expectations also ticked higher once again, rising to 3.1% compared to the previous print of 3.0%.

A decisive election win for former President Donald Trump helped to send stocks soaring this week, and a follow-up 25 bps interest rate trim from the Federal Reserve (Fed) kept the gas pedal pinned to the floor. Friday's uptick in consumer outlook survey results only keeps stock traders leaning into the buy button.

Dow Jones news

Over two-thirds of the Dow Jones index found room on the high end on Friday, with most equities ending the week higher than they started. McDonald’s (MCD), Unitedhealth (UNH), and Procter & Gamble (PG) all ended Friday up around 2%, with MCD breaking above $300 per share for the first time in several weeks.

On the low end, Caterpillar (CAT) backslide around 3.5%, falling below $395 per share and extending its earnings miss decline after the company’s revenue fell 4% YoY. According to a statement from Caterpillar, the decline was a result of “lower sales of equipment to end users”, adding on that “changes in dealer inventories had an unfavourable impact to sales volume.”

Dow Jones price forecast

With the Dow Jones holding stubbornly in record high territory, a technical case for short momentum appears frustratingly impossible. By all measures, the DJIA is pinned far too deep into overbought territory to consider a fresh bid, but continued topside momentum has left the chart entirely absent any technical short entry points. 

“Winners keep winning” is the approach to a long-run Dow Jones bullish trend. The major equity index has entirely outpaced its own 200-day Exponential Moving Average (EMA) for an entire year. Despite a brief reprieve in October, the Dow Jones has continued its one-sided bullish tilt, closing in the green for all but two of the last 11 consecutive months and on pace to chalk in another gain month in November as long as bidders maintain their balance.

Dow Jones daily chart

• US Dollar rises after UoM positive data.
• Consumer confidence improves, inflation expectations were mixed.
• FOMC cuts rates by 25 bps, economic growth remains solid.

The US Dollar Index (DXY), which measures the value of the USD against a basket of six currencies, rose on Friday. This comes after positive University of Michigan data and the announcement that the Federal Open Market Committee (FOMC) lowered interest rates by 25 basis points on Thursday.

The Fed expressed optimism about economic growth but acknowledged easing labor market conditions. Despite the rate reduction, DXY has rebounded and could continue its upward momentum if the data continues coming in strong.

Daily digest market movers: US Dollar rises on Michigan sentiment data, FOMC decision

• The FOMC concluded its two-day meeting with an expected 25 bps rate cut, signaling continued easing amid concerns over global economic growth.
• Despite weak jobs data, other indicators suggest the US economy remains robust, with solid labor market conditions and growth forecasts above trend.
• The Atlanta Fed's GDPNow model estimates Q4 GDP growth at 2.4%, while the New York Fed's Nowcast model tracks it at 2.0%.
• Rising productivity is expected to support low inflationary economic growth, leading to higher real interest rates and currency appreciation in the long term.
• Consumer confidence improved in November with the University of Michigan's Consumer Sentiment Index rising to 73 from 70.5 in October.
• The Current Conditions Index declined slightly to 64.4, while the Consumer Expectations Index climbed to 78.5.
• Inflation expectations remained low, with the one-year outlook edging down to 2.6% and the five-year outlook rising to 3.1%.

DXY technical outlook:  DXY maintains bullish momentum, resistance at 105.50

The DXY index's indicators retracted slightly on Thursday but maintained positive momentum by the end of the week. The Relative Strength Index (RSI) stands deep in positive territory, while the Moving Average Convergence Divergence (MACD) prints lower red bars. 

The DXY has regained support at its 200-day SMA and completed a bullish crossover between the 200-day and 20-day SMAs. This suggests potential for further upward price action despite a recent pullback this week.

• Mexican Peso weakens on fears of Trump-imposed tariffs on Mexican imports.
• Banxico expected to cut rates by 25 bps as inflation approaches 3% target.
• Upcoming US and Mexico economic data, including consumer confidence and Banxico decision, may add to Peso’s volatility.

The Mexican Peso is against the ropes versus the Greenback on Friday, with the latter recovering some ground even though the US Federal Reserve (Fed) cut rates on Thursday. Risk aversion sponsored by China’s lack of clarity on its program to stimulate the economy weighed on global equities, while traders continue to digest Trump’s victory for a third day. At the time of writing, the USD/MXN trades at 20.26, up more than 2.39%.

Mexico’s economic docket remains absent on Friday, but there’s some anxiety after Americans elected Donald Trump as their next president. Fears that Trump could impose tariffs on Chinese and Mexican imports, could spark a reacceleration of inflation and disrupt supply chains.

Mexico’s Economy Secretary Marcelo Ebrard commented on Thursday that most of Mexico’s imports from China are made by around 50 companies and most of them are American. “Putting a tariff on those imports will only put those companies in danger, starting with the automotive industry,” Ebrard said.

In the meantime, the Bank of Mexico (Banxico) is expected to lower rates by 25 basis points on its monetary policy next week. The chances of adjusting policy 50 basis points (bps) are remote, though the latest report showed that underlying inflation dipped from 3.91% to 3.80% YoY, closing into the 3% goal.

Recently in the US, the Consumer Sentiment for November was revealed by the University of Michigan (UoM). The index improved sharply, but inflation expectations in the near and long term were mixed.

On Thursday, the Fed lowered rates by 25 bps but failed to provide guidance moving forward. Fed Chair Jerome Powell and the Federal Open Market Committee (FOMC) voted unanimously. In Powell’s presser he added that the economy remains solid, the labor market has cooled somewhat, and that inflation made progress toward the 2% goal. Despite this, the US central bank hasn’t declared victory on high prices.

Next week, Mexico’s schedule will feature Consumer Confidence readings, Industrial Production and the Banxico policy decision. On the US front, Fed speakers, inflation on the consumer and the producer side and Retail Sales will dictate the US Dollar’s path moving forward.

Daily digest market movers: Mexican Peso collapses on downbeat mood

• The UoM Consumer Sentiment preliminary November reading improved from 70.5 to 73.0, a 3.5% increase. Survey Director Joanne Hsu revealed that, “While current conditions were little changed, the expectations index surged across all dimensions, reaching its highest reading since July 2021.”
• Inflation expectations for one-year dipped from 2.7% to 2.6%. For a five-year period,  they inched up from 3.0% to 3.1%.
• Data from the Chicago Board of Trade, via the December fed funds rate futures contract, shows investors estimate 24.5 bps of Fed easing by the end of the year.

USD/MXN technical outlook: Mexican Peso tumbles again as USD/MXN rises above 20.00

As mentioned throughout the whole week, the USD/MXN bias is upwards, and the correction post-November 5 seems to be reversed. Sellers had lost steam, and buyers re-emerged at around 19.70, pushing the exotic pair above 20.00.

If buyers reclaim 20.50, the two-year peak hit at 20.80 would be exposed. Once those two levels are surpassed, 21.00 would be up next, followed by the March 8 peak at 21.46.

On the downside, sellers must regain the 20.00 figure, if they would like to challenge the 50-day Simple Moving Average (SMA) at 19.68. On further weakness, the next stop would be the psychological figures of 19.50, followed by the October 14 low of 19.23.

• USD/JPY declines to a major trendline and finds support. 
• It remains in an uptrend that could resume and push higher. 

USD/JPY has pulled back to support from a major trendline for the long-term uptrend at about 152.55. Despite the correction, the pair is in an uptrend on a short and medium-term basis and given the technical analysis dictum that “the trend is your friend” the odds still favor a recovery and eventual continuation higher.

USD/JPY 4-hour Chart 

A break above the 154.71 November 7 high would renew the uptrend and probably lead to a continuation up to resistance at 155.24, the July 30 high. A break above that would provide a stronger bullish signal and might lead to a target at 157.86 (July 19 high).  

Alternatively, a break below the trendline and then also below 151.29 might indicate a bearish reversal of the trend over the short-term. Such a move could follow-through lower to a target at 150.15 where support from the 100-day Simple Moving Average (SMA) (not shown) kicks in. 

• EUR/GBP pair is on a four-day losing streak, reaching lows not seen in over a week
• The MACD's rising red bars and declining RSI indicate increasing bearish momentum, suggesting further weakness for the pair.
• Pair has broken deep below its 20-day SMA, reaching multi-week lows.

The EUR/GBP fell towards 0.8310 as sellers continue pushing downwards but will face strong support at the psychological 0.8300 area.
The cross has been on a downward trajectory, breaking below its 20-day SMA and reaching multi-week lows. Technical indicators such as the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) confirm this bearish trend, signaling increasing selling momentum. The pair has recorded four consecutive days of losses, indicating that the selling pressure is intensifying, and further declines are possible.

The RSI is currently in negative territory at 42, with a mildly declining slope, implying that sellers are gaining momentum. The MACD's rising red histogram and elevated volume further support the bearish sentiment, indicating that bearish forces are dominating the market.

Support levels: 0.8300, 0.8275, 0.8250.
Resistance levels:0.8330, 0.8350, 0.8375. 

EUR/GBP daily chart

• UoM Consumer Confidence Index rose in November's flash estimate.
• US Dollar Index stays in positive territory above 104.50.

Consumer confidence in the US improved in early November, with the preliminary University of Michigan's Consumer Sentiment Index rising to 73 from 70.5 in October.  This reading came in better than the market expectation of 71.

The Current Conditions Index declined to 64.4 from 64.9 and the Consumer Expectations Index climbed to 78.5 from 74.1.

The details of the survey showed that the one-year inflation expectation edged lower to 2.6% from 2.7%, while the five-year inflation outlook rose to 3.1% from 3%.

Market reaction

The US Dollar Index continues to stretch higher after this report and was last seen rising 0.42% on the day at 104.78.

Trump’s clear and swift victory in the US presidential election has prevented turmoil in financial markets and more importantly political violence in the streets, Rabobank’s Philip Senior US Strategist Marey notes.

Clean sweep to challenge Fed’s independence

Trump’s return to power, backed up by Republican majorities in the Senate and probably the House of Representatives, implies a major shift in US economic policy.

Trump is likely to raise tariffs which could cause a rebound in inflation and a slowdown in economic growth. The negative impact on growth could be mitigated by tax cuts and deregulation by a Republican Congress. However, this would increase the budget deficit and reinforce inflation, especially in combination with reduced immigration.

For the Fed this means that a pause in the cutting cycle is likely in 2025. This would increase tensions between Trump and Powell and would give the US President additional incentive to challenge the Fed’s independence.

• GBP/USD turns bearish, with RSI signaling potential for further downside below 1.2900.
• Key support lies at 1.2894; a break may lead to 200-day SMA at 1.2814.
• Upside capped by 100-day SMA at 1.2990; clearing 1.3000 could target 1.3105 resistance.

The Pound Sterling dropped from around 1.2980 on Friday as the Greenback recovered some ground following Thursday’s losses. Risk aversion has seen flows into the buck; hence, the GBP/USD trades at 1.2938, down over 0.37%.

GBP/USD Price Forecast: Technical outlook

Once the GBP/USD fell below the 1.3000 figure, it turned neutral to slightly downward biased. Although the pair edged towards 1.2988 on Thursday, failure to clear the 1.30 mark exacerbated the drop toward the mid 1.2900 – 1.3000 range.

Oscillators turned bearish as seen on the Relative Strength Index (RSI). This, and price action, opened the door for further downside on the major.

The first key support would be the March 8 low of 1.2894. Once cleared, June’s 12 resistance turned support would be up next at 1.2880, ahead of dropping toward the 200-day Simple Moving Average (SMA) at 1.2814. Once surpassed up next would be the 1.2800 mark

Conversely, if buyers lift the exchange rate past the 100-day SMA at 1.2990, they could challenge 1.3000. If surpassed, the next stop would be the confluence of the October 15 high and the 50-DMA at 1.3105.

GBP/USD Price Chart – Daily

China imported less crude oil in October as well. According to customs data, crude oil imports fell by 9% year-on-year to 44.7 million tons, or 10.5 million barrels per day, Commerzbank’s commodity analyst Carsten Fritsch notes.

Weakening of oil imports is due to the weaker demand for oil

“This means that imports were down year-on-year for the sixth consecutive month. Imports were also lower than in the previous month, which was due to the closure of a processing plant at a state-owned refinery and lower capacity utilisation at smaller refineries. Since the beginning of the year, crude oil imports have totalled 457 million tons. This corresponds to an average of 10.8 million barrels per day and represents a decline of 3.4% compared to the same period last year.”

“To make up this shortfall, crude oil imports would have to increase to an unrealistic 12.8 million barrels per day in the remaining two months. China's crude oil imports are thus expected to decline year-on-year for the third time in the last four years. Unlike the two previous declines, which were caused by the effects of the coronavirus pandemic, this year's decline is not due to special factors.”

“Rather, the weakening of oil imports in China is due to the weaker demand for oil as a result of the sluggish economic development and the rapid advance of e-mobility. In October, exports of oil products were 23% lower than in the previous year and, after 10 months, 7.2% below the level in the same period of the previous year. Here, too, a decline is therefore likely for the year as a whole.”

• GBP/CAD might be completing a bearish Rising Wedge price pattern.
• If so, there is an increased risk of a downside break. 

GBP/CAD recovers to trade back inside its Rising Wedge pattern after temporarily falling below the lower boundary line. It remains vulnerable to a downside break. 

Rising Wedges are bearish patterns. Although there is no way of confirming GBP/CAD has formed one for sure it looks likely that it has.

GBP/CAD 4-hour Chart 

A break below the lower boundary line and then below 1.7871 (November 6 low) would probably confirm a decisive breakdown and lead to a decline to 1.7719, the October 3 swing low. 

GBP/CAD broke temporarily above the upper guardrail of the Rising Wedge pattern on several occasions (blue circles on chart) on September 20 and November 1. This could be a sign of bullish exhaustion and an early warning of impending reversal. 

• EUR/CHF has formed a Triangle pattern which looks poised to breakout
• A downside break is marginally more probable given the longer-term trend is bearish. 

EUR/CHF has formed a Triangle pattern over the last three months which looks like it is on the verge of completing as it tapers to a tip at around 0.9400. A breakout should soon follow. 

EUR/CHF Daily Chart

Since the market activity prior to the formation of the Triangle (Since May 27) was bearish and the longer-term trend is probably also down, the odds slightly favor a downside breakout. 

