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The European Central Bank (ECB) policymaker Francois Villeroy de Galhau said on Thursday that the central bank should keep its options open for a bigger rate cut next month and its policy rate could eventually fall to a level that once again boots growth, per Reuters.
Key quotes
Seen from today, there is every reason to cut on December 12. Optionality should remain open on the size of the cut, depending on incoming data, economic projections and our risk assessment.
Victory against inflation is in sight.
The inflation target may be reached in early 2025.
Our interest rates should clearly go to the neutral rate.
We still have significant room to remove the restrictive stance of our monetary policy.
I wouldn't exclude going below the neutral rate in the future.
There is every reason to cut on December 12th, optionality should remain open on the size.
For the following meetings, we shouldn't exclude any of them for possible cuts.
Market reaction
At the time of writing, the EUR/USD pair is trading 0.04% higher on the day to trade at 1.0559.
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
The headline Tokyo Consumer Price Index (CPI) for November rose 2.6% YoY as compared to 1.8% in the previous month, the Statistics Bureau of Japan showed on Friday. Meanwhile, the Tokyo CPI ex Fresh Food, Energy came in at 2.2% in November vs. 1.8% in October.
Additionally, Tokyo CPI ex Fresh Food rose 2.2% in November against 2.1% expected and up from 1.8% in the prior month.
Market reaction to the Tokyo Consumer Price Index
As of writing, the USD/JPY pair was down 0.18% on the day at 151.21.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
Reserve Bank of Australia (RBA) Governor Michele Bullock said on Thursday that Australia’s core inflation is “too high” to consider interest-rate cuts in the near term. Bullock reiterated that there’s still some way to go before prices return sustainably to target, per Bloomberg.
Key quotes
Policy will need to remain restrictive until there is more confidence in inflation.
There is still some way to go in returning inflation sustainably to target band.
Our forecasts suggest a sustainable return to target will occur in 2026.
The word ‘sustainably’ is important because it recognizes that we need to look through temporary factors that influence the headline inflation rate.
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.
If the data that we’re seeing and the information we’re getting from our liaison and so on suggests that inflation is picking up again, it’s not going to follow that trajectory, it’s going in another direction, then that would be a very big red flag for us.
Market reaction
At the time of writing, the AUD/USD pair is trading 0.02% lower on the day to trade at 0.6499.
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
- Gold price remains steady at $2,637 amid thin Thanksgiving trading.
- Trump's tariff threats weigh on Gold, but easing rhetoric towards Canada and Mexico offers some relief.
- Market eyes 70% chance of a 25 bps Fed rate cut, supporting gold as Treasury yields stay subdued.
Gold price consolidated around $2,630 on Thursday amid thin liquidity trading as US markets are closed for Thanksgiving. Geopolitics continued to drive the price of non-yielding metal, which dwindled during the last three trading days. The XAU/USD trades at $2,637, virtually unchanged.
Market mood improved on Thursday, partly due to Israel and Lebanon's 60-day ceasefire. However, the escalation of the Russia-Ukraine conflict could keep Bullion prices firmly above $2,600.
US President-elect Donald Trump's tariff threats on China, Canada, and Mexico limited the advance of the golden metal, with traders flying towards the safety of the Greenback. Sources cited by Reuters said, “It did increase a bit of concern about the possible repercussions from these two countries. So that continues to remain an important support factor for gold.”
Following Trump’s remarks, Gold tumbled due to risks linked to his threats. However, recent developments suggest that the US President-elect has eased his rhetoric to Canada and Mexico.
Gold recovered after the report and as market participants eyed another 25 basis point interest rate cut by the Federal Reserve at the upcoming December meeting.
The swaps market sees a probability of 70% of such a decision, according to the CME FedWatch Tool, as the odds improved from around 55% at the beginning of the week.
This would keep US Treasury bond yields depressed, which could undermine the Greenback.
Ahead this week, the US economic docket is absent, barring a surprise of a Federal Reserve speaker in the media. Next Monday, the schedule will be busy with the release of S&P Global and ISM Manufacturing PMI, and Fed Governor Christopher Waller crossing the wires.
Daily digest market movers: Gold prices fluctuate near $2,630
- Gold prices recovered as US real yields remained unchanged at 1.9906%.
- US data released on Wednesday showed the economy growing 2.8% in Q3, below estimates but unchanged from the preliminary estimate.
- This, along with the latest Core PCE Price for October coming at 2.8% YoY up from estimates of 2.7%, suggests the disinflation process has stalled and that the Fed might begin to pause cutting rates.
- Data from the Chicago Board of Trade, via the December fed funds rate futures contract, shows investors estimate 24 bps of Fed easing by the end of 2024.
Technical outlook: Gold price advances modestly, clings to $2,630
Gold price is consolidated within the 50 and 100-day Simple Moving Averages (SMAs), each at $2,668 and $2,572, respectively. Nevertheless, some upside in the short term is seen due to Gold’s being slightly pressed toward the former, but buyers need to clear key resistance levels.
If Gold clears the 50-day SMA, the next stop would be the $2,700 figure. A breach of the latter will expose the psychological $2,750, and the all-time high at $2,790.
Conversely, If bears push prices below $2,600, it will open the door to testing the 100-day SMA of $2,572, immediately followed by the November 14 swing low of $2,536.
Oscillators like the Relative Strength Index (RSI) have shifted bearishly, indicating sellers are in charge.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
- USD/CAD trades in negative territory for the third consecutive day around 1.4010 in Friday’s early Asian session.
- The weakness in the US Dollar (USD) weighs on the pair, but potential downside seems limited.
- Canada’s Q3 GDP growth report will be in the spotlight on Friday.
The USD/CAD pair extends its downside to near 1.4010 during the early Asian session on Friday, pressured by the weakening of the US Dollar (USD) after the holiday-thinned market. All eyes will be on Canada’s Gross Domestic Product (GDP) growth number for the third quarter (Q3), which is due later on Friday.
The Greenback edges lower due to the month-end flows and some profit-taking for the US long weekend. Nonetheless, the cautious stance of the US Federal Reserve (Fed) might help limit the USD’s losses. The FOMC Minutes released on Tuesday showed that Fed officials see interest rate cuts ahead but at a gradual pace as inflation eases and the labor market remains strong.
On the Loonie front, traders brace for Canada’s third-quarter GDP growth, which is expected to grow 1.0% on an annualized basis in Q3, compared to the previous reading of 2.1%. On a monthly basis, Canadian GDP is estimated to expand 0.3% MoM in September, compared to August’s flat 0.0% print.
Any signs of slower growth in the Canadian economy might push the Bank of Canada (BoC) to deliver a second consecutive 50 basis points (bps) rate cut at the upcoming next rate decision on December 11. This, in turn, could drag the Canadian Dollar (CAD) lower and act as a tailwind for USD/CAD.
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
- EUR/USD failed to make any progress toward 1.0600, but is still holding steady.
- Holiday-thinned US markets kneecapped market volumes on Thursday.
- Shortened US hours will also trim volumes on Friday, but EU HICP inflation could spark a move.
EUR/USD churned chart paper just south of the 1.0600 handle on Thursday, failing to extend Fiber’s recent bullish recovery but not losing any ground either. Market volumes were constrained on Thursday with US markets dark for the Thanksgiving holiday, and Friday will likewise see crimped liquidity during the US session to wrap up the trading week.
A fresh batch of pan-EU inflation figures are due on Friday, which could see the Euro take a leg higher rounding the corner into the weekend, however Fiber traders have had little reason to bid EUR/USD as of late. The key figures for Fiber will be pan-EU Harmonized Index of Consumer Prices (HICP) inflation. Core HICP inflation is forecast to tick upwards to 2.8% YoY in November from the previous 2.7%, which will throw a wrench in the works for several European Central Bank (ECB) officials who have hit newswires this week trying to soothe investors with promises of further rate cuts in December and heading into 2025.
On the Greenback side, next Friday’s US Nonfarm Payrolls (NFP) jobs report, scheduled for December 6, will be the big figure to watch. Next week’s NFP will take on renewed importance for traders now that watching for signs of rate cuts from the Federal Reserve (Fed) has taken a backseat as of late. However, a large move in either direction in NFP figures could jolt Treasury rates, sparking fresh fears of either too many or too few rate cuts heading into 2025.
EUR/USD price forecast
The Euro’s much-needed bullish reprieve on Wednesday gave Fiber bulls a chance to put more distance between themselves and the pair’s latest swing low below the 1.0400, but not by much. EUR/USD is poised for a battle with the 1.0600 handle, and even a victory on the key technical level still sees further topside momentum running aground of a quickly-descending 50-day Exponential Moving Average (EMA) falling through 1.0750.
EUR/USD daily chart
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- GBP/USD is treading water near 1.2700 with a quiet Friday on the docket.
- Data is thin on both sides of the Atlantic to wrap up the trading week.
- BoE”s FSR is unlikely to move the needle on Friday, markets await next week’s NFP.
GBP/USD saw a quiet Thursday session, trading on the thin side and holding on near the 1.2700 handle. US markets were dark on Thursday for the Thanksgiving holiday, and Friday will also see shortened US trading hours, keeping the back half of the trading week on the low end of volumes overall.
The Bank of England’s (BoE) latest Financial Stability Report will drop on markets early during Friday’s upcoming US market session. The release is overwhelmingly unlikely to drive much momentum in Cable markets. However, traders should still be on the lookout for low-volume volatility spikes. With the US slated to have shortened trading hours on Friday, overall market liquidity will be even lower than usual, making it easier for outsized orders to shock bids.
Next week’s economic data docket bodes just as poorly for the Pound Sterling. Very little data of note is slated for release next week on the UK side, while traders will be hunkering down to wait for next Friday’s US Nonfarm Payrolls (NFP) jobs report, scheduled for December 6. Next week’s NFP will take on renewed importance for traders now that watching for signs of rate cuts from the Federal Reserve (Fed) has taken a backseat as of late. However, a large move in either direction in NFP figures could jolt Treasury rates, sparking fresh fears of either too many or too few rate cuts heading into 2025.
GBP/USD price forecast
The GBP/USD trend is downward biased, though the British Pound has made some recovery. For buyers to regain control, they need to break above 1.2714, the November 20 high, and the 200-day Simple Moving Average (SMA) at 1.2818. If these levels are surpassed, moving towards 1.3000 will be challenging due to a recent 'death cross' formation between the 50-day and 100-day SMAs.
Sellers must close below 1.2600 for a bearish continuation, which would expose the November 26 low at 1.2506, followed by last week's low of 1.2486. Overall, while the GBP/USD has a slight short-term upside, significant downside risks persist.
GBP/USD daily chart
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- NZD/USD declined to 0.5895 on Thursday.
- Pair rejected at 20-day SMA and indicators lost some steam, but may have momentum to conquer the SMA.
- As long as the pair holds below the 20-day SMA, the outlook for the short-term will be negative.
The NZD/USD declined slightly in Thursday's session, reaching a low of 0.5895, before recovering some ground. Overall, the momentum seems to be mixed. The pair has been in a downtrend since late September, and the short-term outlook remains negative as long as it remains below the 20-day Simple Moving Average (SMA).
The technical indicators present conflicting signals. The Relative Strength Index (RSI) is currently at 47, indicating that it is in negative territory and suggests that selling pressure is present. On the other hand, the Moving Average Convergence Divergence (MACD) histogram is green and rising, indicating that buying pressure is rising. This divergence suggests that while there may be some selling pressure, there is also significant buying interest in the market.
Despite facing resistance at the 20-day SMA, NZD/USD maintains momentum from recent gains, with indicators suggesting both buying and selling pressure present. However, the downward trend continues as long as the pair remains below the mentioned SMA. When American traders return from Thanksgiving’s holiday, the pair may see further volatility which might set the direction of the pair.
NZD/USD daily chart
- AUD/USD stands neutral around 0.6490 on Thursday.
- US-China trade war concerns and upcoming AI chip sanctions weigh on AUD/USD.
- Greenback's weakness continues to support the Australian Dollar.
The AUD/USD stands mixed around 0.6495 in Thursday's session, reversing early gains. The recent weakness in the US Dollar (USD) has helped keep the Aussie afloat. However, buyers have turned cautious amid the United States (US)-China trade war. The US is set to unveil further Artificial Intelligence (AI) chip sanctions against China on Monday, which is weighing on the AUD/USD, due to the risk-off market sentiment that has been triggered.
The Australian Dollar (AUD) has gained support due to weakness in the US Dollar, despite mixed Australian economic data and a hawkish Reserve Bank of Australia (RBA).
Daily digest market movers: Australian dollar pressured as US-China trade concerns linger.
- The AUD/USD benefited lately from the USD softness which seems to be in a consolidation period.
- The Greenback fundamentals remain, with markets pricing a less dovish Federal Reserve (Fed) and strong economic data limiting the USD’s losses.
- On the other side, the Aussie could see some gains by the RBA’s hawkishness but Australia’s mixed economic outlook might limit the upside.
- The markets are seeing the RBA’s first rate cut to come in Q2 of 2025, while continuing to be confident of a Fed cut in December.
- In addition, trade wards fears between the US and China might also affect the Aussie as China is one of its largest trade partners.
AUD/USD technical outlook: Outlook is negative in the short term despite signs of mild recovery
The AUD/USD pair remains under pressure as technical indicators continue to point to a bearish bias, with the Relative Strength Index (RSI) hovering below the 50 mark but the Moving Average Convergence Divergence (MACD) is showing some signs of bullish presence.However, for the short term, the outlook remains negative unless the pair manages to recover above the 20-day SMA. Should this level be breached, it could signal a potential trend reversal and open the door for further gains in the AUD/USD.
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
US markets took Thursday off for the Thanksgiving holiday, keeping the Greenback at bay and setting up European-session traders for a fresh round of preliminary pan-European HICP inflation figures for November.
Here’s what you need to know on Friday, November 29th:
The US Dollar Index (DXY) slumped into a flat day on Thursday, trading flatly near the 106.00 handle as holiday-thinned market volumes took the wind out of US market session sails. The Greenback’s broad-market index has eased from year-plus highs set late last week, but rushing too quickly into a bearish USD stance could catch short-term traders off-guard with a snap back into the high side.
EUR/USD also traded flat through most of Thursday’s market action, hobbled just south of the 1.0600 handle. Euro traders will be looking ahead to Friday’s wide docket of European economic data, but the key figures for Fiber will be pan-EU Harmonized Index of Consumer Prices (HICP) inflation. Core HICP inflation is forecast to tick upwards to 2.8% YoY in November from the previous 2.7%, which will throw a wrench in the works for several European Central Bank (ECB) officials who have hit newswires this week trying to soothe investors with promises of further rate cuts in December and heading into 2025.
GBP/USD struggled to make much progress in either direction, but Cable still managed to inch closer to the 1.2700 handle on Thursday. The UK has a clean data docket on Friday, although the Bank of England (BoE) is expected to release its latest Financial Stability Report.
USD/JPY reclaimed some lost ground on Thursday after a clean bounce off of the 200-day Exponential Moving Average (EMA) near 150.50 during the mid-week market session. However, bullish momentum remains absent as Yen traders gear up for Japanese inflation figures early Friday. Core Tokyo Consumer Price Index (CPI) inflation is expected to tick higher to 2.1% for the year ended in November, compared to the previous period’s 1.8%. While rising inflation will help push the Bank of Japan (BoJ) closer to increasing rock-bottom interest rates, investors have noted that Japan’s Unemployment Rate is also expected to tick up to 2.5% in November from 2.4%, a move that will give permadove BoJ policymakers all the fuel they need to continue holding rates in the basement for an undefined period.
AUD/USD remained stuck near the 0.6500 level, and a quiet data docket for the Antipodeans means the Aussie is likely to remain stuck near recent lows. AUD/USD fell over 7% top-to-bottom from September’s highs near 0.6940, and Aussie bulls are struggling to develop meaningful momentum.
- EUR/AUD falls 0.20%, influenced by expectations of ECB policy easing.
- Technical indicators show a shift to neutral as EUR/AUD invalidates head-and-shoulders pattern.
- Key resistances await at 1.6254 (50-day SMA) and 1.6300; supports positioned at 1.6168 and 1.6003.
- Support level are seen at 1.6200, 1.6168 and 1.6003.
The Euro took a hit and dived against the Australian Dollar as traders seemed convinced that the European Central Bank (ECB) would lower borrowing costs at the upcoming meeting. The chances of the ECB cutting 50 basis points remain, as most Eurozone economies remain subdued. At the time of writing, the EUR/AUD trades were at 1.6231, down 0.20%.
EUR/AUD Price Forecast: Technical outlook
The EUR/AUD shifted from a downward to a neutral bias. Once prices cleared the head-and-shoulders (H&S) chart pattern’s neckline, the H&S was invalidated, indicating that buyers' bulls were gathering momentum.
On its way north, the EUR/AUD found acceptance at 1.6200 before extending its gains, but bulls must reclaim the 50-day Simple Moving Average (SMA) at 1.6254 to keep their hopes of testing 1.6300.
Conversely, if bears move in and push the EUR/AUD below the H&S neckline below 1.6200, this could pave the way for further downside. On that outcome, the first support would be the November 27 low of 1.6168, followed by the November 25 daily low at 1.6003.
EUR/AUD Price Chart – Daly
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- The Canadian Dollar is mostly flat near familiar territory on Thursday.
- Canada GDP figures due Friday to draw some attention from Loonie traders.
- Market volumes are notably thin with US markets shuttered for Thanksgiving.
The Canadian Dollar (CAD) traded thinly on Thursday, sticking to the 1.4000 handle against the Greenback as global markets grind into slow gear in the latter half of the trading week with overall market volumes crimped by a lack of flow from US institutions. US markets are shuttered in observation of the Thanksgiving holiday today, and a shortened day for American markets on Friday also bodes poorly for consistent market moves to wrap up the week.
