Forex-novosti i prognoze od 29-10-2024

• NZD/JPY has dropped to 91.50 in Tuesday's session, signaling a mild bearish turn.
• Technical indicators show a neutral outlook, with the RSI starting to slow down but remaining in positive territory.

NZD/JPY has reversed its upward trajectory after a period of sideways consolidation. In Tuesday's session, the pair declined mildly to 91.50, suggesting a potential shift in market sentiment. However, its unlikely that Tuesday’s movements are a trend shift as the pair continues stuck between the 20-day Simple Moving Average and the 92.00 threshold.

The Relative Strength Index (RSI) has slid from 57, indicating that buying pressure is decreasing. Meanwhile the MACD is showing flat momentum with a neutral histogram and a declining signal line. This change in the signal line could point a potential bearish momentum in the price.

The pair has been trading sideways over the past sessions, within a narrow range defined by support at around 90.70 (20-day SMA) and resistance at 92.20.The 20-day SMA serves as a critical support level that could trigger stronger selling pressure if breached while the 100 and 200-day SMA convergence around 92.00 is the resistances to be breached which could improve the outlook.

NZD/JPY daily chart

• Gold climbs to new ATH at $2,774 as mixed US data bolsters expectations of a Fed rate cut in November.
• Safe-haven demand remains strong amid heightened Middle East conflict, Ukraine war, and rising odds for a Trump victory in US elections.
• Investors await key economic data this week, including GDP, Nonfarm Payrolls, and the PCE Price Index, which could impact the Fed's path.

Gold hit a new all-time high (ATH) of $2,774 late in the North American session amid a risk-on mood and a retracement in US Treasury yields. Following the release of mixed US data on Tuesday, investors seem convinced that the Federal Reserve will lower borrowing costs at the November meeting.

The XAU/USD trades at $2,773, gains over 1%,  within striking distance of cracking the ATH after bouncing off daily lows of  $2,739.

The US Department of Labor revealed that the September Job Openings and Labor Turnover Survey (JOLTS) fell to its lowest level in three and a half years, missing analysts' expectations. Meanwhile, October's Conference Board (CB) Consumer Confidence showed its most impressive gain since March 2021.

Gold traded slightly below its opening price at the beginning of the week and is down by 0.15%, weighed down by rising US Treasury yields. Market players prepare for a busy economic docket in the United States (US), as the data will be crucial with investors looking for cues for the Federal Reserve’s (Fed) monetary policy path.

Meanwhile, traders are closely watching the upcoming US election on November 5. According to polling site FiveThirtyEight, Trump's chances of winning have risen to 52% compared to 48% for Vice President Kamala Harris. Despite this, the Democratic nominee still holds a slight lead in most national polls.

Gold remains supported by safe-haven flows amid the ongoing conflict in the Middle East and the escalation of the war in Ukraine following reports that North Korea has sent troops to Russia.

Traders are also awaiting a busy economic schedule, which will feature a tranche of job data: ADP Employment Change, Initial Jobless Claims, and Nonfarm Payrolls.

Other data will be revealed like the Gross Domestic Product (GDP) for the third quarter of 2024, the ISM Manufacturing PMI, and the Fed’s preferred inflation gauge — the Personal Consumption Expenditures (PCE) Price Index.

Daily digest market movers: Gold price boosted amid upbeat mood

• The US Dollar Index (DXY), which tracks the Dollar's value against a basket of six currencies, is flat at 104.27.
• US JOLTS for September diminished from 7.861 million to 7.443 million, below estimates of 7.99 million.
• The Conference Board (CB) Consumer Confidence in October improved to 108.7 from 99.1, exceeding the forecast of 99.5.
• The US Bureau of Economic Analysis will reveal Wednesday's GDP for the third quarter. Estimates suggest the economy grew 3% QoQ.
• The Atlanta Fed GDP Now model suggests the economy grew by 3.3% in Q3 2024.
• Data from the Chicago Board of Trade, via the December fed funds rate futures contract, shows investors estimate 49 bps of Fed easing by the end of the year.

XAU/USD technical outlook: Gold price rallies to an all-time peak

Gold price rally resumed on Tuesday, set to test the $2,800 if buyers extend XAU/USD advance past $2,775. A breach of the latter will expose $2,800, followed by the psychological $2,850 mark and the $2,900 figure.

On the other hand, if sellers move in and push prices below  $2,750, the next support would be $2,700. Up next the September 26 swing high, which turned support at $2,685, followed by the 50-day Simple Moving Average (SMA), which turned support at $2,603.

