Forex-novosti i prognoze od 09-12-2024

• GBP/USD struggled to make headway in either direction on Monday.
• Traders are taking a breather before key US inflation data.
• UK economic data is thinly-represented on the economic calendar this week.

GBP/USD paddled in a tight circle near 1.2750 on Monday, kicking off a new trading week by sticking close to where it ended the previous one. Key US Consumer Price Index (CPI) inflation data is due during the midweek market session. Pound Sterling traders can expect to fall on the mercy of broad-market sentiment with a crimped economic calendar on the UK side.

Monday was a low-key affair overall for Cable traders. Bank of England (BoE) Deputy Governor and head of Markets and Banking Sir Dave Ramsden noted early Monday that the BoE must remain “vigilant” in the face of increased uncertainty regarding the UK’s economic outlook. The BoE Deputy Governor’s word fell on mostly uninterested ears.

The Federal Reserve (Fed) Bank of New York released its latest summary of consumer survey results during Monday’s American market session, noting that US consumers are riding a tricky line with their economic expectations. According to the NY Fed, US consumers expect a suddenly-improved financial situation for themselves and the federal government, with respondents reporting a sea change in their expectations to afford debt and credit conditions following the re-election of former US President Donald Trump. The same pool of respondents also sharply reduced their expectations for future government borrowing levels.

Further complicating the matter for US consumers, the NY Fed’s survey revealed that the same body of surveyed consumers also raised their expectations of future inflation again, with the average respondent expecting inflation to reaccelerate to 3.0% by next November. 

US session traders will be looking ahead to a fresh print of US Consumer Price Index (CPI) inflation slated for Wednesday, with a thin docket on the offering for the early week. US CPI inflation is expected to tick up again on an annualized basis in November. Median market forecasts expect Wednesday’s US CPI inflation to rise to 2.7% YoY compared to October’s 2.6%.

GBP/USD price forecast

The GBP/USD daily chart showcases a bearish bias in the medium term, with the pair trading below both its 50-day EMA at 1.2831 and 200-day EMA at 1.2827. After a sharp sell-off in early November, the pair found support near the 1.2550 region, marking a key low. Since then, a corrective rally has taken place, but upside momentum has been capped near the 1.2750–1.2800 area, which coincides with previous support-turned-resistance levels and the approaching 50-day EMA.

The most recent candle highlights indecision, as the pair attempted to climb higher but closed slightly above the previous day’s close at 1.2749, reflecting only marginal bullish strength. The upper wick on the candle suggests selling pressure remains present near the 1.2800 resistance zone. A sustained break above this area could signal further recovery, with potential targets at the 1.2900 psychological level. On the downside, failure to maintain levels above 1.2700 could reexpose the pair to downside risks, with initial support at 1.2600 and then at the recent swing low of 1.2550.

The MACD indicator shows early signs of bullish divergence, as the MACD line continues to edge higher, moving closer to the signal line. While this indicates fading bearish momentum, it is insufficient to confirm a reversal unless GBP/USD clears the key resistance near the 50-day EMA. Traders should monitor price action closely, as a rejection from current levels could reinforce the broader downtrend, while a breakout above 1.2830 would improve the pair’s near-term technical outlook.

GBP/USD daily chart

• USD/CAD trades in positive territory for the third consecutive day around 1.4170 in Tuesday’s early Asian session. 
• The Fed is likely to cut rates next week, but the outlook is to tilt hawkish, supporting the USD. 
• The BoC is expected to cut its overnight rate by 50 bps on Wednesday.

The USD/CAD pair extends its upside to near 1.4170 on the firmer US Dollar (USD) and higher US yields during the early Asian session on Tuesday. The US NFIB Business Optimism Index and Unit Labor Costs are due later on Tuesday. 

Friday's US November employment data showed the labor market is cooling but not so robust as to rule out a rate cut from the Federal Reserve (Fed) next week. The US central bank started its interest rate easing cycle with a jumbo 50 basis points (bps) cut in September, followed by a 25 bps cut in November. Traders are now pricing in nearly an 88% chance of Fed rate reductions by a quarter of a percentage point on December 18, according to the CME FedWatch Tool.

"The Fed should be in a position to move forward on the December rate cut, but CPI report now becomes another significant milestone in the policy-adjustment calculus," noted Rick Rieder, BlackRock chief investment officer of global fixed income.

Despite the rising bets for a Fed rate cut in December, market players remain focused on the cautious stance of the Fed officials, which might lift the Greenback against the Canadian Dollar (CAD). San Francisco Fed President Mary Daly noted on Friday that the US central bank will still step in with additional rate hikes if price growth begins to spiral once again.

On the Loonie front, the Bank of Canada (BoC) interest rate will be closely watched. The BoC is anticipated to deliver a 50 bps reduction on Wednesday after the same move in October, bringing the benchmark rate to 3.25%. Nonetheless, the recovery in crude oil prices might help limit the CAD’s losses, as Canada is the largest oil exporter to the United States (US), and higher crude oil prices tend to have a positive impact on the CAD value.

• The Reserve Bank of Australia is expected to hold the interest rate at 4.35% in December.
• Australian central bank Governor Michele Bullock’s comments will be closely scrutinized to gauge when could the RBA trim its benchmark rate.
• The volatility around the Australian Dollar is set to ramp up on the RBA policy announcements.

The Reserve Bank of Australia (RBA) is unlikely to alter its stance on the monetary policy for the ninth meeting in a row on Tuesday.

The RBA is expected to hold the Official Cash Rate (OCR) steady at 4.35% following its final policy meeting this year. The decision will be announced at 03:30 GMT and Governor Michele Bullock’s press conference will follow at 04:30 GMT.

Focus on RBA Governor Bullock’s outlook on interest rate 

The RBA remains an outlier among many other central banks from developed markets that already embarked on the easing trajectory. Elevated core and services inflation and relatively tight labor market conditions in Australia are the primary reasons behind the bank’s cautious stance.

The Australian Unemployment Rate remained at 4.1% in October for the third consecutive month. The economy added 9,700 full-time jobs and 6,200 part-time roles, making a net change of 15,900 positions. The RBA’s closely-watched inflation gauge, the annual Trimmed Mean Consumer Price Index (CPI), slowed to 3.5% from 4.0% in the third quarter but stayed well above the Bank’s 2%-3% target.

RBA Governor Michele Bullock said late last month that “given the tightness in Australia’s labor market, along with our assessment that the level of demand still exceeds supply in the broader economy, we expect it will take a little longer for inflation to settle at target.”

She further noted that Australia’s core inflation is “too high” to consider interest rate cuts in the near term. 

However, Australia's economy in the third quarter grew at the slowest annual pace since the pandemic. The OZ nation’s Gross Domestic Product (GDP) rose 0.3% in the September quarter, missing market forecasts of 0.4%. The surprisingly weak growth numbers undermined the RBA’s forecast for a 1.5% growth by the end of the year.

Weaker-than-expected GDP growth made markets almost fully price in a rate cut next April at 96% (from 73% before) and saw 35 basis points (bps) easing for May (from 28 bps before), according to Refinitive interest rate probabilities data.

Therefore, the policy statement and Governor Bullock’s comments will be key to determining the RBA’s outlook on rates heading into the new year.

Previewing the RBA policy decision, TD Securities (TDS) analysts said: “Q3 GDP underwhelmed, but it's unlikely to influence the RBA's monetary policy outlook. Unless there are sharp job losses and the unemployment rate rises to 4.5% in short order, the absolute earliest the Bank could cut is in May. We are calling August.”

How will the Reserve Bank of Australia decision impact AUD/USD?

RBA Governor Michele Bullock is widely expected to repeat that “the Board is not ruling anything in or out” and “think there are still risks on the upside for inflation.” The Bank’s wait-and-see approach will likely provide the much-needed respite to the Australian Dollar (AUD), lifting the AUD/USD pair from four-month troughs below 0.6400.

If Bullock expresses concerns about the slowing economy while noting that the Board discussed rate cuts as an option at the meeting, the Aussie is expected to face intense selling pressure, revisiting levels last unseen since October 2023.

Dhwani Mehta, Asian Session Lead Analyst at FXStreet, notes key technicals for trading AUD/USD on the policy announcements.

“After charting a 50-day Simple Moving Average (SMA) and 200-day SMA Death Cross on December 4, AUD/USD remains exposed to downside risks in the run-up to the RBA showdown. The 14-day Relative Strength Index (RSI) remains way below the 50 level, currently near 40, adding credence to bearish potential.” 

“A dovish surprise from the Bank could fuel a fresh AUD/USD decline toward the August 5 low of 0.6348, below which the 0.6300 level will come into play. The next downside target aligns at the October 2023 low of 0.6270. Alternatively, buyers need acceptance above the 21-day SMA at 0.6484 to initiate a meaningful recovery. Further up, the November 25 high of 0.6550 will be tested before encountering major daily SMAs near the 0.6620 region,” Dhwani adds.

• NZD/JPY rises by 1.39% on Monday, settling at 88.65 after approaching oversold levels.
• Indicators rebound from oversold conditions but remain in negative territory.
• Bears maintain control below key resistance levels, despite the pair's recovery.

The NZD/JPY pair staged a recovery on Monday, climbing by 1.39% to 88.65 as buyers emerged near oversold levels. This rebound comes after a steep decline last week, offering some relief to the bulls while keeping the broader bearish outlook intact.

Technical indicators reflect the ongoing battle between buyers and sellers. The Relative Strength Index (RSI) has risen sharply to 43, signaling improving momentum but remaining in the negative area, suggesting caution. Similarly, the Moving Average Convergence Divergence (MACD) histogram has shifted to flat green bars, indicating a temporary pause in bearish momentum while still reflecting underlying selling pressure.

For the recovery to gain traction, the pair must reclaim the 89.00 resistance level, which would open the door for further gains toward the 90.00 area. However, failure to sustain the rebound could see the pair revisiting the 88.00 support level, with risks of a renewed decline toward the 87.00 handle and potentially the 85.00-86.00 range if selling pressure resumes.

NZD/JPY daily chart

• NZD/USD rebounds by 0.53% on Monday, settling around 0.5860.
• Pair attempts to reclaim the 20-day SMA but faces rejection, keeping upside limited.
• RSI rises sharply but remains in negative territory, while MACD histogram shows weakening bullish momentum.

The NZD/USD pair posted a modest recovery on Monday, rising by 0.53% to 0.5860 after a sharp decline last week. However, the pair once again failed to breach the 20-day Simple Moving Average (SMA), currently near 0.5890, reinforcing its role as a key resistance level.

Technical indicators provide mixed signals but lean bearish. The Relative Strength Index (RSI) has risen sharply to 47, signaling improving momentum, though it remains in negative territory, reflecting ongoing selling pressure. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram shows shrinking green bars, indicating waning bullish momentum despite the pair's daily gains.

While the pair holds above the 0.5830 support level, a sustained break above the 20-day SMA is needed to confirm a shift in momentum in favor of the bulls. On the downside, failure to maintain current levels could see the pair revisiting the 0.5830 support and potentially targeting the 0.5800 psychological level if selling pressure resumes.

NZD/USD daily chart

• AUD/USD recovered toward 0.6440 on Monday after sinking to 0.6350 on Friday.
• Improved market sentiment and Chinese stimulus hopes boost the Aussie.
• Focus shifts to the RBA’s monetary policy decision on Tuesday.

Friday’s sharp decline was triggered by the stronger than expected US Nonfarm Payrolls (NFP) report and rising bets for an early interest rate cut by the Reserve Bank of Australia (RBA). Monday’s rebound was supported by improved market sentiment and fresh optimism surrounding potential stimulus measures from China.

US November NFP data from Friday showed a robust 227,000 gain, well above expectations, along with stable Average Hourly Earnings growth at 0.4% MoM. US CPI data on Wednesday remains as another key driver for AUD/USD this week.

Daily digest market movers: Aussie rebounds as China pledges more fiscal support, CPI looms

• AUD/USD gains on improved sentiment and stimulus expectations from China.
• China’s leaders announced plans for proactive fiscal and looser monetary policies to accelerate domestic consumption in 2024.
• Weak Chinese CPI data (-0.6% in November, worse than expected) highlights challenges in the recovery but bolsters stimulus speculation.
• In Australia, markets await the RBA’s monetary policy decision on Tuesday, with no change in the 4.35% rate expected. However, comments on easing timing will be key for the Aussie’s direction.

AUD/USD technical outlook: Recovery tests resistance near 0.6440

The AUD/USD pair remains in a bearish trend but showed signs of recovery on Monday, breaking above the 0.6400 level. The Relative Strength Index (RSI), a momentum indicator, spiked back toward its midline but remains in negative territory, suggesting lingering selling pressure. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator printed a green bar for the first time in days, indicating a potential shift in momentum.

Immediate resistance is seen at 0.6445, followed by 0.6480. Support lies at Friday’s low of 0.6350. The pair’s next moves will largely depend on Tuesday’s RBA decision and Wednesday’s US CPI release, both of which are likely to provide significant direction.