Canada will be printing updates to Gross Domestic Product (GDP) growth figures on Friday, leaving Loonie traders in the lurch for Thursday. Still, Canadian Current Account figures came in better than expected, helping to muscle the CAD into a slightly higher stance on the day.
Daily digest market movers: Canadian Dollar propped up by holiday markets
- The Canadian Dollar gains a scant tenth of a percent on Thanksgiving Thursday.
- Market flows have dried up with the US on holiday. Friday volumes will likely be constrained as well.
- Canada’s Current Account came in at -3.23 billion in the third quarter, better than the expected -9.3 billion and rebounding from the previous quarter’s revised -4.7 billion, which was initially released at -8.4 billion.
- On Friday, Canada’s third quarter GDP growth is expected to ease to just 1.0% on an annualized basis, down from the previous 2.1%.
- On a month-on-month basis, Canadian GDP is forecast to swing up to 0.3% MoM in September compared to August’s flat 0.0% print.
Canadian Dollar price forecast
The Canadian Dollar’s (CAD) is seeing a tepid rebound after tapping a 55-month low this week. The CAD has gained an intraday foothold against the US Dollar, dragging the USD/CAD pair back into the 1.4000 handle. The pair is still caught on the high end following a broad-market bull run in the Greenback. Still, technical traders will have an increasingly difficult time ignoring the growing potential for a cyclical turnaround in the long-term charts.
USD/CAD daily chart
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
- The US Dollar Index trades near 106.00 neutral.
- US markets remain closed on Thursday forThanksgiving celebrations.
- Economic data may push the Fed not to hurry to cut rates.
The US Dollar Index (DXY), which measures the value of the USD against a basket of currencies, trades near 106.00 on Thursday, tilted higher by the US Dollar (USD) strength.
Thin liquidity is expected as most major trading floors will be closed across the United States, with Thanksgiving and Black Friday taking place, resulting in a very calm remaining two trading days for the week.
The US Dollar Index (DXY) remains bullish, supported by robust economic data and a hawkish Federal Reserve (Fed) stance. Despite recent profit-taking and geopolitical uncertainty, the uptrend is intact.
Daily digest market movers: US Dollar holds steady, calm end of the week ahead
- Thanksgiving and Black Friday holidays in the US have led to thin liquidity and a lull in trading activity.
- With only two trading days remaining this week, market movements are expected to be subdued.
- This week, November’s Federal Open Market Committee (FOMC) minutes suggested a cautious Fed with no rush to cut rates.
- Robust economic growth, resilient household spending and strong consumer confidence support a cautious Fed easing cycle.
- October’s Personal Consumption Expenditures (PCE) underscored persistent inflation and the need for caution which may push the Fed to consider less cuts.
- In the meantime, the odds of a cut in December by the Fed remain high but subdued.
DXY technical outlook: Outlook remains bullish despite consolidation
Despite temporary setbacks due to profit-taking and global uncertainty, the uptrend remains intact. Technical indicators, including the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD), suggest consolidation, as they struggle to gain traction. However, the DXY remains supported by the 106.00-106.50 area, which has proven resilient and could prevent further losses. On the upside, key resistance is encountered at 107.00.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- Mexican Peso strengthened after Trump – Sheinbaum’s call, reversing some of the losses spurred by Trump's earlier threats.
- Banxico minutes reflect a possibility of further interest rate adjustments based on the inflation outlook.
- Fed’s favorite inflation gauge suggests prices remain high, justifying its gradual approach.
The Mexican Peso rallied against the US Dollar on Thursday after being pressured by Trump’s tariff threats. Upbeat news related to a call between the United States (US) President-elect and Mexico’s President Claudia Sheinbaum weighed on the exotic pair as the Peso recovered and trimmed weekly losses. The USD/MXN trades at 20.41,down 0.72%.
The call betweenSheinbaum and Trump revealed that both countries found common ground to fix issues involving them. In his Truth Social network, Trump indicated that he “had a wonderful conversation with the new President of Mexico, Claudia Sheinbaum Pardo. She has agreed to stop migration through Mexico.” He added they discussed how they could work “to stop the massive drug inflow to the US.”
Following the post, the USD/MXN began to slide after hitting a new year-to-date (YTD) high of 20.82 on Monday.
On the monetary policy front, the Bank of Mexico (Banxico) revealed in its minutes that the inflationary scenario will allow for further adjustments to interest rates.
Across the north of the border, the Federal Reserve’s (Fed) preferred gauge for inflation, the Core Personal Consumption Expenditures (PCE) Price Index, increased 2.8% YoY in October, up from 2.7% in September and in line with analysts’ estimates.. This justifies the Fed’s policymakers' gradual approach to monetary policy, adopted since the latest meeting in early November.
Ahead this week, Mexico’s docket remains light, yet it will feature Fiscal Balance figures. However, USD/MXN traders should be aware of political developments, including US President-elect Donald Trump’s posts on social media.
Daily digest market movers: Mexican Peso to remain volatile – Banxico
- Banxico’s board members noted that the Mexican Peso traded broadly, depreciating markedly and exhibiting volatility mainly due to uncertainty about the US election.
- They added that inflation risks are tilted to the upside, mentioning a greater exchange rate depreciation. They acknowledged the outlook for inflation still calls for a restrictive policy stance.
- In the bank's quarterly report, Banxico’s Governor Victoria Rodriguez commented that they monitored the recent peso volatility and added that there has not been a need to intervene in the forex market.
- The quarterly report revealed that Banxico updated the Mexican economy to grow 1.8% in 2024, up from 1.5%. Nevertheless, the central bank kept its 2025 Gross Domestic Product (GDP) projection at 1.2%.
- The CME FedWatch Tool suggests that investors see a 66% chance of a 25-basis-points (bps) rate cut at the US central bank’s December meeting, up from 59% a day ago.
- Data from the Chicago Board of Trade, via the December Fed funds rate futures contract, shows investors estimate 24 bps of Fed easing by the end of 2024.
USD/MXN technical outlook: Mexican Peso recovers as USD/MXN falls below 20.50
The USD/MXN is still upward biased despite hitting a daily low of 20.20. Despite recovering some ground, it remains below the psychological 20.50 figure, meaning that bulls are not out of the woods. If they want to extend the uptrend, they need to reclaim 20.50, followed by the YTD high of 20.83, ahead of the 21.00 mark. Once those levels are cleared, bulls will target the March 8, 2022, peak at 21.46, followed by the November 26, 2021, high at 22.15.
Conversely, if bears drag the exchange rate below 20.00, the next support would be the 50-day Simple Moving Average (SMA) at 19.90. Key support levels lie beneath the latter, with the 100-day SMA at 19.45, before the psychological 19.00 figure.
Mexican Peso FAQs
The Mexican Peso (MXN) is the most traded currency among its Latin American peers. Its value is broadly determined by the performance of the Mexican economy, the country’s central bank’s policy, the amount of foreign investment in the country and even the levels of remittances sent by Mexicans who live abroad, particularly in the United States. Geopolitical trends can also move MXN: for example, the process of nearshoring – or the decision by some firms to relocate manufacturing capacity and supply chains closer to their home countries – is also seen as a catalyst for the Mexican currency as the country is considered a key manufacturing hub in the American continent. Another catalyst for MXN is Oil prices as Mexico is a key exporter of the commodity.
The main objective of Mexico’s central bank, also known as Banxico, is to maintain inflation at low and stable levels (at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%). To this end, the bank sets an appropriate level of interest rates. When inflation is too high, Banxico will attempt to tame it by raising interest rates, making it more expensive for households and businesses to borrow money, thus cooling demand and the overall economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.
Macroeconomic data releases are key to assess the state of the economy and can have an impact on the Mexican Peso (MXN) valuation. A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only does it attract more foreign investment but it may encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this strength comes together with elevated inflation. However, if economic data is weak, MXN is likely to depreciate.
As an emerging-market currency, the Mexican Peso (MXN) tends to strive during risk-on periods, or when investors perceive that broader market risks are low and thus are eager to engage with investments that carry a higher risk. Conversely, MXN tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- EUR/CAD shed 0.30% on Thursday to trade near 1.4770.
- The cross faced rejection at the 20-day and 200-day SMA convergence at around 1.4800, completing a bearish crossover.
- The bearish crossover tends to be bearish sign, hinting at further weakness in the pair.
The EUR/CAD fell by 0.30% on Thursday, reaching approximately 1.4770. The convergence of the 20-day and 200-day Simple Moving Averages (SMAs) around 1.4800 was rejected the cross, which resulted in a bearish crossover. This bearish crossover may suggest more weakness in the pair.
Technical indicators, such as the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD), substantiate the bearish momentum in EUR/CAD's recent price action. The RSI, currently in negative territory, shows increasing selling pressure with a declining slope, suggesting a rise in bearish sentiment. Meanwhile, the MACD, though flat, remains in red, indicating sustained selling pressure.
The EUR/CAD pair has been facing strong resistance at the confluence of its 20-day and 200-day SMAs, leading to a bearish crossover. This signals potential weakness in the pair in the coming sessions as it may invalidate it latest strides to recover.
EUR/CAD daily chart
- GBP/USD maintains a downward trend but shows signs of short-term upward bias.
- Resistance levels to watch include 1.2714 and the 200-day SMA at 1.2818.
- Key supports lie at 1.2600 and further down at the November 26 low of 1.2506.
- Oscillators like the Relative Strength Index (RSI) hint at continued bearish sentiment despite a recent uptick
The GBP/USD consolidates at around weekly highs, posting modest losses of 0.05% at around 1.2670 due to thin liquidity conditions as US markets remain closed for Thanksgiving.
The Greenback has been pressured for the last few days due to month-end flows and rebalancing, noted ING. Although US data was upbeat on Wednesday, market participants digested Trump’s tariff rhetoric.
GBPUSD Price Forecast: Technical outlook
The GBP/USD trend remains downward biased, although the Pound has recovered some ground. If buyers want to regain control, first, they need to clear 1.2714, the November 20 high, followed by the 200-day Simple Moving Average (SMA) at 1.2818, which has turned flat. If those two resistance levels are surpassed, buyers' ride toward 1.3000 would not be easy after the 50-day SMA just crossed below the 100-day SMA and accelerated toward forming a ‘death-cross.’
Conversely, sellers must achieve a daily close below 1.2600 for a bearish continuation. A breach of the latter will expose the November 26 low of 1.2506, ahead of last week's low of 1.2486.
Oscillators such as the Relative Strength Index (RSI) remain bearish-biased despite rising for three straight days. The GBP/USD is tilted to the upside in the short term, but downside risks remain.
GBP/USD Price Chart – Daily
British Pound PRICE Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.11% | -0.01% | 0.23% | -0.04% | 0.03% | 0.19% | 0.13% | |
| EUR | -0.11% | -0.11% | 0.14% | -0.15% | -0.08% | 0.08% | 0.02% | |
| GBP | 0.01% | 0.11% | 0.25% | -0.02% | 0.04% | 0.19% | 0.13% | |
| JPY | -0.23% | -0.14% | -0.25% | -0.28% | -0.20% | -0.09% | -0.12% | |
| CAD | 0.04% | 0.15% | 0.02% | 0.28% | 0.08% | 0.22% | 0.16% | |
| AUD | -0.03% | 0.08% | -0.04% | 0.20% | -0.08% | 0.16% | 0.10% | |
| NZD | -0.19% | -0.08% | -0.19% | 0.09% | -0.22% | -0.16% | -0.07% | |
| CHF | -0.13% | -0.02% | -0.13% | 0.12% | -0.16% | -0.10% | 0.07% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
- USD/CHF has broken below a key level bringing the uptrend into doubt.
- Other band omens are also appearing suggesting the possibility of a bearish shift in the trend.
USD/CHF is at risk of tipping into a downtrend and reversing its short and medium-term bull trend, as it extends its pullback below a key level. Other “bad omens” also make their appearance on the price chart, suggesting a risk of more downside.
USD/CHF Daily Chart
USD/CHF has found support at the (green) 200-day Simple Moving Average (SMA) at 0.8822 and although it could still mount a recovery from its current level and thereby rescue the uptrend, the evidence is building for a possible reversal and start of new downtrend. Given “the trend is your friend” such a reversal would suggest a bearish bias then dominating.
The pair has broken below the key 0.8801 November 9 swing low and although it failed to close below the level, the breach is still a bearish indication.
The pair formed a Two-Bar reversal pattern (red rectangle on chart) at the November 22 and 23 highs which is bearish. This happens when a long green candle that reaches a peak is followed by a long red candle of a similar size. It is a sign of a reversal in sentiment and a signal of more downside to follow.
The Relative Strength Index (RSI) momentum indicator has formed a Double Top pattern (red ellipse) which is bearish for momentum and consequently also price.
A break below the 0.8797 November 27 low would confirm a change in the short-term trend and more downside to targets at 0.8748 (August 14 high), and 0.8615 (November 4 low).
That said, if price remains above the November 27 low and recovers, it could signal a resumption of the uptrend.
If so, a break above the 0.8958 November 22 high would probably confirm a continuation up to the next target at 0.9000 (round number and psychological area), followed by 0.9050 (July 2 swing high).
- EUR/JPY edges higher on a stronger Euro but fails to build on gains due to conflicting data from the Eurozone.
- The Yen benefits from heightened expectations of the BoJ hiking interest rates in December, increasing inflows into the Yen.
- Lawmakers in Japan are debating a supplementary budget which could deliver cash handouts to households and stoke inflation.
EUR/JPY edges higher to just below the 160.00 level on Thursday after survey data released by the European Commission suggested stubborn inflation expectations might keep interest rates more elevated than previously thought in the Eurozone. This supports the Euro (EUR) since higher interest rates support foreign capital inflows. However, weaker German inflation data contradicts the survey’s findings and keeps the Single Currency under pressure.
“The European Commission survey was little changed in November and is still consistent with weak growth at best, while the price components suggest that inflationary pressures remain sticky,” said Elias Hilmer, assistant economist at Capital Economics of the data.
The Japanese Yen (JPY), meanwhile, trades mixed. On the one hand it is pressured by political risk due to the ruling party’s tenuous grip on power, whilst on the other hand it remains underpinned by expectations the BoJ will raise interest rates at the end of the year.
Political risk for the Yen
On Thursday, the Japanese parliament convened an extraordinary session to begin a 24-day deliberation of the supplementary budget as well as laws governing party funding.
The supplementary budget is expected to help inflation-hit households with cash handouts, whilst policymakers will also debate new laws around political party fundraising after a high profile scandal, in which members of Prime Minister Shigeru Ishiba’s ruling LDP party were found to have amassed private slush funds from fundraising activities, according to Kyodo News. His party rules Japan with a tenuous minority alongside its junior partner, the Momeito party.
If the budget is passed it could drive more inflation, increasing the chances of the Bank of Japan (BoJ) raising its permanently ultar-low interest rate of 0.25%. Higher interest rates are positive for the Yen because they increase foreign capital inflows.
BoJ Governor Kazuo Ueda recently repeated that a rate hike in December was still possible, citing concerns over the Yen’s weakness. Markets are now pricing in a roughly 60% chance of a 25 basis point rate hike in Japan next month, up from around 50% just a week ago, according to Trading Economics.
German Inflation undershoots expectations
EUR/JPY sees upside curtailed on Thursday after just-released preliminary German Consumer Price Index (CPI) data for November fell below economists expectations, weighing on the Euro. The data contradicts the earlier European Commission survey data and increases the chances the European Central Bank (ECB) will begin a more aggressive phase of interest rate cuts in the Eurozone.
German headline CPI rose by 2.2% in November, below the 2.3% expected and core CPI remained at 2.4%, falling below the expected 2.6%.
Traders now await Japanese Tokyo CPI data on Friday for fresh clues as to the direction of monetary policy in Japan, with implications for the direction of the Japanese Yen and its pairs.
- Silver price rebounds strongly as a fresh escalation in the war between Russia and Ukraine bolstered its safe-haven demand.
- Russia hit 14 targets in Ukraine, which resulted in a nationwide blackout.
- The US Dollar bounces back as the Fed is expected to cut interest rates cautiously.
Silver price (XAG/USD) recovers its intraday losses and ticks up to nearly $30.15 in the North American session on Thursday after posting a fresh 11-week low around $29.65. The white metal bounces back as a fresh escalation in the war between Russia and Ukraine has improved its safe-haven demand.
Tensions between Ukraine and Russia intensified after Russia launched its Intermediate-range Ballistic Missiles (IRBM) to hit 17 targets in Ukraine including, military facilities, defense industry facilities and their support systems in response to their attack deep inside Russia through the United States (US) ATACMS missiles last week, Russian President Vladimir Putin said at a security summit in Kazakhstan on Thursday.
According to the energy ministry in Kyiv, this is the 11th large-scale assault by Russia on Ukraine’s energy supplies this year, which caused the nationwide blackout, CNN reported.
Historically, the safe-haven appeal of precious metals such as Silver increases at times of global market uncertainty or heightened geopolitical risks.
Meanwhile, the US Dollar (USD) bounces back in a thin trading volume trading day as United States (US) markets are closed on account of Thanksgiving Day. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, rebounds to near 106.30 after a sharp correction in the last three days. The USD Index rebounds on expectations that projected growth in the Personal Consumption Expenditure (PCE) inflation data for November would force Federal Reserve (Fed) officials to act cautiously on interest rate cuts.
Silver technical analysis
Silver price rebounds strongly after sliding to near the upward-sloping trendline around $29.50, which is plotted from the February 29 low of $22.30 on a daily timeframe. Still, the outlook of the Silver price is bearish as a bear cross, represented by 20 and 50-day Exponential Moving Average (EMA) around $31.30, points to an escalation in the downside trend.
The white metal weakened after the breakdown of the horizontal support plotted from the May 21 high of $32.50.
The 14-day Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, suggesting a sideways trend.
Silver daily chart
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
- Annual inflation in Germany edged slightly higher in November's flash estimate.
- EUR/USD continues to fluctuate in a tight channel at around 1.0550.