If EUR/CHF pierces below the lower boundary line of the Triangle and falls below the 0.9307 level (September 11 lows) it will probably confirm an authentic breakout. The next target to the downside would lie at 0.9132, the 61.8% Fibonacci extrapolation of the height of the Triangle lower. 

An upside breakout – though less likely – is possible. A move above the 0.9508 high of September 25 would probably confirm a bullish breakout and extend to the 0.9581 Fibonacci 61.8% target for the Triangle higher. 

The Average Directional Index (ADX) measures how strong the price is trending. At 14.13 it is currently relatively low, suggesting it will soon start rising again as price begins its next directional phase of development.  

• USD/CAD rises sharply above 1.3900 on multiple tailwinds.
• The Canadian Dollar weakens as job demand remained slow in October.
• The US Dollar rebounds strongly on Trump’s policy outlook.

The USD/CAD pair jumps above the key resistance of 1.3900 in Friday’s North American session. The Loonie asset strengthens as the Canadian labor addition data for October came in weaker than expected and the US Dollar (USD) bounces back strongly.

The Canadian employment report showed that the economy added 14.5K workers, lower than estimates of 25K and from 46.7K in September. The Unemployment Rate remained steady at 6.5%, which was expected to accelerate to 6.6%.

Slower job demand solidifies expectations that the Bank of Canada (BoC) could deliver another large interest rate cut in its last monetary policy meeting of this year in December. In the October meeting, the BoC reduced its key borrowing rates by 50 basis points (bps) to 3.75%.

Meanwhile, Average Hourly Wages accelerated to 4.9% compared to the similar month of the preceding year against 4.5% in September. Higher wage growth is less-likely to impact the BoC’s policy guidance with policymakers remaining confident about inflation staying within the tolerance.

The US Dollar Inde (DXY), which gauges Greenback’s value against six major currencies, extends its recovery to near 104.80. The outlook of the US Dollar remains firm as investors expect that Donald’ Trump’s protectionist policies would keep it competitive against other currencies. Trump vowed to hike import tariffs by 10% and lower corporate taxes in election campaigns.

• Unemployment Rate in Canada held steady at 6.5% in October.
• USD/CAD trades in positive territory above 1.3900 after the labor market data. 

Statistics Canada reported on Friday that the Unemployment Rate in Canada remained unchanged at 6.5% in October. This reading came in below the market expectation of 6.6%.

On a yearly basis, Average Hourly Wages rose by 4.9%, following September's 4.5% increase. In the meantime, the Participation Rate edged lower to 64.8% from 64.9%, while the Net Change in Employment rose by 14.5K, falling short of analysts' estimate for an increase of 25K.

Market reaction

USD/CAD edged higher with the immediate reaction and was last seen rising 0.4% on the day at 1.3915.

• Silver price retreats from $32.30 as investors expect Trump’s protectionist policies could force the Fed to turn hawkish on interest rates.
• Fed Powell doesn’t see any near-term impact of Trump’s policies on the interest rate path.
• China’s economic package failed to impress market participants.

Silver price (XAG/USD) resumes its downside move after its recovery move met resistance near $32.20 in the North American session on Friday. The white metal falls back as traders assess the implications of Donald Trump’s victory in the United States (US) presidential elections on domestic and the global economy.

Donald Trump promised to raise tariffs by 10% universally, expecting China that could face duties rising as much as 60%. Higher tariffs on offering coming from the external economy would boost in house production and prompt labor demand, which will prompt inflationary pressures. This will force the Federal Reserve (Fed) to opt for a hawkish interest rate stance.

However, Fed Chair Jerome Powell doesn’t see any immediate impact of Trump’s victory on the monetary policy action in the upcoming meetings after the bank cut interest rates by 25 basis points (bps) to 4.50%-4.75% on Thursday.

Meanwhile, some recovery in the US Dollar after Thursday’s correction has also weighed on the Silver price. The US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, jumps to nearly 106.40.

Apart from expectations for the Fed turning hawkish, an absence of meaningful economic stimulus by China has also weighed on the Silver price. In Friday’s late Asian session, China announced a massive 10 trillion yuan program to refinance local government debt with approval by the National People’s Congress. Market experts see the stimulus package as a measure against Trump’s potential tariffs, however, they consider it as insufficient to fix the likely impact on their economic growth.

Economists at Standard Chartered Plc expect “China’s growth would suffer a hit of as much as two percentage points should Trump follow through on his campaign vow to raise tariffs on Chinese goods to 60%.”

Silver as a metal has applications in various industries such as solar energy, mining, and power and signs of weak China growth prospects impact the Silver price.

Silver technical analysis

Silver price slides to near $31.00 after breaking below the horizontal support plotted from the May 21 high of $32.50. The near-term trend of the Silver price has turned bearish as it has dropped below the 50-day Exponential Moving Average (EMA), which trades around $31.60.

The asset could find support near the upward-sloping trendline around $29.00, plotted from the February 28 low of $22.30.

The 14-day Relative Strength Index (RSI) dives to near 40.00. Should RSI (14) falls below 40.00, a bearish momentum will be triggered.

Silver daily chart

Saudi Arabia, the world's largest oil exporter, cut its official selling prices (OSPs) for oil deliveries to Asia in December, indicating weaker oil demand, Commerzbank’s commodity analyst Barbara Lambrecht notes.

Iranian oil becomes more expensive

“Accordingly, Asian buyers will have to pay a premium of only $1.7 per barrel for Arab Light compared to the Oman/Dubai benchmark. This is 50 US cents less than this month. Surveyed refiners had expected a premium in this range. Saudi Arabia competes in Asia with lower-priced suppliers such as Iran and Russia.”

“This could change if US President-elect Trump were to enforce the existing oil sanctions against Iran more strictly again. Iran currently covers about 13% of China's crude oil import needs. According to trade sources, the discounts for Iranian oil delivered to China compared to Brent recently fell to their lowest level in five years because Iran was exporting less oil in October due to concerns about a retaliatory attack by Israel.”

“This could be a taste of what could come if US sanctions tighten. The beneficiary of this would be Saudi Arabia, which could then offer its oil again at higher premiums.”

• EUR/GBP has met support at the floor of a five-week range. 
• It will probably recover as the pair extends its range sideways. 

EUR/GBP has fallen down to the base of its six-week range (red dashed line on chart) at roughly 0.8311; it is likely encountering firm support at that level.

EUR/GBP 4-hour Chart 

The pair is probably in a sideways trend on a short-term basis and given the technical analysis maxim that “the trend is your friend” the odds favor an extension of this range-bound price action. 

As such, EUR/GBP will probably bounce off the range floor and start to rise back up within the range thereby extending the sideways trend. 

If EUR/GBP breaks decisively below the 0.8311 floor, however, it would suggest the medium and long-term downtrends were reasserting themselves.  

A longer-than-average daily candlestick below the 0.8311 lows, or perhaps three consecutive red candles that break below the level, would confirm a decisive breakdown. Such a move would probably lead to a sell-off to around the 0.8240 level, this being the 61.8% Fibonacci extension of the height of the range extrapolated lower. 

USD/JPY slipped as Trump trades unwind. Near term, election noises in US and Japan may cloud the outlook for JPY but more likely than not, election uncertainty in US and Japan should come to pass. Pair was last seen at 152.41, OCBC’ FX analysts Frances Cheung and Christopher Wong note.

Daily momentum is mild bearish

“BoJ is expected to uphold central bank independence and Governor Ueda had earlier said that the current political situation in Japan wouldn’t stop him from lifting rates if prices and the economy stay in line with BoJ’s forecast. On the data front, Recent labour market report also pointed to upward wage pressure in Japan with 1/ jobless rate easing, 2/ jobto-applicant ratio increasing to 1.24; 3/ trade unions calling for another 5-6% wage increase at shunto wage negotiations for 2025.”

“Wage growth pressure remains intact, alongside broadening services inflation and this is supportive of BoJ normalizing rates. We still look for USD/JPY to fall into 1H 2025 as Fed and BoJ continue to pursue policy normalisation. This should continue to underpin the broad direction of travel to the downside. One risk to watch is potential Trump tariff on the world as that may impact global trade, growth and pose risks to US disinflation journey and Fed policy.”

“Any slowdown or pause in policy divergence between Fed and BoJ can affect USD/JPY’s direction of travel. Daily momentum is mild bearish while RSI eased from near overbought conditions. Consolidation likely for now but bias to fade rallies. Resistance at 153.30 (61.8% fibo retracement of Jul high to Sep low), 154.80 (recent high) and 156.50 (76.4% fibo). Support at 151.70 levels (21, 200 DMAs), 150.70 (50% fibo).”

The strong US Dollar (USD) put pressure not only on Gold but also on the prices of other precious metals. Silver fell by more than 5% to $31 per troy ounce at times. Platinum slid to $970 per troy ounce and Palladium to $1,010 per troy ounce, Commerzbank’s commodity analyst Carsten Fritsch notes.

USD puts pressure on precious metals

“The prices of these precious metals, which are mainly used in industry, had risen due to the brightening economic outlook in China. Under Trump, new tariffs could impede foreign trade and thus weigh on the growth and demand for these three precious metals. Since Silver plays an important role in the decarbonisation of the economy, a slowdown of this process under Trump could provide less tailwind.”

“Platinum and Palladium, on the other hand, would benefit from this, as they are used in catalytic converters for cars with internal combustion engines. At least in the US, no significant move away from the combustion engine is expected in the coming years. In the case of Palladium, strong inflows into ETFs have been observed since the beginning of October.”

“These have so far totalled 178,000 ounces. This means that 278,000 ounces have already flowed into the Palladium ETFs tracked by Bloomberg since the beginning of the year. This could indicate a change in sentiment for Palladium.”

• Crude Oil is stuck in a tight range while the $71 level gets broken up. 
• Traders digest Donald Trump’s victory, while concerns about Chinese demand are reemerging. 
• The US Dollar Index seems to have found a floor after Fed Chairman Powell said he is committed to finishing his term. 

Crude Oil dips slightly on Friday but remains within the tight range it has been trading in the past four days. The market euphoria following President-elect Donald Trump’s victory appears to be fading as energy markets shift their focus to China, where the prospect of higher US tariffs could continue to hurt growth even more in the context of already sluggish demand for Oil. This could mean even less demand than already forecasted for 2025.

The US Dollar Index (DXY), which tracks the performance of the Greenback against six other currencies, has found support after markets were reassured by Federal Reserve (Fed) Chairman Jerome Powell. Not only did the Fed deliver its 25 basis points (bps) rate cut, but Powell said as well he is not going anywhere. This might take away some uncertainty on whether Powell would finish his remaining two years at the helm of the Fed after Trump’s victory cast some doubts over Powell’s future. 

At the time of writing, Crude Oil (WTI) trades at $70.97 and Brent Crude at $74.54.

Oil news and market movers: China takes over

• The market rally is easing broadly as the so-called Trump trades take a breather and concerns about China are taking over, Bloomberg reports. 
• Looking back to the Oil supply in October from OPEC, production climbed by 370,000 barrels a day. The main part of that increase is from the recovery in Libyan output to above 1 million barrels a day after the resolution of the political crisis over central bank leadership, Bloomberg reports.
• Tropical Storm Rafael is set to hit Texas and Louisiana shores by Saturday, although its impact should remain small with the centre of the Tropical Storm not expected to make landfall, Reuters reports. 

Oil Technical Analysis: Not Trump, than China

Crude Oil prices are unable to catch a break, which in this case makes sense. Where there are winners, there are losers, and the upcoming US tariffs on China are an issue for Oil. High tariffs would mean that China's exports and economy could face even more setbacks, leading to less demand for Oil from China in 2025 than already anticipated. 

On the upside, the hefty technical level at $74.11, with the 100-day Simple Moving Average (SMA) and a few pivotal lines, is the next big hurdle ahead. The 200-day SMA at $76.79 is still quite far off, although it could get tested in case tensions in the Middle East arise. 

The 55-day SMA at $70.81 is still to be considered, although it has lost a lot of strength after being chopped up throughout the week. Traders need to look much lower at $67.12, a level that supported the price in May and June 2023. In case that level breaks, the 2024 year-to-date low emerges at $64.75, followed by $64.38, the low from 2023.

US WTI Crude Oil: Daily Chart

The Euro (EUR) rebounded overnight but continued to trade near recent lows. Pair was last seen at 1.0780 levels, OCBC’ FX analysts Frances Cheung and Christopher Wong note.

Momentum turns flat

“EUR rebounded overnight but continued to trade near recent lows, weighed by fresh concerns of political uncertainty in Germany (Chancellor Scholz dismissed Finance Minister and called for confidence vote on 15 Jan) and ongoing concerns of Trump win on European security and exports to US (due to potential tariffs).”

“Momentum turned flat while RSI fell. Risks remain skewed to the downside. Next support at 1.0660/70 levels. Resistance at 1.0740 (76.4% fibo), 1.0830 (61.8% fibo retracement of 2024 low to high).”

The price of Gold came under pressure in the immediate aftermath of Donald Trump's election victory, falling by more than 3% to $2,650 per troy ounce, Commerzbank's commodity analyst Carsten Fritsch notes.

Trump's policies are likely to increase inflation risks

“From last week's record high, Gold had thus fallen by around $140. Selling pressure was caused by a significantly stronger US dollar and a sharp rise in US bond yields. In previous weeks, neither of these factors had been a hindrance for Gold. However, the extent of the USD appreciation and the rise in yields were apparently too strong this time to be ignored by Gold.”

“In addition, Gold had built up considerable correction potential due to the strong price increase in the previous weeks, which was not based on a change in interest rate expectations. Some market participants apparently took this as an opportunity to close out positions. This can be seen, for example, from the outflows from Gold ETFs that have been observed for a few days.”

“However, we do not expect the Gold price weakness to last for long, as yesterday's recovery to just over $2,700 shows. The Fed's interest rate cut by 25 basis points yesterday and the prospect of further rate cuts continue to favour Gold. In addition, Trump's policies are likely to increase inflation risks, which is why Gold is likely to remain in demand as a hedge against inflation.”

The US Dollar (USD) fell, alongside decline in UST yields. FX volatility eased further. DXY was last at 104.46 levels. AXJ FX also firmed this morning, with THB leading gains, OCBC’ FX analysts Frances Cheung and Christopher Wong note.