• The Canadian Dollar went nowhere quickly on Monday.
• Looming Bank of Canada rate call keeps CAD markets tepid.
• Investor sentiment finds a fresh patch of concern about US CPI inflation update.

The Canadian Dollar (CAD) struggled to find direction on Monday, kicking off a new trading week digging in near familiar lows. Broad-market sentiment has fizzled as investors are bracing for an expected uptick in US Consumer Price Index (CPI) inflation figures due during the midweek market session, and an overall lack of Canadian representation on this week’s economic calendar leaves Loonie traders in the lurch.

The Bank of Canada (BoC) is slated to deliver its latest rate call on Wednesday, around the time that the US will be releasing its latest CPI inflation figures, which are expected to accelerate slightly. With knock-kneed economic figures coming out of Canada, the BoC is expected to accelerate its pace of rate cuts once again, despite growing potential for another uptick in inflation figures that have hampered the domestic economy.

Daily digest market movers: A quiet start to the week has traders looking ahead

• Markets are coiling ahead of a blustery midweek showing on the data docket.
• Data releases remain thin in the early week.
• The BoC is widely expected to deliver another double rate cut on Wednesday, forecast to trim its main reference rate to 3.25% from 3.75%.
• The US’ upcoming CPI print is expected to show headline consumer-level inflation rise back to 2.7% from 2.6% YoY.
• Core US CPI inflation is expected to hold steady at a heady 3.3% annually.

Canadian Dollar price forecast

The USD/CAD daily chart illustrates a strong uptrend that has been intact since mid-September, with the pair climbing steadily above its 200-day EMA at 1.3726 and the 50-day EMA at 1.3912. The bullish momentum gained traction as USD/CAD broke above the 1.4000 psychological level in late October, consolidating gains in November. The pair recently approached the critical resistance zone near 1.4170, where multiple highs were recorded, signaling an area of strong selling pressure. This level aligns closely with the July peak and remains a significant barrier for bulls.

The most recent candle reflects indecision, closing near 1.4157, with a slight bearish tilt after failing to sustain a breakout above the 1.4170 resistance. Despite reaching an intraday high of 1.4175, the inability to close above this critical level could indicate weakening bullish momentum in the near term. However, the fact that the pair remains well above its 50-day EMA suggests the uptrend is still intact, with support likely to emerge around the 1.4000 handle on any pullbacks. A daily close above 1.4170 would open the door for further upside, potentially targeting the 1.4250 region.

The MACD indicator reflects mild bullish momentum, with the MACD line hovering slightly above the signal line and the histogram showing minimal positive growth. This setup suggests that while buyers remain in control, momentum is not overwhelmingly strong. Traders should watch for a breakout confirmation above 1.4170 for renewed bullish confidence or a move below 1.4050 to signal the start of a corrective phase. The broader trend remains constructive as long as the pair stays above the 200-day EMA, but short-term consolidation cannot be ruled out.

USD/CAD daily chart

The Greenback overcame its initial bearish tone and closed Monday’s session with decent gains, supported by renewed geopolitical tensions and cautious sentiment ahead of the upcoming US inflation data release.

Here is what you need to know on Tuesday, December 10:

The US Dollar Index (DXY) rose for the second straight day and reclaimed the area beyond the 106.00 barrier amid a modest uptick in US yields. The NFIB Business Optimism Index is due, along with Unit Labor Costs and the API’s weekly report on US crude oil inventories.

EUR/USD added to Friday’s pullback after an unsuccessful attempt to revisit the 1.0600 barrier. Germany’s final Inflation Rate will take centre stage on the old continent.

GBP/USD traded on a firm footing, although it once again faltered just ahead of the key 1.2800 the figure. There will be no data releases across the Channel.

USD/JPY advanced to multi-day highs north of the 151.00 barrier following the Dollar’s gains and rising US yields.

AUD/USD made a sharp reversal and challenged the 0.6470 zone following a drop to sub-0.6400 levels, all ahead of the RBA meeting on Tuesday. Other than that, the Business Confidence index tracked by NAB is due.

Geopolitics are back in place, helping WTI prices rise sharply to two-day highs near the $69.00 mark per barrel.

Central bank buying and expectations of a Fed rate cut lifted Gold prices to two-week highs near $2,680 per troy ounce. Silver prices advanced to five-week highs north of the $32.00 mark per ounce, buoyed by expectations of further Chinese stimulus.

• DXY trades with mild losses on Monday, hovering near the 105.85 level.
• Markets await November CPI data, which is expected to show slightly accelerating inflation.
• Fed's December rate cut is widely anticipated but seen as hawkish.

The US Dollar Index (DXY) began Monday’s session with mild losses, maintaining its position near the 105.80 level. Market participants are turning their attention to November’s Consumer Price Index (CPI) data, due Wednesday, which is expected to show annual headline inflation accelerating to 2.7% from 2.6%. 

Despite expectations of a December rate cut by the Federal Reserve (Fed), markets remain focused on the central bank's cautious stance amid sticky inflation concerns.

Daily digest market movers: DXY steadies ahead of CPI and Fed decision

• DXY trades near 106.00 as markets prepare for key data releases this week.November Consumer Price Index (CPI) is forecast to rise by 2.7% annually, up from 2.6% in October, while core CPI is expected to remain steady at 3.3%.
• The Fed's media blackout leaves no new commentary, but markets price in an 85% chance of a December rate cut.
• The Atlanta Fed GDPNow model projects Q4 growth at 3.3% SAAR, while the New York Fed's Nowcast shows 1.9% for Q4 and 2.4% for Q1.
• Last week’s jobs data showed strong results with November's Nonfarm Payrolls at 227K, well above expectations of 200K.Consumer Sentiment for December rose to 74, while inflation expectations eased slightly with the 5-year outlook falling to 3.1%.

DXY technical outlook: Bulls cautiously hold 106.00 level amid mixed signals

The DXY continues to hover near 106.00, showing mild strength despite ongoing concerns about sticky inflation and a dovish-leaning Fed. Key technical indicators remain mixed. The Relative Strength Index (RSI) is declining, approaching its neutral 50 level, suggesting waning bullish momentum. 

Meanwhile, the Moving Average Convergence Divergence (MACD) indicator shows red histogram bars, signaling bearish pressure as short-term moving averages lag behind longer-term ones.

Immediate resistance is seen at 106.50, with further hurdles near 107.00. On the downside, support is firm between 105.50 and 106.00. Wednesday’s CPI data will likely be the key driver for the index's next significant move, with a surprise potentially triggering volatility across the board.

• The Dow Jones marked out familiar territory near 44,600.
• Equity traders were pushed into a cautious stance after a policy pivot from China.
• Investors will get a breather from high impact data until midweek CPI inflation figures.

The Dow Jones Industrial Average (DJIA) churned near 44,600 as equities kick off the new trading week on a quiet note. Markets bucked early Monday after China announced its first official monetary policy shift in 13 years. However, risk appetite was hobbled by geopolitical risks from the Middle East and South Korea.

Political turbulence dampened investor mood during Monday’s overnight session. Chinese political leaders signaled a looser monetary policy strategy next year, clearing the way for the Chinese government to pursue further stimulus policies directly. Stocks exposed to Chinese markets rallied for a strong start to the week. Not all is rosy on the China front, however: Chinese authorities have declared an antitrust investigation into Nvidia (NVDA) over supposed violations of obscure anti-monopoly laws. The move is perceived as a retaliation against US sanctions meant to cripple China’s access to advanced chip technology.

South Korea’s latest political turmoil is evolving into complete gridlock after South Korean President Yoon Suk Yeol’s failed coup via martial law was soundly rejected by the South Korean Parliament. Despite getting soundly rejected by political leaders within South Korea, lawmakers were unable to reach consensus on what to do in response, with an initial impeachment vote failing to reach the required threshold. Members of the South Korean opposition party are immediately calling for another impeachment vote.

Middle East tensions continue to run on the high side following the overthrow of Bashar al-Assad’s Syrian government. The freshly deposed dictator has reportedly fled to Moscow following the overthrow of a decades-long regime. Further destabilization in the Middle East has bolstered Crude Oil prices but kept overall investor sentiment within the region at bay.

Investors will be looking ahead to a fresh print of US Consumer Price Index (CPI) inflation slated for Wednesday, with a thin docket on the offering for the early week. US CPI inflation is expected to tick up again on an annualized basis in November. Median market forecasts expect Wednesday’s US CPI inflation to rise to 2.7% YoY compared to October’s 2.6%.

Dow Jones news

The Dow Jones equity board is on-balance on Monday with listed equities split roughly down the middle between gainers and losers. Boeing (BA) rose 4.5% to test $161 per share after announcing further layoffs in Washington, keeping in-line with the company’s plans to axe 10% of its global workforce in a bid to prove to investors they’re willing to do whatever it takes to achieve profitability and cut costs, even if it means crippling their ability to meet customer orders in the future. 

Dow Jones price forecast

The Dow Jones’ post-Trump election rally is once again running aground of tepid investor sentiment, and the major equity index is poised for further downside after bulls ran out of gas near the 45,000 major price handle. Despite congestion hobbling topside momentum, price action has yet to commit to a move south. 

The 50-day Exponential Moving Average (EMA) is rising through 43,400, providing a convenient floor for bidders to return to the fold if downside momentum wins the tug of war. The Dow Jones is up 18% YTD, but poised for a retracement after climbing 7.6% in November alone.

Dow Jones daily chart

• Mexican Peso strengthens as November inflation decreases, suggesting potential for continued rate cuts.
• Banxico Governor adopts cautious stance on aggressive rate cuts despite lower inflation.
• Upcoming economic releases include Mexican Consumer Confidence and US CPI with markets watching for further cues on monetary policy.

The Mexican Peso extended its rally for the fifth consecutive day as inflation in Mexico dipped to its lowest level since April 2024. Even though this suggests the Bank of Mexico (Banxico) might continue its easing cycle, the USD/MXN dropped 0.06% and traded at 20.14 at the time of writing.

Mexico’s economic docket revealed that headline and core inflation in November missed estimates, edging lower after the Consumer Price Index (CPI) hit its highest level of 5.57% in July, according to the Instituto Nacional de Estadistica Geografia e Informatica (INEGI).

Last week, Banxico Governor Irene Espinosa was hawkish, saying, "At this point, too many things need to change to be able to believe that the conditions are right for a much more aggressive move." Her statement followed a query about the possibility of a cut of more than 25 points.

Across the border on Friday, the latest US Nonfarm Payrolls (NFP) report in November was stellar. The economy added 227K jobs to the workforce, exceeding estimates of 200K, though the Unemployment Rate ticked up from 4.1% to 4.2%.

Federal Reserve (Fed) officials have begun their blackout period before the December 17-18 monetary policy meeting. Policymakers failed to provide any hints regarding the meeting with most supporting a gradual approach. They are awaiting November’s Consumer Price Index (CPI) data on December 11.

This week, Mexico’s economic docket will feature Consumer Confidence and Industrial Production data. In the US, the Consumer Price Index, the Producer Price Index, and Initial Jobless Claims data will also entice traders.

Daily digest market movers: Mexican Peso shrugs off soft inflation, appreciates

• Mexico’s headline inflation dipped from 4.76% to 4.55% YoY, below forecasts of 4.60%, its lowest level in eight months.
• Core figures showed an improvement of the disinflation process with November edging lower from 3.80% to 3.58%, below projections of 3.6%.
• “Mexican inflation continues to decline slightly and underlying pressures are under control. We believe that the headline CPI will increase by around 0.5% monthly in December, and that the annual rate will close 2024 at 4.4%,” explained Andrés Abadía, chief economist for LATAM at Pantheon Macroeconomics.
• Banco Base Economist Gabriela Siller said, "The Bank of Mexico is expected to cut interest rates by 25 basis points on Dec. 19. For 2025, inflation is expected to slow down to close the year at 4.1%, and the Bank of Mexico will cut the interest rate to 8.5%."
• Money market futures price in 90% odds that the Fed will lower borrowing costs by 25 basis points this month, according to the CME FedWatch Tool.
• Banxico’s November survey shows that analysts estimate Mexican inflation at 4.42% in 2024 and 3.84% in 2025. Underlying inflation figures will remain at 3.69% in 2024 and 2025. GDP is forecast at 1.55% and 1.23% for 2024 and 2025, respectively, and the USD/MXN exchange rate at 20.22 for the rest of the year and 20.71 in 2025.

Mexican Peso technical outlook: USD/MXN drops below 20.20 on Peso strength

The USD/MXN dipped as low as 20.09 last Friday, near the 50-day Simple Moving Average (SMA) at 20.00. Momentum shifted to the downside as the Relative Strength Index (RSI) turned bearish, indicating that the exotic pair could test the 20.00 mark.

In that outcome, the next support would be the 100-day SMA at 19.61 before testing the psychological 19.50 mark, ahead of the 19.00 figure. Otherwise, if USD/MXN climbs above the December 6 high of 20.28, that could pave the way to challenge 20.50, ahead of the year-to-date peak at 20.82, followed by the 21.00 mark.

China is more relevant to crude oil prices than the fall of Bashar Al-Assad's regime, TDS’ Senior Commodity Strategist Daniel Ghali notes.