Inflation in Germany, as measured by the change in the Consumer Price Index (CPI), rose to 2.2% on a yearly basis in November from 2% in September, Destatis' flash estimate showed on Thursday. This reading came in below the market expectation of 2.3%.
On a monthly basis, the CPI declined 0.2% as anticipated.
The Harmonized Index of Consumer Prices in Germany, the European Central Bank's preferred gauge of inflation, increased 2.4% on a yearly basis, matching September's reading and falling short of analysts' estimate of 2.6%.
Market reaction
EUR/USD showed no immediate reaction to these figures and was last seen losing 0.25% on the day at 1.0540.
- The US Dollar trades mildly positive against most major currencies.
- With Thanksgiving and Black Friday ahead, US trading activity and volumes will be subdued.
- The US Dollar Index trades back above 106.00 after a brief excursion found support below the level on Wednesday.
The US Dollar (USD) trades overall marginally higher against most major pairs on Thursday, with the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, bouncing back above 106.00 after a sharp sell-off the prior day, in what is expected to be a very calm remaining two trading days for the week with Thanksgiving and Black Friday taking place. Thin liquidity and most major trading floors will be closed across the United States.
Meanwhile, the focus shifts to Europe, where France is struggling to convince markets it can pass its much-needed budget after France’s Prime Minister, Michel Barnier, warned that mayhem could take place in financial markets if the French parliament does not support the budget bill with the possibility that the French government could fall, Bloomberg reports.
Daily digest market movers: Markets are enjoying Thanksgiving
- The US economic calendar will be empty on Thursday and Friday due to the Thanksgiving holidays.
- Equities are trading in the green overall this Thursday. European indices are up nearly 1%, while US futures are flat to marginally higher on the day.
- The CME FedWatch Tool is pricing in another 25 basis points (bps) rate cut by the Fed at the December 18 meeting by 68.2%. A 31.8% chance is for rates to remain unchanged. The Fed Minutes have helped the rate cut odds for December to move higher.
- The US 10-year benchmark rate trades at 4.26%, and will not move this Thursday with the US bond market being closed.
US Dollar Index Technical Analysis: Risks above Europe
The US Dollar Index (DXY) might be moving in the coming two days due to some outside forces. One driver could come from the Eurozone, where France’s budget hangs in the balance. Should the balance not pass Parliament, France’s yields and spreads with other European countries could get out of control and trigger uncertainty for the Eurozone and the Euro (EUR), thus making the US Dollar (USD) outperform the shared currency.
With the profit taking this week, the pivotal resistance of 107.35 (October 3, 2023, high) became active again. The fresh two-year high at 108.07 reached last Friday is the level to beat further up. A brief spike to the 109.00 big figure level could play out in a volatile moment.
The DXY is bouncing off from 105.89, a pivotal level since May 2, which was held under profit-taking pressure on Wednesday. A touch lower, the pivotal 105.53 (April 11 high) should avoid any downturns towards 104.00. Should the DXY fall all the way towards 104.00, the big figure and the 200-day Simple Moving Average at 104.02 should catch any falling knife formation.
US Dollar Index: Daily Chart
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- AUD/NZD has confirmed a bearish reversal pattern after peaking in late November.
- The MACD has crossed below its signal line providing a sell signal.
AUD/NZD has completed a Three Black Crows candlestick pattern (red rectangle on chart) after peaking at the November 25 multi-month high.
AUD/NZD Daily Chart
The Three Black Crows is a Japanese candlestick pattern which occurs after a market peak, when three red down days occur consecutively. Such a pattern indicates the odds favor AUD/NZD moving to lower lows.
The (blue) Moving Average Convergence Divergence (MACD) has crossed below its red signal line, giving a sell signal and reinforcing the bearish candlestick pattern.
Support lies first at the 200-day Simple Moving Average (SMA) at 1.9029 and then at the trendline for the broader uptrend at around 1.0900.
A break below the low of the Three Black Crows at 1.0992 would confirm a continuation to the above-mentioned targets.
- Gold continues to snake higher on Thursday as markets price in higher probabilities of the Fed cutting interest rates in December.
- A softening of Trump’s rhetoric on tariffs is a possible factor in the falling interest rate expectations.
- XAU/USD is technically crawling up a major trendline but remains vulnerable to further breakdowns.
Gold (XAU/USD) extends its shallow recovery from Tuesday’s lows as it trades in the $2,640s on Thursday. The yellow metal is seeing gains on the back of cementing market bets that the Federal Reserve (Fed) will go ahead and cut US interest rates at its December meeting. Lower interest rates are positive for Gold as they reduce the opportunity cost of holding the non-interest-paying asset, making it more attractive to investors.
Gold’s gains may be limited, however, by receding geopolitical risks after Israel and Hezbollah agreed on a 60-day ceasefire deal on Tuesday, although sceptics say it will remain unsustainable without an end to hostilities in Gaza, according to Bloomberg News.
Gold recovers as markets see greater chance of Fed cutting before Christmas
Gold is seeing a shallow recovery on Thursday as the probabilities edge up of the Fed making a 25 basis point (bps) cut to US interest rates before Christmas.
The market-based probability of such a decision has risen to 70% on Thursday from previously oscillating between 55% and 66%, according to the CME FedWatch tool. This leaves a 30% chance the Fed will leave interest rates unchanged.
Benchmark US Treasury bond yields are edging lower amid softening rhetoric around trade tariffs, and this could be behind the move in both Gold and US yields.
President-elect Donald Trump’s threat to place 25% tariffs on imports from Mexico and Canada had increased US inflation expectations and, with them, higher interest rates. However, recently Trump softened his tone.
“Just had a wonderful conversation with the new President of Mexico, Claudia Sheinbaum Pardo,” Trump posted on his Truth Social platform on Wednesday.
“She has agreed to stop migration through Mexico, and into the United States, effectively closing our southern border,” Trump added.
“We also talked about what can be done to stop the massive drug inflow into the United States, and also, US consumption of these drugs. It was very productive,” he continued.
At the start of this week, Trump announced he would impose a 25% tariff on Mexican and Canadian imports in an effort to get his neighbors to crack down on illegal immigration and drug smuggling.
Since then, Canada has announced new measures to protect its border, and Mexico has threatened to raise tariffs on US goods entering the country, thereby triggering a trade war that would be as costly from an economic standpoint to the US as Mexico.
However, many analysts now interpret Trump’s 25% threat as more of a negotiating tactic than a concrete pledge.
“We believe Trump's announcement is a tactic to negotiate with these three countries, his main trade partners, from a position of strength, taking into account that imposing tariffs would also be negative for the US economy," Mexican lender CIBanco said in a note.
"As such, the final result of the tariff threat could be less severe once negotiations with the respective parties conclude," the bank added.
Technical Analysis: XAU/USD keeps above major trendline
Gold trades up the length of a major trendline for the third day in a row on Thursday. The trendline reflects the precious metal’s long-term uptrend.
XAU/USD Daily Chart
Gold’s short-term trend is unclear, but it is in a medium and long-term uptrend. Given the maxim that “the trend is your friend,” the odds still favor an eventual continuation higher.
A break above $2,721 (Monday’s high) would be a bullish sign and give the green light to a continuation higher. The next target would be at $2,790, matching the previous record high.
Alternatively, a decisive break below the major trendline would likely lead to further losses, probably to the $2,536 November lows. Such a move would confirm the short-term trend as bearish.
A decisive break would be one accompanied by a long red candlestick that broke cleanly through the trendline and closed near its low – or three red candlesticks in a row that broke below the line.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
- US President Joe Biden calls the activated 60-day ceasefire deal as permanent.
- OPEC+ will delay its upcoming Output Policy Meeting to December 5th.
- The US Dollar Index bounces off support after traders took profit in their Greenback rally.
Crude Oil trades rather steady this Thursday with selling pressure building after US President Joe Biden called the recent active ceasefire deal in Gaza as a permanent cessation of hostilities, Bloomberg reports. Meanwhile OPEC+ has confirmed it will postpone its upcoming Output Policy Meeting decision from Sunday to December 5th. The conglomerate of Oil Producing and Exporting Countries (OPEC) is again facing an existential crisis with a slowdown in global demand with more non-OPEC supply to be released to markets taking place.
The US Dollar Index (DXY), which measures the performance of the US Dollar (USD) against a basket of currencies, is bouncing off a technical support level. With US markets closed Thursday and Friday for Thanksgiving and Black Friday, the bounce comes from Europe where France is facing issues. The French Prime Minister Michel Barnier warned that France could become unstable if the French parliament does not pass a much needed budget plan, and could cause issues for France on financial markets, Bloomberg reported.
At the time of writing, Crude Oil (WTI) trades at $68.97 and Brent Crude at $72.73
Oil news and market movers: OPEC+ has no time
- Delegates close to the matter confirmed in early Thursday trading that OPEC+ will delay its planned meeting for Sunday towards December 5th, Reuters and Bloomberg reported. OPEC’s secretariat said that the delay was because several ministers will attend the meeting of the Gulf Cooperation Council in Kuwait on Dec. 1.
- China’s independent refiners have snapped up barrels from across the Middle East and Africa as offers of Iranian oil remain scarce and are more expensive due to broadening US sanctions, Bloomberg reports.
- Israel has warned residents displaced by fighting and evacuation orders not to return to their homes in southern Lebanon, despite a ceasefire between Israeli forces and Hezbollah coming into effect Wednesday, CNN reports.
Oil Technical Analysis: A delay is not a solution
Crude Oil price still faces selling pressure with traders becoming impatient on what OPEC+ will do to make sure Crude OIl prices remain supported. With the slowdown in the Chinese economy, a global slowdown in Oil demand and the US set to pump and dump many more barrels under President-elect Donald Trump, the rabbit that OPEC+ will need to grab out of its magic hat, must be an impressive one. Keep in mind that with plenty of stops placed just elbow $67.00, a quick correction to even $66.00 or $64.00 could be a possible scenario.
On the upside, the pivotal level at $71.46 and the 100-day Simple Moving Average (SMA) at $72.26 are the two main resistances. The 200-day SMA at $76.27 is still far off, although it could be tested if tensions intensify further. In its rally towards that 200-day SMA, the pivotal level at $75.27 could still slow down any upticks.
On the other side, traders need to look towards $67.12 – a level that held the price in May and June 2023 – to find the first support. In case that breaks, the 2024 year-to-date low emerges at $64.75, followed by $64.38, the low from 2023.
US WTI Crude Oil: Daily Chart
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- USD/CHF rebounds to near 0.8850 following the USD’s recovery in a thin volume trading day.
- Investors expect the US Bessent to manage Trump’s agenda without denting geopolitical harmony.
- The SNB could push interest rates into a negative trajectory amid a low-inflation environment.
The USD/CHF pair rebounds to near 0.8850 in the European trading session on Thursday after a sharp sell-off on Wednesday. The recovery move in the Swiss Franc pair is bolstered by the US Dollar (USD), which rebounded in a thin volume trading session due to a holiday in the United States (US) economy on account of Thanksgiving Day.
The US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, bounces to near 106.20, at the time of writing. The USD’s recovery came after a 1.9% correction from its two-year high of 108.00, noted on Friday.
The US Dollar drifted into a correction mode as investors watered down so-called “Trump trades” after US President-elect Donald Trump nominated Scott Bessent, a veteran hedge fund manager, for the role of Treasury Secretary. The USD fell sharply as investors anticipated Bessent to fulfill Trump’s economic agenda without jeopardizing fiscal discipline and political steadiness.
Bessent said in an interview with the Financial Times (FT) over the weekend that he will focus on enacting tariffs, however, objectives would be “layered in gradually”.
Going forward, market speculation for the Federal Reserve’s (Fed) monetary policy action in the December meeting will influence the US Dollar. According to the CME FedWatch tool, the probability for the Fed to cut interest rates by 25 basis points (bps) to 4.25%-4.50% next month is 70%.
Meanwhile, the outlook of the Swiss Franc (CHF) remains uncertain amid expectations that the Swiss National Bank’s (SNB) interest rates could return to a negative trajectory. SNB Chairman Martin Schlegel said in an event in Zurich on Friday, "I want to emphasize that lower interest rates, plus negative interest rates, are not excluded from our toolbox."
Schlegel chose extremely dovish remarks for the interest rate guidance as inflationary pressures in the Swiss economy have remained in their desired range of 0%-2% since June 2023. The Annual Swiss Consumer Price Index (CPI) decelerated to 0.6% in October.
Swiss Franc FAQs
The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.
The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.
The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.
As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
- USD/JPY has fallen to the base of a bearish price pattern.
- The pair has bounced but remains vulnerable to further downside.
USD/JPY has fallen to the base of a bearish Broadening Formation price pattern and the 50-day Simple Moving Average (SMA) just below at 150.59, and bounced.
USD/JPY Daily Chart
A break below the 150.46 November 27 low would cement the breakdown from the pattern and probably lead to more downside toward 148.54, the downside target for the pattern, followed by 148.24 the September 2, key swing high.
The (blue) Moving Average Convergence Divergence (MACD) momentum indicator recently crossed below the red signal line and they are diverging – a bearish indication.
It is possible the pattern may not have finished forming yet in which case it could be in the process of beginning a new up leg within the boundary lines. This could either rally about half way up before pettering out, or all the way up to the top of the pattern in the 156.00s. It is still too early to say whether either of these outcomes is likely to be the case.
- The Mexican Peso is rebounding on Thursday as the threat of trade between the US and Mexico recedes.
- Reportedly positive conversations between the two country’s leaders, resulting in upbeat messages on social media, are calming investor nerves.
- Technically, USD/MXN pushes back from the top of a mini range and begins to cycle lower.
The Mexican Peso (MXN) rebounds by almost one and a half percentage points in its most-traded pairs on Thursday as markets price in less chance of a United States (US) – Mexico trade war.
The Peso makes back the losses it suffered on Tuesday. These came after President-elect Donald Trump said he would place 25% tariffs on Mexican and Canadian imports unless they put a stop to illegal immigration and the cross-border traffic of narcotics into the US. The MXN declined due to the expected hit such tariffs would have on Mexican exports.
In response, Mexican President Claudia Sheinbaum said Mexico would counter any US levies with its own tariffs. Sheinbaum said Mexico was already doing a lot to reduce illegal immigration, which had come down by 75% in 2024 so far. Further, she said Mexico was also cracking down on drug cartels smuggling Fentanyl into the US but that these gangs were being armed with guns from the US. A trade war would do substantial harm to business in both countries' economies, she added.
The Mexican Peso stabilized on Wednesday, however, after Trump appeared to soften his rhetoric towards Mexico. Late on Wednesday, the former president posted a message on Truth Social that he had just had “a wonderful conversation” with Sheinbaum and that she had agreed to stop migration through Mexico, according to Lallalit Srijandorn, editor at FXStreet. His comments suggested the 25% tariffs might be averted.
Mexican Peso rallies as Trump softens his rhetoric towards Mexico
The Mexican Peso edges higher after President-elect Donald Trump characterized his conversation with President Sheinbaum as “wonderful” late on Wednesday.
“She has agreed to stop migration through Mexico, and into the United States, effectively closing our southern border,” Trump wrote on Truth Social.
“We also talked about what can be done to stop the massive drug inflow into the United States, and also, US consumption of these drugs. It was very productive,” Trump continued.
At the start of this week, the Mexican Peso dropped like a lead balloon after Trump announced that he planned to impose a 25% tariff on Mexican imports in an effort to get the country to crack down on illegal immigration and drug smuggling.
For her part, President Sheinbaum initially appeared to echo Trump’s assessment of their talk, posting on X that she had had “an excellent conversation” with Trump, in which “we discussed Mexico's strategy on the migration phenomenon and I shared that [migrant] caravans are not arriving at the northern border because they are being taken care of in Mexico.”
Later, Sheinbaum tweeted that during their conversation, she had “reiterated Mexico's position was not to close borders, but to address migration while respecting human rights.”
When the Levee Breaks
Trump’s initial threat to whack 25% tariffs on US neighbors’ imports into the country drew criticism from both Mexico and Canada and institutional analysts.
Barclays said that imposing a 25% tariff against Canadian and Mexican imports “could wipe out effectively all profits” from the three Detroit automakers, according to Christian Borjon Valencia, editor at FXStreet.
On Wednesday, Mexico’s Economy Minister Marcelo Ebrard said tariffs could cost the US 400,000 jobs, describing them as "a shot in the foot" for the American economy.
Mexico was particularly vulnerable after the Morena-led government made reforms to Mexican autonomous bodies that crossed clauses in the US, Mexico, and Canada Free Trade Agreement (USMCA), annulling the deal.
However, Mexico’s Congress has since proposed adjustments to the details of the reforms – which abolished several regulatory bodies – to ensure compliance with the USMCA.
“The fact that MORENA is taking a more cautious approach with two of the most important regulators, antitrust and telecoms, is a positive sign,” said Rodolfo Ramos, a strategist at Brazilian bank Bradesco BBI.
Technical Analysis: USD/MXN pushing down from range ceiling
USD/MXN pushes down after touching the ceiling of a mini range (green dashed line on the chart below) that it formed during November.
USD/MXN 4-hour Chart
USD/MXN is probably range-bound in the short term as it oscillates within this mini range. In the medium and long term, however, it is still in an uptrend within a rising channel.
The pair is likely to continue trading up and down within the parameters of its range. The current move looks like it is taking prices back down towards support at either the 20.06 lows of wave B, the major trendline in the 19.90s, or support in the 19.70s (red dashed line).
The move is supported by a sell signal from the (blue) Moving Average Divergence Convergence (MACD) momentum indicator, which has crossed below its red signal line. The MACd is particularly reliable in sideways markets.
A decisive break above the top of the range at 20.80 would be required to signal the start of a more bullish short-term trend in line with longer-term up cycles.