Markets seem volatile for now

“Trump's threat on tariff is clearly one of the biggest risks that markets are concerned about, but we do not know how long it takes for those policies to be in place after all President inauguration only takes place on 20th Jan. Tariff risk and Trump policy uncertainty may keep USD supported on dips but in the event of a delay to implementing tariffs or even in the scenario it doesn’t materialise, then further unwinding of Trump trade may also be likely.”

“Daily momentum is showing a mild bearish bias while RSI fell. Support at 103.70/80 levels (21, 200 DMAs, 50% fibo retracement of 2023 high to 2024 low). Resistance at 104.60 (61.8% fibo), 105.20 and 105.60 levels (76.4% fibo).”

• Gold weakens on Friday as Donald Trump’s re-election continues to impact the precious metal. 
• This reverses a short-term bounce following the Federal Reserve’s decision to cut interest rates by 0.25%. 
• Technically, XAU/USD corrects back within a short-term downtrend. 

Gold (XAU/USD) falls about half a percent to trade in the $2,680s on Friday, extending the short-term bearish mini trend it has been in since it rolled over on Halloween. The decline comes amid market expectations that President-elect Donald Trump’s economic policies will be positive for the US Dollar (USD), as higher tariffs and tax cuts could keep interest rates high, supporting foreign capital inflows into the US currency. This, in turn is expected to pressure Gold lower since it is mainly priced and traded in USD.

Gold bounces briefly after Fed meeting

Gold reverses its brief bounce after the US Federal Reserve (Fed) November rate meeting concluded with the decision to cut interest rates by 25 basis points (bps) (0.25%) on Thursday. This brought the Fed Funds Target Range (FFTR) down to the range of 4.50% - 4.75%, as expected. Lower interest rates are positive for Gold, which is a non-interest-bearing asset, as they reduce the opportunity cost of holding the precious metal. 

Gold also won bids due to the complete absence of any mention of how the outcome of the US presidential election might impact the US economy in the Fed’s accompanying statement. Nor was the wording changed by much from the previous meeting, except to state that “labor market conditions have generally eased” since the last meeting in September.  

During his press conference, Fed Chairman Jerome Powell deflected question about Trump’s policies, saying it was too early to give an assessment given he did not know the “timing, (or) substance of policy changes.” Powell also said he did not think the rise in US Treasury bond yields was due to higher inflation expectations, perhaps signaling a gloomier assessment that might benefit safe-haven Gold. 

Gold weakens after Donald Trump wins election 

Gold's steep decline on Wednesday was triggered by the results of the US presidential election, which increasingly confirmed a return to the White House for former president Donald Trump. The newly-elected president’s economic agenda supports a higher US Dollar, which is negative for the precious metal. 

Gold may have been further hit by a broad rotation out of safe-haven investments and into alternative, riskier assets, such as Bitcoin (BTC) and equities, as a result of Trump’s re-election. 

Bitcoin hit a new all-time high on Thursday due to expectations that Trump will relax crypto regulation. Stocks also rose as a result of anticipated tax cuts and a looser regulatory environment overall. These all came at the cost of Gold, which saw outflows as investors shuffled their portfolios. 

Trump’s claims that he can end the conflicts in the Middle East and Ukraine, though seemingly exaggerated (“I will have that (Ukraine-Russia) war settled in one day – 24hrs,” Trump said once), probably reduced safe-haven flows and also hit Gold. Even before Trump’s re-election, the US had bolstered its military presence in the region with B-52 bombers designed to act as a deterrent to any plans Iran might have for attacking Israel after its bombardment last month.

Technical Analysis: XAU/USD pulls back within short-term downtrend

Gold pulls back higher after finding a floor following the post-Trump election. The correction is likely to be temporary, however, given the precious metal remains in a short-term downtrend, and it is a principle of technical analysis that “the trend is your friend.”

XAU/USD 4-hour Chart

The Relative Strength Index (RSI) momentum indicator has exited oversold territory, advising short-holders to close their trades and open tentative longs. The Moving Average Divergence Convergence (MACD) indicator has crossed above its signal line, giving a buy signal. This suggests a risk the correction may still have higher to go. 

However, due to the bearish short-term trend, the odds currently favor Gold eventually turning back down again. A break below the $2,643 low of Thursday would confirm a continuation to the downside, probably to the next target and the trendline for the long-term uptrend at $2,605.

However, the precious metal remains in an uptrend on a medium and long-term basis, with a material risk of a reversal higher in line with these broader up cycles at some point in time. 

Asian currencies have been on a roller-coaster ride in the past three months or so. The volatility stems from the recent strong rebound in the USD as the market dialed back the extent of Fed rate cuts in the coming year. Asian currencies rallied strongly against the USD and peaked at the end of September. It was led by the Malaysian Ringgit (MYR), Thai Baht (THB), and Singapore dollar (SGD), Commerzbank’s FX analyst Charlie Lay notes.

Asian currencies seem too volatile for now

“Since then, they have reversed sharply and weakened further against the USD after the US election result. For example, Asian currencies ex-Japan rose 1.8% vs USD on average from the start of the year to the end of September. Since then, they have flipped to -1.8% vs USD year-to-date, representing a near 4% turnaround in just over a month. The more pertinent aspect is that volatility and policy uncertainties will likely persist in the coming months.”

“The top concern will be how forcefully and quickly the new Trump administration will implement its trade policies. For example, President-elect Trump has threatened 10-20% tariffs on all imports arriving in the US and 60-100% tariff on Chinese imports. China and the rest of Asia may tolerate weaker currencies to cushion the impact of tariffs.”

“However, they will also be cognizant of the importance of ensuring investor confidence, which may entail maintaining a certain degree of FX stability. It will be a delicate balancing act for policymakers going forward. In terms of implications for monetary policy, weaker Asian currencies and higher volatility are likely to restrain some central banks from shifting to an overly dovish stance too soon. This is relevant for India and Singapore.”

The Riksbank went all out yesterday by cutting the policy rate by 50 basis points from 3.25% to 2.75%, while signaling that more could follow: ‘The policy rate may also be cut in December and during the first half of 2025, in line with what was communicated in September.’ This confirms the view that the Riksbank was planning on 75 basis points by the end of the year anyway and has therefore taken the big step yesterday, only to follow up with another 25 basis points in December, Commerzbank’s FX analyst Tatha Ghose notes.

Rate cuts might continue

“According to the Riksbank, there are not yet enough clear signs of an economic recovery, which is why it is cutting a little faster to allow inflation to stabilize close to target. If the outlook remains unchanged, the cuts will continue.”

“Although the Riksbank is already being quite outspoken about the future interest rate path, it is still leaving a door open by admitting: ‘Economic developments are difficult to assess at present, especially those abroad and not least following the US election. There are risks linked to the geopolitical tensions, the economic policy abroad, the krona exchange rate and economic activity in Sweden that can affect the outlook for economic activity and inflation and lead to a different monetary policy stance’.”

“Growth was somewhat weaker than expected at the time, and the unemployment rate was somewhat higher, which explains the 50 bp move yesterday. The Riksbank will publish the new Monetary Policy Report with the new forecasts and the interest rate path in December. Since the interest rate decision was in line with market expectations, it had no major impact on the SEK. Similarly to the NOK, it is likely to have benefited from waning uncertainty surrounding the US election yesterday.”

• The US Dollar stabilizes on  Friday after a volatile week. 
• Jerome Powell responded bluntly to markets and reporters on his future as Fed Chairman. 
• The US Dollar index steadies in the 104-region, looking for a fresh direction. 

The US Dollar (USD) stablizes around the mid-104.00 region on Friday after founding support as investors digest the Federal Reserve’s (Fed) decision to lower its monetary policy rate by 25 basis points to the 4.50%-4.75% range on Thursday. The rate cut event completely faded to the background, with reports eager to ask if Fed Chairman Jerome Powell needs to fear for his job now that President-elect Donald Trump will come to the White House in January. Powell was quite blunt and direct in saying that he will not resign and cannot be fired, underlining that the Fed is an independent body from politics in the US. 

The US economic calendar sees the release of the University of Michigan’s preliminary November report on Friday. As always, a good guide and leading indicator of how consumer sentiment in the US is holding up. The inflation expectation of US consumers in the report will be a key factor after several head economists and analysts have predicted inflation will be one of the major concerns for the Trump presidency. 

Daily digest market movers: Did it even matter? 

• The Federal Reserve decided on Thursday to lower its monetary policy rate by 25 basis points to the 4.50%-4.75% range after the Bank of England (BoE) made the same move towards 4.75% earlier that day. 
• During the press conference after the meeting, Fed Chairman Powell was asked about possible resignations or threats to his job under President-elect Trump. Powell reiterated that the Fed is an independent institute that does not follow politics and only looks at US data and its mandates. The Fed Chairman even got annoyed at one point with the question and simply said “No!” to the question, Reuters reports. 
• At 15:00 GMT, the University of Michigan will release its preliminary reading for November. Consumer Sentiment is expected to tick up to 71 from 70.5 in the previous month. Inflation expectations, which were at 3% in October, have no consensus view.
• At 16:00 GMT, Federal Reserve Governor Michelle Bowman participates in a conversation about banking at a symposium organized by the University of Mississippi School of Business.
• European equities have a clear off-day with losses near 1% intraday. US futures are looking bleak as well ahead of the US opening bell. 
• The CME FedWatch Tool is pricing in another 25 basis points (bps) rate cut by the Fed at the December 18 meeting by 71.3%. A smaller 28.7% chance is for rates to remain unchanged. 
• The US 10-year benchmark rate trades at 4.29%, tumbling lower from this week’s high at 4.47%.  

US Dollar Index Technical Analysis: Powell is here to stay

The US Dollar Index (DXY) eased on Thursday after its steep move higher earlier in the week. That move came on the back of comments from Fed Chairman Jerome Powell that he is here to stay and will stay even when President-elect Donald Trump takes office. This reassures markets that stability will be present on the monetary policy front, and logical action will be taken to ensure the US economy does not overheat or head into hyperinflation. 

The first level to watch out for on the upside is 105.53 (April 11 high), a very firm cap resistance, with 105.89 (May 2 high) just above. Once that level is broken, 106.52, the high of April and a double top, will be the last level standing before starting to talk about 107.00.

Last week’s peak at 104.63 did not do a great job in offering some support for the fade on Thursday. On the downside, the round level of 104.00 and the 200-day Simple Moving Average (SMA) at 103.86 should refrain from sending the DXY any lower. 

US Dollar Index: Daily Chart

The Fed in its 6/7 Nov 2024 Federal Open Market Committee (FOMC) meeting, unanimously decided to reduce the target range of its Fed Funds Target Rate (FFTR) by 25-bps to 4.50-4.75%, in line with our and broad market expectations. The Fed also voted to cut the interest rate paid on reserves (IOER) balances by 25-bps to 4.65% while keeping the pace of QT unchanged, UOB Group’s economist Alvin Liew notes.

Fed provides scant forward guidance

“The most notable changes in the Nov monetary policy statement (MPS) were the removal of the entire statement, ‘has gained greater confidence that inflation is moving sustainably toward 2 percent,’ and replacing ‘In light of the progress of inflation and the balance of risks’ simply with ‘In support of its goals’. During the press conference, FOMC Chair Powell explained that both modifications were ‘not meant to send a further signal’ and that ‘further confidence’ was a test for the first rate cut, and that test has been met.”

Powell deflected most of the political questions except saying election outcomes will not impact policy decisions in the near term, and more importantly, a point-blank ‘no’ that he would not resign if the President-elect Trump asked him to leave, adding that it is ‘not permitted under the law’ for the US President to remove the Fed chair and Vice chairs. This left no doubt that Powell intends to complete his term which runs till May 2026.

“While we too agree that the US election results will not impede on the Fed’s gradualism in the pace of easing trajectory for the rest of 2024, there could be serious questions being asked about the independence of the Fed once Trump assumes office in 2025. For now, we still expect one more 25-bps cut for the Dec 24 FOMC to bring rates to 4.25%-4.50% by end-2024, followed by 100 bps of cuts in 2025 (one 25-bps cuts per quarter) with one final 25-bps rate cut to bring us to the terminal rate of 3.25% by 1Q 2026.

BoE’s MPC has not given the market a clear conclusion of what the budget could mean for the economy, and once again there is no strong guidance on how fast rates can be cut, ING’s FX analyst Francesco Pesole notes.

December rate cut is looking rather unlikely

“Our house view on the BoE has been tweaked but not radically changed. A December rate cut is looking rather unlikely following the budget, and markets are also pricing in a very small implied probability. At the same time, we don’t think the budget will significantly derail the BoE’s easing path next year, and we still expect faster cuts in the spring compared to market expectations.”

“Accordingly, we think there is a gap to be filled on the dovish side in the Sonia curve. Such repricing may however take some time to show, and the rate/growth differential with the eurozone means there should be continued resistance on a substantial shift higher in EUR/GBP.”

As expected, Norges Bank left the policy rate at 4.50% yesterday. Anyway, the question was more whether it might give first indications of earlier interest rate cuts. According to the September rate path, it does not expect the first interest rate cut until March 2025. However, the disinflation process has made good progress since the summer, so it is quite possible that it will bring forward the timing of the interest rate turnaround, Commerzbank’s FX analyst Antje Praefcke notes.

NOK gains ground in the wake of the interest rate decision

“However, nothing of the sort was apparent in the rather brief statement. “The policy rate will most likely be kept at 4.5 percent to the end of 2024,” said Governor Ida Wolden Bache. As we expected, Norges Bank is postponing the decision on when the first interest rate move will come until December, when the new forecasts will be presented in the new monetary policy report, stating: ‘The Committee will have received more information about developments ahead of its next monetary policy meeting in December, when new forecasts will be presented’.”

“In this respect, it can be assumed that if the data and developments warrant it, Norges Bank will announce an interest rate cut in December for January. Inflation has fallen somewhat faster than expected in September, but the krone is somewhat weaker and international policy rate expectations have risen according to Norges Bank. Norges Bank will therefore keep a close eye on these aspects – in addition to the fundamentals – between now and December.”

“The NOK was able to gain ground in the wake of the interest rate decision. While it is still not certain whether an interest rate cut will come sooner than in March, the next move will be down. The prospect of a rising real interest rate, along with the waning uncertainty surrounding the US election, should have helped the NOK.”

• USD/JPY slides further to near 152.00 as the Japanese yen strengthens after Japana Kato warned of possible intervention.
• The US Dollar tries to resume its upside trend on Trump policy optimism.
• On Thursday, the Fed cut interest rates by 25 bps to 4.50%-4.75%.