Momentum suggests the non-yielding metal could consolidate as the Relative Strength Index (RSI) remains bullish, aiming higher, breaking the last peak. This means that buyers are gathering steam.

• The Australian Monthly Consumer Price Index is foreseen at 2.3% in September. 
• Quarterly CPI inflation expected below 3%, but core figures are still seen as too high.
• The Reserve Bank of Australia will meet in early November to decide on monetary policy.
• The Australian Dollar could find some near-term demand on higher-than-anticipated CPI readings. 

Australia will publish fresh inflation-related figures on Wednesday, kick-starting a row of global first-tier releases that should grant volatility across the FX board. Ahead of the announcement, the Australian Dollar (AUD) fell to a nearly three-month low against the US Dollar (USD), with the latter benefiting from prevalent demand for safety. 

The Australian Bureau of Statistics (ABS) will publish two different inflation gauges: the quarterly Consumer Price Index (CPI) for the third quarter of 2024 and the September Monthly CPI, which measures annual price pressures over the past twelve months. The quarterly report includes the Trimmed Mean Consumer Price Index, the Reserve Bank of Australia's (RBA) favorite inflation gauge. 

The RBA will have a monetary policy meeting next week and the outcome will be announced on November 5. The Australian central bank has kept the Official Cash Rate (OCR) steady at 4.35% for roughly a year, and a rate cut remains out of sight.

What to expect from Australia’s inflation rate numbers?

The ABS is expected to report that the Monthly CPI rose by 2.3% in the year to September, easing from the 2.7% posted in August. The quarterly CPI is foreseen to increase by 0.3% quarter-on-quarter (QoQ) and by 2.9% year-on-year (YoY) in the third quarter of the year. Finally, the central bank’s preferred gauge, the RBA Trimmed Mean CPI, is expected to rise by 3.5% YoY in Q3, easing from the 3.9% advance posted in the previous quarter. 

Inflationary pressures in Australia are receding after a rough first quarter of 2024 and are now expected to fall into the RBA’s target range of 2% to 3%. Nevertheless, Australian policymakers have repeated multiple times that inflation remains high and would not be sustainable within target for “another year or two.” With that in mind, an interest rate cut before 2025 remains out of the picture.

Easing inflationary pressures, however, should boost the odds for a soon-to-come interest rate trim, particularly considering shrinking growth. The Australian economy has not fallen into recession but it is close to it. Only government spending has prevented the country from suffering a steeper setback. The latest Gross Domestic Product (GDP) showed the economy grew by 0.2% QoQ and by 1.0% YoY in the three months to June. 

In September, following the RBA’s latest monetary policy meeting, Governor Michele Bullock noted that while inflation “has fallen substantially since the peak in 2022”, it remains above the RBA’s preferred range of 2% to 3%. Bullock highlighted that underlying inflation was higher at 3.9% over the year to the June quarter. The focus will then be on core CPI as it remains closer to 4% than the magical 3% top goal.

An uptick in price pressures will likely push the odds for an interest-rate cut further away. The hawkish tone of policymakers will reinforce this idea, resulting in a stronger AUD. However, its strength remains doubtful, given the global scenario that keeps pushing investors toward safe-haven assets. 

How could the Consumer Price Index report affect AUD/USD?

As previously noted, the RBA will meet next week and announce its decision on November 5. Market participants won’t expect action, but policymakers will acknowledge inflation levels and hopefully hint where they are heading next. 

Generally speaking, higher CPI figures will be AUD bullish amid expectations for a persistently hawkish RBA. The opposite scenario is less likely: inflation may ease, but that won’t grant policymakers shifting towards a more dovish stance. 

Heading into the CPI release, the AUD/USD pair trades below the 0.6600 mark, down for a third consecutive day. 

Valeria Bednarik, FXStreet Chief Analyst, says: “The AUD/USD pair is not done with its slump, and regardless of the AUD’s reaction to the CPI, the risk is skewed to the downside. A recovery post-inflation data release could allow sellers to add shorts. From a technical perspective, the daily chart shows that AUD/USD is developing below all its moving averages. The 20 Simple Moving Average (SMA) heads south almost vertically and is about to cross below a directionless 100 SMA. The 200 SMA also stands flat, providing resistance at around 0.6630. Finally, technical indicators remain within negative levels, although with uneven bearish strength.”

Bednarik adds: “The AUD/USD pair has an immediate support area at around 0.6550, where it posted daily highs and lows between May and July. A break below this region should favor a bearish extension towards the 0.6500 threshold, while once the latter gives up, sellers could target the 0.6400-0.6430 area. Near-term resistance lies at 0.6630, en route to the 0.6670 area. Further gains could result in a test of the 0.6710 area, yet sellers will likely take their chances around it.”