Mexican Peso FAQs
The Mexican Peso (MXN) is the most traded currency among its Latin American peers. Its value is broadly determined by the performance of the Mexican economy, the country’s central bank’s policy, the amount of foreign investment in the country and even the levels of remittances sent by Mexicans who live abroad, particularly in the United States. Geopolitical trends can also move MXN: for example, the process of nearshoring – or the decision by some firms to relocate manufacturing capacity and supply chains closer to their home countries – is also seen as a catalyst for the Mexican currency as the country is considered a key manufacturing hub in the American continent. Another catalyst for MXN is Oil prices as Mexico is a key exporter of the commodity.
The main objective of Mexico’s central bank, also known as Banxico, is to maintain inflation at low and stable levels (at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%). To this end, the bank sets an appropriate level of interest rates. When inflation is too high, Banxico will attempt to tame it by raising interest rates, making it more expensive for households and businesses to borrow money, thus cooling demand and the overall economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.
Macroeconomic data releases are key to assess the state of the economy and can have an impact on the Mexican Peso (MXN) valuation. A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only does it attract more foreign investment but it may encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this strength comes together with elevated inflation. However, if economic data is weak, MXN is likely to depreciate.
As an emerging-market currency, the Mexican Peso (MXN) tends to strive during risk-on periods, or when investors perceive that broader market risks are low and thus are eager to engage with investments that carry a higher risk. Conversely, MXN tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
LME zinc cancelled warrants increased by another 49kt yesterday to surge to around 107kt, their highest level since October 2017, ING’s commodity analysts Ewa Manthey and Warren Patterson note.
Gold prices continue to trade flat
“The majority of the cancellations came from Singapore warehouses, hinting at strong demand for physical metals in the Asian market. Cancelled warrants now account for around 41% of the inventory in LME warehouses. Higher demand in the physical market could also be seen in the forward curve, where spot prices trade at a premium of US$5.2/t compared to the 3-month contract. This is still not as tight as in October, when the premium hit a high of US$58/t.”
“Gold prices continue to trade flat after the rout on Monday as the market assesses the positives and negatives. On the positive side, the US Fed is likely to continue with rate cuts at its next meeting, with the CME’s Fed watch tool currently hinting at a 68% probability of 25bp cuts. This was at around 56% a week ago. Even after the Israel-Hezbollah deal, a fair amount of uncertainty remains in the Middle East and Europe, which could keep safe-haven buying supportive for gold in the medium term.”
“On the other hand, inflation numbers were on the higher side yesterday with the US Personal Consumption Expenditure (PCE) index increasing to 2.8% YoY (+0.3% MoM) from 2.7% a month ago. A sticky inflation number could weaken the case for further rate cuts.”
Crude oil prices continue to trade soft, with ICE Brent trading at US$72.7/bbl as of writing and NYMEX WTI trading at around US$68.6/bbl. The Brent forward curve continues to tighten, with the Jan-Feb spread increasing to a 6-month high backwardation of US$0.55/bbl today compared to a recent low of US$0.18/bbl on 11 November. The market expects the crude oil market balance to ease further over the coming months as OPEC+ delays output hike plans, ING’s commodity analysts Ewa Manthey and Warren Patterson note.
The crude oil market balance to ease further
“Weekly data from the Energy Information Administration (EIA) shows that crude oil inventory in the US dropped by 1.8m barrels last week, a larger draw than market expectations of around 0.5m barrels and mainly due to lower imports. Crude oil imports fell by 1.6m bbls/d last week to 6.1m bbls/d as imports from Latin America softened. Exports strengthened by 0.3m bbls/d to 4.7m bbls/d.”
“For refined products, gasoline inventory increased by 3.3m barrels to 212.2m barrels while distillate inventory increased by 0.4m barrels to 114.8m barrels on higher refinery output. Refinery utilization increased 0.3% to 90.5% over the last week. Refinery utilization in the US over the past few weeks remains high when compared to seasonal averages.”
“US Henry Hub prices dropped by around 7% yesterday to settle at US$3.2/MMBtu with prices again softening this morning as inventory draw slowed. Weekly data from the EIA shows that natural gas inventory dropped by just 2Bcf last week, compared to the preceding week’s 3Bcf draw and a 5-year average draw of around 30Bcf at this time of year. Natural gas demand has been slow to pick up even as the US experiences colder than usual weather.”
The ruble exchange rate has been depreciating rapidly in recent weeks. At first, this did not stand out because the US dollar was rallying sharply against most EM currencies. But more recently, the rouble’s decline became noticeable versus an already weak euro. Rouble weakness will now add to the central bank’s (CBR’s) anxiety about pro-inflationary forces, which makes a large 200bp rate hike a likely scenario for the 20 December meeting. One question we might ask is why USD/RUB or EUR/RUB – which are not truly traded exchange rates at all, only artificial ‘fixes’ – should react to each round of sanctions news, Commerzbank’s FX analyst Tatha Ghose notes.
USD/RUB and EUR/RUB to steadily trend up in coming years
“These exchange rates do not typically react to geopolitical or military news-flow, nor to news about rounds of sanctions, nor to domestic news about inflation or rate hikes. Such factors can influence arbitrage-seeking foreign capital flows, and thereby, the exchange rate. In Russia’s case, widespread sanctions prevent any free flow of hard currencies – for example, no yield-seeking capital can flow in in the hope of higher interest rates. More recently (in June 2024), all trading of euros and dollars were banned on the Moscow exchange via sanctions on the exchange itself, which further restricted the channels of FX access even for permitted activites.”
“The rouble fix is perhaps not entirely fictitious – some (weak) fundamental links have to exist. For example, energy and commodity trade is still permitted in US dollars and euros. The exchange rate at which this market will clear naturally has a bearing on where CBR might set the rate on paper. Similarly, capital flows are open versus other emerging markets, in currencies such as CNY or INR. As a result, CNY now dominates FX liquidity in Russia. In fact, the USD/CNY exchange rate is an important cross-link while setting the USD/RUB fix.”
“US sanctions against hitherto untouched banks, which are integral to clearing energy payments, and which had de facto taken over the role of central bank for hard currency, comes as a shock to hard currency demand and supply and is making USD/RUB and EUR/RUB spike up. Some part of this could well turn out to be early overshooting. Perhaps, alternative shadow channels will open up and smooth FX supply. That remains to be seen. We anyway forecast USD/RUB and EUR/RUB to steadily trend up in coming years. The current level has run ahead of our own forecast (our end-2025 USD/RUB forecast is 115.0 and end-2026 is 135.0), but the direction is entirely consistent.”
EUR/USD appreciated 1.4% to 1.0566 after hitting the year’s low of 1.0418 last Friday. GBP/USD recovered to 1.2680 after failing to break below 1.25 in the past three sessions, DBS’ Senior FX Strategist Philip Wee notes.
BoE officials do not signal another cut in December
“European Central Bank board member Isabel Schnabel narrowed the gap with the Fed by pushing back dovish rate cut bets in the Eurozone. EU CPI inflation returned to the 2% target in October after a brief dip to 1.7% YoY in September, with core inflation remaining high at 2.7%.”
“Eurozone recession fears were not validated by GDP growth which improved to 0.4% QoQ sa in 3Q24 from 0.2% in 2Q24.”
“GBP/USD recovered to 1.2680 after failing to break below 1.25 in the past three sessions. Bank of England officials did not signal another cut in December after its 25 bps cut to 4.75% on November 7.”
The Brazilian real has softened to the weakest levels since the pandemic-era sell-off in early 2020, ING’s FX analyst Chris Turner notes.
USD/BRL to trade at 6.25 in 12 months
“If the real did not have enough to worry about with the threat of a global trade war, President Lula's foot-dragging on fiscal reforms is adding to the woes. Here his plans to raise income tax exemptions for the poor are eating into fiscal consolidation plans and leaving Brazilian assets on the ropes.”
“Overnight, it looks like the government has announced BRL70bn of spending cuts after all (there had been fears that this would be delayed), but let's see whether that is enough to stabilise the real. Additionally, in the back of investors' minds, is that 2026 is an election year and that the current fiscal laxity is just a warm-up to events in 2025.”
“In our recent USD/BRL update in FX talking, we revised our 12-month USD/BRL forecast to 6.25 which seems to be the direction of travel.”
- USD/CAD ticks lower as the Canadian Dollar gains on expectations of healthy trade negotiations with the US.
- Economists expect the Canadian economy to have grown by 1% in the third quarter of the year.
- The US Dollar recovers amid quiet trade on account of Thanksgiving Day.
The USD/CAD pair falls to near the psychological support of 1.4000 in European trading hours on Thursday despite a decent recovery move in the US Dollar (USD). The Loonie asset drops as the Canadian Dollar (CAD) gains on expectations that Canada would manage to negotiate a trade deal with the United States (US).
Canadian Dollar PRICE Today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.28% | 0.20% | 0.55% | -0.12% | 0.00% | 0.16% | 0.27% | |
| EUR | -0.28% | -0.07% | 0.29% | -0.39% | -0.26% | -0.11% | 0.00% | |
| GBP | -0.20% | 0.07% | 0.35% | -0.31% | -0.18% | -0.04% | 0.08% | |
| JPY | -0.55% | -0.29% | -0.35% | -0.66% | -0.53% | -0.42% | -0.27% | |
| CAD | 0.12% | 0.39% | 0.31% | 0.66% | 0.14% | 0.26% | 0.39% | |
| AUD | -0.01% | 0.26% | 0.18% | 0.53% | -0.14% | 0.15% | 0.27% | |
| NZD | -0.16% | 0.11% | 0.04% | 0.42% | -0.26% | -0.15% | 0.11% | |
| CHF | -0.27% | -0.00% | -0.08% | 0.27% | -0.39% | -0.27% | -0.11% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
US President-elect Donald Trump said in a post on Truth.Social on Monday that he will impose 25% tariffs on Canada and Mexico for providing a freeway to China to supply illicit drugs into the US economy.
Canada is a leading supplier of oil, gas, and energy products to the US. A scenario of higher tariffs on Canada would result in a significant decline in foreign flows in their economy, which is negative for the Canadian Dollar (CAD).
"Targeting both countries suggests the threat was likely a strategic opening move in renegotiating the existing free trade agreement between the three nations," said analysts at AscendantFX.
However, there will be some impact on the CAD from incoming tariffs in Trump’s administration.
This week, investors will focus on the Canadian Q3 Gross Domestic Product (GDP) data, which will be published on Friday. The Canadian economy is estimated to have expanded by 1% compared to the same quarter of the previous year but slower than 2.1% in the previous quarter of the year.
Meanwhile, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, bounces back to near 106.40 amid thin trading volume due to a holiday in the US markets on account of Thanksgiving Day.
The USD Index will be influenced by market expectations about the Federal Reserve’s (Fed) interest rate action in the December meeting. According to the CME FedWatch tool, there is a 70% chance that the Fed will cut interest rates by 25 basis points (bps) to 4.25%-4.50% next month, according to the CME FedWatch tool.
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
Despite no significant increase in downward momentum, there is room for the US Dollar (USD) to edge lower to 7.2380. In the longer run, momentum has largely faded; USD is likely to trade between 7.2200 and 7.2800 for the time being, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
USD to edge lower to 7.2380
24-HOUR VIEW: “Two days ago, USD rose to 7.2730, then pulled back. Yesterday, we highlighted that ‘Upward pressure appears to have eased with the pullback.’ We added, ‘instead of continuing to advance, USD is more likely to trade in a sideways range of 7.2450/7.2660.’ USD then rose to 7.2695, dropped to 7.2425 before closing at 7.2479, lower by 0.15%. Despite no significant increase in downward momentum, there is room for USD to edge lower to 7.2380 before a rebound is likely. The major support at 7.2200 is unlikely to be tested. Resistance is at 7.2590, followed by 7.2660.”
1-3 WEEKS VIEW: “Two days ago (26 Nov, spot at 7.2630), we noted that ‘momentum is building again.’ We added, ‘USD could break above 7.2800, but it is too early to determine if 7.3115 is within reach.’ Since then, USD has not been able to make much headway on the upside. The buildup in momentum has largely faded. The current price action is likely part of a consolidation range, and we expect USD to trade between 7.2200 and 7.2800 for the time being. Looking ahead, USD has to break clearly above 7.2800 before a sustained advance is likely.”
Profit-taking sent the USD and US bond yields lower before the long Thanksgiving holiday starting today.US stock and bond markets will be closed on Thursday and Friday before returning on Monday, DBS’ Senior FX Strategist Philip Wee notes.
Too early to underestimate Trump’s tariff threats
“The DXY Index fell a second time in three days by 0.9% to 106, its lowest close since November 11. US inflation data met expectations; October’s PCE headline and core inflation were unchanged at 0.2% MoM and 0.3%, respectively, the same level as a month ago.”
The futures market increased the probability (66.5% vs. 52.3% a week ago) of the Fed lowering rates by 25 bps to 4.00-4.25% at its FOMC meeting on December 18.The US Treasury 2Y yield fell a third session by 2.9 bps to 4.23%, its lowest close since November 7.”
“The 10Y yield ended November at 4.26%, near the month’s low of 4.22% seen on November 1. US fiscal sustainability worries ebbed after Trump nominated prominent hedge fund manager Steve Bessent as US Treasury Secretary.”
USD/SGD bounced this morning, tracking the move higher in USD/CNH. Pair was last seen at 1.3444, OCBC’s FX analysts Frances Cheung and Christopher Wong note.
SGD can still remain resilient on trade-weighted terms
“Mild bullish momentum on daily chart continues to fade while the dip in RSI moderated. Consolidation likely in the near term. Support at 1.3410, 1.3340/60 levels (21, 200 DMAs) and 1.3290 (61.8% fibo retracement of Jun high to Oct low). Resistance at 1.3520 levels. S$NEER has continued to ease; last at 0.92% above model-implied mid. Looking back, SGD has been easing since Oct-2024 on tradeweighted terms even as MAS maintained policy status quo.”
“That said, SGD remains stronger vs. peers in the basket but it is less strong today (vs. than for most of the year). Historically the positive correlation between the change in S$NEER and MAS core inflation shows that SGD strength can ease when core inflation eases materially. Monday’s release of CPI report saw both headline and core CPI surprised to the downside. The sharp pullback has also led to chatters if MAS would ease soon at the next MPC in Jan-2025.”
“We think there is no hurry to ease amidst many moving parts – tariff threats, geopolitics – which may see price pressures return. MAS is better off monitoring further to avoid any risk of flip-flopping on policy. MAS maintaining policy status quo suggests that SGD can still remain somewhat resilient on trade-weighted terms. At some point in 2Q or 3Q in 2025, MAS may ease policy if core CPI does ease further.”
The US Dollar (USD) is likely to trade in a range between 150.80 and 152.60. In the longer run, downward momentum has surged; deeply oversold conditions suggest 149.40 may not come into view so soon, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
Deeply oversold conditions suggest 149.40 may not come into view
24-HOUR VIEW: “When USD was at 153.10 yesterday, we expected it to weaken. However, we pointed out that ‘given the oversold conditions, it may not be able to break clearly below 152.50.’ We underestimated the downward momentum, as USD not only broke below 152.50 but also plunged to a low of 150.44. USD rebounded from the low to close at 151.10, lower by a whopping 1.31%. The outsized decline seems overdone. This, combined with the rebound in deeply oversold conditions, suggests that USD is likely to trade in a range today, probably between 150.80 and 152.60.”
1-3 WEEKS VIEW: “We shifted our outlook from neutral to negative yesterday (27 Nov, spot at 153.10), indicating that USD ‘could edge lower, but it remains to be seen if it can reach 151.60.’ We did not expect the surge in momentum that sent USD plunging to a low of 150.44. Unsurprisingly, there has been a surge in downward momentum. That said, given the deeply oversold short-term conditions, the next support may not come into view so soon. We will maintain our negative USD view as long as 153.00 (‘strong resistance’ level was at 154.35 yesterday) is not breached.”
USD/JPY fell further overnight amid the decline in UST yields and broad US Dollar (USD). Pair was last at 151.90 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.
Risks remain skewed to the downside
“Move lower remains in line with our downside bias. Daily momentum is bearish but decline in RSI moderated. Risks remain skewed to the downside but likely the pace may slow. Near term consolidation is likely.”
“Support at 150.70 (50% fibo), 149.20 (100 DMA). Resistance at 152 (200 DMA), 153.30/70 levels (61.8% fibo retracement of 2024 high to low, 21DMA). Data this week brings jobless rate, retail sales and Tokyo CPI. Hotter print on Tokyo CPI may further fuel JPY bulls.”
Scope for the New Zealand Dollar (NZD) to test 0.5920 before levelling off; the major resistance at 0.5950 is likely out of reach for now. In the longer run, for the time being, NZD is likely to trade in a range between 0.5840 and 0.5950, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
The major resistance at 0.5950 is likely out of reach for now
24-HOUR VIEW: “The sharp rise in NZD that sent it to a high of 0.5908 was surprising (we were expecting 0.5810/0.5860 range trading). The rapid rise seems excessive, but there is scope for NZD to test 0.5920 before levelling off. The major resistance at 0.5950 is likely out of reach for now. Support levels are at 0.5880 and 0.5865.”
1-3 WEEKS VIEW: “We turned negative in NZD two days ago (26 Nov, spot at 0.5820), expecting it to weaken to 0.5770. However, after dropping to 0.5797, it rebounded strongly, and yesterday, it broke above our ‘strong resistance’ at 0.5875 (high has been 0.5908). The breach of the ‘strong resistance’ indicates that downward momentum has faded. The current price movements are likely part of a range trading phase. For the time being, NZD is likely to trade between 0.5840 and 0.5950.”
- The Pound Sterling falls to near 1.2650 against the USD as the latter bounces after plunging on Wednesday.
- Market speculation for the Fed to cut interest rates in December has increased.
- BoE’s Lombardelli supports reducing interest rates gradually amid risks of inflation overshooting the bank’s target.