Energy supply risks are not rising

“The Levant is not an oil producing region, limiting the implications for energy prices in the near-term despite a significant reshuffle of the geopolitical order in the Middle East. In fact we think geopolitical risks in the MidEast are at their highest levels since at least the Gulf War. Considering Iran's Axis of Resistance has been notably reduced over the past months, longer-term implications for the nation's nuclear policy and its impact on regional stability should not be understated.”

“Still, our return decomposition framework suggests that energy supply risks are not rising, in line with the limited implications for oil supplies resulting from Syrian regime change. Instead, broad commodity demand expectations are rising notably.”

“This reflects the Chinese Politburo meeting's strongest signals since the Global Financial Crisis, having changed policy language from signaling a ‘prudent’ monetary policy apparoch since 2011 to a ‘moderately loose’ policy for the first time since the GFC. Language on fiscal policy also progressed from a ‘proactive’ approach to a ‘more proactive’ one, underscoring the notion that China's "whatever it takes" moment may have stuck the landing.”

• EUR/USD gains mildly on Monday, trading at 1.0585 after rebounding from the 20-day SMA.
• Pair maintains its position above the 20-day SMA, supporting a constructive short-term outlook.
• RSI points upward but remains below 50, while MACD prints rising green bars, signaling gradual bullish momentum.

The EUR/USD pair is showing mild gains on Monday, climbing to 1.0585 after finding support at the 20-day Simple Moving Average (SMA). This rebound reinforces the importance of the 20-day SMA as a key level, with the pair maintaining a slightly positive short-term outlook.

Technical indicators suggest improving momentum. The Relative Strength Index (RSI) is pointing upward but remains below the neutral 50 mark, indicating a cautious recovery. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator continues to print rising green bars, highlighting building bullish momentum, though a decisive breakout remains elusive.

To extend the recovery, EUR/USD needs to clear resistance at 1.0600, which would confirm further upside potential. On the downside, the 20-day SMA near 1.0550 serves as a crucial support level. A break below this could see the pair revisiting 1.0530 and, subsequently, the psychological 1.0500 level.

EUR/USD daily chart

• GBP/USD climbs to 1.2780, supported by improved risk appetite and technical indicators pointing upward.
• Buyers target resistance at 1.2800; surpassing this could expose further key levels including the 200-day SMA at 1.2820.
• Downside risks persist with potential support at the December 2 low of 1.2616 and November 22 low at 1.2486 if declines resume.

The British Pound registered gains of 0.33% against the Greenback on Monday, despite the lack of a catalyst aside from an improvement in risk appetite. The GBP/USD trades at 1.2780 after bouncing off daily lows of 1.2716.

GBP/USD Price Forecast: Technical outlook

The GBP/USD is printing a leg-up following the over 4% loss following the US Presidential Elections, which witnessed President-elect Donald Trump's victory. Momentum shifted bullish, as shown by the Relative Strength Index (RSI), which turned bullish and aimed upwards.

Buyers must clear the 1.2800 figure before challenging the 200-day Simple Moving Average (SMA) at 1.2820. If surpassed, the next stop would be the 50-day SMA at 1.2878, 1.2900, and the 100-day SMA at 1.2963.

Conversely, if sellers keep the GBP/USD from reaching 1.2800 and drag towards the 1.2700 figure, it would exert downward pressure on the pair. A breach of the latter will expose the December 2 swing low of 1.2616, followed by the November 22 major support at 1.2486.

GBP/USD Price Chart – Daily

• NZD/USD recovers sharply to near 0.5870 as China’s Politburo supported expansionary monetary and fiscal policies.
• The RBNZ is expected to cut interest rates again by 50 bps.
• Investors await the US CPI data for fresh interest rate guidance.

The NZD/USD pair rebounds strongly to near 0.5870 in the North American trading session on Monday after testing the annual low of 0.5800. The Kiwi pair jumps higher as the New Zealand Dollar (NZD) strengthens after China’s Politburo vowed to implement “more proactive fiscal policy and moderately loose monetary policy.” A scenario that will boost stimulus and allow the economy to achieve its economic targets.

It is worth noting that New Zealand is one of the leading trading partners of China and a boost to economic stimulus is favorable for the New Zealand Dollar.

Domestically, the outlook of the NZD remains weak as the Reserve Bank of New Zealand (RBNZ) is expected to continue with its aggressive policy-easing stance. The RBNZ reduced its Official Cash Rate (OCR) by 50 basis points (bps) to 4.25% in its monetary policy meeting on November 27 and guided for a similar rate cut pace if economic conditions continue to evolve as projected.

Meanwhile, the US Dollar (USD) consolidates, with investors focusing on the United States (US) Consumer Price Index (CPI) data for November, which will be released on Wednesday.

NZD/USD finds temporary support near 0.5800, while the 20-day Exponential Moving Average (EMA) near 0.5930 continues to act as a major barricade for the NZD bulls. The 14-day Relative Strength Index (RSI) rebounded after conditions turned oversold and climbed above 40.00, suggesting that the bearish momentum has faded. However, the bearish trend has not extinguished.

The Kiwi pair is expected to decline to near the October 2023 low at 0.5770 and the round-level support of 0.5700 if it retreats below 0.5820.

On the contrary, an upside move above the November 15 high of 0.5970 will drive the asset toward the psychological figure of 0.6000 and the November 7 high of 0.6040.

NZD/USD daily chart

The Pound Sterling (GBP) retains a somewhat firm undertone in the upper 1.27s. It also failed to hold the post NFP gains on the USD Friday but it has found a solid bid off the intraday low in European trade, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

Reeves heads to Brussels to help UK/EU reset

“There were no UK data releases of note today. Chancellor Reeves is visiting Brussels as the Labour government pursues its attempt to ‘reset’ UK relations with the EU. Improvement here would be constructive for the GBP in the medium term.”

“Intraday price action looks a little more GBP-positive but gains will have to be sustained over the course of the session for a bull signal to be confirmed. Sterling tested the 200-day MA (1.2822) effectively last week.”

“Regaining the low 1.28 region on a sustained basis would suggest a new, slightly firmer 1.28/1.30 range may be developing. Support is 1.2720/25.”

The Euro (EUR) has picked up a little support in the low/mid-1.05s following the chop seen around Friday’s US NFP data, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

EUR holds with Friday’s intraday range

“Failure to hold and extend gains above 1.06 likely means a more cautious, range-bound trading environment for the EUR in the short run as attention switches to Thursday’s ECB policy decision and the latest ECB staff forecasts which may shape market expectations about the pace of expected rate easing into 2025.”

“The EUR has attracted firm support through European trade but is only just about finding its way back to the mid-point of the range that developed through Friday’s choppy session. The failed push above 1.06 last week may become a drag on the EUR’s near-term outlook if the market is unable to regain that point quickly. Support is 1.0525. Resistance is 1.06 and 1.0650.”

• USD/CHF bounces off, marks a 0.12% rise as market sentiment weighs on safe-haven currencies.
• Technical analysis suggests potential for further gains if the pair surpasses the 0.8800 resistance level.
• Downside risk remains if USD/CHF dips below 0.8750, with subsequent support targets at 0.8726 and 0.8700.

The US Dollar pares some of its earlier losses against a basket of six currencies as measured by the US Dollar Index (DXY) and rises over 0.12% against the Swiss Franc amid a session characterized by an appetite for high-beta currencies. At the time of writing, the USD/CHF trades at 0.8791 after bouncing off daily lows of 0.8776.

USD/CHF Price Forecast: Technical outlook

Last week, the pair witnessed losses of over 1.80% but ended Friday’s session near the day’s high. It formed a hammer preceded by a downtrend, indicating that USD/CHF didn’t find acceptance below 0.8750. Therefore, the major edged up, beginning the week on the front foot.

If USD/CHF climbs above 0.8800, the 200-day Simple Moving Average (SMA) will be exposed at 0.8820. Once surpassed, the next stop would be the latest swing high at 0.8888, the December 2 peak, ahead of 0.8900.

Conversely, if USD/CHF falls below 0.8750, look for a re-test of the December 6 ow of 0.8726 before aiming toward 0.8700.

USD/CHF Price Chart – Daily

The Canadian Dollar (CAD) has found a modest bid on the coattails of its commodity cousins even as President-elect Trump repeated his threat to impose huge tariffs on Canada, Mexico and China in his first major TV interview which aired over the weekend. Scope for CAD gains is limited, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

CAD firms modestly

“Despite a solid-looking gain in November jobs, there were enough holes in Friday’s labour market report (government jobs drove the full-time gain, wage growth slowed and—chiefly—the unemployment rate rose) to support expectations that the Bank of Canada will cut its policy rate 50bps this week. Markets are close to fully pricing in a 1/2-point cut (46bps) so the outcome may not weigh on the CAD significantly.”

“There is likely to be limited room for the CAD to rebound around the BoC decision unless the Bank opts for a smaller ease or signals a more cautious outlook for policy amid developing uncertainties. Intraday price action is tilting somewhat CAD-bullish. The CAD sold off into the end of last week, retesting the late November peak at 1.4178 in effect.”

“The USD has formed a bearish outside session on the 6-hour chart through European trading, however, suggesting a minor peak is in and that the CAD might improve a little more. Still, USD-bullish trend momentum signals are aligned across the short-, medium– and long-term DMIs which means limited scope for USD corrections (perhaps only to the 1.4025/50 area in the short run) and ongoing pressure for USD strength.”

The US Dollar (USD) is somewhat softer on the session as markets react to further upheaval in uncertainty in the Middle East, more signs from China’s politburo that it will step up efforts to bolster stimulus efforts and comments from President-elect Trump reiterating tariff and deportation plans once he takes office, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

DXY is flat, resisting the usual negative seasonal price trend

“Ranges among the major currencies are relatively limited outside of the AUD and NZD which head the overnight performance league with gains of 0.9% and 0.6% respectively on China growth hopes. The CNY is slightly firmer on the session. Friday’s NFP data showed a rebound in hiring in November but, even after revisions, the pace of job growth has slowed, supporting expectations that the Fed will cut its policy rate 25bps later this month.”

“Those expectations may be tested somewhat by this week’s US inflation data, however, with CPI forecast to reflect some persistent stickiness in prices. The USD’s reaction to Friday’s data was a classic payrolls move, with the initial move reversing and the DXY ending the day little changed. So far in December, the DXY is flat, resisting the usual negative seasonal trend in price. If anything, the index is still tracking close to the 2016 post-election profile which might mean a bit more USD strength in the short run if that pattern continues.”

“It’s a quiet start to a busy week on the calendar. There are no major data reports in North America to start the week. This evening’s RBA policy decision is expected to keep the cash rate on hold, with policymakers having indicated that it will be well into 2025 before they are likely to consider easing amid sticky core inflation pressures. Over the balance of the week, there are central bank decisions in Canada (cut), Brazil (hike), Peru (hold), Eurozone (cut) and Switzerland (cut).”

• The UDS Dollar is rejected at 1.4180 and the CAD picks up with Oil prices bouncing up.
• Chinese authorities have pledged more economic stimulus providing support to the Oil-sensitive CAD.
• Market expectations of a larger BoC cut on Wednesday might weigh on the Canadian Dollar's recovery.

The US Dollar’s rally has been rejected again at the 1.4180 level and the Canadian Dollar is trimming some losses on Monday. Oil prices are bouncing up on hopes of further stimulus measures in China while the US Dollar treads water.

Comments from the Chinese authorities pledging more fiscal stimulus measures and looser monetary ahead of the key Central Economic Work Conference have given some support to Crude prices. The Oil-sensitive CAD has bounced up with them.

On the Other hand, the US Dollar is looking for direction as the impact of the stronger-than-expected US employment figures waned. Markets are pricing a nearly 90% chance that the Fed will cut rates by 25 basis points next week, which is keeping US Dollar rallies limited.

In Canada, the BoC meets this week and is expected to deliver a large rate cut on Wednesday. Downbeat Canadian Employment and business activity figures sustain that view. This is likely to weigh on a deeper CAD recovery

• USD/JPY climbs to near 150.80 amid sheer weakness in the Japanese Yen.
• Japan’s GDP rose faster by 1.2% in the third quarter of the year.
• Investors await the US CPI data for fresh interest rate guidance.

The USD/JPY pair posts a fresh two-day high at 150.80 in the North American session on Monday. The asset surges more than 0.5% as the Japanese yen (JPY) weakens across the board amid growing doubts among market participants about whether the Bank of Japan (BoJ) will raise interest rates in the monetary policy meeting on December 19.

Traders seem to be less confident about the BoJ pushing interest rates higher even though Japan’s Q3 Gross Domestic Product (GDP) grew faster than projected. Japanese Cabinet Office reported in the Asian session that the economy rose by 1.2% compared to the same quarter of the previous year against the estimates and the Q2 growth of 0.9%.

Going forward, investors will focus on the Producer Price Index (PPI) data for November for fresh cues on price pressures, which will be published on Wednesday. The producer inflation is estimated to have grown steadily on a monthly as well as an annual basis.