• US bond yields rise, supported by sentiment favoring Trump in the upcoming US presidential election and cautious Fed stance on future rate cuts.
• Job openings decrease slightly in September to 7.44 million.
• US Housing Prices index from August saw an improvement.

The US Dollar Index (DXY), which measures the value of the USD against a basket of six currencies, extends gains on Tuesday, hitting a three-month high at 104.55. Despite a slight dip in September JOLTS Job Openings, the US labor market remains robust, as indicated by steady hiring and separation rates.

Key economic data releases, including ISM Manufacturing PMI and Nonfarm Payrolls (NFP), are expected this week. The outcome of these releases will be crucial in determining the index's trajectory. The USD remains supported by a resilient economy, but headwinds include Fed caution on inflation and market expectations for rate cuts.

Daily digest market movers: US Dollar rises despite mixed labor data, Trumps odds also help

• The US Dollar (USD) strengthens as positive economic data from last week suggests ongoing resilience in the US economy.
• The CME FedWatch Tool indicates a 95.8% probability of a 25-basis-point rate cut in November, with no anticipation of a larger 50-basis-point reduction. The odds of a cut in December also remain high.
• The US Dollar receives support amid higher US bond yields, driven by market sentiment increasingly favoring Former President Donald Trump in the upcoming US presidential election.
• On the data front, the number of job openings on the last business day of September stood at 7.44 million, below the market expectation of 7.99 million.
• On the positive side, hires and total separations remained stable, while quits and layoffs showed minimal changes.

DXY technical outlook: DXY surges, faces resistance from overbought conditions

The DXY index remains above its 200-day SMA, but the rally faces resistance as overbought conditions emerged. The index is now expected to consolidate, potentially correcting its overbought status. Indicators such as the Relative Strength Index (RSI) remained near overbought levels. Technically, the index cleared gains that had pushed it to a high of around 104.60, which gives further evidence of buying momentum losing steam. Support levels lie at 104.50, 104.30 and 104.00, while resistance levels are located at 104.70, 104.90 and 105.00.

• The Mexican Peso falls 0.57% for the week, pressured by upcoming Q3 GDP data, expected to show economic deceleration.
• Political turmoil deepens as eight Supreme Court Judges plan resignations, leaving only three linked to ruling party Morena.
• Fears of Trump’s victory in the US election weighed on the Mexican currency.

The Mexican Peso remains on the defensive against the Greenback, extending its losses for three consecutive days as market participants await crucial economic data in Mexico. The release of mixed data in the United States (US), weakened the Mexican currency, which accumulates so far, losses of 0.57% in the week. The USD/MXN trades at 20.07, up 0.20% on Tuesday.

Mexico’s economic docket remains absent, yet it will gather traction on Wednesday. The Instituto Nacional de Estadistica Geografia e Informatica (INEGI) would reveal Q3 2024 Gross Domestic Product (GDP) figures, which are expected to show the economy is decelerating sharply, below the Minister of Finance’s goal of 2.4%. GDP is expected to rise 0.8% QoQ above Q2’s reading of 0.2%, though the annual basis is expected to dip from 2.1% to 1.2%.

In the meantime, domestic issues linked to politics and the controversial judicial reform continued to grab the headlines. According to El Financiero, eight of the eleven current Supreme Court Judges would submit their resignations, effective until the end of August 2025.

Magistrate Juan Jose Olvera said, “The message is that they will decline to go to the election and will leave the spaces free for the people to decide.” He added that the three Supreme Court Judges remaining would be Lenia Batres, Yasmin Esquivel, and Loretta Ortiz, who are linked to the ruling party Morena.

In the meantime, Supreme Court Judge Alfredo Gutierrez Ortiz Mena submitted its resignation to the Senate, stating, “I do not consider myself a suitable candidate for a position that depends on popular support… the function is not to validate the will of the majority, but to safeguard rights.”

Aside from this, the US Department of Labor revealed that Job Openings and Labor Turnover (JOLTS) in September fell to their lowest level in three and a half years, missing analysts' estimates. Further data revealed the Conference Board (CB) Consumer Confidence in October, which posted its most impressive gain since March 2021.

US elections also pressure the Mexican currency. Jim Reid of Deustche Bank wrote in a note “The momentum has shifted a reasonable amount over the last couple of weeks as FiveThirtyEight’s model still had Harris having a 54% probability of victory on October 15, but that’s since reversed and now Trump is a 54% probability to win.”