The Pound Sterling (GBP) declines to near 1.2650 against the US Dollar (USD) in Thursday’s London session after failing to visit the round-level resistance of 1.2700 the prior day. The GBP/USD pair is expected to trade sideways amid thin trading volume as United States (US) markets are closed on Thursday and will open for a short duration on Friday on account of Thanksgiving Day.
The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, bounces back to near 106.40 after a sharp sell-off on Wednesday. The USD plunged as investors trimmed the so-called “Trump Trades” with the intention to go light in an extended weekend.
The Greenback was also pressured by weak Durable Goods Orders data for October. New orders for Durable Goods grew by 0.2% in the month, slower than the estimates of 0.5%. Meanwhile, the Personal Consumption Expenditures Price Index (PCE) report for October showed that price pressures rose in line with estimates. The core PCE inflation data – which excludes volatile food and energy prices – rose by 2.8%, as expected, faster than 2.7% in September.
An expected increase in the US PCE inflation data has boosted market expectations for the Fed to cut interest rates by 25 basis points (bps) again in the December meeting. At the time of writing, there is a 68% chance that the Fed will cut its key borrowing rate by 25 bps to the 4.25%-4.50% range next month, escalated from 56% a week ago, according to the CME FedWatch tool.
Going forward, investors will focus on the US ISM Manufacturing Purchasing Managers Index (PMI) data for November, which will be published on Monday. The economic data will show the current status of activities in the manufacturing sector.
Daily digest market movers: Pound Sterling remains broadly firm against its major peers
- The Pound Sterling exhibits an indecisive action against its major peers on Thursday. The British currency is broadly sideways as the United Kingdom (UK) economic calendar has nothing to offer in the later part of the week.
- The performance of the Pound Sterling has remained strong against its peers for a few weeks, except the US Dollar, on expectations that the Bank of England (BoE) will be one of those central banks that will follow a gradual policy-easing approach due to persistent upside risks to inflation.
- BoE Deputy Governor Clare Lombardelli warned about risks of inflation remaining higher than the bank’s forecast where wage growth normalizes at 3.5%-4% and the Consumer Price Index (CPI) around 3% rather than 2% in her speech at King's Business School on Monday. Lombardelli added, “I support a gradual removal of monetary policy restriction.”
- Going forward, the Pound Sterling will be guided by market speculation about whether the BoE will cut interest rates in the December meeting. Traders are highly confident that the central bank will leave its key borrowing rates unchanged at 4.75% next month.
Technical Analysis: Pound Sterling drops after facing resistance near 1.2700
The Pound Sterling falls to near 1.2650 against the US Dollar in European trading hours on Thursday. The GBP/USD pair corrects after posting a fresh weekly high near 1.2700 the prior day. The recovery move in the Cable came after it found buying interest near the upward-sloping trendline around 1.2550, which is plotted from the October 2023 low around 1.2040.
The 14-day Relative Strength Index (RSI) rebounds after turning oversold. However, the downside bias remains afloat.
Looking down, the pair is expected to find a cushion near the psychological support of 1.2500. On the upside, the 20-day Exponential Moving Average (EMA) around 1.2725 will act as key resistance.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
USD/KRW ticked higher after BoK surprised with a 25bp cut. Pair was last at 1396 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.
Broader sentiment is still likely to drive USD/KRW
“Disinflation pressure, slowdown in housing market and risks of slowdown in growth momentum may have justified BoK’s case. That said, a softer USD and dip in UST yield helped to negate the rise in USD/KRW.”
“Daily momentum is mild bearish while RSI fell. Consolidation likely. Support at 1392, 1385 (23.6% fibo retracement of Sep low to Nov high). Resistance at 1405, 1410 levels. Broader sentiment is still likely to drive USD/KRW’s direction until at some point later in January when market revisits the topic of any back-to-back cut.”
There has been a slight increase in upward momentum; the Australian Dollar (AUD) could drift higher but is unlikely to break the resistance at 0.6525. In the longer run, AUD is expected to consolidate between 0.6440 and 0.6550 for the time being, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
AUD can drift higher but is unlikely to break above 0.6525
24-HOUR VIEW: “Two days ago, we were of the view that AUD ‘could break below 0.6440, but it might not be able to maintain a foothold below this level.’ After AUD dropped to 0.6434 and rebounded, we indicated yesterday that ‘downward momentum appears to have eased with the strong rebound.’ We held the view that AUD ‘is likely to trade in a range today, probably between 0.6440 and 0.6500.’ AUD then traded in a narrower range than expected (0.6457/0.6500), closing at 0.6497, higher by 0.36%. There has been a slight increase in momentum. Today, AUD could drift higher, but it is unlikely to break the resistance at 0.6525 (there is another resistance at 0.6510). On the downside, support levels are at 0.6480 and 0.6460.”
1-3 WEEKS VIEW: “In our latest narrative from Tuesday (26 Nov, spot at 0.6470), we pointed out that AUD ‘must break and hold below 0.6440 before a move to 0.6400 can be expected.’ We indicated, ‘The likelihood of AUD breaking clearly below 0.6440 will increase in the next few days, provided that 0.6525 is not breached.’ Yesterday, AUD rose to 0.6500, closing on a firm note at 0.6497 (+0.36%). While our ‘strong resistance’ level has not been breached yet, downward momentum has largely faded. The current price movements are likely part of a consolidation phase. For the time being, we expect AUD to trade between 0.6440 and 0.6550.”
Most recent article: Silver price today: Silver broadly unchanged, according to FXStreet data
Silver prices (XAG/USD) fell on Thursday, according to FXStreet data. Silver trades at $30.00 per troy ounce, down 0.37% from the $30.11 it cost on Wednesday.
Silver prices have increased by 26.07% since the beginning of the year.
| Unit measure | Silver Price Today in USD |
|---|---|
| Troy Ounce | 30.00 |
| 1 Gram | 0.96 |
The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 88.19 on Thursday, up from 87.58 on Wednesday.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
(An automation tool was used in creating this post.)
The US Dollar (USD) continued to drift lower as US data overnight was largely within expectations. DXY was last at 106.35, OCBC’s FX analysts Frances Cheung and Christopher Wong note.
FX markets may still trade cautious on tariff threats
“Daily momentum turned mild bearish while RSI fell. Bearish divergence on daily MACD, RSI observed. Downside play remains likely. Support here at 106.20, 105.40/80 levels (21 DMA, 38.2% fibo). Resistance at 107.20, 108.10 (recent high). Price action continues to show that USD bull momentum is feeling fatigue, and the highs seen last week lacked follow through.”
“Stretched USD valuation, technical signals and potential December seasonality effect (DXY fell in 8 out of the last 10 Decembers) are some considerations for profit-taking on USD longs in the near term. We may need to see a flush out of USD longs before USD can resume its rise (at some point later). There is no US data for released today and Fri due to Thanksgiving Day holidays. As such, razor thin market liquidity may exacerbate choppy moves in FX market on any catalyst.”
“On tariffs, USD/MXN rose sharply earlier this week in response to Trump’s comment for 25% tariff on Mexico but subsequently, Trump said he had a very productive conversation with Mexican President Claudia Sheinbaum. The Mexican episode shows that Trump's tariff threat was likely a bargaining chip to unlock other policy agenda, which in this case appears to be migration, drugs. This reinforces the case that tariff threat may not be about the timing of implementation or by how much but whether it is intended to achieve other purposes. Nevertheless, FX markets may still trade cautious on tariff threats until we get greater clarity on policy objectives.”
Reserve Bank of Australia (RBA) Governor Michele Bulock said on Thursday, “if inflation falls more quickly than forecast, the Board can respond.”
Additional comments
Hard to tell what the new Trump admin will do, as opposed to what they say they will do.
Have to set policy on what we know rather than shadows.
US tariffs could potentially see inflation in the US rise.
This is not going to impact inflation in Australia in the next six months.
We are aiming for inflation at 2.5%.
Will be in a position at some point to consider cutting rates.
As long as inflation continues on its gradual slowing path.
We do not need inflation to be at target to cut, but we need to be sure it's heading there.
Looking at forward-looking surveys, our liaison program for policy.
- Silver price tests a “throwback support” at the psychological level of $30.00.
- The pair remains confined within a descending channel pattern, signaling a strong bearish bias.
- A decisive break below the throwback support could drive the Silver price to approach its three-month low of $27.69.
Silver price (XAG/USD) extends its losses for the second successive day, trading around $30.00 per troy ounce during the European hours on Thursday. The daily chart analysis indicates a dominant bearish bias, with the pair consolidating within a descending channel pattern. Additionally, the 14-day Relative Strength Index (RSI) remains below the 50 mark, further supporting the bearish sentiment.
The XAG/USD pair continues to trade below the 14- and nine-day Exponential Moving Averages (EMA), reinforcing a bearish outlook and signaling weakening short-term price momentum. This points to limited buying interest and raises the likelihood of further price declines.
In terms of the upside, the Silver price finds a primary barrier around the nine-day Exponential Moving Average at $30.54, followed by the 14-day EMA at $30.78. Further resistance appears around the upper boundary of the descending channel at 31.20 level.
On the downside, the Silver price tests a “throwback support” at the psychological level of $30.00. A successful breach below this level could deepen bearish sentiment, potentially driving the asset price lower toward its three-month low of $27.69, followed by the descending channel's lower boundary at $27.50.
XAG/USD: Daily Chart
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Euro (EUR) shorts continued to face the squeeze as USD, UST yield eased. Pair was last at 1.0546 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.
Possible EUR short squeeze near term
“Daily momentum shows signs of turning bullish RSI rose. Bullish divergence is observed on daily MACD is playing out. We continue to caution for EUR short squeeze in the near term.”
“Resistance at 1.0580, 1.0640 (21 DMA). Key support at 1.0490, 1.0450 levels before 1.03. Focus this week on Euro-area CPI (Fri). Upside surprise may aid the squeeze in EUR shorts.”
EUR/USD found some support yesterday from a detailed interview given to Bloomberg by the ECB's influential Isabel Schnabel. A few of her comments stood out such as there was no need to take rates into accommodative territory (seen as sub 2%), the neutral ECB interest rates may be in the 2-3% area (2.00/2.25% is the commonly seen neutral rate) and that easing should be gradual, ING’s FX analyst Chris Turner notes.
1.0565/0580 may be the top of the short-term trading range
“Her pushback against a 50bp rate cut in December has helped market pricing for that meeting move in from 38bp last week to 28bp today. That has helped the 'Atlantic' rate spread narrow some 8bp and provided some support for EUR/USD. This spread could narrow further if the Fed cuts 25bp in December (ING house view) and the ECB only cuts 25bp (50bp is currently the house view).”
“But before we call for an extension in this EUR/USD correction, we should be wary of developments in French politics. Marine Le Pen's faction may well pull the plug on Michel Barnier's government next week over a budget vote. The French-German sovereign 10-year sovereign bond spread has widened to levels last seen in 2012, which is worrying for the euro and a reminder that any chance of fiscal support from either France or Germany is remote.”
“Indeed, we are surprised that EUR/CHF managed to edge higher yesterday and instead we can see it returning to the 0.9200/9210 area, where SNB bids may be waiting. 1.0565/0580 may be the top of the short-term trading range and we favour EUR/USD drifting back to 1.0500 in quiet markets.”
- AUD/USD struggles to find acceptance above 0.6500 amid the emergence of some USD buying.
- Bets for slower Fed rate cuts trigger a fresh leg up in the US bond yields and underpin the USD.
- Geopolitical risks and trade war fears further benefit the Greenback and weigh on the Aussie.
The AUD/USD pair attracts some sellers following an intraday uptick to the 0.6510 region on Thursday and drops to a fresh daily low during the first half of the European session, though it lacks follow-through. Spot prices currently trade just below the 0.6500 psychological mark, nearly unchanged for the day, and for now, seem to have stalled a recovery move from the lowest level since August 5 touched earlier this week.
The US Dollar (USD) regains positive traction and reverses a part of the previous day's slide to a two-week low, which, in turn, is seen as a key factor exerting some pressure on the AUD/USD pair. US macro data released on Wednesday pointed to a resilient economy and stalling inflation progress, suggesting that the Federal Reserve (Fed) might be cautious about further rate cuts. This, in turn, triggers a modest bounce in the US Treasury bond yields and helps revive the USD demand.
Apart from this, persistent geopolitical risks stemming from the protracted Russia-Ukraine war and concerns that US President-elect Donald Trump's tariff plans offer additional support to the safe-haven buck. This, along with the renewed US-China trade war, contributes to driving flows away from the China-proxy Australian Dollar (AUD). That said, a positive risk tone and the Reserve Bank of Australia's (RBA) hawkish stance could limit the downside for the AUD/USD pair.
Traders might also refrain from placing aggressive bets amid relatively light liquidity on the back of the Thanksgiving holiday in the US. Nevertheless, the aforementioned fundamental backdrop and the lack of any meaningful buying interest suggest that the path of least resistance for the AUD/USD pair is to the downside. Hence, any attempted recovery could still be seen as a selling opportunity and runs the risk of fizzling out rather quickly.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.16% | 0.19% | 0.47% | -0.10% | 0.00% | 0.09% | 0.22% | |
| EUR | -0.16% | 0.03% | 0.30% | -0.27% | -0.15% | -0.08% | 0.05% | |
| GBP | -0.19% | -0.03% | 0.25% | -0.30% | -0.18% | -0.11% | 0.02% | |
| JPY | -0.47% | -0.30% | -0.25% | -0.57% | -0.45% | -0.41% | -0.25% | |
| CAD | 0.10% | 0.27% | 0.30% | 0.57% | 0.12% | 0.19% | 0.31% | |
| AUD | -0.01% | 0.15% | 0.18% | 0.45% | -0.12% | 0.07% | 0.21% | |
| NZD | -0.09% | 0.08% | 0.11% | 0.41% | -0.19% | -0.07% | 0.12% | |
| CHF | -0.22% | -0.05% | -0.02% | 0.25% | -0.31% | -0.21% | -0.12% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Strong momentum suggests further Pound Sterling (GBP) strength; overbought conditions could limit any advance to a test of 1.2715. In the longer run, outlook has shifted from negative to positive; any advance is likely a recovery, potentially testing the resistance at 1.2755, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
GBP can potentially test the resistance at 1.2755
24-HOUR VIEW: “Our view for GBP to trade in a range yesterday was incorrect. Instead of trading in a range, GBP surged, closing higher by 0.89% at 1.2679, its biggest 1-day gain since late Aug. Strong momentum suggests further GBP strength, even though deeply overbought conditions could limit any advance to a test of 1.2715. The major resistance at 1.2755 is likely to be out of reach for now. On the downside, any intraday pullback is expected to face strong support at 1.2620, with minor support at 1.2640.”
1-3 WEEKS VIEW: “We have held a negative view in GBP since the middle of this month. After GBP plummeted to 1.2475 and rebounded strongly, we indicated on Monday (25 Nov, spot at 1.2590) that ‘the sharp drop appears to be overextended.’ We pointed out, ‘any further decline may find it difficult to break last Friday’s low of 1.2475, which is serving as a significant support level.’ However, we did not quite expect GBP to jump quickly above our ‘strong resistance’ at 1.2650 (high has been 1.2694). Given the surge in upward momentum, the outlook seems to have shifted from negative to positive. That said, we view any advance from here as a recovery rather than the beginning of a major reversal. Overall, as long as 1.2575 is not breached, GBP could recover and test the resistance at 1.2755.”
The Dollar Index (DXY) yesterday suffered its largest one-day correction since early August. One factor in play was some less dovish comments from the ECB's Isabel Schnabel and the other was probably some buy-side end-month rebalancing flows. Fund managers will have been re-adjusting non-USD portfolios upwards to bring them back to desired benchmarks. Presumably, some of this activity took place in the more liquid markets yesterday than waiting for Thanksgiving-thinned conditions, ING’s FX analyst Chris Turner notes.
DXY can find support near 106.00
“Also worth mentioning overnight is the Mexican peso rallying 1% after President-elect Trump posted that he'd had a ‘wonderful conversation’ with Mexico's President Claudia Sheinbaum. Trump concluded that she had agreed to effectively close the border with the US, while her post seemed to reflect a different conversation. Rather than signaling the all-clear for Mexican asset risk, probably the strongest takeaway is that volatility is here to stay. For example, USD/MXN three-month realized volatility is now 15%. This compares to 7% back in March. Volatility is the enemy of the carry trade and at these kinds of volatility levels, don't expect the peso to benefit from carry trade inflows anytime soon.”
“Some possible mild negatives exist from the Israeli-Hezbollah ceasefire opening the door for a calmer period in the Middle East and some softer US macro data next week building back expectations of a 25bp Fed rate cut in December. Nearly 17bp of that 25bp cut is currently priced. However, high US interest rates (4.61% one-week deposits), European politics and the threat of more tariff social media posts coming through should keep the dollar bid on dips. “
“We think DXY can find support near 106.00, but would have to change our multi-week views if it started trading sub 105.70.”
The Euro (EUR) could rise further to 1.0600 before a pause can be expected; 1.0650 is highly unlikely to come into view today. In the longer run, downward has faded, and upward momentum is building. EUR could rebound further, potentially reaching 1.0650, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
EUR can rebound even further, potentially reaching 1.0650
24-HOUR VIEW: “Following EUR’s wide swings on Tuesday, we indicated yesterday that it ‘is likely to trade in a relatively broad range, probably between 1.0435 and 1.0535.’ However, EUR blew above 1.0535 and soared to a high of 1.0587. Although the rapid surge seems overdone, there is no indication of momentum loss just yet. EUR could continue to rise to 1.0600 before a pause can be expected. The major resistance at 1.0650 is highly unlikely to come into view today. Support is at 1.0545; a breach of 1.0520 would mean that EUR is not rising further.”