Meanwhile, the US Dollar (USD) consolidates in a tight range, with investors focusing on the United States (US) Consumer Price Index (CPI) data for November, which will be published on Wednesday. The inflation data will significantly influence market expectations for the Federal Reserve’s (Fed) likely interest rate action in the policy announcement on December 18.

There is an 87% chance that the Fed will reduce interest rates by 25 basis points (bps) to 4.25%-4.50% on December 18, according to the CME FedWatch tool.

The Aussie bounces up on a brighter market mood and hopes of further stimulus in China.
Chinese authorities have promised more proactive fiscal measures and loser monetary policies to boost economic recovery.
The RBA is expected to leave interest rates unchanged at restrictive levels on Tuesday.
 

The Australian Dollar performed a significant comeback on Monday’s European session. An improved market sentiment and some comments by China’s President Xi Jinping have provided a fresh boost to the Aussie.

China’s leaders vowed more proactive fiscal policies and looser
monetary policies next year to accelerate domestic consumption at a key policy meeting ahead of this week’s Central Economic Work conference.

Speculation about further stimulus measures has offset the impact of weak Chinese CPI data. Consumer inflation contracted by 0.6% in November, beyond the 0.4% expected after a 0.3% decline in October. These figures add to evidence of the weak post-Covid recovery in the world’s second-largest economy.

In Australia, the focus this week is on the RBA’s monetary policy decision, due on Tuesday. The bank is widely expected to leave rates at the 4.35% current level with the market’s focus on the timing for the Bank’s easing cycle. Her comments on this question are likely to set the Aussie’s near-term direction.
 

• The USD/MXN resumed its downtrend as the effect of the release of strong US labour figures waned.
• Mexican CPI data is expected to show cooling inflation, which might increase the selling pressure on the MXN.
• Technically, USD/MXN’s double top at 20.80 suggests the possibility of a deeper correction.
   

The Mexican Peso (MXN) opened the week in the same positive tone seen in the previous one, slightly appreciating against the US Dollar. The USD/MXN pair has lost about 3.30% after peaking near 21.00 in late November and is approaching the key 20.00 area ahead of the release of last month’s inflation figures.

The pair’s mild recovery attempt seen on Friday was halted after the dust from the strong US Nonfarm Payrolls (NFP) data settled. The higher unemployment rate increased hopes that the Federal Reserve (Fed) will cut rates again next week.

The US calendar is thin on Monday, and the focus will be on Mexico’s Consumer Prices Index (CPI) figures. Price pressures are expected to have resumed their cooling trend in November after an uptick in October. This might increase hopes of a further rate cut next week by the Banxico and increase pressure on the Peso.  

Daily digest market movers: Mexican Peso extends gains despite strong US data

• US Nonfarm payrolls increased by 227,000 in November, beating expectations of a 200,000 increase. October’s data was revised to a 36,000 increment from the previously estimated 12,000 payrolls.
   
• The US unemployment rate, however, increased to 4.2% from 4.1% in October,  which cemented hopes of a Federal Reserve (Fed) cut in December, and kept the US Dollar from rallying further.
   
• Futures markets are now pricing a nearly 90% chance that the Fed will cut rates by 25 basis points in December, up from below 70% last week, according to data from the CME Group’s Fed Watch tool.
   
• Later on Monday, Mexico’s inflation is expected to show some cooling, with the yearly CPI easing to 4.59% in November from 4.76% in October. The core CPI is seen down to 3.6% from the previous 3.8% level.

Mexican Peso technical outlook: USD/MXN approaches key support at 20.00

The USD/MXN  maintains its negative bias intact from the late November highs at around 20.80. The pair, however, faces a strong support area between 20.05 and 20.15.

The 4-hour Relative Strength Index (RSI) is in bearish territory below the 40 level, and the double top at 20.80 suggests the possibility of a deeper correction.

Below the 20.00 psychological level, which is also the neckline of the mentioned double top, the next target would be November’s low at 19.75. Resistances are Friday’s high at 20.25, ahead of the December 2 high at 20.60 and November’s peak at 20.80.

USD/MXN 4-Hour Chart

US Dollar (USD) is expected to trade in a 7.2650/7.2900 range. In the longer run, current price movements are likely part of range trading, probably between 7.2400 and 7.2900, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.  

USD is expected to trade in a 7.2650/7.2900 range

24-HOUR VIEW: “We expected USD to ‘trade in a 7.2550/7.2800 range’ last Friday. USD traded in a higher range of 7.2558/7.2869 before closing at 7.2846 (+0.29%). There has been a slight increase in momentum, but this is likely to lead to a higher trading range of 7.2650/7.2900 instead of a sustained rise.”

1-3 WEEKS VIEW: “There is not much to add to our update from last Friday (06 Dec, spot at 7.2660). As previously indicated, ‘the current price movements are likely part of range trading, probably between 7.2400 and 7.2900.’ Looking ahead, if USD breaks and stays above 7.3145, it would indicate that the start of a sustained rise.”

USD/CNH continued to drift lower, thanks to softer USD and taking cues from fixing guidance. Pair was last at 7.2737, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Corrective pullback likely

“Policymakers continue to manage the daily fix, setting it lower at 7.1848 vs. 7.1879 (yesterday). Fixing pattern continues to suggest that PBoC is doing whatever it takes to not only restraint the RMB from over-weakening but also to guide its bias and direction.”

“Tariff may hurt RMB when it happens but that may be a story for 2025 after Trump inauguration. Meantime, we would keep a look out for the CEWC meeting on 11-12 Dec.”

“Daily momentum is flat while RSI fell. Corrective pullback likely. Support at 7.2510 (21 DMA), 7.22 levels. Resistance at 7.32, 7.3450 levels.”

US Dollar (USD) is likely to consolidate in a range of 149.15/150.55. In the longer run, USD weakness appears to have stabilised; it is likely to trade in a range of 148.65/152.00 for now, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

USD weakness appears to have stabilised

24-HOUR VIEW: “We stated last Friday that USD ‘appears to have entered a consolidation phase.’ We expected it to ‘trade in a 149.65/150.65 range.’ Despite trading in a wider range of 149.34/150.69, USD closed largely unchanged at 150.03 (-0.03%). The price movements still appear to be part of a consolidation, but the slightly softened underlying tone suggests USD is likely to trade in a lower range of 149.15/150.55 today.”

1-3 WEEKS VIEW: “Last Thursday (05 Dec, spot at 150.35), we highlighted that the recent USD weakness ‘appears to have stabilised.’ We also highlighted that ‘the current price movements are likely the early stages of a range trading phase, probably between 148.65 and 152.00.’ Our view remains unchanged.”

USD/JPY waffled around 150 levels. Bias remains to sell rallies. BoJ to carry on with policy normalization with a hike next week and into 2025, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

The risk is a slowdown in pace of respective policy normalization

“Bearish momentum on daily chart intact while RSI is flat. Bias remains to sell rallies. Support at 149.50, 148.80 levels (100 DMA) and 148.20 (38.2% fibo retracement of September low to November high). Resistance at 150.70, 151.30 (50 DMA), 152 levels (200 DMA). In terms of data, there is a few to keep a look out for this week, including PPI on Wednesday and Tankan survey on Friday before BoJ MPC (19 December).”

“But largely, we are looking for BoJ to carry on with policy normalization with a hike next week and into 2025. Recent uptick in base pay supports the view about positive development in labor market, alongside still elevated services inflation, better 3Q GDP (that was just released this morning) and expectations for 5-6% wage increases for 2025.”

“For USD/JPY, it is not just Japan or BoJ in the equation but the Fed and US data also matters. While we are of the view that broader direction of travel for USD/JPY is skewed towards the downside as Fed cuts and BoJ hikes. The risk is a slowdown in pace of respective policy normalization, especially if Fed slows pace on return of US exceptionalism. Then USD/JPY moves may even face intermittent upward pressure.”

• Silver price soars above $31.50 on firm Fed dovish bets.
• A ceasefire between Russia and Ukraine could weigh on safe-haven demand.
• Investors await the annual China Central Economic Work Conference.

Silver price (XAG/USD) surges above $31.50 at the start of the week. The white metal strengthens as financial market participants become increasingly confident that the Federal Reserve (Fed) will cut interest rates by 25 basis points (bps) to 4.25%-4.50% in the policy meeting on December 18.

According to the CME FedWatch tool, the probability for the Fed to cut interest rates by 25 bps to 4.25%-4.50% on December 18 has increased to 87% from 62% a week ago. A scenario that historically weighs on the US Dollar (USD) and bond yields but is favorable for non-yielding assets, such as Silver, given that lower yields result in lower opportunity cost for holding an investment in them.

The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, retreats after failing to sustain above the key figure of 106.00. 10-year US Treasury yields tick higher to near 4.16%.

Meanwhile, fresh attempts at a ceasefire between Russia and Ukraine by US President-elect Donald Trump could weigh on the safe-haven demand for Silver. “Zelenskyy and Ukraine would like to make a deal and stop the madness,” Trump wrote on a social media platform. The safe-haven demand for precious metals increases in a heightened geopolitical uncertainty.

This week, investors will focus on the closed-door annual central economic work conference to be held on Dec 11-12, according to Bloomberg. The committee is expected to set priorities for the following year along with scrutinizing current economic performance. The outcome will influence the Silver price, given the application of Silver as a metal in diversified industries.

Silver technical analysis

Silver price rallies to near $31.60 after breaking above the three-day resistance of $31.30. The asset climbs above the 20- and 50-day Exponential Moving Averages (EMAs) near $31.10 and $31.20, respectively, suggesting a strong uptrend.

The 14-day Relative Strength Index (RSI) approaches 60.00. A bullish momentum would trigger a decisive break above the same.

Looking down, the upward-sloping trendline around $29.50, which is plotted from the February 29 low of $22.30 on a daily timeframe, would act as key support for the Silver price. On the upside, the horizontal resistance plotted from the May 21 high of $32.50 would be the barrier.

Silver daily chart

The meeting on Tuesday is the last meeting for the year and the next meeting is not due until 18 February. AUD was last at 0.6448, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Risks remain skewed to the downside

“We expect cash rate to remain on hold at 4.35% as services inflation remains sticky and labour market is fairly tight. The risk is an earlier than expected dovish pivot as softer than expected 3Q GDP print last week saw markets shifted expectations to fully price in a cut at Apr’s meeting. There were also light chatters if RBA may even need to cut earlier at the Feb meeting.”

“Tariff worries, slowing growth momentum and anticipation for earlier RBA cuts are some factors that may continue to undermine AUD in the short term, unless AU labour market report on Thu comes in hotter or USD reverses lower.”

“Daily momentum is mild bearish while RSI fell. Risks remain skewed to the downside. Support at 0.6380, 0.6350 (2024 low). Break out risks a sharp move towards 0.6270 (2023 low). Resistance at 0.6485 (21 DMA).”

• The increasing uncertainty in the Middle East and China’s purchases support Gold’s recovery.
• The US Dollar hesitates as strong US labour data did not curb hopes of further Fed interest-rate cuts next week.
• XAU/USD is heading towards a key resistance area at $2,665.

Gold price (XAU/USD) nudges higher on Monday’s early European session, favoured by its safe-aven status amid the increasing uncertainty in the Middle East after the fall of the Bashar al-Assad regime in Syria.

Beyond that, The People’s Bank of China (PBoC) announced over the weekend that it resumed Gold purchases in November after a six-month pause, which is giving an additional boost to the precious metal.

Data from the US released on Friday revealed that the country’s labour market remains solid, but the increasing unemployment rate confirmed expectations that the Federal Reserve (Fed) would cut rates by 25 bps next week. This, and a mild risk appetite, are keeping US Dollar upside attempts limited.

Daily digest market movers: Fed easing, geopolitical concerns and China boost Gold

• China’s Gold reserves increased by 160,000 ounces to 72.96 million ounces in November from 72.80 million ounces in November. This has boosted expectations of further Gold appreciation and is likely to underpin demand for the precious metal.
   
• On Friday, Nonfarm Payrolls (NFP) data showed that the US economy added 227,000 new jobs in November, beating expectations of a 200,000 increase.
   
• The Unemployment rate, however, ticked up to 4.2% from 4.1% in the previous month, which kept hopes of a Fed rate cut in December intact.
   
• The CME Group’s Fed Watch shows an 87% chance of a quarter-point rate cut by the Fed next week, up from less than 70% last week.
   
• The Benchmark 10-year Treasury yields are ticking up on Monday after losing about 20 basis points in the last two weeks. This has offset the positive impact of the Trump trade and is adding pressure on the US Dollar.

Technical analysis: XAU/USD is approaching the channel top at $2,665

Gold is showing an increasing bullish momentum on Monday as the positive trend from last week's lows gathers steam. With fundamentals in its favour, the pair seems likely to retest the top of the last two weeks’ channel at $2,665.

Above here, the next target would be the $2,690 intra-day level, and the November 24 high, at $2,720. On the downside, the bottom of the mentioned channel is at $2,620. Below here, the next support is the November 25 low, at $2,605.