The USD/JPY pair falls further to near 152.00 in European trading hours on Friday. The asset weakens despite some recovery in the US Dollar (USD), suggesting a sheer strength in the Japanese Yen (JPY). The Yen gains after Finance Minister Katsunobu Kato alerted that the administration would take "appropriate action" to address excessive foreign exchange fluctuations.

“Will closely monitor the impact of Trump's policies on Japan's economy,” Kato added. In the comments from Kato, Trump’s policies point to a hike in import tariffs by 10%, which he promised in his election campaign.

Earlier, Democratic Party for the People (DPFP) leader Yuichiro Tamaki also warned that Trump’s protectionist policies could put further downward pressure on the Yen.

Meanwhile, the US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, strives to gain ground above 104.00. The US Dollar corrected sharply on Thursday as traders unwinded so-called ‘Trump trades’ and the Federal Reserve’s (Fed) monetary policy guidance was dovish.

On Thursday, the Fed cut interest rates by 25 basis points (bps) to 4.50%-4.75%, as expected, and showed confidence over the continuation of the policy-easing cycle with confidence that inflationary pressures remain on track to the bank’s target of 2%.

The US Dollar (USD) is likely to trade in a range between 7.1350 and 7.1770. In the longer run, surge in momentum suggests further USD strength, but the pace and extent is likely to be more moderate, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

USD to trade in a range between 7.1350 and 7.1770

24-HOUR VIEW: “Our view for USD to rise above 7.2200 yesterday did not turn. After reaching a high of 7.2133, it staged an unexpectedly sharp drop, reaching a low of 7.1420. The decline appears to be excessive, and USD is unlikely to weaken much further. Today, USD is more likely to trade in a range between 7.1350 and 7.1770.”

1-3 WEEKS VIEW: “The level to watch is 7.2400. USD soared by 1.48% two days ago, closing at 7.2040. Yesterday (07 Nov, spot at 7.2020), we indicated that ‘The surge in momentum suggests further USD strength, but severely overbought conditions suggest the pace and extent is likely to be more moderate.’ We indicated that ‘The level to watch on the upside is 7.2400,’ and ‘should USD breach 7.1300, it would indicate that the rally is ready to take a breather.’ We did not anticipate the sharp pullback that reached a low of 7.1420. Although momentum has slowed, we will continue to hold the same view as long as 7.1300 is not breached.”

EUR/USD traded briefly above 1.080 yesterday on the back of the broad-based unwinding of post-election USD longs. This appears to be a positioning unwinding, and we doubt markets are reconsidering the negative implications of Trump’s expected policies on the eurozone, ING’s FX analyst Francesco Pesole notes.

Short-term rate spread argues for a weakening in the pair

“Our core view is that the new Republican administration can widen the USD:EUR rate gap further as inflationary policies slow down Federal Reserve easing while the European Central Bank could move faster with cuts ahead of some protectionism-related impact on growth.”

“While our projected rate profile for the Fed and ECB is enough to justify EUR/USD trading below 1.05 throughout 2025, we have added a risk premium related to a potential worsening in global risk sentiment as well as idiosyncratic eurozone risk around the end of 2025 and beginning of 2026. This is when we expect the impact of US tariffs to have the deepest market impact.”

“Back to the short term, we think we have entered a period where EUR/USD could be oscillating around its recent range as markets shift the focus back to macro. However, the short-term rate spread argues for a weakening in the pair and the looming risks for the eurozone associated with Trump’s core policies mean we retain a bearish bias on the euro.”

Upward momentum has slowed sharply and quickly; a break of 152.50 means that USD is likely to trade in a range instead of heading higher, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

USD/JPY to trade in a range below 152.50

24-HOUR VIEW: “When USD was at 154.55 yesterday, we indicated that ‘the overbought USD rally could extend above 155.00 before pausing.’ However, USD did not rise above 155.00. Instead, it pulled back sharply to 152.69. The pullback appears to be overextended, and USD is unlikely to weaken much further. Today, USD is more likely to trade in a range between 152.50 and 153.85.”

1-3 WEEKS VIEW: “We highlighted yesterday (07 Nov, spot at 154.55) that’ the spike in momentum suggests USD could continue to rise, possibly to 156.00.’ The subsequent steep pullback was surprising, and upward momentum has slowed sharply and quickly. From here, if USD breaks below 152.50 (no change in ‘strong support’ level), it would mean that USD is likely to trade in a range instead of heading higher.”

A large portion of the election move in the US Dollar (USD) has been unwound. That looks more like a positioning adjustment rather than a rethink of what a Trump presidency means for global markets. Remember that markets got to Election Day broadly pricing in a Trump victory, and while the USD spiked in reaction to the Republican clean sweep, there are perhaps some questions now on how far the USD can rally near term given the focus is shifting back to the macroeconomic discussion, ING’s FX analyst Francesco Pesole notes.

USD remains in a strong position

“The Fed cut rates by 25bp yesterday, in line with market expectations and consensus. The FX market was very marginally impacted and so was the rates market. If anything, we saw a very brief firming in the USD and a small rise in yields when Chair Jerome Powell seemed to suggest a more upbeat outlook for the US economy. Ultimately, markets were seeking any indication that Powell might tweak the narrative on the back of the US election, but there was understandably no indication of that.”

“The USD remains in a strong position from a rate perspective. The two-year USD swap rate is near the 4% handle, and we probably need to see some worsening in US data sentiment for markets to take that back lower.”

“We are in an adjustment phase after the US election moves, and with volatility falling there are some potential pockets of opportunity for pro-cyclical currencies that offer attractive yields to do well in the near term. In that sense, the AUD appears well positioned as markets incidentally don’t see the impact of US protectionism as a near-term threat and Beijing stimulus can help some China proxies.”

• The Mexican Peso trades mixed in key pairs after extending its recovery on Thursday. 
• The Fed’s decision to cut interest rates in the US weighed on the US Dollar whilst uncertainty of tariffs is still a threat to the Peso.
• USD/MXN finds support at the 50-day SMA and remains in a broader uptrend.  

The Mexican Peso (MXN) trades mixed in its key pairs on Friday during the European session after rising up and meeting resistance near the top of a falling channel it has been steadily declining in since Mexico’s June elections. 

Whilst the Peso initially weakened on Wednesday because of President elect Donald Trump’s victory in the US presidential election, it quickly bounced back. MXN's initial depreciation came on the back of concerns about the impact of Trump’s tariff-heavy agenda on Mexican exports to the US. 

Pressure on the Peso eased, however, after the release of higher-than-expected Mexican headline inflation data for October suggested the Bank of Mexico (Banxico) might not be as aggressive in cutting interest rates as had previously been expected. This came to the Peso’s aid since elevated interest rates tend to attract greater inflows of foreign capital. 

The Peso recovered further following the Federal Reserve’s (Fed) November policy meeting – which had an overall negative impact on the US Dollar (USD), as reflected by the three-quarter percent decline in the US Dollar Index (DXY) on the day. The Fed decided to cut the Fed Funds Target Range (FFTR) by 25 basis points (bps) (0.25%) to 4.50%-4.75% as expected, largely ignoring the market’s assessment of Trumponomics as likely to spur higher inflation. 

The Fed’s accompanying statement made no direct reference to the potential impact of Trump’s economic agenda on the economy and the wording was little changed from the previous meeting. During his press conference, Fed Chairman Jerome Powell said he could not comment on the impact of Trump’s policies since he did not know the “timing, (or) substance of policy changes.” He also dismissed the rise in US Treasury bond yields as resulting from higher inflation expectations. Overall, it was as if the election had never happened.  

Mexican Peso faces uncertainty from tariffs 

The Mexican Peso’s rebound from multi-year lows may also be due to uncertainty regarding the impact of Donald Trump’s promised tariffs on Mexican goods entering the US. 

Trump has threatened to place tariffs of 200% or even 300% on Chinese vehicles entering the US via Mexico. During the election campaign, Chinese investment in electric car plants in Mexico was put on hold due to uncertainty about the outcome. That said, some Mexicans remain optimistic about Chinese companies continuing to manufacture in Mexico. 

“The arrival of Donald Trump to the US presidency will not discourage investments by Chinese electric vehicle manufacturers in Mexico, as they can focus on the local market and avoid exporting cars to US territory,” said Mexican financial consultant Luis Felipe Alcántara Pozos, to El Financiero. 

Others have made the point that even if Trump imposes high tariffs, Mexico is still a gateway to a broader Latin America market. 

Many of Trump’s tariff policies may actually be difficult to implement given the United States-Mexico-Canada Agreement (USMCA) free trade deal. This already stipulates that Mexican autos exported to the US must contain a high percentage of US components, so if tariffs were imposed on these vehicles, they would also have a detrimental impact on the US companies exporting components to Mexico. 

US Congress election result could impact Peso

Trump has won the presidency and his Republican party also gained a majority in the United States (US) Senate. However, the US Congress is still up for grabs. On Friday, the Republican party had won 211 seats to the Democratic party’s 199, according to the Associated Press, with 25 still to be called. The threshold to obtain the majority of seats stands at 218.

If the Republicans win a majority in Congress, they will have a “clean sweep,” and Trump will be able to implement his policies with less friction and delay. 

According to forecasts by El Financiero, a Republican majority in Congress with Trump as President could lead the Peso to weaken even further against the USD. They estimate a band of between 21.14 and 22.26 for USD/MXN in such a scenario. The pair currently trades in the 19.70s. 

If the Republicans fail to win a majority in Congress, the pair is likely to end up in a range between 19.70 and 21.14, says El Financiero. 

Technical Analysis: USD/MXN falls to support 

USD/MXN weakens to support from the 50-day Simple Moving Average (SMA) at 19.70 after forming a bearish Long-Legged Doji candlestick on Wednesday, which was followed up and confirmed by a long red down day on Thursday.

USD/MXN Daily Chart 

The Moving Average Convergence Divergence (MACD) momentum indicator has crossed below its signal line, giving a sell signal, another bearish indication. 

However, USD/MXN remains within the guardrails of a rising channel and is still in an overall uptrend on a short, medium and long-term basis. Given the technical principle that “the trend is your friend,” the odds favor an eventual continuation higher. 

A break above the 20.80 high set on Wednesday would probably confirm more gains, with 21.00 as the next key target and resistance level (round number, psychological support).  

Instead of continuing to advance, the New Zealand Dollar (NZD) is more likely to trade in a 0.5980/0.6040 range. In the longer run, upward momentum is building tentatively; NZD could edge higher to 0.6075, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

NZD likely to trade in a 0.5980/0.6040 range

24-HOUR VIEW: “Yesterday, we highlighted that NZD ‘could drop to 0.5900 before the risk of a more sustained recovery increases.’ However, NZD rebounded from a low of 0.5933 to 0.6037, closing sharply higher by 1.41% at 0.6023. The sharp rebound appears to be running ahead of itself, and instead of continuing to advance, NZD is more likely to trade in a 0.5980/0.6040 range.”

1-3 WEEKS VIEW: “NZD dropped to a 3-month low of 0.5912 two days ago. Yesterday (07 Nov), when NZD was at 0.5935, we highlighted that ‘Although the increase in momentum indicates further NZD weakness, conditions remain oversold due to the recent month-long decline.’ We pointed out that ‘the potential of any weakness may be limited.’ We also pointed out that ‘as long as 0.6015 is not breached, NZD could drop to 0.5875 before a rebound is likely.’ We did not expect NZD to rebound so quickly and sharply, as it soared to 0.6037. Downward momentum has faded. Upward momentum is beginning to build, albeit tentatively. From here, as long as 0.5955 is not breached, NZD could edge higher to 0.6075. Currently, the chance of a sustained break above this level is not high.”

• NZD/USD corrects to near 0.6000 as the US Dollar bounces back.
• Trump’s protectionist policies would keep the US Dollar’s downside limited.
• The RBNZ is expected to cut interest rates again by 50 bps.

The NZD/USD pair struggles to extend Thursday’s recovery move above 0.6050 and corrects to near the psychological support of 0.6000 in Friday’s European session. The Kiwi pair faces slight pressure as the US Dollar (USD) rebounds after a sharp correction on Thursday. The US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, bounces back from 104.20.

The USD gains as market participants expect that US Donald Trump’s tight external policies would improve the overall productivity, business investment, and spending for the longer term. Trump promised to raise import tariffs by 10% universally, except China, which is expected to face even higher duties.

Meanwhile, the outlook of the New Zealand Dollar (NZD) remains weak as poor labor demand has solidified speculation of another Reserve Bank of New Zealand (RBNZ) larger interest rate cut in its policy meeting on November 27.

New Zealand Q3 employment data showed that the laborforce reduced by 0.5%, faster than estimates of a 0.4% decline. The Unemployment Rate rose to 4.8%, slower than estimates of 5% but was higher than 4.6% in the second quarter of this year.

NZD/USD encounters offers after a mean-reversion move to near the 20-day Exponential Moving Average (EMA), which trades around 0.6023. The 14-day Relative Strength Index (RSI) returns above 40.00, suggesting that the bearish momentum has faded. However, the bearish bias remains intact.

More downside is highly likely towards the round-level support of 0.5900 and the April 19 low at 0.5850 if the pair breaks below the October 31 low of 0.5940.

On the flip side, a further recovery above the October 23 high of 0.6058 will drive the asset toward the round-level resistance of 0.6100 and the October 8 high of 0.6146.

NZD/USD daily chart

As expected, the Bank of England (BoE) yesterday cut interest rates by 25 basis points and lowered its inflation forecast for the fourth quarter, Commerzbank’s FX analyst Michael Pfister notes.

BoE to cut rates much more gradually

“More surprising were the forecasts for the coming years: the inflation forecast for 2025 was raised by 0.5 percentage points to 2.7%, while the forecast for 2026 was raised by 0.6 percentage points to 2.2%. At the same time, the BoE now expects growth next year to be almost twice as high as previously thought, at 1.7%. Clearly, the BoE has taken into account the recent UK budget, which is likely to be much more expansionary in the short term than previously expected.”

“In my view, this was a rather hawkish rate cut, which I had not expected. While I could have imagined that the new forecasts would reflect the risks posed by the UK budget, I had thought that, given the BoE's rather dovish stance in recent years and recent statements by central bank officials, the changes would be smaller, leaving the door open for another rate cut in December. Instead, we have to acknowledge that after yesterday's decision, another move in December has become rather unlikely. Our economists have therefore adjusted the BoE forecast accordingly.”