1-3 WEEKS VIEW: “We have held a negative view in EUR since one week ago. As we tracked the decline, we emphasised on Monday (25 Nov, spot at 1.0475) that ‘while the weakness in EUR remains intact, it must break and remain below last Friday’s low of 1.0333 before further decline can be expected.’ Yesterday (27 Nov, spot at 1.0490), we noted that ‘downward momentum appears to be slowing, and the likelihood of EUR breaking below 1.0333 is decreasing.’ EUR subsequently soared and broke above our ‘strong resistance’ level of 1.0560, reaching a high of 1.0587. Not only has downward momentum faded, but upward momentum is also beginning to build. We view the current price action as part of a rebound that could potentially reach 1.0650. On the downside, should EUR break below 1.0490 (‘strong support’ level), it would mean that the buildup in momentum has eased.”
- NZD/USD depreciates as traders expect the Fed to adopt a cautious approach regarding a rate cut next month.
- The Fed remains on alert following the latest US inflation data, which highlighted an increase in consumer spending for October.
- The New Zealand Dollar may struggle as the US plans further AI chip sanctions against China.
The NZD/USD pair remains subdued near 0.5890 during early European trading hours. The pair's weakness can be attributed to the stronger US Dollar (USD), driven by a cautious market sentiment regarding the Federal Reserve’s (Fed) December interest rate decision. Trading volumes may remain light due to the US Thanksgiving holiday.
Wednesday’s latest US inflation data indicated solid growth in consumer spending for October, but it also highlighted a stagnation in progress toward lowering inflation, keeping the Fed on alert. The US Personal Consumption Expenditures (PCE) Price Index rose by 2.3% year-over-year in October, up from 2.1% in September. Meanwhile, the core PCE Price Index, which excludes volatile food and energy prices, increased by 2.8%, slightly higher than the 2.7% recorded the previous month.
According to the CME FedWatch Tool, futures traders are now pricing in a 68.2% chance that the Fed will cut rates by a quarter point in December, up from 59.4%, a day ago. Nonetheless, they anticipate the Fed leaving rates unchanged at its January and March meetings.
The New Zealand Dollar (NZD) may face headwinds as the United States (US) plans to implement new measures next week aimed at restricting China’s progress in artificial intelligence technology. Given New Zealand's strong trade relationship with China, any significant economic impacts on China could have ripple effects on Kiwi markets.
On Wednesday, the Reserve Bank of New Zealand (RBNZ) delivered a 50 basis point (bps) cut to its Official Cash Rate (OCR), bringing it down from 4.75% to 4.25% in November’s policy meeting. During the post-meeting press conference, RBNZ Governor Adrian Orr indicated that the bank’s projections suggest another potential 50 bps cut in February 2025, contingent on economic activity. Orr also expressed confidence that domestic inflationary pressures will continue to subside.
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- GBP/JPY may appreciate as the BoE leans toward a gradual approach to policy easing.
- The Pound Sterling may gain ground as BoE officials support following a gradual policy-easing approach.
- The likelihood of a BoJ’s 25 basis point hike in December rose to nearly 60%, against 50% a week ago.
The GBP/JPY pair snaps its five-day losing streak, trading near 191.90 during Asian trading hours on Thursday. Economic data releases remain sparse for the United Kingdom (UK), with a similarly light calendar expected in the coming week.
As a result, the Pound Sterling (GBP) is likely to be influenced by market expectations regarding the Bank of England's (BoE) December interest rate decision. The GBP/JPY cross could find support as BoE officials lean toward a gradual approach to policy easing.
On Monday, during a speech at King’s Business School, BoE Deputy Governor Clare Lombardelli stressed the need for clearer signs of easing inflationary pressures before considering further rate cuts.
Deputy Governor Lombardelli also warned of the risks associated with inflation staying above the BoE’s target. She highlighted concerns about wage growth stabilizing at 3.5%-4.0% and the Consumer Price Index (CPI) lingering around 3% instead of the 2% target, which could present significant policy challenges.
The upside for the GBP/JPY cross may face headwinds as the Japanese Yen (JPY) finds support amid increasing expectations of another interest rate hike by the Bank of Japan (BoJ) as early as next month. Market sentiment has shifted, with the probability of a 25 basis point hike in December rising to approximately 60%, compared to around 50% just a week ago.
Additionally, BoJ Governor Kazuo Ueda recently hinted at the possibility of tightening monetary policy, highlighting concerns over the Yen's prolonged weakness. Investors are now closely watching Tokyo's inflation data, scheduled for release on Friday, as it could provide crucial clues regarding the BoJ's policy direction.
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
- EUR/USD falls as the US Dollar steadies in a thin-trading weekend due to holidays in the US on account of Thanksgiving Day.
- ECB Schnabel ruled of risks of inflation undershooting ECB’s target.
- Investors await the German HICP data for fresh ECB interest rate guidance.
EUR/USD ticks down on Thursday as the US Dollar (USD) steadies after a weak Wednesday. However, the near-term outlook of the Euro (EUR) has slightly improved after less-dovish remarks from European Central Bank (ECB) board member Isabel Schnabel in her interview with Bloomberg on Wednesday.
Schnabel pushed back expectations of an aggressive policy-easing cycle as she doesn’t see any risk of inflation undershooting the bank’s target. She argued that the central bank stimulus doesn’t address structural issues that the Eurozone is currently facing.
For more cues on the ECB interest rate path, investors will focus on the flash November’s Harmonized Index of Consumer Prices (HICP) data of Spain, Germany, and its six major states, which will be published in Thursday’s session. German HICP is estimated to have accelerated to 2.6% from 2.4% in October on year. Month-on-month HICP is expected to have deflated by 0.5%.
Meanwhile, fears of a potential decline in Eurozone exports due to the imposition of hefty tariffs by US President-elect Donald Trump have slightly eased, which could offer more support to the Euro. ECB President Christine Lagarde said in an interview with the Financial Times (FT) in the early European session on Thursday, “Trump's lack of specificity on a level of potential European tariffs may signal that he is open to negotiation,” according to MACE News. Lagarde added, “It's difficult to make America great again if global demand is falling due to trade tariffs.”
Daily digest market movers: EUR/USD edges lower as US Dollar gains temporary ground
- EUR/USD drops to near 1.0550 in the European trading session on Thursday after posting a fresh weekly low near 1.0590 on Wednesday. The major currency pair faces pressure as the US Dollar (USD) manages to gain temporary ground in a thin volume trading day amid a long weekend in the United States (US) economy on account of Thanksgiving Day.
- The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, discovers an interim cushion around 106.00 on Thursday after a sharp downside move on Wednesday. The Greenback will be influenced by market expectations for the Federal Reserve’s (Fed) likely interest rate action in the December meeting as the US economic calendar has nothing to offer.
- Traders see a 66% chance that the Fed will cut interest rates by 25 basis points (bps) to 4.25%-4.50% next month, according to the CME FedWatch tool. Fed rate cut prospects remain firm even though the US Personal Consumption Expenditure Price Index (PCE) data for October grew expectedly. Annual core PCE Price Index, a Fed’s preferred inflation gauge – which excludes volatile food and energy prices – rose by 2.8%, faster than 2.7% in September.
Technical Analysis: EUR/USD strives to revisit 20-day EMA
EUR/USD drops after failing to extend Wednesday’s rally above the round-level resistance of 1.0600. The recovery in the major currency pair appears to be a mean-reversion move, which could extend to near the 20-day Exponential Moving Average (EMA) around 1.0600. Still, the broader outlook would remain bearish as all short-to-long-term day EMAs are declining, pointing to a downside trend.
The 14-day Relative Strength Index (RSI) rebounded after conditions turned oversold and climbed above 40.00, suggesting that the bearish momentum has faded. However, the bearish trend has not been extinguished.
Looking down, the November 22 low of 1.0330 will be a key support for Euro bulls. On the flip side, the 50-day EMA near 1.0750 will be the key barrier for the Euro bulls.
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Commenting on US President-elect Donald Trunp’s tariff threat, Chinese Commerce Ministry said on Thursday that “China’s stance of opposing unilateral tariff increases has been consistent.”
“Imposing tariffs arbitrarily on trade partners cannot solve the problems within the United States itself,” the Ministry added.
Here is what you need to know on Thursday, November 28:
The trading action in foreign exchange markets remain subdued early Thursday. Regional and nation-wide Consumer Price Index data from Germany, business and consumer sentiment data from the Eurozone will be watched closely by market participants. Financial markets in the US will remain closed in observance of the Thanksgiving Day holiday.
US Dollar PRICE This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.20% | -1.00% | -1.61% | 0.49% | 0.28% | -0.52% | -0.93% | |
| EUR | 1.20% | 0.03% | -1.01% | 1.11% | 1.43% | 0.11% | -0.31% | |
| GBP | 1.00% | -0.03% | -1.04% | 1.08% | 1.39% | 0.08% | -0.34% | |
| JPY | 1.61% | 1.01% | 1.04% | 2.13% | 2.36% | 1.17% | 0.87% | |
| CAD | -0.49% | -1.11% | -1.08% | -2.13% | -0.05% | -0.99% | -1.44% | |
| AUD | -0.28% | -1.43% | -1.39% | -2.36% | 0.05% | -1.30% | -1.71% | |
| NZD | 0.52% | -0.11% | -0.08% | -1.17% | 0.99% | 1.30% | -0.42% | |
| CHF | 0.93% | 0.31% | 0.34% | -0.87% | 1.44% | 1.71% | 0.42% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
The US Dollar (USD) came under selling pressure midweek following mixed macroeconomic data releases from the US. Additionally, month-end flows ahead of the long weekend may have put additional weight on the currency's shoulders. Durable Goods Orders rose by 0.2% on am monthly basis in October, missing the market expectation for an increase of 0.5%. Weekly Initial Jobless Claims edged lower to 213,000 from 215,000 in the previous week. Finally, the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's (Fed) preferred gauge of inflation, rose 2.3% on a yearly basis, matching the market expectation, while the annual core PCE inflation ticked up to 2.8% from 2.7% as anticipated. After falling 0.8% on Wednesday, the USD Index recovers modestly early Thursday and holds above 106.00.
EUR/USD gathered bullish momentum and climbed to a fresh weekly high near 1.0600 on Wednesday. The pair struggles to extend its rebound and trades at around 1.0550 in the European morning on Thursday. In addition to Germany, inflation data from Spain will be also be featured in the European economic docket.
GBP/USD benefited from the persistent USD weakness and registered strong gains on Wednesday. The pair stays in a consolidation phase and trades in a tight channel slightly above 1.2650 early Thursday.
Gold climbed above $2,650 on Wednesday but retraced a large portion of its daily climb to end the day marginally higher. XAU/USD stays quiet in the European morning and fluctuates below $2,640.
Following Tuesday's decline, USD/JPY continued to push lower on Wednesday and touched its weakest level in over a month near 150.50. After losing 1.3% on a daily basis, USD/JPY stages a rebound and was last seen trading above 151.50. In the Asian session on Friday, Tokyo CPI, Industrial Production, Unemployment Rate and Retail Trade data will be featured in the Japanese economic docket.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
(This story was corrected on November 28 at 07:17 GMT to say EUR/USD trades at around 1.0550 in the European morning on Thursday, not Wednesday, and the data from Japan will be released in the Asian session on Friday, not Wednesday.)
- AUD/JPY holds positive ground around 98.30 in Thursday’s early European session.
- Japan’s foreign stock investments fell by ¥446B, weighing on the Japanese Yen.
- The hawkish expectations of the RBA provide some support to the Aussie.
The AUD/JPY cross recovers some lost ground to near 98.30, snapping the three-day losing streak during the early European session on Thursday. A generally positive risk tone and a decline in Japan’s foreign stock investments drag the Japanese Yen (JPY) lower against the Australian Dollar (AUD).
Data released by the Ministry of Finance showed on Thursday that foreign investment in Japanese stocks fell by ¥446 billion for the week ending November 23, compared to investments of ¥127.6 billion in the previous week. Foreign capital outflows exert some selling pressure on the JPY and act as a tailwind for AUD/JPY. Nonetheless, the rising geopolitical tensions in the Middle East and the Russia-Ukraine war could boost the safe-haven flows, benefiting the JPY against the Aussie.
On the other hand, the downside for the AUD might be limited due to the hawkish remarks from the Reserve Bank of Australia (RBA). Australia’s monthly Consumer Price Index (CPI) inflation for October remained well within the Australian central bank target, but the RBA is likely to want more proof price rises have moderated before it will cut interest rates. Capital Economics' Mr. Thieliant said that price pressures are only moderating very slowly.
"And with the RBA arguing at its latest meeting that it would need to see more than one good quarterly CPI print to be confident that such a decline is sustainable, we're comfortable with our forecast that the bank will only cut interest rates in the second quarter of next year,” added Thieliant.
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
European Central Bank (ECB) President Christine Lagarde said on Thursday that a trade war at large would be a "net negative for all" and not just for the targets of US tariffs, per Reuters.
Key quotes
Trump has indicated a range of tariffs around 10-20% for the rest of the world.
The fact that you put out a range means that you are open to discussion.
Europe is erring towards a "cheque book strategy”.
We could offer to buy certain things from the US and signal that we are prepared to discuss to see how we can reach a compromise.
This is a better scenario than a pure retaliation strategy where there is no real winner.
An all-out trade war would cause a negative drag on global GDP
The actual net impact on inflation is still uncertain at this stage.
It is "extremely difficult" to assess the outlook as you may have a combination of a decline in GDP and potential depreciation or appreciation of the dollar.
Market reaction
At the time of writing, EUR/USD is trading 0.18% lower on the day to trade at 1.0545.
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- EUR/GBP flat lines near 0.8330 in Thursday’s early European session.
- BoE policymakers support a gradual policy-easing approach.
- The preliminary German CPI inflation data for November will be in the spotlight on Thursday.
The EUR/GBP cross holds steady around 0.8330 during the early European session on Thursday. The cautious stance and reduced bets of the Bank of England's (BoE) cutting interest rates in December provide some support to the Pound Sterling (GBP) and drag the cross lower.
The BoE officials remain cautious on rate reductions. The BoE Deputy Governor Clare Lombardelli supported the case of BoE pauses easing at the December meeting, citing that “I do worry [that] we still have services inflation in this country consistently at levels above their pre-Covid average, well above rates that are consistent with the [2%] inflation target.” Lombardelli further stated that she needs to see more evidence of cooling price pressures before she backs another interest rate cut.
The European Central Bank (ECB) policymakers express concerns about the Eurozone's current and future economic growth. The rising speculation that the ECB will have to implement aggressive interest rate cuts to prop up the faltering regional economy could weigh on the Euro (EUR) against the GBP in the near term.
Traders brace for the preliminary German Consumer Price Index (CPI) for November, which is due on Thursday. The annual CPI inflation is expected to rise to 2.2% in November from 2.0% in the previous reading. If the report shows a hotter-than-expected outcome, this could underpin the shared currency.
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- USD/CAD struggles to gain any meaningful traction, though the downside remains limited.
- Rebounding US bond yields help revive USD demand and act as a tailwind for the major.
- Weaker Oil prices undermine the Loonie and also lend support amid Trump’s tariff threats.
The USD/CAD pair remains on the defensive for the second straight day on Thursday, albeit it manages to hold above the 1.4000 psychological mark through the Asian session. Moreover, the fundamental backdrop warrants some caution before positioning for an extension of this week's pullback from the 1.4175-1.4180 region, or the highest level since April 2020.
US President-elect Donald Trump earlier this week pledged to impose big tariffs on all products coming into the US from Mexico and Canada, which would end a regional free trade agreement and trigger trade wars. Furthermore, Crude Oil prices languish near the weekly low amid concerns about slowing fuel demand growth in the US and China – the world's top consumers. This, in turn, is seen undermining the commodity-linked Loonie and acting as a tailwind for the USD/CAD pair amid the emergence of some US Dollar (USD) dip-buying.
Wednesday's US macro data dump pointed to a still resilient US economy and stalling inflation progress, suggesting that the Federal Reserve (Fed) might be cautious on further interest rate cuts. This triggers a fresh leg up in the US Treasury bond yields and assists the USD Index (DXY), which tracks the Greenback against a basket of currencies, in reversing a part of the previous day's slide to a two-week low. Apart from this, geopolitical risks benefit the safe-haven buck and turn out to be another factor lending support to the USD/CAD pair.
Traders, however, seem reluctant to place aggressive bets amid relatively thin trading volumes on the back of the Thanksgiving Day holiday in the US and ahead of the OPEC+ meet on Sunday. Nevertheless, the aforementioned supporting factors suggest that the path of least resistance for the USD/CAD pair is to the upside. Hence, any further corrective decline might still be seen as a buying opportunity and remain limited.
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
- USD/CHF attempts to break above the 14-day EMA at the 0.8832 level.
- The daily chart analysis indicates a sustained bullish bias, with the pair trending higher within an ascending channel pattern.
- The pair may navigate the support region around the ascending channel’s lower boundary at 0.8750 level.
The USD/CHF pair retraces recent losses from the previous session, trading around 0.8830 during the Asian hours on Thursday. An analysis of the daily chart suggests an ongoing bullish bias as the pair moves upwards within the ascending channel pattern.
The 14-day Relative Strength Index (RSI) is slightly above 50 level, indicating a bullish market trend. Additionally, the nine-day Exponential Moving Average (EMA) remains above the 14-day EMA, suggesting a bullish bias in the short-term price movement.
On the upside, the USD/CHF pair tests the immediate 14-day EMA at 0.8832 level, followed by the nine-day EMA at 0.8847 level. A successful breach above these levels could further strengthen the bullish bias and support the pair to approach the upper boundary of the ascending channel at a psychological level of 0.8900.
In terms of support, the USD/CHF pair may navigate the region around the lower boundary of the ascending channel at the 0.8750 level. A decisive break below the channel may cause the emergence of the bearish bias and put downward pressure on the pair to approach its six-week low of 0.8606.