Gold 4-hour Chart

Scope for New Zealand Dollar (NZD) to continue to weaken; given the oversold conditions, any decline is unlikely to reach last month’s low, near 0.5795. In the longer run, NZD is likely to trade with a downward bias towards 0.5795; the likelihood of it reaching 0.5770 is not high for now, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Likelihood of it reaching 0.5770 is not high for now

24-HOUR VIEW: “When NZD was at 0.5880 last Friday, we were of the view that it ‘is likely to trade in a higher range of 0.5860/0.5900.’ Our view was incorrect, as it dropped to 0.5824, closing at 0.5832, sharply lower by 0.90% for the day. Today, there is scope for NZD to continue to weaken. Given the oversold conditions, any decline is unlikely to reach last month’s low, near 0.5795 (there is another support at 0.5810). Resistance is at 0.5845, followed by 0.5865.”

1-3 WEEKS VIEW: “Our most recent narrative was from last Thursday (05 Dec, spot at 0.5860), wherein NZD is ‘expected to trade in a 0.5830/0.5930 range.’ Last Friday, NZD broke below 0.5830, reaching a low of 0.5824. There has been a slight increase in momentum, and NZD is likely to trade with a downward bias towards 0.5795. While NZD could break below this level, the likelihood of it reaching last year’s low of 0.5770 is not high for now. To sustain the momentum, NZD must remain below the ‘strong resistance’ level, currently at 0.5890.”

This Thursday, the Swiss National Bank will likely be cutting rates a few hours before the ECB, ING’s FX analyst Chris Turner notes.  

SNB has little room for manouevre

“We are a little surprised to see the market pricing 36bp for the SNB decision. We think a 25bp cut is far more likely given that, with the Swiss policy rate already at 1.00%, the SNB has far less room for conventional policy easing. Indeed, there is a case that the SNB does not take rates below 0.50% in this cycle – even though market pricing is toying with the idea of negative rates next year.”

“Having stayed surprisingly bid during French political stress last week, EUR/CHF is now turning a little lower. Here we favour a grind lower towards this year's spike lows near 0.9200/9210 as it becomes apparent the SNB will not be able to keep pace with ECB easing.”  

Sharp drop appears excessive, but there is scope for Australian Dollar (AUD) to retest 0.6375 before stabilisation can be expected. The risk for AUD remains on the downside, likely towards the year-to-date low, near 0.6350, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Risk for AUD remains on the downside

24-HOUR VIEW: “We expected AUD to consolidate between 0.6435 and 0.6475 last Friday. However, AUD plummeted and closed at 0.6390 (-0.96%), its lowest daily closing since Apr this year. Although the sharp drop appears to be excessive, there is scope for AUD to retest last Friday’s low near 0.6375 before a stabilisation can be expected. The major support at 0.6350 is unlikely to come under threat. On the upside, should AUD break above 0.6430 (minor resistance is at 0.6415), it would mean that the weakness has stabilised.”

1-3 WEEKS VIEW: “Last Thursday (05 Dec, spot at 0.6430), we indicated that ‘the risk for AUD has shifted to the downside.’ However, we pointed out that, ‘the 0.6380 level is expected to provide significant support.’ On Friday, AUD broke below 0.6380, reaching a low of 0.6373. Despite the breach of the support level, downward momentum has not increased much. That said, the risk for AUD remains on the downside, likely towards the year-to-date low, near 0.6350. To keep the momentum going, AUD must not break above the ‘strong resistance’ of 0.6450 (level previously at 0.6490).”

Friday's softish US jobs report only landed a glancing blow on the dollar and the Dollar Index (DXY) did indeed find good support below 106. Geopolitics is probably helping the USD a little. Markets probably do not know immediately what to make of the regime change in Syria, but uncertainty in Korean politics and the underperformance of Korean asset markets is certainly noteworthy, ING’s FX analyst Chris Turner notes.

November's CPI dominates this weeks calendar

“Looking ahead this week, we see two themes. The first could be some large rate cuts in the rest of the G10 FX markets. Here we have rate meetings in the eurozone, Switzerland and Canada this week. 25bp or 50bp rate cuts are options in all, although more likely will it be that just Canada sees a 50bp rate cut. Here the narrative is that while most of the G10 central banks (ex Japan) are looking to cut rates back to neutral, the Federal Reserve will be slower than most trading partners and interest differentials will continue to stay wide in favour of the USD.”

“The second theme is the US calendar this week, where Wednesday's release of November's CPI dominates. Consensus expects another sticky 0.3% core month-on-month reading. While not ideal for the Fed, such a reading should not prevent the central bank from cutting 25bp a week later. But a 0.4% MoM reading on core CPI would really throw the cat amongst the pigeons and more seriously question whether the Fed is right to be cutting rates after all.”

“The Fed is also now in blackout mode ahead of its rate meeting on 18 December, and the only other thing of note in the calendar is tomorrow's release of the NFIB small business optimism index – seen as slightly dollar positive. There seems little reason to reduce long dollar positions right now and after two weeks of consolidation, we see it as more likely that the dollar will resume its bull trend. We favour DXY to stay bid in a 106.00-106.70 range today.”

• EUR/USD juggles near 1.0500 as investors await US CPI data for November and the ECB policy meeting.
• Investors expect the ECB to cut interest rates by 25 bps for the third time in a row.
• Fed Goolsbee forecasts the central bank to reach the neutral rate by the end of 2025.

EUR/USD consolidates around 1.0550 in Monday’s European session with investors focusing on the European Central Bank (ECB) monetary policy decision on Thursday. Markets are almost fully pricing in that the ECB will cut its Deposit Facility Rate by 25 basis points (bps) to 3% as many officials have shown concerns over risks of inflation undershooting the bank’s target due to the weak economic outlook.

The ECB has already reduced the deposit rate by 75 bps this year and Thursday’s rate-cut decision would be the third in a row.

Market participants expect the Eurozone economy to underperform amid political uncertainty in Germany and France, which are the largest nations of the bloc. The potential impact on the export sector when US President Donald Trump takes the administration at the White House is also a source of concern.

The French economy is going through a tough phase, and the outlook became gloomier after the government was toppled by lawmakers. Last week, Michel Barnier became the shortest-serving French prime minister after losing a no-confidence vote from the Far Right and the Left-Wing parties over his fiscal plans. French President Emmanuel Macron said that he will find a successor for Barnier “in the coming days.”

Daily digest market movers: EUR/USD consolidates amid firm Fed dovish bets

• EUR/USD trades sideways as the US Dollar (USD) struggles amid firm expectations that the Federal Reserve (Fed) will cut its key borrowing rates in its policy meeting on December 18. The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, surrenders its gains generated in the Asian session and struggles to hold the key support of 106.00.
• According to the CME FedWatch tool, the probability for the Fed to cut interest rates by 25 bps to 4.25%-4.50% on December 18 has increased to 87% from 62% a week ago. Fed dovish bets escalated after the United States (US) Nonfarm Payrolls (NFP) report for November showed higher-than-expected hiring numbers.
• For the longer-term outlook on interest rates, Chicago Fed President Austan Goolsbee said on Friday that expects the central bank to reach the median rate by the end of next year. Goolsbee didn’t provide a specific number for the neutral rate but specified that a level around 3%, which is roughly the median that Fed officials projected as a stopping point at their September meeting, “doesn’t seem crazy.”
• This week, investors will focus on the US Consumer Price Index (CPI) data for November, which will be released on Wednesday. Economists expect the annual headline CPI to have accelerated to 2.7% from the October reading of 2.6%, with the core CPI – which excludes volatile food and energy items – growing steadily by 3.3%.

Technical Analysis: EUR/USD stays above 1.0500

EUR/USD wobbles above the psychological figure of 1.0500. The outlook of the major currency pair remains bearish as the 20-day EMA near 1.0580 acts as key resistance for the Euro (EUR) bulls.

The 14-day Relative Strength Index (RSI) rebounded after conditions turned oversold and has climbed above 40.00, suggesting that the bearish momentum has faded. However, the broader bearish trend for the pair doesn’t seem to be over yet.

Looking down, the November 22 low of 1.0330 will be a key support. On the flip side, the 50-day EMA near 1.0700 will be the key barrier for the Euro bulls.

The Pound Sterling (GBP) appears to have entered a consolidation and is likely to trade between 1.2705 and 1.2770. In the longer run, there has been a strong surge in momentum; GBP may rise to 1.2850, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

GBP may rise to 1.2850

24-HOUR VIEW: “Last Friday, we expected GBP to ‘continue to rise, potentially breaking above 1.2805.’ However, we were of the view that ‘the major resistance at 1.2850 is likely out of reach for now.’ Our view was not wrong, as GBP broke above 1.2805, reaching a high of 1.2811. The advance was short-lived, as it fell swiftly from the high to close at 1.2741 (-0.15%). GBP appears to have entered a consolidation and is likely to trade between 1.2705 and 1.2770.”

1-3 WEEKS VIEW: “We revised our GBP outlook to positive last Friday (06 Dec, spot at 1.2760), indicating that ‘there has been a strong surge in momentum,’ and it ‘may rise to 1.2850.’ GBP subsequently rose to a 3-week high of 1.2811 before pulling back quickly. While the pullback has decreased the upward momentum somewhat, we continue to hold the view that GBP may rise to 1.2850. That said, should GBP break below 1.2685 (no change in ‘strong support’ from last Friday), it would indicate that the current upward momentum has faded.”

The US Dollar (USD) traded lower last Fri post-release of payrolls, unemployment report. But subsequently traded higher into NY close. DXY was last at 105.95 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

A break below neckline to see bears gather momentum

“There were a handful of Fedspeaks last Friday post-NFP, and officials like Bowman, reiterated gradualism in pace of lowering rates but she also said that it is hard to think interest rates are restrictive right now. Another FOMC member, Hammack believes that Fed is ‘at or near’” the point where Fed should slow rate cut. Goolsbee also echoed the view that pace of rate cuts will probably slow next year. Fedspeaks go into blackout so that puts the focus on data before FOMC next Thu (19 December).”

“This week, we have CPI on Wednesday and PPI on Thursday. A 25bp cut is more or less a done deal for December meeting unless US CPI unexpectedly surprises a lot to the upside. We would be keen to see the dot plot guidance for 2025. Fed fund futures are implying about 3 cuts for 2025, slightly less than the previous dot plot of 4 cuts that was penciled in for 2025.”

“Daily momentum is mild bearish while RSI fell. Head and shoulders pattern appears to have formed with DXY testing the neckline (which was respected on Friday). This is typically a bearish setup. A decisive break below neckline should see bears gather momentum. Support at 105 levels (38.2% fibo retracement of Sep low to November high), 104.60 (50 DMA) and 104.10 (200 DMA, 50% fibo). Resistance at 106.20/30 levels (23.6% fibo, 21 DMA), 106.70 (second shoulder).”

ECB meets on Thursday. Pair was last at 1.0564 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Germany comes into focus this week

“Markets have already reduced bets of 50bp cut and is now pricing just a 25bp cut. But politics may steal the show from ECB. Germany will come into focus this week. Chancellor Scholz is expected to call for a vote of confidence on 11 December (Wednesday) and the Bundestag will vote next Monday on 16 December. To survive the vote, Scholz would need to receive the support of an absolute majority of 367 votes.”

“But in the event, he fails, then Germany is likely to make way for elections on 23 February 2025. Political risks in Europe may still weigh on EUR, but we had also flagged that many EUR negatives, such as slowing growth momentum, political fallout, ECB cut expectations, etc. are already in the price. We still do not rule out the risk of EUR short squeeze in the short term.”

“Daily momentum is mild bullish but rise in RSI slowed. Price pattern shows a classic formation of an inverted head & shoulders pattern, which is typically associated with a bullish reversal. Neckline comes in at 1.0610/20 levels. Break-out puts 1.0670 (38.2% fibo) within reach before next resistance comes in at 1.0750/75 levels (50 DMA, 50% fibo). Support at 1.0540/50 levels (23.6% fibo, 21 DMA), 1.0460 levels.”

Upward pressure appears to have eased; the Euro (EUR) may trade sideways between 1.0530 and 1.0590. In the longer run, EUR has to break and remain above 1.0610 before further advance to 1.0650 is likely, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

May trade sideways between 1.0530 and 1.0590

24-HOUR VIEW: “EUR soared to 1.0589 last Thursday. On Friday, we highlighted that ‘strong momentum points to further EUR strength.’ However, we highlighted that, ‘it remains to be seen if it can break clearly above the major resistance at 1.0610.’ Although EUR rose more than expected to 1.0629, it pulled back quickly from the high, closing lower by 0.17% at 1.0568. Upward pressure appears to have eased, and today, EUR may trade sideways, most likely between 1.0530 and 1.0590.”

1-3 WEEKS VIEW: “After EUR soared to 1.0589 last Thursday, we indicated on Friday (06 Dec, spot at 1.0585) that it ‘has to break and remain above 1.0610 before further advance to 1.0650 is likely.’ Although EUR broke above 1.0610 during NY trading session, it was unable to hold on to its gains, pulling back to close at 1.0568, lower by 0.17% for the day. There is still a chance for EUR to break and remain above 1.0610, as long as 1.0500 (no change in ‘strong support’ level from last Friday) is not breached. Looking ahead, the next level to watch above 1.0610 is 1.0650.”