“For the Pound Sterling (GBP), this bodes well for the coming months. It shows that the BoE will continue to cut rates much more gradually than the ECB, while the British economy is likely to grow much faster than its eurozone counterpart. Only the new forecasts for 2026 are likely to cause some concern, as the BoE now expects weaker growth and higher inflation in that year. However, a lot can happen between now and then, which is why GBP optimism prevails for the time being.”

Sharp bounce appears to be overdone, but there is a chance for the Australian Dollar (AUD) to test 0.6700 before a pause is likely. In the longer run, there has been a slight increase in upward momentum; AUD could rise gradually and test 0.6720, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

AUD can rise gradually and test 0.6720

24-HOUR VIEW: “AUD dropped sharply to 0.6513 two days ago, and then rebounded. Yesterday, when AUD was at 0.6570, we indicated that ‘The bounce from the low has resulted in a slowdown in momentum.’ We added, ‘instead of weakening further, AUD is likely to trade in a 0.6530/0.6610 range.’ AUD did not weaken further, but instead of trading in a range, it surged to a high of 0.6688, closing on a strong note at 0.6681, up by 1.69% for the day. The sharp bounce appears to be overdone, but there is a chance for AUD to test 0.6700 before a pause is likely. A sustained rise above 0.6700 is unlikely. On the downside, a breach of 0.6620 (minor support is at 0.6645) would mean that the current upward pressure has faded.”

1-3 WEEKS VIEW: “We pointed out yesterday (07 Nov, spot at 0.6570), that despite AUD dropping to a low of 0.6513 two days ago, ‘there has been no significant increase in momentum.’ While we held the view that ‘there is potential for AUD to decline to 0.6500,’ we indicated that ‘the likelihood of a sustained break below this level is not high.’ We did not anticipate the subsequent sharp reversal, as AUD soared and broke above our ‘strong resistance’ level at 0.6640 (high of 0.6688). Although there has been a slight increase in upward momentum, it is not enough to suggest a strong advance. That said, there is room for AUD to rise gradually, but any advance is likely limited to a test of 0.6720. We will maintain our view provided that AUD remains above 0.6590.

• EUR/USD faces significant offers near 1.0800 as the US Dollar resumes its upside trend.
• Trump’s victory has improved the US Dollar’s long-term outlook.
• The Euro is down amid Trump tariffs’ threats, German political uncertainty, and doubts over the Eurozone economic outlook.

EUR/USD faces selling pressure near the key resistance of 1.0800 in European trading hours on Friday. The major currency pair fails to extend Thursday’s recovery as the US Dollar (USD) resumes its upside journey after a sharp correction. 

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, bounces back to nearly 104.65. The index had retraced to nearly 104.20 on Thursday following the more than four-month high of 105.50 registered after Donald Trump won the presidential election in the United States (US). 

The reasoning behind the US Dollar’s recovery can be attributed to the victory of Trump, who vowed to raise import tariffs by 10% and lower corporate taxes in his election campaign. Market experts suggest that Trump’s fiscal policy, if implemented, would result in higher investment, spending and labor demand, which will elevate upside risks to inflation and force the Federal Reserve (Fed) to opt for a restrictive monetary policy stance.

Fed Chair Jerome Powell said on Thursday that he doesn’t see any near-term effect of Trump’s return to the White House regarding the central bank’s policy decisions. “We don’t guess, speculate and we don’t assume what future government policy choices will be,” Powell said after the bank decided to cut interest rates by 25 basis points (bps) to 4.50%-4.75%, as expected.

When asked about the interest rate path ahead, Powell sounded confident about the continuation of the policy-easing cycle by saying he is optimistic about inflation remaining on track to the bank’s target of 2% with some softness in labor market conditions.

Daily digest market movers: EUR/USD drops as US Dollar bounces back

• EUR/USD is also facing sharp selling pressure due to the Euro’s (EUR) underperformance against its major peers, except for Asia-Pacific currencies. The Euro is down as investors are worried about the Eurozone economic outlook due to Trump’s victory, the dissolution of Germany’s three-party coalition, and growing risks of inflation remaining below the European Central Bank’s (ECB) target of 2%.
• Higher tariffs by the US would strain the Eurozone’s export sector, likely hitting economic growth. “Uncertainty is high on many levels, from the exact impact of US tariffs to the timing of their implementation to how and when Europe responds,” Deutsche Bank analysts said. 
• Meanwhile, the Deutsche Bank also sees the ECB’s Deposit Facility rate heading to 1.5%, down from the 2.25% previously projected, due to weakening macroeconomic conditions and inflation risks falling below target. 
• The collapse of the German coalition after Chancellor Olaf Scholz dismissed Federal Minister of Finance Christian Lindner has paved the way for snap elections in early 2025. The scenario of political uncertainty limits the growth potential of an economy due to the postponement of fiscal spending by the government.

Technical Analysis: EUR/USD retreats from 1.0800

EUR/USD resumes decline after a short-lived recovery to near 1.0800 in Friday’s European session. The near-term trend of the major currency pair remains bearish as the 20-day and 50-day Exponential Moving Averages (EMAs) near 1.0860 and 1.0920, respectively, continue to decline.

The 14-day Relative Strength Index (RSI) wobbles near 40.00. A bearish momentum would resume if the RSI (14) slides below the above-mentioned level.

The upward-sloping trendline, plotted from the April 16 low of around 1.0600, will act as a key resistance zone for Euro bulls around 1.0800. Looking down, the shared currency pair could decline to the year-to-date (YTD) low of 1.0600

The US Dollar may well appreciate somewhat further in the coming weeks and months once the consequences of Trump's election victory have been fully priced in, Commerzbank’s FX analyst Ulrich Leuchtmann notes.

Policy of the Trump administration likely to lag behind its announcements

“However, the potential is limited. The main consequences have already been factored into the exchange rate. In the medium term, further USD strength is not likely to prove sustainable.”

“On the one hand, because the actual policy of the Trump administration is likely to lag behind its announcements. And on the other hand, because the inflationary effects are likely to be accepted by the Fed.”

Instead of continuing to advance, the Pound Sterling (GBP) is more likely to trade sideways between 1.2930 and 1.3010. In the longer run, downward momentum has faded; outlook is unclear, and GBP could trade in a range between 1.2850 and 1.3055, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Short-lived swings result in an unclear outlook

24-HOUR VIEW: “GBP dropped sharply to 1.2835 on Wednesday, and then rebounded. Yesterday (Thursday), we highlighted that GBP ‘could retest the 1.2835 low before stabilisation is likely.’ Our view was incorrect, as GBP soared, reaching a high of 1.3009. GBP then pulled back from the high, closing at 1.2986. The pullback in overbought conditions indicates that instead continuing to advance, GBP is more likely to trade sideways between 1.2930 and 1.3010.”

1-3 WEEKS VIEW: “We shifted from a neutral to negative GBP stance yesterday (07 Nov, spot at 1.2890), indicating that ‘the breach of the 1.2900 support suggests GBP could continue to weaken.’ However, we pointed out that ‘there is a weekly support at 1.2800.’ We added, ‘To maintain the rapid buildup in momentum, GBP must remain below 1.3000.’ Our view was invalidated quickly, as GBP staged a strong rebound that broke above 1.3000 (high has been 1.3009). The buildup in downward momentum has faded. The rapid but short-lived swings have resulted in an unclear outlook. For now, GBP could trade in a range, likely between 1.2850 and 1.3055.”

Yesterday's FOMC decision and the subsequent press conference with Fed Chairman Jerome Powell did not really reveal much that was new. As a result, the US dollar barely reacted to the events, which must have come as a relief to many market participants after an exciting week, Commerzbank’s FX analyst Michael Pfister notes.

Further USD strength in the coming months

“In my opinion, there are only three facts worth mentioning. The FOMC is very confident that inflation is no longer a major problem. The part of the core PCE that is still exerting the greatest pressure on prices is, in their view, due to catch-up effects and should soon fade.”

“The real economy remains extremely strong, and they even see opportunities for even stronger growth next year than this year. The rate cuts are simply to ensure that this is the case.”

“And Powell has made it very clear that he has no intention of resigning if Donald Trump asks him to. He also made it clear that it would not be legally possible to remove him from office. All three of these factors are fundamentally positive for the USD and therefore encourage us to expect further USD strength in the coming months.”

Silver prices (XAG/USD) fell on Friday, according to FXStreet data. Silver trades at $31.53 per troy ounce, down 1.35% from the $31.96 it cost on Thursday.

Silver prices have increased by 32.50% since the beginning of the year.

The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 85.29 on Friday, up from 84.62 on Thursday.

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

The Euro (EUR) is expected to trade in a range between 1.0740 and 1.0840. In the longer run, price action suggests further EUR weakness; the levels to watch are 1.0665 and 1.0600, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

EUR to trade in a range between 1.0740 and 1.0840

24-HOUR VIEW: “Yesterday, we held the view that ‘as long as 1.0800 is not breached, EUR could drop to 1.0665 before stabilisation can be expected.’ We were also of the view that ‘a sustained break below this level seems unlikely.’ Instead of dropping to 1.0665, EUR rebounded strongly, reaching a high of 1.0824 in NY trade. The strong bounce is likely part of a broader range trading phase. Today, we expect EUR to trade between 1.0740 and 1.0840.”

1-3 WEEKS VIEW: “We highlighted yesterday (07 Nov, spot at 1.0730) that the steep selloff from two days ago suggests ‘further EUR weakness.’ We pointed out, ‘The support levels to watch are 1.0665 (low in Jun) and the year-to-date low of 1.0600 in April.’ While we did not quite expect EUR to rebound strongly, we will maintain our view as long as 1.0870 is not breached (no change in ‘strong resistance’ level from yesterday).”

The People’s Bank of China (PBOC) published its third-quarter monetary policy report on Friday, with the key findings noted below.

Market reaction

AUD/USD has paused its recovery attempt near 0.6650 following the report publication, losing 0.40% on the day. 

• Silver struggles to capitalize on the previous day’s goodish rebound from a three-week low.
• The technical setup favors bears and supports prospects for a further near-term downfall.
• A sustained strength above the $32.30-$32.35 area is needed to negate the negative bias.

Silver (XAG/USD) meets with a fresh supply on Friday and reverses a major part of the previous day's goodish recovery move from over a three-week low. The white metal continues losing ground through the first half of the European session and touches a fresh daily low, around the $31.30 area in the last hour.

From a technical perspective, any further decline is likely to find some support near the $31.00 mark ahead of the $30.85-$30.80 region, or the multi-week low. Some follow-through selling below the 50% Fibonacci retracement level of the August-October rally, around the $30.65-$30.60 area, will be seen as a fresh trigger for bearish traders. 

Given that oscillators on the daily chart have just started gaining negative traction, the subsequent fall could drag the XAG/USD below the 100-day Simple Moving Average (SMA), currently pegged around the $30.25 area, towards the $30.00 psychological mark. The downward trajectory could extend to the 61.8% Fibo. level, near the $29.65 region.

On the flip side, the $32.00 round figure now seems to have emerged as an immediate strong hurdle. This is followed by a hurdle near the $32.30-$32.35 horizontal zone, which if cleared decisively might trigger a short-covering move to the $33.00 mark before the XAG/USD extends the positive momentum towards the next relevant barrier near the mid-$33.00s.

Silver daily chart

• AUD/USD meets with a fresh supply on Friday amid the emergence of some USD dip-buying.
• The overnight failure near the 100-day SMA and the technical setup favors bearish traders.
• A sustained strength and acceptance above the 0.6700 mark will negate the negative bias.

The AUD/USD pair fails to capitalize on the previous day's strong move-up to the 0.6700 neighborhood, or a two-week top and retreats from the vicinity of the 100-day Simple Moving Average (SMA) resistance. Spot prices extend the intraday descent through the first half of the European session on Friday and drop to the 0.6625-0.6620 region, or a fresh daily low amid a modest US Dollar (USD) strength.

Expectations that Trump's policies will spur economic growth, boost inflation and restrict the Federal Reserve's (Fed) ability to interest cut rates aggressively help the USD to stall the previous day's retracement slide from a four-month top. This turns out to be a key factor exerting downward pressure on the AUD/USD pair. The AUD/USD bulls, meanwhile, seem unaffected by the fact that China's Standing Committee of the National People's Congress (NPC) approved plans to increase the local debt ceiling. Even the Reserve Bank of Australia's (RBA) hawkish stance earlier this week fails to lend support to the Aussie.

From a technical perspective, acceptance below the very important 200-day SMA will suggest that a short-covering rally from the lowest level since August 8 touched on Wednesday has run out of steam. Given that oscillators on the daily chart – though have been recovering – are still holding in negative territory, the subsequent fall could drag the AUD/USD pair to the 0.6600 mark en route to the 0.6555-0.6550 support zone. The downward trajectory could extend further towards the 0.6515-0.6510 area, or the multi-month low before spot prices eventually drop to the next relevant support near the 0.6465-0.6460 region. 

On the flip side, bulls need to wait for a sustained breakout above the 100-day SMA hurdle, currently pegged just ahead of the 0.6700 mark, before placing fresh bets. This is closely followed by the 50-day SMA, around the 0.6715-0.6820 area, above which the AUD/USD pair could climb beyond the 0.6750-0.6755 intermediate resistance and aim to reclaim the 0.6800 round figure. The subsequent move-up will suggest that the recent downfall has run its course and shift the near-term bias in favor of bullish traders.

AUD/USD daily chart

China's Vice chairman of the National People's Congress (NPC) Financial and Economic Affairs Committee announced on Friday that Beijing approved a bill to raise local government debt ceilings to replace existing hidden debts.

Key takeaways

• The Pound Sterling ticks down on Friday against the US Dollar after moving higher on Thursday.
• The BoE signaled it would follow a more gradual rate-cut path.
• Both the Fed and the BoE cut interest rates by 25 bps on Thursday.

The Pound Sterling (GBP) trades lower against the US Dollar (USD) below the psychological resistance of 1.3000 in Friday’s London session. The GBP/USD weakens slightly as the US Dollar strives to gain ground after a sharp correction on Thursday. The US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, trades in a tight range near 104.50.