USD/CHF: Daily Chart
Swiss Franc PRICE Today
The table below shows the percentage change of Swiss Franc (CHF) against listed major currencies today. Swiss Franc was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.11% | 0.10% | 0.27% | 0.00% | 0.13% | 0.05% | 0.15% | |
| EUR | -0.11% | -0.01% | 0.16% | -0.10% | 0.03% | -0.05% | 0.05% | |
| GBP | -0.10% | 0.01% | 0.15% | -0.09% | 0.04% | -0.05% | 0.05% | |
| JPY | -0.27% | -0.16% | -0.15% | -0.27% | -0.15% | -0.26% | -0.13% | |
| CAD | -0.01% | 0.10% | 0.09% | 0.27% | 0.13% | 0.06% | 0.14% | |
| AUD | -0.13% | -0.03% | -0.04% | 0.15% | -0.13% | -0.08% | 0.03% | |
| NZD | -0.05% | 0.05% | 0.05% | 0.26% | -0.06% | 0.08% | 0.10% | |
| CHF | -0.15% | -0.05% | -0.05% | 0.13% | -0.14% | -0.03% | -0.10% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Swiss Franc from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CHF (base)/USD (quote).
FX option expiries for Nov 28 NY cut at 10:00 Eastern Time via DTCC can be found below.
EUR/USD: EUR amounts
- 1.0500 1.1b
- 1.0650 849m
USD/JPY: USD amounts
- 152.20 580m
EUR/GBP: EUR amounts
- 0.8300 430m
- EUR/JPY recovers from a multi-month low amid the emergence of some selling around the JPY.
- Bets for a December BoJ rate hike, trade war fears and geopolitical risks could limit JPY losses.
- The setup supports prospects for the emergence of fresh selling around the cross at higher levels.
The EUR/JPY cross gains some positive traction during the Asian session on Thursday and moves away from its lowest level since early October, around the 159.10 region touched the previous day. The intraday uptick lifts spot prices to the 160.00 psychological mark in the last hour and is sponsored by the emergence of fresh selling around the Japanese Yen (JPY).
Any meaningful JPY depreciation, however, seems elusive in the wake of speculations that the Bank of Japan (BoJ) will hike interest rates again in December. Apart from this, US President-elect Donald Trump's tariff threats and geopolitical risks might continue to benefit the safe-haven JPY. This, along with bets for faster interest rate cuts from the European Central Bank (ECB), should act as a headwind for the shared currency and cap the EUR/JPY cross.
From a technical perspective, the recent repeated failures near the 100-period Simple Moving Average (SMA) on the 4-hour chart and a subsequent breakdown below the 162.35-162.30 support favor bearish traders. Moreover, oscillators on the daily chart are holding deep in negative territory and are still away from being in the oversold zone. This suggests that any subsequent move up in the EUR/JPY cross could be seen as a selling opportunity and remain limited.
In the meantime, the overnight swing high, around the 160.70 area, is likely to act as an immediate hurdle ahead of the 161.00 mark. Some follow-through buying beyond the 161.30 region might trigger a short-covering rally and allow the EUR/JPY ross to reclaim the 162.00 round figure. The momentum, however, runs the risk of fizzling out rather quickly near the 162.30-162.35 region, which now seems to act as a key pivotal point for short-term traders.
On the flip side, the Asian session low, around the 159.45 area, could protect the immediate downside ahead of the 159.10-159.05 region, or the multi-month low set on Wednesday. A sustained break below the 159.00 mark will be seen as a fresh trigger for bearish traders and drag the EUR/JPY cross to the 158.55 zone en route to the late September swing low, around the 158.00 mark and the next relevant support near the 157.65 region.
EUR/JPY 4-hour chart
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
Gold prices fell in India on Thursday, according to data compiled by FXStreet.
The price for Gold stood at 7,151.93 Indian Rupees (INR) per gram, down compared with the INR 7,161.73 it cost on Wednesday.
The price for Gold decreased to INR 83,416.17 per tola from INR 83,533.05 per tola a day earlier.
| Unit measure | Gold Price in INR |
|---|---|
| 1 Gram | 7,151.93 |
| 10 Grams | 71,509.80 |
| Tola | 83,416.17 |
| Troy Ounce | 222,451.80 |
FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
(An automation tool was used in creating this post.)
- GBP/USD faces challenges due to increasing caution surrounding the Fed’s decision next month.
- US markets may witness thin trading activity due to the Thanksgiving holiday on Thursday.
- The Pound Sterling may gain ground as BoE officials support following a gradual policy-easing approach.
GBP/USD holds losses as the US Dollar (USD) advances as the latest US inflation report indicated solid growth in consumer spending for October, but it also highlighted a stagnation in progress toward lowering inflation, keeping the Fed on alert. The GBP/USD pair edges lower to near 1.2660 during the Asian trading hours on Thursday. US markets may witness thin trading activity due to the Thanksgiving holiday on Thursday, to be followed by shortened trading hours on Friday.
The US Personal Consumption Expenditures (PCE) Price Index increased by 2.3% year-over-year in October, up from 2.1% in September. Meanwhile, the core PCE Price Index, which excludes volatile food and energy prices, rose by 2.8%, slightly higher than the 2.7% recorded the previous month. Additionally, annualized US Gross Domestic Product (GDP) grew by the expected 2.8% through the third quarter.
Economic data remains limited for the United Kingdom (UK), with a similarly sparse calendar expected next week. As a result, the Pound Sterling (GBP) will largely be driven by market expectations surrounding the Bank of England's (BoE) interest rate decision in December.
Speaking at King’s Business School on Monday, BoE Deputy Governor Clare Lombardelli emphasized the need for more evidence of easing price pressures before supporting further rate cuts. Lombardelli also cautioned about the risk of inflation staying above the bank’s target, noting that wage growth stabilizing at 3.5%-4.0% and the Consumer Price Index (CPI) remaining around 3%—rather than the 2% target—could pose significant challenges.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- Gold price attracts some sellers as rebounding US bond yields help revive the USD demand.
- Trade war jitters and geopolitical tensions could help limit losses for the safe-haven XAU/USD.
- Thin trading volumes on the back of a US holiday warrant some caution for aggressive traders.
Gold price (XAU/USD) extends the previous day's retracement slide from the $2,658 region and drifts lower during the Asian session on Thursday. Wednesday's US macro data dump pointed to a still resilient US economy and stalled progress on inflation. This suggests that the Federal Reserve (Fed) might be cautious about further rate cuts and triggers a modest bounce in the US Treasury bond yields, which helps revive the US Dollar (USD) demand and is seen undermining the non-yielding yellow metal.
The markets, however, are still pricing in a greater chance that the US central bank will lower borrowing costs by 25 basis points (bps) in December. Furthermore, the US President-elect's threatened tariffs fueled concerns about a renewed trade war between the world’s largest economies and could undermine global economic growth. This, along with persistent geopolitical risks stemming from the protracted Russia-Ukraine war, assists the safe-haven Gold price to hold above the $2,600 mark.
Gold price drifts lower amid a fresh leg up in the US bond yields and reviving USD demand
- The US Bureau of Economic Analysis (BEA) reported on Wednesday that the Personal Consumption Expenditures (PCE) Price Index rose to 2.3% on a yearly basis in October from 2.1% in the previous month.
- Additional details of the report revealed that the core PCE Price Index, which excludes volatile food and energy prices, rose 0.3% on a monthly basis and edged higher from 2.7% in September to 2.8% last month.
- Separately, data published by the US Commerce Department showed that the world's largest economy expanded at a healthy 2.8% annual pace in the third quarter on strong consumer spending, which rose by 3.5%.
- Meanwhile, the Labor Department said that the number of Americans filing new applications for unemployment-related benefits fell by 2,000, to a seasonally adjusted 213,000 during the week ended November 23.
- This helps offset a slight disappointment from the US Durable Goods Orders, which rose 0.2% in October against an increase of 0.5% expected. Excluding transportation, orders increased by 0.1%, missing estimates.
- This comes on top of worries that US President-elect Donald Trump's policies will boost inflation and FOMC minutes, showing that the Committee could pause its easing of the policy rate if inflation remained elevated.
- The benchmark 10-year US Treasury yields rebound from a level not seen in a month and assist the US Dollar in reversing a part of the overnight slide to a two-week low, exerting some pressure on the Gold price.
- Trump earlier this week pledged to impose tariffs on a wide range of products coming into the US from Mexico, Canada, and China. Apart from this, geopolitical tensions underpin the safe-haven precious metal and help limit losses.
Gold price bears need to wait for a sustained break below $2,600 before placing fresh bets
The overnight failure to find acceptance above the 100-period Exponential Moving Average (EMA) on the 4-hour chart and the subsequent downfall warrant caution for bullish traders. Furthermore, negative oscillators on hourly and daily charts suggest that the path of least resistance for the Gold price is to the downside. That said, it will still be prudent to wait for a sustained break and acceptance below the $2,600 mark before positioning for deeper losses. The XAU/USD might then aim to challenge the 100-day SMA, currently pegged near the $2,571-2,570 area, before eventually dropping to the monthly swing low, around the $2,537-2,536 region.
On the flip side, any move up beyond the Asian session peak, around the $2,638-2,639 zone, now seems to confront a strong barrier near the overnight swing high, around the $2,658 region. A sustained strength beyond the latter could lift the Gold price to the next relevant hurdle near the $2,677-2,678 hurdle en route to the $2,700 round figure. Some follow-through buying will suggest that the recent corrective decline from the all-time peak touched in October has run its course and shifts the bias in favor of bullish traders.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
“Rate cut of either 25 bp or 50 bp will be on the table for Feb,” Reserve Bank of New Zealand (RBNZ) Assistant Governor Karen Silk said in an interview with Reuters on Thursday.
Additional quotes
Everything was on the table this week, but the committee reached a consensus on a 50 bp cut very quickly.
Did not feel the need to do more than 50 bp because there is still work to do on domestic inflation.
Expects tradeable inflation to pick up, so need non-tradeable inflation to come down.
Have to make sure core inflation is sustainably at target mid-point.
Market reaction
NZD/USD is less impressed by these comments, losing 0.06% on the day to trade at 0.5890 at press time.
- EUR/USD struggles as the US Dollar advances due to increasing caution surrounding the Fed’s rate cut decision in December.
- The stronger US PCE data indicated a solid growth in consumer spending in October.
- Eurozone HICP headline and core inflation are projected to show annualized increases in November.
EUR/USD edges lower to near 1.0550 during the Asian trading hours on Thursday. This downside of the pair could be attributed to the improved US Dollar (USD) amid the cautious mood surrounding the Federal Reserve’s (Fed) interest rate decision in December, following Wednesday's robust inflation data. Markets may witness thin trading due to the US Thanksgiving holiday.
This latest US inflation report indicated solid growth in consumer spending for October, but it also highlighted a stagnation in progress toward lowering inflation, keeping the Fed on alert. The US Personal Consumption Expenditures (PCE) Price Index increased by 2.3% year-over-year in October, up from 2.1% in September. Meanwhile, the core PCE Price Index, which excludes volatile food and energy prices, rose by 2.8%, slightly higher than the 2.7% recorded the previous month.
According to the CME FedWatch Tool, futures traders are now pricing in a 68.1% chance that the Fed will cut rates by a quarter point in December, up from 59.4%, a day ago. Nonetheless, they anticipate the Fed leaving rates unchanged at its January and March meetings.
The Euro (EUR) faces a bearish outlook as European Central Bank (ECB) policymakers express concerns about the Eurozone's current and future economic growth. A rate cut from the ECB in December appears highly likely, though the market remains divided on the expected size of the reduction.
Traders are now turning their attention to Friday's release of the Eurozone Harmonized Index of Consumer Prices (HICP) inflation data. Preliminary figures for both headline and core inflation in November are projected to show annualized increases, which could heighten investor unease.
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- The Indian Rupee trades firmer in Thursday's Asian session.
- High USD bids for month-end payments and uncertainties surrounding Trump's trade policies undermine the INR.
- The RBI intervention might support the INR and cap the pair’s upside.
The Indian Rupee (INR) edges higher on Thursday. The month-end US Dollar (USD) demand from importers weighs on the local currency. Additionally, the speculation over aggressive trade policies under Donald Trump’s presidency and the expectation that the Federal Reserve (Fed) might be cautious about further rate cuts could boost the USD against the INR in the near term.
On the other hand, the Reserve Bank of India (RBI) could step in to sell USD, which might help limit the INR’s losses. The US markets will be closed on Thursday in observance of the Thanksgiving holiday. Traders will keep an eye on the Indian Federal Fiscal Deficit for October and GDP growth data for the July-September 2024 quarter (Q2 FY25), which is set to be released on Friday.
Indian Rupee remains fragile due to Trump-related policies, Dollar demand intensifies
- "Rupee lost all its sheen it had gained on Wednesday and fell to 84.48 before recovering as RBI sold dollars... but dollars were bought again on account of month-end demand and it (rupee) closed lower," said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.
- Inflation in the US, as measured by the change in the Personal Consumption Expenditures (PCE) Price Index, rose to 2.3% YoY in October from 2.1% in September, the US Bureau of Economic Analysis (BEA) reported on Wednesday. This figure matched the expectation.
- The US core PCE Price Index, which excludes volatile food and energy prices, climbed 2.8% in the same period, compared to a 2.7% increase in September, in line with the market consensus. On a monthly basis, the core PCE Price Index increased 0.3% in October, as expected.
- The US economy grew at a 2.8% annual pace from July through September, the Commerce Department's Bureau of Economic Analysis reported in its second estimate of third-quarter Gross Domestic Product (GDP).
- Futures traders are now pricing in a 66.5% chance that the Fed will cut rates by a quarter point in December, up from 55.7% before the PCE data, according to the CME FedWatch Tool. However, they expect the Fed to leave rates unchanged at its January and March 2025 meetings.
USD/INR’s constructive outlook prevails
The Indian Rupee trades on a weaker note on the day. The uptrend of the USD/INR pair remains intact within an ascending trend channel on the daily chart, with the price holding above the key 100-day Exponential Moving Average (EMA). The path of least resistance is to the upside as the 14-day Relative Strength Index stands above the midline near 58.0, indicating bullish sentiment in the near term.
The key upside barrier for USD/INR is seen at the 84.50-84.55 region, representing the all-time high and the upper boundary of the trend channel. Extended gains above this level could attract some buyers to the 85.00 psychological mark.
In the bearish event, any follow-through selling below the lower limit of the trend channel of 84.24 could expose 83.95, the 100-day EMA. Further south, the next support level emerges at 83.65, the low of August 1.
Indian Rupee FAQs
The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee.
The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference.
Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee.
Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
- Silver price depreciates due to safe-haven flows diminishing amid easing Middle-East tensions.
- A ceasefire between Israel and the Lebanese armed group Hezbollah was successfully upheld on Wednesday.
- Dollar-denominated Silver faces headwinds as an improved US Dollar increases its cost for buyers using other currencies, potentially dampening demand.
Silver price (XAG/USD) extends its losses for the second consecutive day, trading around $29.90 per troy ounce during the Asian session on Thursday. The decline in Silver prices can be attributed to safe-haven flows diminishing amid easing geopolitical tensions in the Middle East.
A ceasefire between Israel and the Lebanese armed group Hezbollah was successfully upheld on Wednesday, following a deal mediated by the United States (US) and France. This truce has allowed people in the border areas, devastated by 14 months of conflict, to begin returning to their homes. However, Israel continues its military operations against Hamas in the Gaza Strip, according to Reuters.
The price of dollar-denominated Silver has been pressured by an improved US dollar (USD) as the Federal Reserve (Fed) is likely to remain cautious about cutting interest rates following Wednesday's robust inflation data. The report indicated solid growth in consumer spending for October, but it also highlighted a stagnation in progress toward lowering inflation, keeping the Fed on alert.
The US Personal Consumption Expenditures (PCE) Price Index increased by 2.3% year-over-year in October, up from 2.1% in September. Meanwhile, the core PCE Price Index, which excludes volatile food and energy prices, rose by 2.8%, slightly higher than the 2.7% recorded the previous month. Both figures aligned with market expectations, indicating steady inflationary pressure within the economy.
Demand of the non-yielding Silver receives downward pressure due to optimism in the bond market following the selection of Scott Bessent as US Treasury Secretary in the incoming administration. Bessent has advocated for a phased approach to trade restrictions and expressed a willingness to negotiate tariff levels in coordination with President-elect Donald Trump.
Silver traders still assess the recent Federal Open Market Committee's (FOMC) Meeting Minutes for the policy meeting held on November 7, which indicated that policymakers are adopting a cautious stance on cutting interest rates, citing easing inflation and a robust labor market.
According to the CME FedWatch Tool, futures traders are now pricing in a 68.1% chance that the Fed will cut rates by a quarter point in December, up from 59.4%, a day ago. Nonetheless, they anticipate the Fed leaving rates unchanged at its January and March meetings.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
- The Japanese Yen retreats from over a one-month high touched against the USD on Wednesday.
- December BoJ rate hike bets, trade war jitters and geopolitical risks might lend support to the JPY.
- The recent decline in the US bond yields could undermine the USD and cap the upside for USD/JPY.
The Japanese Yen (JPY) weakens slightly against its American counterpart during the Asian session on Thursday and erodes a part of the recent strong gains to a five-week top touched the previous day. In the absence of a fresh fundamental catalyst, the intraday JPY slide is more likely to remain limited amid speculation that the Bank of Japan (BoJ) may hike interest rates again in December. Furthermore, US President-elect Donald Trump’s tariff threats and geopolitical risks could underpin the safe-haven JPY.
Meanwhile, traders have been dialling back on the so-called "Trump trades" following the nomination of Scott Bessent as the US Treasury Secretary. Meanwhile, Wednesday's US macro data did little to temper market expectations that the Federal Reserve (Fed) will lower borrowing costs by 25 basis points in December. This led to a further decline in the US Treasury bond yields, which dragged the US Dollar (USD) to a two-week low and could benefit the lower-yielding JPY ahead of Tokyo inflation data on Friday.