• Eurozone investors’ morale declines in December.
• EUR/USD holds the upswing near 1.0570 after the Eurozone data.

The Eurozone Sentix Investor Confidence Index declined to -17.5 in December from -12.8 in November, the latest survey showed on Monday.

The Current Situation gauge for the bloc dropped to its lowest level in more than two years, reaching -28.5 in December from -21.5 in November.

Sentix said, “following the announcement of new elections to the German Bundestag, there is no mood of optimism.”

"With regard to Europe's top economy, the recession remains omnipresent," it added.

Market reaction to the Eurozone Sentix data

EUR/USD holds its recovery momentum near 1.0570 after the Eurozone data. As of writing, EUR/USD is trading 0.05% higher on the day.

Silver prices (XAG/USD) rose on Monday, according to FXStreet data. Silver trades at $31.34 per troy ounce, up 1.11% from the $30.99 it cost on Friday.

Silver prices have increased by 31.70% 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 84.66 on Monday, down from 84.92 on Friday.

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

Friday's US jobs report was not weak enough for EUR/USD to sustain a move over 1.06. Rate spreads have become a little more supportive for EUR/USD, ING’s FX analyst Chris Turner notes.

Few reasons for the ECB to be cheerful right now

“The highlight this week will be Thursday's European Central Bank meeting. A 25bp cut is probably more likely now, although the press conference could potentially open the door to sub-neutral (i.e., less than 2.00%) policy rates next year. There certainly seem few reasons for the ECB to be cheerful right now, even though the hard data is holding up better than expected.”

“After heavy losses in October and November, EUR/USD has since enjoyed two weeks of consolidation. It now looks like time for the bear trend to get going again. And despite seasonal trends which are normally EUR/USD supportive in December, we favour EUR/USD drifting back to 1.0500/0520 short-term and potentially breaking lower in the week should US CPI data or the ECB meeting have something for EUR/USD bears like ourselves.”

China’s Consumer Price Index (CPI) slowed for the third consecutive month to 0.2% y/y in November (Bloomberg est: 0.4%; October: 0.3%). Core CPI (excluding food & energy) remained weak at 0.3% y/y from 0.2% y/y in October. Services inflation was unchanged from October at 0.4% y/y but consumer goods inflation eased to 0.0% y/y (October: 0.2%), UOB Group’s Economist Ho Woei Chen notes.

Prices stayed near flat in November

“China’s CPI inflation slowed for the third consecutive month to 0.2% y/y in November. Sequentially, the accelerated pace of decline by -0.6% m/m in November was due to high temperatures supporting agricultural production and falling travel demand.”

“The PPI deflation eased to -2.5% y/y in November while rising 0.1% m/m in November for the first time in six months. This was attributed to the effects of the government’s existing and incremental policies which boosted demand for industrial products.”

“Overall, the price outlook remains weak and the PBOC is expected to keep its easing bias. The PBOC indicated another 25-50 bps reduction to banks’ reserve requirement ratio (RRR) by year-end to stabilize growth.”

US Dollar (USD) net short positions have increased for the third consecutive week. Euro (EUR) net short positions have increased for the third consecutive week. The Pound Sterling (GBP) net long positions have decreased for the third consecutive week, and Japanese Yen (JPY) positions have turned net long for the first time in five weeks, Rabobank’s FX analysts Jane Foley and Molly Schwartz note.

JPY is the best-performing G10 currency in November

“USD net short positions have increased for the third consecutive week, driven by a decrease in long positions. USD was the second-best performing G10 currency y-t-d as of December 3rd, but investor confidence of a 25bp cut come the December 18th meeting has been rising, with 71% of a 25bp cut priced in as of December 3rd (and 85% priced in at the time of writing).”

“EUR net short positions have increased for the third consecutive week, driven by an increase in short positions. EUR was the worst performing G10 currency in the month of November, depreciating 2.37% against USD. EUR has suffered from deteriorating economic fundamentals and impending cuts from the ECB. We expect the ECB to cut the policy rate 25bp at the December 12th.”

“GBP net long positions have decreased for the third consecutive week, driven by an increase in short positions. GBP/USD is trading at 1.2737 as of December 6th, having run into resistance at the 200D SMA (1.2822). JPY positions have turned net long for the first time in five weeks, driven by a decrease of around 20,000 short positions. JPY was the best-performing G10 currency in November, returning 2.16% against USD.

China’s President Xi Jinping said on Monday, “we must be fully prepared to achieve next year's economic targets.”

Additional comments

Market reaction

AUD/USD has caught a fresh bid wave on China’s stimulus optimism, rising 0.60% on the day to trade near 0.6430. The pair hit the lowest level in four months at 0.6373 on Friday.

• AUD/USD jumps to near 0.6420 with investors focusing on the RBA monetary policy announcement on Tuesday.
• The RBA is expected to leave interest rates steady at 4.35%.
• Investors expect the Fed to cut its key borrowing rates next week by 25 bps to 4.25%-4.50%.

The AUD/USD pair finds temporary support and advances to near 0.6420 in Monday’s European session after posting a fresh four-month low near 0.6370 on Friday. The Aussie pair rebounds slightly with investors focusing on the Reserve Bank of Australia’s (RBA) monetary policy decision, which will be announced on Tuesday.

Market experts expect the RBA to leave interest rates unchanged at 4.35% but would temper its hawkish tone as the Australian Q3 Gross Domestic Product (GDP) growth came in weaker-than-expected, a scenario that would be favorable for the Australian Dollar (AUD).

Analysts at ANZ and Westpac expect the RBA to start reducing interest rates from May 2025. They have pushed their forecasts from March 2025 amid concerns over sticky price pressures.

Meanwhile, the US Dollar (USD) ticks higher even though traders are confident that the Federal Reserve (Fed) will cut interest rates by 25 basis points (bps) to 4.25%-4.50% in the policy meeting on December 18. This week, investors will pay close attention to the United States (US) Consumer Price Index (CPI) data for November, which will release on Wednesday.

The near-term trend of the AUD/USD pair is bearish as all short-to-long-term Exponential Moving Averages (EMAs) are declining.

The 14-day Relative Strength Index (RSI) wobbles below 40.00, suggesting that a bearish momentum is intact.

More downside towards the August low of 0.6348 and the round-level support of 0.6300 would appear if the Aussie pair fails to hold recovery above the round-level support 0.6400.

On the flip side, a decisive recovery above the November 25 high of 0.6550 will drive the asset towards the round-level resistance of 0.6600, followed by September 11 low of 0.6622.

AUD/USD daily chart

China’s Politburo, the country’s top leadership, met on Monday, with the key highlights noted below. 

FX option expiries for Dec 9 NY cut at 10:00 Eastern Time via DTCC can be found below.

EUR/USD: EUR amounts

• 1.0400 963m
• 1.0600 1.2b
• 1.0625 956m
• 1.0635 637m

USD/JPY: USD amounts                     

• 148.00 600m
• 149.50 447m
• 149.85 582m

AUD/USD: AUD amounts

• 0.6300 660m
• 0.6440 430m

USD/CAD: USD amounts       

• 1.3980 600m

NZD/USD: NZD amounts

• 0.5920 430m

• The Pound Sterling trades broadly stable against the US Dollar amid increasing bets that the Fed will cut interest rates by 25 bps on December 18.
• Fed Governor Michelle Bowman vowed to be cautious on interest rate cuts as price pressures are still elevated.
• Higher contributions by UK employers to the National Insurance norm in Labour’s first budget have weighed on labor demand, survey data shows.

The Pound Sterling (GBP) trades cautiously slightly above the key support of 1.2700 against the US Dollar (USD) on Monday. The GBP/USD pair trades broadly stable even though market participants are becoming increasingly confident that the Federal Reserve (Fed) will cut interest rates in its monetary policy meeting on December 18. 

There is an 83% chance that the Fed will reduce its key borrowing rates by 25 basis points (bps) to 4.25%-4.50% next week, according to the CME FedWatch tool, up from the 62% seen a week ago. The US Dollar seems largely unbothered by increasing Fed rate cut bets, with the US Dollar Index (DXY) – which tracks the Greenback’s value against six major currencies – risinges to near 106.20.

Market speculation for the Fed to cut interest rates next week strengthened after the release of the United States (US) Nonfarm Payrolls (NFP) data for November on Friday. The report showed that the economy added 227K fresh workers, higher than estimates of 200K. The Unemployment Rate accelerated to 4.2%, as expected, from 4.1%. Average Hourly Earnings rose steadily by 0.4% and 4% on monthly and annual basis, respectively, faster than estimated.

Defying market expectations, Federal Reserve (Fed) Governor Michelle Bowman said on Friday that she would prefer “to proceed cautiously and gradually in lowering the policy rate as inflation remains elevated.”

For more cues about the current status of inflation, investors await the US Consumer Price Index (CPI) data for November, which will be released on Wednesday. Headline CPI inflation is expected to have accelerated to 2.7% from the prior release of 2.6%. The core CPI – which excludes volatile food and energy prices – is seen rising at a steady 3.3%.

Pound Sterling remains well-supported amid fears of persistent UK inflation

• The Pound Sterling trades broadly firm against its major peers at the start of the week as the Bank of England (BoE) is expected to be among those central banks that will follow a more gradual policy-easing cycle amid worries over price pressures remaining persistent.
• BoE Monetary Policy Committee (MPC) external member Megan Greene said on Thursday, “I suspect we'll hit our inflation target by the end of our forecast period which is three years.” Also, BoE Governor Andrew Bailey said that the central bank has still some work to do to bring inflation down below the bank’s target of 2% on Wednesday. Still, he was confident that the disinflation process is well embedded.
• In Monday’s session, investors will pay close attention to the BoE Deputy Governor Dave Ramsden’s speech at an event organized by the Official Monetary and Financial Institutions Forum at 13:00 GMT. Dave Ramsden has been one of those policymakers who remained lean towards reducing interest rates.
• On the economic front, a recent survey from the Recruitment and Employment Confederation (REC) trade body and accountants KPMG has shown a decline in the demand for workers after the release of the United Kingdom (UK) Labour’s first budget, in which the administration raised Employer’s National Insurance Contribution (NIC) to 15%. The agency reported that their index of demand for staff fell to 43.9, the lowest reading since August 2020, from 46.1 in October.

Technical Analysis: Pound Sterling finds cushion near 20-day EMA

The Pound Sterling falls back after failing to extend recovery above the key resistance of 1.2800 against the US Dollar. The GBP/USD pair hovers near the 20-day Exponential Moving Average (EMA) around 1.2720 after a corrective move.

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

Looking down, the pair is expected to find a cushion near the upward-sloping trendline around 1.2500, which is plotted from the March 2023 low near 1.1800. On the upside, the 200-day EMA will act as key resistance.

Here is what you need to know on Monday, December 9:

Financial markets stay relatively calm early Monday as investors refrain from taking large positions ahead of this week's key events and data releases. Sentix Investor Confidence for December will be featured in the European economic docket and later in the day the US Census Bureau will publish Wholesale Inventories data for October. 

After posting losses for three consecutive days, the US Dollar (USD) Index gained traction on Friday and closed the day in positive territory.

The US Bureau of Labor Statistics (BLS) reported that Nonfarm Payrolls (NFP) in the US rose by 227,000 in November. This reading followed the 36,000 increase reported in October (revised from 12,000) and came in above the market expectation of 200,000. Other details of the report showed that the Unemployment Rate ticked up to 4.2% in November from 4.1%, while the annual wage inflation, as measured by the change in the Average Hourly Earnings, held steady at 4%, coming in above the market forecast of 3.9%. Early Monday, the USD Index clings to small gains above 106.00 and the benchmark 10-year US Treasury bond yield stays slightly below 4.15%. On Wednesday, the BLS will publish Consumer Price Index (CPI) figures for November.

In the Asian session, the data from China showed that the Consumer Price Index (CPI) declined by 0.6% on a monthly basis in November, compared to the market forecast for a decrease of 0.4%. On Tuesday, Trade Balance data from China will be watched closely by market participants.

AUD/USD came under heavy bearish pressure on Friday and lost nearly 1% on the day. The pair struggles to stage a rebound and trades at its weakest level since early August below 0.6400. The Reserve Bank of Australia (RBA) will release monetary policy decisions early Tuesday.

Japan's Gross Domestic Product (GDP) expanded at an annual rate of 1.2% in the third quarter, Japan's Cabinet Office reported on Monday. This reading came in better than the market expectation for a growth of 0.9%. USD/JPY showed no reaction to this report and was last seen trading marginally higher on the day above 150.00.

After reaching its highest level in three weeks above 1.0600 on Friday, EUR/USD reversed its direction and closed the day in negative territory. The pair continues to edge lower to begin the new ween and trades at around 1.0550. Later in the week, the European Central Bank (ECB) will conduct its last policy meeting of the year.

GBP/USD snapped a three-day winning streak on Friday as the US Dollar benefited from the upbeat employment data. The pair holds its ground early Monday and fluctuates near 1.2750.

Gold failed to make a decisive move in either direction in the previous week. XAU/USD extends its sideways grind slightly below $2,650 in the European morning on Monday.