The Greenback retraced almost 60% of Wednesday’s rally on Thursday as traders unwinded some of the so-called ‘Trump trades’ and the Federal Reserve (Fed) Chair Jerome Powell’s commentary was interpreted as slightly dovish.  The US Dollar rallied in October and in the first week of November as traders priced in Republican Donald Trump’s victory in the United States (US) presidential election.

The Federal Reserve cut interest rates by 25 basis points (bps) to 4.50%-4.75%, as expected. Jerome Powell said in the press conference following the decision that he remained confident over the continuation of the policy-easing cycle, adding that the disinflation trend towards the bank’s target of 2% is intact and that there are some signs of slowing labor market conditions.

On Trump’s victory, Powell said he sees no near-term effects on the interest rate path and refrained from speculating about it. Trump’s victory is widely seen as inflationary, given that he promised to raise import tariffs and lower corporate taxes in his election campaign.

 According to the CME FedWatch tool, the likelihood of an interest rate cut of 25 bps to 4.25%-4.50% in the December meeting is 71.3%.

In Friday’s session, investors will focus on Fed’s Governor Michelle Bowman’s speech for fresh interest rate guidance, which is scheduled at 16:00 GMT. Still, it is uncertain if Bowman will talk about monetary policy as she participates in a symposium about banking. 

Daily digest market movers: Pound Sterling outperforms the majority of its peers

• The Pound Sterling gains against the majority of its pairs on Friday, with the notable exception of the US Dollar, as the commentary from Bank of England (BoE) Governor Andrew Bailey on interest rates on Thursday was less dovish than what market participants had anticipated. 
• After the bank reduced its key borrowing rates by 25 bps to 4.75%, Bailey commented that interest rates will continue to fall gradually if the economy evolves as expected. However, he emphasized that the monetary policy will remain restrictive until the risks of inflationary pressures remaining persistent get dissipated. 
• When asked about the impact of last week’s Autumn Forecast Statement on the interest rate path, Bailey said: "I don't think that it's sensible to conclude that the path of interest rates will be particularly different." However, Bailey also said that fiscal measures would boost the overall growth by around three-quarters of a percent at their peak in a year's time, pointing to stronger and relatively front-loaded paths for government consumption and investment, more than offsetting the impact on growth of higher taxes, Reuters reported.
• Bailey refrained from making any presumption about the impact of US Donald Trump's administration on the UK economy but said that the central bank will remain vigilant to Trump's trade policy decisions.
• Going forward, investors will focus on BoE Chief Economist Huw Pill’s speech at 12:15 GMT for fresh interest rate guidance and the employment data for the three months ending September, which will be published on Tuesday.

Technical Analysis: Pound Sterling remains on tenterhooks below 1.3000

The Pound Sterling trades at make or a break against the US Dollar near the breakdown region of a Rising Channel pattern, just below 1.3000 on Friday, after rebounding from a fresh 11-week low near 1.2830 on Wednesday. The GBP/USD pair remains well-supported by the 200-day Exponential Moving Average (EMA) around 1.2860.

However, the near-term trend is bearish as the 20-day and 50-day EMAs, around 1.3000 and 1.3035, respectively, are declining.

The 14-day Relative Strength Index (RSI) hovers near 40.00. A bearish momentum would resume if the RSI (14) fails to hold this level.

Looking down, the round-level support of 1.2800 will be a major cushion for Pound Sterling bulls. On the upside, the Cable will face resistance near the psychological figure of 1.3000.

• The US Dollar Index may test a four-month high of 105.45 level.
• The DXY keeps a bullish outlook as it moves upwards within an ascending channel.
• The nine-day EMA appears as the immediate support at the 104.25 level.

The US Dollar Index (DXY) maintains its position on daily gains, hovering around 104.50 during European trading hours on Friday. The analysis of the daily chart indicates an ongoing bullish bias as the index moves upwards within an ascending channel.

Additionally, the 14-day Relative Strength Index (RSI) remains above the 50 level, reinforcing the prevailing bullish sentiment. Additionally, the nine-day Exponential Moving Average (EMA) is positioned above the 14-day EMA, indicating short-term price movement upwards

In terms of resistance, the DXY could appreciate toward a four-month high of 105.45 level, which was marked on November 6. A breakthrough above this level could reinforce the market sentiment and support the DXY to approach the upper boundary of the ascending channel at the psychological level of 106.00.

On the downside, the nine-day EMA appears as the immediate support at 104.25 level, followed by the 14-day EMA at 104.09 level. A break below this level could put downward pressure on the US Dollar Index to navigate toward the lower boundary of the ascending channel at 103.70 level.

US Dollar Index: Daily Chart

Here is what you need to know on Friday, November 8:

Following two days of highly volatile action, financial markets stay relatively quiet early Friday as investors digest the Federal Reserve's (Fed) policy announcements following Donald Trump's victory in the presidential election. The US economic calendar will feature the University of Michigan's flash estimate of the Consumer Sentiment Index for November.

The Fed lowered the policy rate by 25 basis points to the range of 4.5%-4.75% following the November policy meeting, as expected. In its policy statement, the Fed noted that risks to the job market and inflation were "roughly in balance," echoing language from its September statement. In the post-meeting press conference, Fed Chairman Jerome Powell refrained from hinting on a possible policy action in December and said that the results of the presidential election will have no effect on the monetary policy in the near term. 

Following Wednesday's rally, the US Dollar (USD) Index lost 0.7% on Thursday and erased a portion of its weekly gains. The USD Index holds steady near 104.50 in the European morning on Friday. In the meantime, US stock index futures trade flat, while the benchmark 10-year US Treasury bond yield fluctuates above 4.3%.

EUR/USD staged a rebound and closed in positive territory on Thursday. The pair, however, lost its traction after failing to stabilize above 1.0800 and was last seen trading in the red near 1.0770.

The Bank of England (BoE) announced on Thursday that it cut the bank rate by 25 basis points to 4.75%. In its policy statement, the BoE noted that it revised its forecast for the Consumer Price Index inflation in one year's time to 2.7% from 2.4% in August's projections, adding that the new budget is provisionally expected to boost inflation by just under 0.5 percentage points at peak between mid 2026 and early 2027. GBP/USD gathered bullish momentum following the BoE event and gained about 0.8% on the day. In the early European session on Friday, the pair trades in a narrow range below 1.3000.

USD/CAD edges higher toward 1.3900 after losing more than 0.5% on Thursday. Statistics Canada will release labor market data for October later in the session.

After reaching a multi-month high above 154.50 midweek, USD/JPY corrected sharply on Thursday and lost more than 1% on the day. The pair stays on the back foot early Friday and trades below 153.00.

Gold rebounded following Wednesday's sharp decline, rising nearly 1.8% on Thursday. XAU/USD, however, started to edge lower and was last seen trading below $2,700 in the European morning on Friday.

• EUR/GBP extends the decline to near 0.8310 in Friday’s early European session. 
• The negative outlook of the cross remains intact as the price holds below the 100-day EMA, with bearish RSI indicator. 
• The immediate resistance level emerges at 0.8355; the first downside target is seen at 0.8290.

The EUR/GBP cross remains on the defensive around 0.8310 on Friday during the early European trading hours. The Bank of England (BoE) cut interest rates by 25 basis points (bps) at its November meeting on Thursday, bringing the benchmark rate to 4.75%. BOE Governor Andrew Bailey said during the press conference that the central bank needs to retain a “gradual approach” to policy easing.

However, the expectation that the BoE would cut rates less aggressively than the European Central Bank (ECB) could provide some support to the Pound Sterling (GBP) and cap the upside for the cross in the near term. 

According to the 4-hour chart, the negative outlook of EUR/GBP prevails as the cross remains capped below the key 100-period Exponential Moving Averages (EMA). Furthermore, the downward momentum is reinforced by the Relative Strength Index (RSI), which is located below the midline near 35.55, indicating that the further downside cannot be ruled out. 

The first downside target for the cross emerges near the lower limit of the descending trend channel at 0.8290. A breach of this level could see a drop to 0.8230, the low of March 4, 2022. The next contention level to watch is the 0.8200 psychological level.

In the bullish case, the crucial resistance level is seen at 0.8355, representing the confluence of the upper boundary of the trend channel and the 100-period EMA. A decisive break above this level could see a rally to 0.8419, the high of November 4.  

EUR/GBP 4-hour chart

• AUD/JPY depreciates due to fears over Trump’s tariffs on Chinese goods.
• The Aussie Dollar may regain its ground due to the hawkish mood surrounding the RBA.
• Japan’s Finance Minister Katsunobu Kato said to closely monitor the impact of Trump’s policies on Japan's economy.

AUD/JPY retraces its recent gains from the previous session, trading around 101.60 during the early European hours on Friday. The Australian Dollar (AUD) lost ground due to concerns about Donald Trump’s proposals to raise tariffs on Chinese goods, given that Australia is one of the largest exporters to China.

However, the downside of the Aussie Dollar could be limited due to hawkish sentiment surrounding the Reserve Bank of Australia (RBA). RBA Governor Michele Bullock emphasized the need for restrictive monetary policy given persistent inflation risks and a strong labor market on Tuesday following the central bank’s decision to hold the Official Cash Rate (OCR) steady at 4.35%, marking its eighth consecutive pause.

The downside of the AUD/JPY cross could be attributed to some verbal intervention from Japanese authorities. Japan’s Finance Minister Katsunobu Kato stated on Friday that he will "closely monitor the impact of Trump’s policies on Japan's economy." Kato emphasized the importance of currencies moving in a stable manner that reflects economic fundamentals and affirmed that appropriate measures would be taken in response to excessive fluctuations.

Japan's real wages and household spending both declined for the second consecutive month in September, which could dampen inflation expectations and delay the Bank of Japan's (BoJ) plans for a rate hike. Combined with Japan's political landscape and prevailing risk-on sentiment, this is likely to limit gains for the safe-haven Yen.

• The USD/CAD pair finds immediate resistance at the nine-day EMA at the 1.3885 level.
• The bullish bias prevails as the 14-day RSI is positioned above 50 level.
• The immediate support appears around the 14-day EMA at the 1.3868 level.

The USD/CAD pair gains ground to near 1.3880 during the Asian trading session on Friday. On the daily chart, the analysis shows that the pair is consolidating within an ascending channel, suggesting an ongoing bullish bias.

The 14-day Relative Strength Index (RSI) is positioned above the 50 level, reinforcing the prevailing bullish sentiment. Additionally, the nine-day Exponential Moving Average (EMA) is positioned above the 14-day EMA, indicating short-term price movement upwards.

On the upside, the USD/CAD pair tests the immediate barrier at the nine-day EMA at 1.3885, followed by 1.3959, the highest level since October 2022, which was reached on November 1. A break above the latter could improve the market sentiment and support the pair to approach the upper boundary of the ascending channel at the 1.4040 level.

In terms of support, the USD/CAD pair could test immediate support around the 14-day EMA at the 1.3868 level. A break below this level could cause the weakening of the bullish bias and put downward pressure on the pair to test the lower boundary of the ascending channel at the 1.3820 level.

USD/CAD: Daily Chart

FX option expiries for Nov 8 NY cut at 10:00 Eastern Time, via DTCC, can be found below.

EUR/USD: EUR amounts

• 1.0700 971m
• 1.0750 1b
• 1.0785 1.4b
• 1.0800 1.8b
• 1.0850 859m
• 1.0885 1.4b
• 1.0900 765m
• 1.0925 1.7b
• 1.0985 943m

USD/JPY: USD amounts                     

• 151.00 935m
• 151.75 735m
• 152.00 734m
• 154.00 973m

USD/CHF: USD amounts     

• 0.8450 600m
• 0.8755 525m
• 0.8810 883m

AUD/USD: AUD amounts

• 0.6475 503m
• 0.6500 1.2b
• 0.6560 2.4b
• 0.6730 619m

USD/CAD: USD amounts       

• 1.3750 504m
• 1.3800 452m
• 1.3885 458m
• 1.3920 444m
• 1.4000 678m

NZD/USD: NZD amounts

• 0.5840 600m
• 0.6000 587m
• 0.6200 774m

EUR/GBP: EUR amounts        

• 0.8300 420m
• 0.8350 654m

• USD/CHF gains ground to near 0.8730 in Friday’s early European session. 
• The Fed cut interest rates by a quarter point at the November meeting on Thursday. 
• The safe-haven flows could underpin the Swiss Franc. 

The USD/CHF pair drifts higher to around 0.8730 during the early European session on Friday. The renewed Greenback demand provides some support to the pair. Traders brace for the advanced US Michigan Consumer Sentiment data for November and the speech from the Federal Reserve’s (Fed) Michelle Bowman later on Friday.

The US Fed on Thursday decided to cut its borrowing costs by 0.25 basis points (bps),  half the size of its September reduction, bringing down the federal funds rate to a range of 4.5% to 4.75% from its current 4.75% to 5% level. Fed Chair Jerome Powell said during the press conference that the "economy is strong overall and has made significant progress toward our goals over the past two years.”

Fed’s Powell emphasized that the Fed doesn't want to move too quickly on the interest rate nor move too slowly and do unnecessary damage to the labor market. The Fed will continue assessing data to determine the "pace and destination" of interest rates. Meanwhile, the US Dollar (USD) attracts some buyers as investors expect Trump's policies would spur economic growth and inflation and reduce the pace of interest rate cuts.

On the other hand, the uncertainty surrounding global economic growth and the ongoing geopolitical tensions in the Middle East could boost the safe-haven flows, benefiting the Swiss Franc (CHF). President-elect Donald Trump's comeback victory on Tuesday undermines diplomatic attempts to stop Israel's multifront conflicts in the near term and calls into question US long-term support for Israel’s military campaigns against Iran and its proxies.

• EUR/JPY drifts lower for the second successive day and slides back below the 200-day SMA.
• Intervention fears offer some support to the JPY and exert downward pressure on the cross. 
• Bets for less aggressive ECB rate cuts could limit losses for the shared currency and spot prices.

The EUR/JPY cross remains under some selling pressure for the second successive day and drops to a two-week low, around mid-164.00s during the Asian session on Friday. The downfall is sponsored by a combination of factors and drags spot prices back below a technically significant 200-day Simple Moving Average (SMA).

The Japanese Yen (JPY) continues to draw support from speculations about a possible government intervention to prop up the domestic currency, which, in turn, is seen weighing on the EUR/JPY cross. In fact, Japan's Chief Cabinet Secretary, Yoshimasa Hayashi reiterated earlier this week that the government intended to closely watch moves in the FX market with a higher sense of urgency. Separately, Japan’s Vice Finance Minister for International Affairs and top FX official Atsushi Mimura said that the government is ready to take appropriate actions against excessive FX moves if necessary. 