Japanese Yen bulls look to seize control amid trade war fears and hopes for a BoJ December rate hike
- Japan’s stronger Consumer Price Index and steady corporate service inflation reaffirmed Bank of Japan Governor Kazuo Ueda's view that the economy was progressing towards sustained wages-driven inflation.
- This keeps the door open for another BoJ interest rate hike in December, which, along with trade war jitters, lifted the safe-haven Japanese Yen to a five-week high against its American counterpart on Wednesday.
- The flight to safety and expectations that Scott Bessent – Trump's US Treasury secretary nominee – will restrain budget deficits dragged the benchmark 10-year US Treasury yields to a level not seen in a month.
- The US Dollar fell to a two-week low amid some follow-through profit-taking and failed to gain any respite from Wednesday's US macro data, which underscored the US economic resilience and a solid labor market.
- The Bureau of Economic Analysis reported that the economy expanded steadily in the third quarter, by a 2.8% annualized pace – matching the first estimate – and consumer spending rose 3.5% – the most this year.
- Meanwhile, data released by the US Department of Labor showed that the number of individuals filing new applications for unemployment insurance fell to 213K for the week ending November 22 from 215K prior.
- Separately, Durable Goods Orders climbed 0.2% in October as compared to the 0.4% decline (revised from -0.8%) recorded in the previous month and was worse than the consensus estimates for an increase of 0.5%.
- Furthermore, the Personal Consumption Expenditures (PCE) Price Index rose to 2.3% on a yearly basis in October from 2.1% in September and the core gauge edged higher from 2.7% to 2.8% during the reported month.
- The data did little to bolster the case for the Federal Reserve to ease again next month, although market participants are pricing in over a 65% chance of another 25-basis points rate cut at the December FOMC meeting.
- However, expectations that Trump's expansionary policies will boost inflation and limit the scope for the Fed to cut rates further revive the USD demand and lend some support to the USD/JPY pair on Thursday.
- Trading volumes are expected to remain thin on the back of the Thanksgiving Day holiday in the US, warranting some caution for aggressive traders ahead of the Tokyo consumer inflation figures on Friday.
USD/JPY seems vulnerable below 200-day SMA; bearish confirmation below 38.2% Fibo. level
The overnight breakdown below the very important 200-day Simple Moving Average (SMA) could be seen as a key trigger for bearish traders. Moreover, oscillators on the daily chart have just started gaining negative traction and support prospects for further USD/JPY depreciation. That said, a modest recovery from the vicinity of the 38.2% Fibonacci retracement level of the September-November rally warrants some caution. Any further move up, however, is more likely to remain capped near the 152.00 mark (200-day SMA), above which spot prices could climb to the 152.60 area, en route to the 153.00 mark and the 153.30 horizontal barrier.
On the flip side, the overnight swing low, around the 150.45 area, closely followed by the 150.20-150.15 region (38.2% Fibo. level) and the 150.00 psychological mark now seem to act as immediate support levels. A convincing break below the latter has the potential to drag the USD/JPY pair to the 149.40-149.35 intermediate support en route to the 149.00 round figure and the 50% retracement level, around the 148.25-148.20 zone.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
| Raw materials | Closed | Change, % |
|---|---|---|
| Silver | 30.077 | -1.19 |
| Gold | 2635.54 | 0.16 |
| Palladium | 974.72 | -0.49 |
- NZD/USD trades with mild gains around 0.5900 in Thursday’s early Asian session.
- The cautious stance from the Fed on further rate cuts might lift the US Dollar.
- The speculations about a potential 10% tariff on Chinese goods could weigh on the Kiwi.
The NZD/USD pair gains traction to around 0.5900 during the Asian trading hours on Thursday, bolstered by the weaker US Dollar (USD). The Greenback edges lower due to the month-end flows and some profit-taking for the US long weekend. The US markets will be closed on Thursday in observance of the Thanksgiving holiday.
However, the downside for the Greenback might be limited amid the expectation of a less aggressive rate cut by the Federal Reserve (Fed). The signal of stalled inflation progress hinted that the Fed might be cautious about further rate cuts.
The US Personal Consumption Expenditures (PCE) Price Index rose 2.3% YoY in October, compared to a 2.1% increase in September, the US Bureau of Economic Analysis (BEA) reported on Wednesday. The core PCE Price Index, which excludes volatile food and energy prices, climbed 2.8% in the same period, up from 2.7% in September. Both figures came in line with the market consensus.
“This paves the way for a 25 basis point cut in December and then probably a pause. But the pause won't likely be due to inflation data, but because of uncertainties over Trump's tariffs. I think the Fed will grow cautious,” noted Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
On Wednesday, the Reserve Bank of New Zealand (RBNZ) decided to cut its Official Cash Rate (OCR) by 50 basis points (bps) from 4.75% to 4.25% in the November meeting. RBNZ Governor Adrian Orr noted during the press conference that the forecasts align with a potential 50 bps reduction in February 2025, contingent on economic activity. He further stated that domestic inflation pressures would continue to ease. In the meantime, the recent tariff threats from US President-elect Donald Trump could exert some selling pressure on the Kiwi as China has been the largest trading partner of New Zealand.
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- The Australian Dollar receives support from the stronger Private Capital Expenditure on Thursday.
- Australia's total new capital expenditure unexpectedly increased by 1.1% QoQ in Q3, exceeding the expected 0.9% increase.
- The AUD/USD pair may struggle as the US is set to introduce further AI chip sanctions against China on Monday.
The Australian Dollar (AUD) holds steady against the US Dollar (USD) following the release of stronger-than-expected Private Capital Expenditure on Thursday. Australia's total new capital expenditure rose by 1.1% quarter-on-quarter in the third quarter, surpassing market expectations of a 0.9% increase and rebounding from a 2.2% decline in the previous quarter.
However, the AUD/USD pair may face downward pressure as the United States (US) is set to unveil additional measures on Monday aimed at curbing China’s ability to advance in artificial intelligence technology. Given the close trade ties between Australia and China, any significant shifts in China’s economy are likely to ripple through Australian markets.
Additionally, the Australian Dollar faced challenges due to dampened market sentiment following President-elect Donald Trump's announcement of a 10% increase in tariffs on all Chinese goods entering the United States.
The downside of the AUD was restrained due to the Reserve Bank of Australia's (RBA) hawkish outlook on future interest rate decisions. Australia's monthly Consumer Price Index (CPI) rose by 2.1% year-over-year in October, unchanged from the previous month but below market expectations of 2.3%. This marked the lowest inflation rate since July 2021 and remained within the central bank's target range of 2-3% for the third consecutive month.
Australian Dollar holds ground as the US Dollar faces challenges due to monthly flows
- The US Dollar struggles due to monthly flows and reduced trading activity due to the Thanksgiving holiday. However, the USD's decline may be capped, as the Federal Reserve (Fed) is likely to remain cautious about cutting interest rates following Wednesday's robust inflation data. The report indicated solid growth in consumer spending for October, but it also highlighted a stagnation in progress toward lowering inflation, keeping the Fed on alert.
- The US Personal Consumption Expenditures (PCE) Price Index increased by 2.3% year-over-year in October, up from 2.1% in September. Meanwhile, the core PCE Price Index, which excludes volatile food and energy prices, rose by 2.8%, slightly higher than the 2.7% recorded the previous month. Both figures aligned with market expectations, indicating steady inflationary pressure within the economy.
- The latest Federal Open Market Committee's (FOMC) Meeting Minutes for the policy meeting held on November 7, indicated that policymakers are adopting a cautious stance on cutting interest rates, citing easing inflation and a robust labor market.
- US President-elect Donald Trump is expected to appoint Jamieson Greer as the US Trade Representative, Bloomberg reported on Tuesday. Greer’s nomination highlights the central role of tariffs in Trump’s economic strategy.
- Chicago Fed President Austan Goolsbee indicated on Tuesday that the Fed will likely continue lowering interest rates toward a neutral stance that neither stimulates nor restricts economic activity. Meanwhile, Minneapolis Fed President Neel Kashkari highlighted that it remains appropriate to consider another rate cut at the Fed’s December meeting, according to Bloomberg.
- The recent preliminary S&P Global US Purchasing Managers’ Index (PMI) data have reinforced expectations that the Federal Reserve (Fed) may slow the pace of rate cuts. Futures traders are now assigning a 57.7% probability to the Federal Reserve cutting rates by a quarter point in December, according to the CME FedWatch Tool.
- Australia's four largest banks predicted the Reserve Bank of Australia's first rate cut. Westpac has revised its forecast for the first cut to May, up from February. National Australia Bank (NAB) also expects the cut in May. Meanwhile, the Commonwealth Bank of Australia (CBA) and ANZ are cautiously forecasting a rate cut in February.
Technical Analysis: Australian Dollar tests nine-day EMA near 0.6500
AUD/USD trades near 0.6500 on Thursday, with technical analysis indicating growing short-term bearish momentum. The pair remains within a descending channel, while the 14-day Relative Strength Index (RSI) stays below 50, reflecting sustained negative sentiment.
On the downside, the AUD/USD pair could retest its four-month low of 0.6434, recorded on November 26. A break below this level could expose the yearly low of 0.6348, last seen on August 5, with further support near the descending channel’s lower boundary around 0.6310.
Conversely, the immediate resistance is at the nine-day Exponential Moving Average (EMA) of 0.6501, followed by the 14-day EMA at 0.6513. Additional resistance is seen at the channel's upper boundary near 0.6540. A decisive break above these levels could pave the way for a move toward the four-week high of 0.6687.
AUD/USD: Daily Chart
Australian Dollar PRICE Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.05% | 0.03% | 0.20% | -0.11% | -0.14% | -0.06% | 0.10% | |
| EUR | -0.05% | -0.02% | 0.14% | -0.16% | -0.19% | -0.12% | 0.04% | |
| GBP | -0.03% | 0.02% | 0.15% | -0.14% | -0.15% | -0.10% | 0.06% | |
| JPY | -0.20% | -0.14% | -0.15% | -0.31% | -0.33% | -0.30% | -0.11% | |
| CAD | 0.11% | 0.16% | 0.14% | 0.31% | -0.02% | 0.04% | 0.20% | |
| AUD | 0.14% | 0.19% | 0.15% | 0.33% | 0.02% | 0.07% | 0.24% | |
| NZD | 0.06% | 0.12% | 0.10% | 0.30% | -0.04% | -0.07% | 0.16% | |
| CHF | -0.10% | -0.04% | -0.06% | 0.11% | -0.20% | -0.24% | -0.16% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
The People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead on Thursday at 7.1894, as compared to the previous day's fix of 7.1982 and 7.2227 Reuters estimates.
US President-elect Donald Trump said on Wednesday that Mexico's President Claudia Sheinbaum agreed to stop migration through Mexico, and into the United States, effectively closing our Southern Border, per the New York Times.
“Just had a wonderful conversation with the new President of Mexico, Claudia Sheinbaum Pardo,” Trump posted on his Truth Social platform.
Earlier this week, Trump announced that he planned to impose a 25% tariff on Mexican imports in an effort to get the country to crack down on illegal immigration and drug smuggling.
Market reaction
At the time of writing, the USD/MXN pair is trading 1.08% lower on the day to trade at 20.39.
Mexican Peso FAQs
The Mexican Peso (MXN) is the most traded currency among its Latin American peers. Its value is broadly determined by the performance of the Mexican economy, the country’s central bank’s policy, the amount of foreign investment in the country and even the levels of remittances sent by Mexicans who live abroad, particularly in the United States. Geopolitical trends can also move MXN: for example, the process of nearshoring – or the decision by some firms to relocate manufacturing capacity and supply chains closer to their home countries – is also seen as a catalyst for the Mexican currency as the country is considered a key manufacturing hub in the American continent. Another catalyst for MXN is Oil prices as Mexico is a key exporter of the commodity.
The main objective of Mexico’s central bank, also known as Banxico, is to maintain inflation at low and stable levels (at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%). To this end, the bank sets an appropriate level of interest rates. When inflation is too high, Banxico will attempt to tame it by raising interest rates, making it more expensive for households and businesses to borrow money, thus cooling demand and the overall economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.
Macroeconomic data releases are key to assess the state of the economy and can have an impact on the Mexican Peso (MXN) valuation. A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only does it attract more foreign investment but it may encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this strength comes together with elevated inflation. However, if economic data is weak, MXN is likely to depreciate.
As an emerging-market currency, the Mexican Peso (MXN) tends to strive during risk-on periods, or when investors perceive that broader market risks are low and thus are eager to engage with investments that carry a higher risk. Conversely, MXN tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- WTI price remains steady near $68.65 in Thursday’s early Asian session.
- Israel agreed to a ceasefire agreement with Lebanon’s Hezbollah militants, effective Wednesday.
- US crude stocks fell by 1.844 million barrels last week, according to the EIA.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $68.65 on Wednesday. The WTI price holds steady as a large surprise crude draw offsets a ceasefire deal between Israel and Hezbollah. The oil market might be somewhat quiet due to the Thanksgiving Day holiday.
The latest US economic data indicated that the progress on lowering inflation appears to have stalled in recent months, which could diminish the expectation for the Federal Reserve (Fed) to cut interest rates in 2025. The markets are now pricing in nearly 66.5% chance that the Fed will cut rates by a quarter point in December, up from 55.7% before the PCE data, according to the CME FedWatch Tool.
However, they anticipate the Fed will leave rates unchanged at its meetings in January and March. It’s worth noting that slower-than-expected rate reductions would keep borrowing costs high, which could slow economic activity and lower oil demand.
Israel approved a ceasefire agreement with Lebanon’s Hezbollah militants that would end nearly 14 months of fighting linked to the war in the Gaza Strip, effective Wednesday. The easing geopolitical risks could drag the WTI price lower. "The real question will be for how long it (the ceasefire) will truly be honored," said Dennis Kissler, senior vice president of trading at BOK Financial.
However, a decline in US crude inventories last week might boost the black gold price. The US Energy Information Administration's (EIA) weekly report showed Crude oil stockpiles in the United States for the week ending November 22 fell by 1.844 million barrels, compared to a rise of 545,000 barrels in the previous week. The market consensus estimated that stocks would decrease by 1.3 million barrels.
Meanwhile, gasoline stocks added 3.3 million barrels in the week to November 22. This compared with an inventory build of 2.1 million barrels for the previous week.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
| Index | Change, points | Closed | Change, % |
|---|---|---|---|
| NIKKEI 225 | -307.03 | 38134.97 | -0.8 |
| Hang Seng | 443.93 | 19603.13 | 2.32 |
| KOSPI | -17.3 | 2503.06 | -0.69 |
| ASX 200 | 47.3 | 8406.7 | 0.57 |
| DAX | -34.23 | 19261.75 | -0.18 |
| CAC 40 | -51.48 | 7143.03 | -0.72 |
| Dow Jones | -138.25 | 44722.06 | -0.31 |
| S&P 500 | -22.89 | 5998.74 | -0.38 |
| NASDAQ Composite | -113.82 | 19060.48 | -0.59 |
The US is expected to announce another set of measures on Monday designed to further restrain China's ability to develop advanced artificial intelligence, per WIRED.
The measures might include sanctioning dozens of Chinese companies that produce semiconductor equipment, as well as imposing limits on a few chip manufacturing factories, some of which are linked to the Chinese tech giant Huawei.
Market reaction
At the time of writing, the AUD/USD pair is trading 0.01% lower on the day to trade at 0.6497.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- EUR/USD bounced back toward the 1.0600 handle on Wednesday.
- Markets have stepped away from broad Greenback bidding pressure.
- Volumes and trading flows set to be crimped through the rest of the week.
EUR/USD caught a broad-market bid on Wednesday, taking a new run at the 1.0600 handle during the midweek market session. Fiber’s bullish rebound was due mostly to investors broadly taking a step out of recent Greenback buying pressure, rather than any instrinsic strength within the Euro itself.
Wednesday’s data docket was entirely one-sided, delivering a wide chunk of US economic figures before US markets shutter exchanges for the Thanksgiving holiday on Thursday, to be followed by shortened trading hours on Friday. Annualized US Gross Domestic Product (GDP) grew by the expected 2.8% through the third quarter, to no one's surprise and barely moving the needle on investor pulses. Core Personal Consumption Expenditure Price Index (PCEPI) accelerated to 2.8% for the year ended in October, also meeting expectations. While upticks in inflation metrics generally bode poorly for market expectations of future rate cuts, the move upward was widely expected, and a hold in monthly figures at 0.3% MoM helped to frame the bump in the data as being in the rear-view mirror.
Fiber traders will be looking toward Friday’s preliminary pan-EU Harmonized Index of Consumer Prices (HICP) inflation data, with equal parts hope and despair. Pan-EU inflation is broadly forecast to tick higher in the near term, which will further cripple the European Central Bank (ECB) even further as ECB policymakers struggle to find the words to bolster investor confidence in the lopsided European economy.
EUR/USD price forecast
The Euro’s much-needed bullish reprieve on Wednesday gave Fiber bulls a chance to put more distance between themselves and the pair’s latest swing low below the 1.0400, but not by much. EUR/USD is poised for a battle with the 1.0600 handle, and even a victory on the key technical level still sees further topside momentum running aground of a quickly-descending 50-day Exponential Moving Average (EMA) falling through 1.0750.
EUR/USD daily chart
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
| Pare | Closed | Change, % |
|---|---|---|
| AUDUSD | 0.64972 | 0.44 |
| EURJPY | 159.676 | -0.46 |
| EURUSD | 1.05654 | 0.77 |
| GBPJPY | 191.63 | -0.37 |
| GBPUSD | 1.26796 | 0.89 |
| NZDUSD | 0.58941 | 1.06 |
| USDCAD | 1.40293 | -0.17 |
| USDCHF | 0.88192 | -0.44 |
| USDJPY | 151.13 | -1.24 |
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