• USD/CAD gains traction to near 1.4170 in Monday’s early European session. 
• The BoC expects to deliver another big rate cut at its December meeting on Wednesday. 
• US Nonfarm Payrolls came in stronger than expected, rising by 227K in November vs. 36K (revised from 12K) prior. 

The USD/CAD pair extends the rally to around 1.4170 during the early European session on Monday. The Canadian Dollar (CAD) weakens to near a four-and-a-half-year low as traders expect another outsized interest rate cut by the Bank of Canada (BoC) at its December meeting on Wednesday. 

The BoC is expected to deliver a 50 basis points (bps) reduction on Wednesday after the same move in October, bringing the benchmark rate to 3.25%. “The Bank of Canada’s policy outlook is weighing on the Canadian dollar, and from a technical point-of-view, there’s little to suggest the currency will not keep sliding in the near-term,” noted Shaun Osborne, Scotiabank’s chief foreign exchange strategist.

Furthermore, the threat of US tariffs following Donald Trump’s election might contribute to the CAD’s downside. US President-elect Donald Trump said that he would propose massive hikes in tariffs on goods coming from Mexico, Canada, and China starting on the first day of his administration. 

Data released by the Bureau of Labor Statistics revealed on Friday that there were 227K new jobs added to the US economy in November, above the 200K expected by the market consensus. Meanwhile, the Unemployment Rate increased to 4.2% in November from 4.1% in October. Nonetheless, the release didn't shift the view that the US labor market is cooling but not at a rapid pace that would alter the Fed's interest rate-cutting path. 

Investors will closely monitor the release of the US Consumer Price Index (CPI) and Producer Price Index (PPI) reports, which are due on Wednesday and Thursday, respectively. These readings could be the main determinant of the Fed’s interest rate decision in December. 

• NZD/USD extends the decline to around 0.5805 in Monday's early European session, down 0.47% on the day. 
• Trump's tariff threats and Chinese deflationary pressure exert some selling pressure on the China-proxy Kiwi. 
• The US CPI inflation data will take center stage on Wednesday. 

The NZD/USD pair faces some selling pressure to around 0.5805 during the early European session on Monday. The renewed US Dollar (USD) demand and discouraging Chinese consumer inflation undermine the pair. The US November Consumer Price Index (CPI) report will be the highlight on Wednesday. 

China's CPI inflation hit a five-month low in November, indicating that Beijing's recent measures to boost weakening economic demand are having little impact, weighing on the China-proxy New Zealand Dollar (NZD) as China is a major trading partner to New Zealand. 

Additionally, the potential fresh tariffs from US President-elect Donald Trump might create a headwind for NZD/USD. On Monday, Fitch Ratings lowered its economic projections for China for 2025 to 4.3% from 4.5%, citing risks of even higher US tariffs on Chinese goods.

On the USD’s front, Federal Reserve (Fed) officials appeared on track to lower its interest rates in the December meeting after data showed the US labor market remained solid but continued to cool in November. According to the CME Group's FedWatch Tool, markets currently see an 85.1% possibility of a 25 basis points (bps) rate cut this month. 

With a quarter-point rate cut by the US central bank next week a near certainty as per market pricing, analysts believe the Greenback might face some profit-taking after its long run-up in the four weeks since Donald Trump won the US Presidential election. This, in turn, might cap the downside for the NZD/USD pair. 

However, traders will focus on the US inflation report on Wednesday for fresh impetus. "The inflation read may determine if we will have a hawkish cut from U.S. policymakers next week, which could still see the U.S. dollar stronger if the Fed were to set the stage for a pause in the rate-cutting process into early 2025," said IG market strategist Yeap Jun Rong. 

• WTI attracts some buyers and snaps a three-day losing streak to a multi-week trough.
• Rising Middle East tensions turn out to be a key factor underpinning the commodity.
• Concerns about slowing demand in China and the global supply glut could cap gains.

West Texas Intermediate (WTI) US Crude Oil prices show some resilience below the $67.00 round-figure mark and attract some buyers at the start of a new week. The commodity currently trades just below mid-$67.00s, up 0.60% for the day, and for now, seems to have snapped a three-day losing streak to a three-week low touched on Friday. 

The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, last week decided to postpone planned supply increases by three months until April and extend the full unwinding of cuts by a year until the end of 2026. Moreover, the worsening Russia-Ukraine war, along with the overthrow of Syrian President Bashar al-Assad by rebels, keeps the geopolitical risk premium in play and acts as a tailwind for Crude Oil prices. 

Furthermore, signs of US economic resilience, along with hopes that US President-elect Donald Trump's expansionary policies will boost fuel demand, offer some support to the black liquid. Meanwhile, Saudi's price cuts to Asian buyers highlighted concerns about a slowdown in demand from China – the world's top oil importer. Adding to this, worries about a potential supply glut might cap any meaningful upside for Crude Oil prices. 

Furthermore, a closely followed report by Baker Hughes on Friday showed that the number of oil and gas rigs deployed in the US hit the highest since mid-September last week. This pointed to rising output from the world's biggest crude producer and might further contribute to keeping a lid on Crude Oil prices. Hence, it will be prudent to wait for strong follow-through buying before positioning for any further appreciating move for the commodity.

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

The price for Gold stood at 7,185.13 Indian Rupees (INR) per gram, up compared with the INR 7,170.23 it cost on Friday.

The price for Gold increased to INR 83,805.96 per tola from INR 83,632.15 per tola on friday.

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.)

• Gold price ticks higher on Monday amid bets for another Fed rate cut in December. 
• Geopolitical tensions and trade war fears further benefit the safe-haven commodity.
• Expectations for a less dovish Fed underpin the USD and cap gains for the XAU/USD.

Gold price (XAU/USD) attracts some dip-buyers at the start of a new week and builds on Friday's bounce from the $2,614-2,613 area, though it remains confined in a familiar range held over the past two weeks or so. The US Nonfarm Payrolls (NFP) report released on Friday reaffirmed expectations that the Federal Reserve (Fed) will lower borrowing costs in December. This keeps the US Treasury bond yields depressed and acts as a tailwind for the non-yielding yellow metal. 

Apart from this, the cautious mood amid political disruption in South Korea, Geopolitical Tensions and trade war fears turn out to be other factors supporting the safe-haven Gold price. Meanwhile, rising bets that the US central bank would slow the pace or pause its rate-cutting cycle in January assist the US Dollar (USD) to build on Friday's modest bounce from a nearly one-month low. This, in turn, should keep a lid on any meaningful appreciating move for the XAU/USD. 

Gold price draws some support from safe-haven demand; upside seems capped

• The US Bureau of Labor Statistics (BLS) reported on Friday that Nonfarm Payrolls (NFP) rose by 227K in November, marking a notable rise from the previous month's upwardly revised reading of 36K and was better than the 200K expected.
• Other details of the report revealed that the Unemployment Rate ticked up, as expected, to 4.2% during the reported month, from 4.1% in October, lifting bets that the Federal Reserve will lower rates by 25 basis points at its meeting this month.
• The University of Michigan’s preliminary survey for December showed that the gauge of US consumer sentiment rose to 74.0 in December from the 71.8 previous and one-year inflation expectations climbed to 2.9% from 2.6% in November. 
• Cleveland Fed President Beth Hammack noted that the economic landscape calls for a modestly restrictive monetary policy, though said the market view of one more interest rate cut between now and late January was reasonable.
• Adding to this, San Francisco Fed President Mary Daly warned that despite data still leaning toward achieving the inflation target, the central bank might still step in with additional interest rate hikes if price growth begins to spiral once again.
• Separately, Chicago Fed President Austan Goolsbee stated that the labor market appears stable and that the progress on inflation is encouraging, while any pause in the rate-cutting would come if conditions in inflation or the labor market change. 
• Meanwhile, Fed Governor Michelle Bowman said that she would prefer that the US central bank proceeds cautiously and gradually in lowering the policy rate as the underlying inflation remains elevated, uncomfortably above the 2% target.
• This comes amid hopes that US President-elect Donald Trump's expansionary policies will rekindle inflationary pressures and might force the Fed to adopt a less dovish stance, which, in turn, might cap gains for the non-yielding Gold price.

Gold price needs to move beyond $2,666 for bulls to seize near-term control

From a technical perspective, any further strength above the $2,648-2,650 supply zone is likely to confront some resistance near the $2,666 region. Some follow-through buying beyond the $2,672 hurdle will be seen as a key trigger for bulls and allow the Gold price to aim to reclaim the $2,700 round figure. The momentum could extend further towards the next relevant hurdle near the $2,722 area. 

On the flip side, weakness below the $2,630 immediate support could drag the Gold price back towards the $2,614-2,613 area. This is followed by the $2,605-2,600 support zone and the 100-day Simple Moving Average (SMA), around the $2,586-2,585 region. A convincing break below the latter should pave the way for deeper losses and expose the November swing low, around the $2,537-2,536 area.

• The Indian Rupee softens in Monday’s Asian session. 
• A stronger USD and concerns over slowing domestic growth could drag the INR lower, but RBI intervention might cap its downside. 
• The US November CPI inflation report will be released on Wednesday ahead of Indian CPI data. 

The Indian Rupee (INR) weakens on Monday. The weakness in the Chinese Yuan, the renewed US Dollar (USD) demand from importers and local oil companies, and concerns over slowing domestic growth could weigh on the local currency in the near term. Despite this weakening, the expectations of increased government spending and foreign exchange intervention by the Reserve Bank of India (RBI) might help limit the INR’s losses. 

Traders will monitor the US November Consumer Price Index (CPI) report on Wednesday, which is expected to rise to 2.7% YoY in November from 2.6% in October. This reading could be the last major obstacle to the Federal Reserve’s (Fed) third consecutive rate reduction. On the Indian docket, the CPI inflation data will be published on Thursday. 

Indian Rupee edges lower amid firmer US Dollar and slowing India’s economic growth

• The RBI kept its benchmark repo rate unchanged at 6.50% during its October 2024 meeting.
• RBI Governor Das said, “The MPC believes that only with durable price stability can strong foundations be secured for high growth. The MPC remains committed to restoring the inflation growth balance in the overall interest of the economy.”
• The US Nonfarm Payrolls (NFP) increased by 227,000 in November, compared with an upwardly revised 36,000 in October, according to the US Bureau of Labor Statistics (BLS) on Friday. This figure came in better than the estimation of 200,000. 
• The US Unemployment Rate ticked up to 4.2% in November from the previous reading of 4.1%, in line with the expectations of 4.2%. 
• The annual wage inflation, as measured by the change in the Average Hourly Earnings, held steady at 4.0% YoY in November, coming in above the market forecast of 3.9%.
• According to the CME FedWatch tool, financial markets are now pricing in nearly 85.1% odds of a 25 basis points (bps) rate cut by the Fed on December 17-18. 

USD/INR’s bullish outlook remains in play

The Indian Rupee trades on a weaker note on the day. The positive view of the USD/INR pair prevails as the price remains well above the key 100-day Exponential Moving Average (EMA) on the daily chart. The upward momentum is supported by the 14-day Relative Strength Index (RSI), which stands above the midline near 65.90, indicating further upside looks favorable. 

The first upside barrier for USD/INR emerges at an all-time high of 84.77. Further north, the next hurdle is seen at the 85.00 psychological level, followed by 85.50.

On the flip side, a break below the resistance-turned-support of 84.60 could expose 84.22, the low of November 25. The additional downside filter to watch is the 84.05-84.00 region, representing the 100-day EMA and psychological mark. 

New Zealand Prime Minister (PM) Christopher Luxon said on Monday, “our commitment is to energize the economy by continuing efforts to lower living costs, inflation, and interest rates.”

Market reaction

At the time of writing, NZD/USD is trading flat at 0.5825.

• GBP/USD struggles for a firm intraday direction and oscillates in a range on Monday.
• Bets for a less dovish Fed act as a tailwind for the USD and cap the upside for the pair.
• BoE Governor's predicted four rate cuts in 2025 also warrant caution for the GBP bulls.

The GBP/USD pair kicks off the new week on a subdued note and oscillates in a narrow trading band, below mid-1.2700s during the Asian session. Spot prices, meanwhile, remain within striking distance of over a three-week high – levels above the 1.2800 mark – touched on Friday, though the fundamental backdrop warrants some caution for bullish traders. 

The US Nonfarm Payrolls (NFP) report released on Friday showed that the Unemployment Rate inched higher in November and reaffirmed expectations that the Federal Reserve (Fed) will lower borrowing costs in December. The initial market reaction, however, turned out to be short-lived amid bets that the US central bank would slow the pace or pause its rate-cutting cycle in January. This, in turn, assists the US Dollar (USD) to hold above its lowest level in nearly one-month low, which, in turn, is seen acting as a headwind for the GBP/USD pair.

Apart from this, persistent geopolitical tensions, China's economic woes and concerns about US President-elect Donald Trump's impending trade tariffs turn out to be other factors lending support to the safe-haven Greenback. The British Pound (GBP), on the other hand, struggles to lure buyers amid the Bank of England (BoE) Governor Andrew Bailey's dovish outlook, signaling four interest rate cuts in 2025. This further contributes to capping the upside for the GBP/USD pair as traders now look to the US consumer inflation figures for a fresh impetus.