Adding to this, Japan’s Finance Minister Katsunobu Kato said this Friday that the government will closely monitor the impact of President-elect Donald Trump's policies on the domestic economy. Furthermore, quarterly data from the Ministry of Finance (MOF) showed that Japan spent ¥5.53 trillion on currency intervention made during the period from June 27 through July 29. Meanwhile, a modest US Dollar (USD) strength prompts some selling around the shared currency, which, in turn, is seen contributing to the offered tone surrounding the EUR/JPY cross and the intraday slide. 

That said, a generally positive risk tone, along with doubts over the Bank of Japan's ability to tighten monetary policy further, could cap gains for the safe-haven JPY and limit losses for the currency pair. Donald Trump’s victory in the US presidential election fueled optimism about stronger economic growth. Adding to this, hopes for additional stimulus from China continues to boost investors' confidence and remain supportive of the upbeat mood. Investors, meanwhile, seem convinced that Japan's political landscape could make it difficult for the BoJ to hike interest rates this year.

Furthermore, data released on Thursday showed Japan’s real wages and household spending declined for the second straight month in September. This could dampen the inflation outlook and delay the BoJ's rate-hike plans. Adding to this, bets for a less dovish European Central Bank (ECB) might hold back traders from placing aggressive bearish bets around the Euro and offer some support to the EUR/JPY cross. This makes it prudent to wait for some follow-through selling before confirming that spot prices have topped out in the near term and positioning for deeper losses.

• Silver price loses ground as higher US Treasury yields increase the opportunity cost of holding precious metals.
• The demand for dollar-denominated Silver struggles due to the improved US Dollar.
• Non-interest-bearing Silver received support on Thursday after the Fed announced a 25 basis point rate cut.

Silver price (XAG/USD) loses ground to near $31.70 per troy ounce during the Asian hours on Friday. A modest rise in US Treasury yields is adding downward pressure on non-yielding assets like Silver, as higher yields increase the opportunity cost of holding precious metals. At the time of writing, the 2-year and 10-year US Treasury bond yields stand at 4.20% and 4.33%, respectively.

Additionally, the demand for dollar-denominated Silver struggles, as a stronger US Dollar (USD) makes the precious metal more expensive for buyers using foreign currencies. The US Dollar Index (DXY), which measures the value of the US Dollar against the other six major currencies, advances to near 104.50 at the time of writing.

Traders expect potential stimulus measures from China as the National People’s Congress Standing Committee concluded its five-day meeting. Earlier this week, media reports suggested that the potential stimulus package could exceed 10 trillion yuan. As one of the world’s largest manufacturing hubs for electronics, solar panels, and automotive components, China may have increased demand for Silver.

However, prices of the non-interest-bearing Silver gained ground following the Federal Reserve's recent rate cut. The Federal Open Market Committee (FOMC) lowered its benchmark overnight borrowing rate by 25 basis points (bps) to a target range of 4.50%-4.75% at its November meeting on Thursday.

Moreover, Federal Reserve Chair Jerome Powell indicated that the central bank is proceeding with interest rate cuts, given the ongoing tightness of monetary policy. Investors are now anticipating the release of the preliminary US Michigan Consumer Sentiment, which is expected later on Friday.

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

The price for Gold stood at 7,313.17 Indian Rupees (INR) per gram, down compared with the INR 7,336.01 it cost on Thursday.

The price for Gold decreased to INR 85,299.38 per tola from INR 85,565.77 per tola a day earlier.

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

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

• EUR/USD depreciates to around 1.0780 in Friday’s Asian session, down 0.20% on the day. 
• Future Fed policy decisions are still data-dependent after a 25 bps rate cut on Thursday. 
• Trump’s proposals to raise tariffs and rising bets on ECB rate cuts exert some selling pressure on the Euro. 

The EUR/USD pair plunges to near 1.0780 amid the renewed US Dollar (USD) demand on Friday during the Asian trading hours. Also, Donald Trump’s proposals to raise tariffs weigh on the Euro (EUR) against the Greenback. Traders await the advanced US Michigan Consumer Sentiment data for November for fresh impetus, along with the speech from the Federal Reserve (Fed) Michelle Bowman on Friday. 

As widely expected, the US Fed cut its key interest rate by 25 basis points (bps) at its November meeting on Thursday. The US central bank does not want to see any further weakening of the labor market and continues to expect that inflation will sustainably decline to the Fed's 2% target. Therefore, the Fed is expected to lower interest rates further at the next few meetings, but the timing remains uncertain as the Fed will continue assessing data to determine the "pace and destination" of interest rates.

Trump has vowed a 10% tariff on imports from all countries, exerting some selling pressure on the Euro as the European Union has the second-largest trade deficit with the United States globally and is the largest exporter to the US, per JPMorgan. 

Furthermore, the European Central Bank (ECB) is seen cutting rates at a faster pace than the Fed. This, in turn, could drag the shared currency lower against the Greenback. The ECB has already reduced rates three times this year as inflation risks in the Eurozone ease faster than expected. The rising expectation of another rate reduction continues to undermine the EUR in the near term. 

• GBP/USD edges lower on Friday amid the emergence of some USD dip-buying.
• The BoE’s hawkish tilt could underpin the GBP and limit losses for the major.
• The technical setup favors bears and supports prospects for a further downfall.

The GBP/USD pair struggles to build on the previous day's positive move and faces rejection near the 100-day Simple Moving Average (SMA) during the Asian session on Friday. Spot prices currently trade around the 1.2965-1.2960 region, down 0.15% for the day amid a modest US Dollar (USD) uptick, though the downside seems limited on the back of the Bank of England's (BoE) hawkish stance.

In fact, the BoE warned that the expansive Autumn Budget introduced by Chancellor Rachel Reeves is expected to fuel inflation, suggesting that it adopt a cautious stance toward rate cuts in 2025. In contrast, the Federal Reserve (Fed) Chair Jerome Powell failed to offer any cues that the central bank was likely to pause rate cuts in the near term. This leads to a further decline in the US Treasury bond yields and might hold back the USD bulls from placing aggressive bets, which, in turn, should offer support to the GBP/USD pair. 

From a technical perspective, the range-bound price action witnessed over the past three weeks or so could be categorized as a bearish consolidation phase against the backdrop of the recent pullback from the highest level since February 2022. Moreover, failure to build on this week's recovery from a nearly three-month low, around the 1.2835 region, suggests that the path of least resistance for the GBP/USD pair is to the downside. The outlook is reinforced by the fact that oscillators on the daily chart are holding in negative territory.

That said, it will still be prudent to wait for a sustained break and acceptance below the 1.2900 mark before positioning for a fallback towards the 200-day SMA, currently pegged near the 1.2815 region. This is followed by the 1.2800 round figure, which if broken should pave the way for a further near-term depreciating move and drag the GBP/USD pair to the 1.2765 intermediate support en route to the 1.2700 mark. The downward trajectory could extend further towards the August monthly swing low, around the 1.2665 area.

On the flip side, bulls need to wait for a move beyond the 100-day SMA and the 1.3000 psychological mark before positioning for any meaningful appreciating move. The GBP/USD pair might then climb to the 1.3070 supply zone and then aim to reclaim the 1.3100 mark. Some follow-through buying will suggest that a one-month-old corrective decline has run its course and shift the near-term bias back in favor of bullish traders.

GBP/USD daily chart

• NZD/USD receives downward pressure due to the threat of Donald Trump’s tariffs on Chinese goods.
• The NZD may appreciate as traders expect more stimulus measures from China as the NPC Standing Committee concluded its meeting.
• Fed Chair Jerome Powell emphasized that the central bank will continue evaluating economic data to guide future rate decisions.

NZD/USD depreciates as the New Zealand Dollar (NZD) receives downward pressure from the concerns about Donald Trump’s proposals to raise tariffs on Chinese goods, given that New Zealand is a close trading partner to China. The NZD/USD pair trades around 0.6010 during the Asian session on Friday.

However, investors are hopeful about potential stimulus measures from China as the National People’s Congress Standing Committee concluded its five-day meeting. Any positive change in the Chinese economy could positively impact the New Zealand markets.

The slight improvement in the US Treasury yields provides support for the Greenback. The US Dollar Index (DXY), which measures the value of the US Dollar against the other six major currencies, improves to near 104.50 with 2-year and 10-year yields on US Treasury bonds standing at 4.20% and 4.33%, respectively, at the time of writing.

The NZD/USD pair rose by over 1% on Thursday after the Federal Reserve announced a 25 basis point cut to its benchmark overnight rate, setting a new target range of 4.50%-4.75% at its November meeting.

Federal Reserve Chair Jerome Powell highlighted that the US central bank will continue to monitor economic data to guide the "pace and destination" of future rate adjustments, noting that inflation is gradually easing toward the Fed’s 2% target. Investors are now focused on the upcoming preliminary US Michigan Consumer Sentiment report, due on Friday.

• Gold price met with a fresh supply and eroded a part of the overnight recovery gains.
• The Trump trade optimism revives the USD demand and weighs on the precious metal.
• Retreating US bond yields and bets for additional Fed rate cuts could help limit losses.

Gold price (XAU/USD) struggles to capitalize on the previous day's solid rebound from the 50-day Simple Moving Average (SMA) support near the $2,643 area, or over a three-week low and attracts some sellers during the Asian session on Friday. The US Dollar (USD) regains positive traction and reverses a part of the previous day's retracement slide from a four-month peak. This, along with a generally positive risk tone, turns out to be a key factor undermining the safe-haven precious metal. 

Meanwhile, the unwinding of the so-called Trump trade and the lack of hawkish signals from the Federal Reserve (Fed) keep the US Treasury bond yields depressed below a multi-month high touched on Wednesday. This, in turn, might hold back the USD bulls from placing aggressive bets and act as a tailwind for the non-yielding Gold price. Traders now look forward to the release of the Preliminary Michigan Consumer Sentiment Index and Inflation Expectations for short-term opportunities. 

Gold price drifts lower amid renewed USD buying and a positive risk tone

• Traders closed out some profitable Trump trades, which triggered a US Dollar corrective decline from a four-month high and provided a goodish lift to the Gold price on Thursday.
• The USD decline remained uninterrupted after the Federal Reserve decided to lower its benchmark overnight borrowing rate by a 25 basis point, to a target range of 4.50%-4.75%. 
• In the accompanying policy statement, Fed officials justified the easing mode as they view supporting employment becoming at least as much of a priority as arresting inflation.
• Furthermore, Fed Chair Jerome Powell, during the post-meeting press conference, failed to offer cues that the central bank may pause rate cuts in the near term amid sticky inflation. 
• According to the CME Group's FedWatch Tool, traders are pricing in 75% odds the Fed will cut rates again in December, leading to a further decline in the US Treasury bond yields.
• Donald Trump's presidential election victory fueled speculations about economic policy shifts that could increase deficits and inflation, and restrict the Fed's ability to cut rates.
• Meanwhile, hopes for an announcement of additional stimulus from China after a five-day meeting of the Standing Committee of the NPC remains supportive of the upbeat mood.

Technical Outlook: Gold price needs to move beyond the 61.8% Fibo. level for bulls to regain control

From a technical perspective, the recovery momentum falters ahead of a resistance marked by the 50% Fibonacci retracement level of the recent slide from the all-time peak. The said barrier is pegged near the $2,718 region, above which the Gold price could climb to the $2,734 area (61.8% Fibo. level). Some follow-through buying will suggest that the corrective pullback has run its course and lift the XAU/USD beyond the $2,750 static resistance en route to the $2,758-2,790 zone, or the record high touched on October 31.

On the flip side, the $2,672 region now seems to protect the immediate downside ahead of the $2,660 zone and the overnight swing low, around the $2,643 area, or the 50-day SMA support. A convincing break below the latter will be seen as a fresh trigger for bearish traders. Given that oscillators on the daily chart have been losing positive traction, the Gold price might then accelerate the fall toward the October monthly swing low, around the $2,605-2,602 region.

Japan’s Finance Minister Katsunobu Kato on Friday that he “will closely monitor the impact of Trump's policies on Japan's economy.”

Additional quotes

Market reaction

USD/JPY is back under 153.00 following these above comments, losing 0.08% on the day.

• WTI price positions for a weekly gain of more than 3% after the Fed’s rate cut.
• Markets expect the incoming Trump administration to tighten sanctions on Iran and Venezuela, potentially reducing the Oil supply.
• Crude supply disruptions continue as Oil production in the US Gulf of Mexico remains shut down due to Hurricane Rafael.

West Texas Intermediate (WTI) Oil price steadies around $71.50 per barrel during the Asian session on Friday, positioning for a weekly gain of over 3%. This rise in crude Oil prices may be attributed to investors assessing the potential impact of the Federal Reserve's recent rate cut and the upcoming policies of the Donald Trump administration on Oil supply dynamics.

The Federal Open Market Committee (FOMC) lowered its benchmark overnight borrowing rate by 25 basis points (bps) to a target range of 4.50%-4.75% at its November meeting on Thursday. Lower Oil prices would support the economic activities in the United States (US), the largest Oil consumer, and may positively impact the Oil demand.

Federal Reserve Chair Jerome Powell indicated that the central bank is proceeding with interest rate cuts, given the ongoing tightness of monetary policy. Powell emphasized that the Fed will continue to assess economic data to decide on the "pace and destination" of future rate changes, highlighting that inflation has been gradually slowing toward the Fed's 2% target.

According to a Reuters report, Andrew Lipow, President of Lipow Oil Associates, noted that Oil prices have been buoyed by expectations that the incoming Trump administration may tighten sanctions on Iran and Venezuela, potentially reducing Oil supply. "The market is now looking into what Donald Trump's policies might be, and it's reacting to that prospect," Lipow stated.

In addition, supply disruptions continue in the US Gulf of Mexico due to Hurricane Rafael, which has led operators to scale back Oil and gas production. The US Bureau of Safety and Environmental Enforcement reported on Thursday that over 22% of crude Oil production and 9% of natural gas output in the region were shut down in response to the hurricane.