The crucial US Consumer Price Index (CPI) report, due for release on Wednesday, should offer more cues about the Fed's rate-cut path and guide policymakers' decision at the December meeting. This, in turn, will play a key role in driving the near-term USD demand and help in determining the next leg of a directional move for the GBP/USD pair. In the meantime, BoE Deputy Governor David Ramsden's speech later this Monday might influence the GBP price dynamics and allow traders to grab short-term opportunities.

• EUR/USD loses traction to around 1.0550 in Monday’s Asian session.
• Markets see a potential December rate cut by the Fed. 
• The ECB is anticipated to cut another 25 bps at its December meeting on Thursday.

The EUR/USD pair trades with a mild negative bias near 1.0550 on Monday during the Asian trading hours. Investors will closely monitor the US Consumer Price Index (CPI) inflation report for November, which is due on Wednesday. On Thursday, the European Central Bank (ECB) interest rate decision will take center stage. Investors will be looking for clues about what comes next.

The expectation of a quarter-point rate cut by the Federal Reserve (Fed) on December 18 grew last week after the employment report showed strong job creation, but not at a pace that would necessarily deter Fed officials from lowering rates to between 4.25 and 4.5% from their current range of 4.5 to 4.75%. 

With hopes high for a US interest rate cut later this month, inflation data on Wednesday could serve as the one remaining potential stumbling block to a third successive rate cut from the Fed. The annual consumer price inflation is expected to rise to 2.7% YoY in November from 2.6% in October. Core inflation, which excludes volatile food and energy prices, is projected to be steady at 3.3% YoY in November. 

The European Central Bank (ECB) is expected to deliver its fourth interest rate cut of the year at its final policy meeting of 2024 on Thursday. Analysts expect the ECB to stick to its data-dependent guidance by reiterating that it “is not pre-committing to a particular rate path.” However, the ECB President Lagarde’s press conference could offer some hints about the interest rate outlook. Any dovish remarks from ECB policymakers could weigh on the Euro (EUR) against the US Dollar. 

China's National Bureau of Statistics (NBS) published a statement following the country’s inflation data.

Key takeaways

Market reaction

AUD/USD is consolidating its renewed upside near 0.6400, little affected by Chinese inflation data. The pair is up 0.19% on the day, as of writing.

Middle East geopolitical tensions mount as the 15-year-long civil war in Syria took a new turn over the weekend after Syrian rebels seized control and ousted the old autocratic leader, President Bashar al-Assad, after seizing control of Damascus on Sunday.

Reuters reported that Russia has given asylum to Bashar al-Assad and his family after the toppling of his government by opposition forces in a lightning offensive.

The United Nations (UN) is set to convene for an emergency closed-door meeting on Monday regarding the situation in Syria.

Top rebel commander Abu Mohammed al-Golani said a "new history was being written" after a "great victory".

Meanwhile, US Secretary of State Antony Blinken said the US has taken note of the statements made by the rebel leaders of Hayat Tahrir Al-Sham (HTS) group, and Washington has called on all actors involved to respect human rights.

• The Japanese Yen edges higher in reaction to an upward revision of Japan’s Q3 GDP.
• The recent decline in the US bond yields undermines the USD and also benefits the JPY.
• Doubts over the BoJ’s ability to hike interest rates further cap the upside for the JPY.

The Japanese Yen (JPY) kicks off the new week on a positive note and draws support from a combination of factors, though the upside potential seems limited. Government data released earlier today showed that Japan’s economy expanded at a faster pace than initially estimated in the third quarter. Apart from this, geopolitical tensions and concerns about US President-elect Donald Trump's impending trade tariffs offer support to the safe-haven JPY. 

Meanwhile, the recent fall in the US Treasury bond yields contributes to the JPY's relative outperformance against its American counterpart and keeps the USD/JPY pair depressed below the 150.00 psychological mark during the Asian session. That said, the market split over whether the Bank of Japan (BoJ) will hike interest rates further at its December meeting might hold back the JPY bulls from placing aggressive bets and limit losses for the currency pair. 

Japanese Yen is underpinned by a combination of factors; bulls lack conviction

• Japan’s third-quarter GDP was revised to show a 0.3% growth as compared to the 0.2% estimated originally. On a yearly basis, the economy expanded by 1.2%, above prior estimates of 0.9%.
• The yearly rate marks a sharp slowdown from the 2.2% rise in the prior quarter, while sluggish private consumption suggests that the boost from bumper wage hikes is running out of steam. 
• This, in turn, raises doubts over whether the Bank of Japan has enough headroom to raise interest rates further and fails to assist the Japanese Yen to build on a modest intraday uptick on Monday. 
• The US Nonfarm Payrolls (NFP) report released on Friday revealed that the economy added 227K jobs in November against the previous month's upwardly revised 36K and 200K anticipated. 
• Additional details of the report showed that the Unemployment Rate edged up to 4.2% in November from 4.1%, as expected, and the Average Hourly Earnings held steady at 4% vs 3.9% forecasted.
• The crucial jobs data reaffirmed market expectations that the Federal Reserve is unlikely to pause in its easing cycle and lower borrowing costs again at its upcoming policy meeting in December. 
• The University of Michigan’s preliminary gauge of US consumer sentiment rose to 74.0 in December reading from 71.8 while one-year inflation expectations rose to 2.9% from 2.6% in November. 
• Cleveland Fed President Beth Hammack noted that the economic landscape calls for modestly restrictive policy, though the market view of one cut between now and late January is reasonable.
• San Francisco Fed President Mary Daly said that the labor market remains in a good position and that the central bank will still step in with additional rate hikes if price growth begins to spiral once again.
• Chicago Fed President Austan Goolsbee stated that the overall progress on inflation is still encouraging and any pause in the rate-cutting would come if conditions in inflation or the labor market change. 
• Fed Governor Michelle Bowman said that she prefers to cut the interest rates cautiously and emphasized that the underlying inflation remains uncomfortably above the central bank’s 2% goal.
• The yield on the benchmark 10-year US government bond hangs near its lowest level since October 21, capping the US Dollar recovery from a multi-week low and supporting the lower-yielding JPY. 

USD/JPY remains confined in a range; 100-day SMA holds the key for bullish traders

From a technical perspective, the range-bound price action could be categorized as a bearish consolidation phase against the backdrop of the recent pullback from a multi-month top touched in November. Moreover, oscillators on the daily chart are holding in negative territory and suggest that the path of least resistance for the USD/JPY pair is to the downside. That said, last week's resilience below the 100-day Simple Moving Average (SMA) warrants some caution for bearish traders. 

In the meantime, the post-NFP low, around the 149.35 area, now seems to act as immediate support ahead of the 149.00 mark and the 100-day SMA, currently pegged near the 148.70-148.65 region. The latter coincides with a nearly two-month low touched last Tuesday and should act as a key pivotal point. Some follow-through selling could drag the USD/JPY pair to the 148.10-148.00 region en route to the 147.35-147.30 zone and the 147.00 round figure.

On the flip side, attempted recovery might now confront some resistance near the 150.55 region. This is followed by the 150.70 hurdle, the 151.00 round figure and last week's swing high, around the 151.20-151.25 zone. A sustained move beyond the latter should allow the USD/JPY pair to test the very important 200-day SMA near the 152.00 mark. Some follow-through buying will suggest that the corrective decline from a multi-month high has run its course and shift the bias in favor of bullish traders.

• Gold price edges higher to $2,645 in Monday’s Asian session, up 0.52% on the day. 
• PBoC resumes gold purchases after a six-month pause in November. 
• Traders see an 87% chance of a 25bp rate cut by the Fed on December 18.

Gold price (XAU/USD) trades with mild gains around $2,645 during the early Asian session on Monday. The renewed geopolitical tensions in the Middle East and Federal Reserve (Fed) rate cut expectations support the yellow metal. The US Consumer Price Index (CPI) for November will be in the spotlight on Wednesday. 

The People's Bank of China (PBOC), China's central bank, resumed buying gold for its reserves in November after a six-month pause. This, in turn, might boost the precious metal price, as China is a major gold-consuming country. China’s gold holdings climbed to 72.96 million fine troy ounces at the end of November, up from 72.80 million troy ounces a month earlier. 

Persistent global uncertainties and ongoing geopolitical tensions in Ukraine following another major attack by Russia continue to drive demand for gold as a safe-haven asset. CNN reported on Sunday that Syrian President Bashar al-Assad and his family fled to Moscow and were granted political asylum, ending 50 years of a brutal dictatorship. The downfall of Bashar al-Assad's regime could lead to a conflict involving regional countries and Turkey, the Iranian envoy to Syria said on Sunday.

Furthermore, the US November employment report on Friday suggested the labor market continues to ease gradually, leaving room for the Fed to cut interest rates in December, which lifts the Gold price as lower rates increase the appeal of holding non-yielding gold. According to the CME FedWatch tool, financial markets are now pricing in nearly 85.1% odds of a 25 basis points (bps) rate cut by the Fed on December 17-18.

On the other hand, the potential higher tariff policies by the US-elected Donald Trump could stoke inflation and convince the US central bank to adopt a cautious approach to further rate cuts. This might undermine the Greenback and act as a headwind for USD-denominated commodity price. 

China’s Consumer Price Index (CPI) rose at an annual pace of 0.2% in November after reporting a 0.3% growth in October. The market consensus was for a 0.5% increase in the reported period.

Chinese CPI inflation came in at -0.6% MoM in November versus October’s 0.3% decline, worse than the 0.4% drop estimate.

China’s Producer Price Index (PPI) declined 2.5% YoY in November, following a 2.9% fall in October. The data came in better than the market forecast of -2.8%. 

Market reaction to China’s inflation data

At the press time, the AUD/USD pair is up 0.12% on the day to trade at 0.6397. 

On Monday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.1870, as compared to Friday's fix of 7.1848 and 7.2627 Reuters estimates.

South Korea's finance ministry and regulators said Monday they will make all-out efforts to stabilise financial markets by implementing previously stated contingency plans and preparing new steps to increase foreign currency market liquidity by the end of December, per Reuters. 

South Korean authorities further stated that they will work with the Bank of Korea (BoK) on the outright purchase of Korea Treasury Bonds (KTBs) if needed. 

Market reaction

At the time of writing, the USD/KRW pair is trading 0.12% higher on the day to trade at 1425.38. 

• AUD/USD trades in positive territory near 0.6400 in Monday’s early Asian session. 
• US Nonfarm Payrolls was stronger than expected in November, rising by 227,000 vs. 36,000 prior. 
• The RBA is expected to hold the interest rate steady at 4.35% at its meeting on Tuesday.

The AUD/USD pair gains ground to around 0.6400 on the weaker US Dollar (USD) during the Asian session on Monday. There are no Federal Reserve (Fed) speakers this week due to the media blackout. All eyes will be on the Reserve Bank of Australia (RBA) interest rate decision on Tuesday, with no change in rates expected. 

Data released by the US Bureau of Labor Statistics (BLS) on Friday showed that the US Nonfarm Payrolls (NFP) increased by 227,000 in November, compared with an upwardly revised 36,000 in October. This reading came in better than the estimation of 200,000. Meanwhile, the Unemployment Rate ticked up to 4.2% in November from the previous reading of 4.1%. 

Several Fed officials have spoken over the past few weeks, and there is near unanimity that the labor market is cooling but healthy. The Greenback edged lower with the immediate reaction to Nonfarm Payrolls data. Financial markets are now pricing in nearly 70% odds of a 25 basis points (bps) rate cut by the Federal Reserve (Fed) at the upcoming meeting on December 17-18, according to the CME FedWatch tool.

 On the Aussie front, the Australian central bank is anticipated to keep the benchmark interest rate steady at 4.35%. RBA Governor Bullock said earlier this month that “underlying inflation is still too high to be considering lowering the cash rate target in the near term.” However, Australia’s Q3 GDP growth report was weak and suggests a dovish surprise cannot be ruled out. 

 The market has brought forward the timing of the first rate cut to April versus May before. Market players will keep an eye on the RBA Press Conference. The dovish comments from the policymakers could exert some selling pressure on the Aussie against the USD. 

South Korea's President Yoon Suk Yeol survived an impeachment vote in the opposition-led parliament late on Saturday, prompted by his short-lived attempt to impose martial law last week, per Reuters. However, the leader of his party said the president would effectively be excluded from his duties before eventually stepping down.

Thousands of people rallied in front of the parliament in Seoul on Sunday, calling for the impeachment and arrest of Yoon and the disbandment of his ruling party. 

Market reaction

At the time of writing, the USD/KRW pair is trading 0.11% higher on the day to trade at 1425.25. 

Federal Reserve Governor Michelle Bowman said on Friday that she prefers to cut the interest rates cautiously, emphasizing underlying inflation remains “uncomfortably” above the central bank’s 2% goal, per Bloomberg. 

Key quotes

Market reaction

The US Dollar Index (DXY) is trading unchanged on the day at 105.98, as of writing.