On the other hand, Oil prices may face downward pressure from data indicating that China’s crude Oil imports dropped 9% in October, marking the sixth consecutive month of year-on-year decline. However, investors are hopeful about potential stimulus measures from China as the National People’s Congress Standing Committee concluded its five-day meeting. Since China is the world’s largest Oil importer, any favorable policies could help boost demand for crude.

• The Indian Rupee trends lower in Friday’s Asian session. 
• The Indian equity selloff and the rise in crude oil prices continue to undermine the INR. 
• The advanced US November Michigan Consumer Sentiment data and Fed Bowman’s speech will be the highlights on Friday.

The Indian Rupee (INR) weakens on Friday. The local currency depreciated to record lows again in the previous session amid weak domestic equities and sustained foreign fund outflows. Additionally, the rise in crude oil prices also weighed on the INR.

Donald Trump is expected to boost the US Dollar (USD) and push US yields higher, driven by anticipated populist measures that could increase borrowing, inflation, and yields. This, in turn, might contribute to the INR’s downside. However, the downward movement of the local currency might be limited as the Reserve Bank of India (RBI) is likely to intervene in the market by selling the USD to avoid excess volatility. 

Looking ahead, traders will keep an eye on the advanced US Michigan Consumer Sentiment data for November. Also, the Federal Reserve’s (Fed) Michelle Bowman is scheduled to speak later on Friday.

Daily Digest Market Movers: Indian Rupee remains sensitive to global factors

• Foreign investors have pulled out more than $1.5 billion from local stocks so far in November, adding to $11 billion of outflows in the previous month.
• India appears to be in a comparatively stronger position than many of its Asian peers, owing to its lower dependency on trade with China, according to a report by Emkay.
• The Federal Open Market Committee (FOMC) lowered its benchmark overnight borrowing rate by 25 basis points (bps) to a target range of 4.50%-4.75% at its November meeting on Thursday. 
• Fed Chair Jerome Powell said the US central bank is pursuing interest rate cuts, while monetary policy remains tight. Powell further stated that the Fed will continue assessing data to determine the "pace and destination" of interest rates as inflation has slowed nearing the Fed’s 2% target.
• According to the CME FedWatch Tool, the possibility of a quarter-point December rate reduction rose to more than 68% following the Fed meeting, while the odds of a pause declined to nearly 32%. 
• The US Initial Jobless Claims for the week ending October 25 increased to 221K, the US Department of Labor (DoL) showed Thursday. This figure matched initial estimates and was higher than the previous reading of 218K (revised from 216K).

Technical Analysis: USD/INR’s broader trends remain constructive

The Indian Rupee trades softer on the day. According to the daily chart, the USD/INR pair remains in a bullish trend as the price holds above the key 100-day Exponential Moving Average (EMA). Nonetheless, the 14-day Relative Strength Index (RSI) is over the midline near 75.0, suggesting an overbought condition. This means that additional consolidation should not be ruled out before positioning for any short-term USD/INR appreciation.

A move above the upper boundary of the ascending trend channel at 84.30 could pave the way for the next hurdle at 84.50, followed by the 85.00 psychological level.

On the other hand, a breach of the lower limit of the trend channel and the high of October 11 at the 84.05-84.10 region could draw in selling pressure to 83.82, the 100-day EMA. Further south, the next contention level is seen at 83.46, the low of September 24. 

• The Japanese Yen struggles to capitalize on Thursday’s recovery from a multi-month trough.
• The BoJ rate-hike uncertainty and the risk-on mood seem to undermine the safe-haven JPY.
• A modest USD uptick offers support to USD/JPY, though intervention fears cap the upside. 

The Japanese Yen (JPY) edges lower against its American counterpart during the Asian session on Friday and stalls the previous day's recovery move from the lowest level since July 30. Data released on Thursday showed Japan’s real wages declined in September, which, along with cost-of-living woes, continue to adversely affect household spending and could dampen the inflation outlook. This is expected to delay the Bank of Japan's (BoJ) plans for additional rate hikes amid the domestic political uncertainty and is seen undermining the JPY. 

Apart from this, a generally positive risk tone undermines the safe-haven JPY, which, along with the emergence of US Dollar (USD) dip-buying, offers support to the USD/JPY pair. That said, the recent bout of JPY weakness has prompted some verbal intervention from Japanese authorities. Moreover, the unwinding of the Trump trade and the lack of any hawkish signals from the Federal Reserve (Fed) act as a headwind for the US Treasury bond yields. This might hold back the JPY bears from placing aggressive bets and cap the currency pair. 

Japanese Yen is weighed down by diminishing odds for another BoJ rate hike in 2024

• Government data released this Friday showed that Japan's household spending fell for the second successive month, by 1.3% in September and 1.1% from the year earlier. 
• This comes on top of a fall in Japan's inflation-adjusted wages for the second straight month in September and could hinder the Bank of Japan's plans to hike rates further.
• Donald Trump’s victory in the US presidential election pushed the USD/JPY pair beyond the 154.00 mark on Wednesday and prompted verbal intervention by authorities.
• Japan's Chief Cabinet Secretary, Yoshimasa Hayashi, reiterated that the government intended to closely watch moves in the FX market with a higher sense of urgency.
• Japan’s Vice Finance Minister for International Affairs and top FX official Atsushi Mimura said that the government is ready to take appropriate actions against excessive FX moves.
• Quarterly data from the Ministry of Finance (MOF) showed this Friday that Japan spent ¥5.53 trillion on currency intervention made during the period from June 27 through July 29.
• The US Dollar attracts some dip-buying on Friday to reverse a part of Thursday's pullback from a four-month top and offer some support to the USD/JPY pair. 
• The Federal Reserve lowered borrowing costs by 25 basis points on Thursday, following a jumbo rate cut in September that kicked off the policy easing cycle.
• In the post-meeting press conference, Fed Chair Jerome Powell failed to offer any cues that the central bank was likely to pause rate cuts in the near term.
• According to the CME Group's FedWatch Tool, market participants are now pricing in 75% odds the US central bank will cut interest rates again in December.
• Furthermore, traders continue to unwind some of the profitable Trump trades, which might cap any meaningful upside for the USD and the currency pair. 

Technical Outlook: USD/JPY needs to move back above 153.50 for bulls to retain control

From a technical perspective, the overnight downfall stalled near the 152.70-152.65 horizontal support. The said area might now act as a pivotal point, below which the USD/JPY pair could accelerate the corrective decline towards the 152.00 mark en route to the 100-day Simple Moving Average (SMA), around the 151.70-151.65 region. Some follow-through selling will suggest that the recent strong move up from the September monthly swing low has run out of steam and paves the way for deeper losses.

On the flip side, the 153.50 area could act as an immediate hurdle ahead of the 153.85-153.90 supply zone. A subsequent move back above the 154.00 mark has the potential to lift the USD/JPY pair back towards the multi-month peak, around the 154.70 region touched on Thursday. The momentum could extend further toward the 155.00 psychological mark and the 155.20 zone (July 30 swing high).

• The Australian Dollar depreciates as traders adopt caution due to concerns over Donald Trump’s proposals to raise tariffs.
• The AUD/USD pair appreciated more than 1% on Thursday, as the Fed announced a 25 basis point rate cut.
• Fed Chair Jerome Powell emphasized that the central bank will continue to assess economic data to decide future rate changes.

The Australian Dollar (AUD) edges lower against the US Dollar (USD) on Friday. The downside risks for the AUD/USD pair seem possible as the US Dollar (USD) may receive support from the concerns about Donald Trump’s proposals to raise tariffs.

However, the AUD/USD pair appreciated more than 1% as the US Dollar (USD) faced challenges following the Federal Reserve's interest rate decision in the previous session. Additionally, the Aussie Dollar received support from China's trade balance, which was better than expected and released on Thursday.

The Federal Open Market Committee (FOMC) lowered its benchmark overnight borrowing rate by 25 basis points (bps) to a target range of 4.50%-4.75% at its November meeting on Thursday. Investors are now anticipating the release of the preliminary US Michigan Consumer Sentiment, which is expected later on Friday.

Federal Reserve Chair Jerome Powell indicated that the central bank is proceeding with interest rate cuts, given the ongoing tightness of monetary policy. Powell emphasized that the Fed will continue to assess economic data to decide on the "pace and destination" of future rate changes, highlighting that inflation has been gradually slowing toward the Fed's 2% target.

Daily Digest Market Movers: Australian Dollar depreciates amid Trump’s tariff threats

• US Initial Jobless Claims rose to 221,000 for the week ending November 1, according to a Thursday report from the US Department of Labor (DoL). This figure aligned with initial estimates and was up from the previous week’s revised total of 218,000 (originally reported as 216,000).
• China’s trade surplus expanded in October, reaching $95.27 billion year-over-year, surpassing the expected $75.1 billion and the previous $81.71 billion. Exports rose by 12.7% YoY, well above the anticipated 5.0% increase and the previous 2.4% growth. Meanwhile, annual imports fell by 2.3%, exceeding the expected 1.5% decline and contrasting with the previous 0.3% increase.
• Australia’s trade surplus fell to 4,609 million in September, down from an expected 5,300 million and August’s figure of 5,284 million, as reported by the Australian Bureau of Statistics on Thursday. Exports fell by 4.3% in September from the 0.2% decline seen a month earlier. Meanwhile, Imports fell by 3.1% MoM in September, compared to a decrease of 0.2% seen in August.
• The US ISM Services Purchasing Managers' Index increased to 56.0 in October, up from 54.9 in September, exceeding the forecast of 53.8. In contrast, the S&P Global Services PMI registered at 55.0 in October, slightly below the prior reading and the expected 55.3.
• The Reserve Bank of Australia (RBA) decided to hold the Official Cash Rate (OCR) steady at 4.35% on Tuesday, marking its eighth consecutive pause. RBA Governor Michele Bullock reiterated a hawkish stance, emphasizing the need for restrictive monetary policy given persistent inflation risks and a strong labor market.
• Australia's Judo Bank Services PMI improved to 51.0 in October from 50.6 in the previous reading, above the market consensus of 50.6. The Composite PMI climbed to 50.2 in October versus 49.8 prior. Caixin China Services PMI also rose to 52.0 in October from 50.3 in September.
• The TD-MI Inflation Gauge rose by 0.3% month-over-month in October, up from a 0.1% increase in the prior month, marking the highest reading since July and ahead of the RBA's November policy meeting. Annually, the gauge climbed by 3.0%, compared to the previous 2.6% reading.
• China’s Commerce Minister Wang Wentao met with Australia’s Trade Minister Don Farrell on Sunday. China expressed hopes that Australia will continue enhancing its business environment and ensure fair and equitable treatment for Chinese companies.

Technical Analysis: Australian Dollar trades above 0.6650, 14-day EMA

The AUD/USD pair trades near 0.6660 on Friday, showing a shift from bearish to bullish momentum on the daily chart. The pair has moved above the nine- and 14-day Exponential Moving Averages (EMAs), signaling short-term upward momentum. Furthermore, the 14-day Relative Strength Index (RSI) has crossed above the 50 mark, suggesting an ongoing bullish sentiment.

On the upside, the AUD/USD pair may explore the region around the psychological level of 0.6700.

Regarding the support, the AUD/USD pair may test the 14-day EMA of 0.6630, aligned with the nine-day EMA of 0.6624. A break below the latter could lead the pair to navigate the area around its three-month low at 0.6512, followed by key psychological support at 0.6500.

AUD/USD: Daily Chart

On Friday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.1433, as compared to the previous day's fix of 7.1659 and 7.1452 Reuters estimates.

• GBP/USD loses ground to near 1.2975 in Friday’s Asian session. 
• The Fed cuts interest rates by a quarter point at the November meeting, as widely expected. 
• The BOE decided to cut the benchmark rate to 4.75% at its November meeting on Thursday.

The GBP/USD pair edges lower to around 1.2975 during the Asian trading hours on Friday. The Pound Sterling weakens after the Bank of England (BoE) reduced its interest rates by 25 basis points (bps) on Thursday. Traders will take more cues from the advanced US Michigan Consumer Sentiment data and the Federal Reserve’s (Fed) Michelle Bowman’s speech later on Friday.

After a jumbo half percentage point reduction in September, the Federal Open Market Committee (FOMC) lowered its benchmark overnight borrowing rate by a quarter percentage point to a target range of 4.50%-4.75% at its November meeting on Thursday. Fed officials have justified the easing mode for policy as they view supporting employment as becoming at least as much of a priority as arresting inflation.

Expectations for a December interest rate cut remained strong after the Fed cut its rates in November. The chance of a quarter-point December rate cut rose to more than 68% following the Fed meeting, while the odds of a pause dropped to nearly 32%, according to the CME FedWatch Tool.

On Thursday, the Bank of England (BoE) cut interest rates by 25 bps while raising its inflation forecast. This comes after Labour's released UK budget, which casts doubt on future policy easing. The UK central bank has trimmed the interest rate for the second time this year after it began its easing cycle in August. BOE Governor Andrew Bailey said during the press conference that the central bank needs to retain a “gradual approach” to policy easing.

• NZD/USD softens to around 0.6020 in Friday’s early Asian session. 
• The 25 basis points (bps) rate cut by the Fed on Thursday was widely expected.
• Donald Trump’s proposals to raise tariffs could drag the Kiwi lower against the USD. 

The NZD/USD pair trades with a mild negative bias near 0.6020 during the early Asian session on Friday. The concerns about Donald Trump’s proposals to raise tariffs might cap the upside for the Kiwi in the near term. Investors await the release of advanced US Michigan Consumer Sentiment, which is due later on Friday. The Federal Reserve’s (Fed) Michelle Bowman is also set to speak. 

The US central bank trimmed interest rates by a quarter point, bringing the target rate range to 4.50%-4.75%. The Fed hints that another interest rate cut is likely coming, but the timing remains uncertain. The markets are now pricing in nearly 75% possibility the Fed will cut rates again in December, up from 69% on Wednesday, according to the CME Group's Fed Watch Tool.

On the Kiwi front, traders speculate Trump will reset trade relations with China, headlining a 60% import tariff on all Chinese goods, which undermines the China-proxy New Zealand Dollar (NZD) against the Greenback as China is a major trading partner to New Zealand. 

Additionally, the rising bets of an aggressive rate-cut cycle by the Reserve Bank of New Zealand (RBNZ) might contribute to the NZD’s downside for the time being. The RBNZ is expected to cut the official cash rate (OCR) by 50 bps in the November meeting, with a supersize 75 bps cut an outside possibility.