Reid added “The Republican sweep probability on Polymarket.com was at 28% as recently as October 4 but is now 48% as we type. Over 45 million people have already voted so one side probably already has some momentum, but we won't of course know who until at least after the polls close next Tuesday night.”

Ahead of the week, Mexico’s economic schedule will feature the release of Gross Domestic Product (GDP) figures for Q3 2024, Business Confidence, and S&P Global Manufacturing PMI.

In the US, the economic docket is expected to reveal jobs data, GDP for the third quarter of 2024 on its preliminary reading, the Fed’s preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index and Nonfarm Payrolls (NFP).

Daily digest market movers: Mexican Peso tumbles after mixed US data

• Mexico’s Retail Sales and Economic Activity data for August were weaker than expected last week, according to INEGI. Alongside this, inflation’s dip in October could open the door for an interest rate cut by the Bank of Mexico (Banxico) at the November meeting.
• According to money market futures, Banxico is expected to cut between 175 to 200 basis points over the next 12 months.
• US JOLTS for September diminished from 7.861 million to 7.443 million, below estimates of 7.99 million.
• The Conference Board (CB) Consumer Confidence in October improved to 108.7 from 99.1, exceeding the forecast of 99.5.
• The US Bureau of Economic Analysis will reveal Wednesday's GDP for the third quarter. Estimates suggest the economy grew 3% QoQ.
• Data from the Chicago Board of Trade, via the December fed funds rate futures contract, shows investors estimate 49 bps of Fed easing by the end of the year.

USD/MXN technical outlook: Mexican Peso plunges as USD/MXN clears 20.00

The USD/MXN extended its gains but remains capped on the upside by the October 23 high  20.09. Despite this, the uptrend remains intact, and once buyers clear the latter, the next stop would be the YTD high at 20.22, followed by key psychological levels of 20.50 and 21.00.

On the other hand, if sellers reclaim the October 18 low at 19.64, this could pave the way for a challenge to 19.50. The next move would be toward the October 4 swing low of 19.10 before testing 19.00.

Oscillators suggest the USD/MXN uptrend remains intact, as depicted by the Relative Strength Index (RSI). The RSI is bullish and aiming upward.

The US dollar held steady, finishing almost unchanged from Monday’s close. This stability came amid a slowdown in the rally of US yields, ongoing uncertainty ahead of the US election, and anticipation of key US data releases.

Here is what you need to know on Wednesday, October 30:

The US Dollar Index (DXY) kept its inconclusive price action in the low-104.00 against the backdrop of a widespread cautious trade in the global markets. The usual MBA’s Mortgage Applications is due, seconded by the ADP Employment Change, the advanced Q3 GDP Growth Rate, Pending Home Sales, and the EIA’s weekly report on US crude oil inventories.

EUR/USD managed to rebound from earlier lows near 1.0770 and reclaimed the area just above the 1.0800 hurdle. Germany’s preliminary Inflation Rate takes centre stage along with EMU’s flash Q3 GDP Growth Rate, the final Consumer Confidence print, Economic and Industrial Sentiment, and the ECB’s Consumer Inflation Expectations. In addition, the ECB’s Schnabel is due to speak.

GBP/USD was the outperformer in the risk complex amidst rising expectations ahead of the release of the Autumn Budget on Wednesday.

USD/JPY maintained its trading range in the area of recent multi-week highs, although further gains remained limited by the 154.00 region. Japan’s Consumer Confidence gauge will be released.

Further concerns around China continued to weigh on the Aussie Dollar, sending AUD/USD to new two-month lows near 0.6550. The RBA’s Monthly CPI Indicator is next on tap seconded by the Q3 Inflation Rate.

Market chatter around the likelihood of a diplomatic solution for the crisis in Lebanon sent prices of WTI below the $67.00 mark per barrel, or four-week lows.

Gold prices rose to an all-time high past the $2,770 mark per ounce troy on the back of persistent geopolitical effervescence and prospects of further easing by major central banks. Silver prices rose to four-day highs well north of the $34.00 mark per ounce.

• USD/CAD holds its position above 1.3900, close to its three-month high recorded on Monday.
• Oil prices fall sharply as limited military operations alleviate fears of an all-out war in the Middle East.
• US Dollar strengthens as strong housing figures seem to outshadow soft JOLTs data.

The USD/CAD pair continues to gain traction on Tuesday with the quote rising by 0.23% to 1.3910 at the time of writing. The pair is trading near its three-month high of 1.3908 recorded on Monday and has been supported by a combination of factors, including the USD’s strength and a decline in oil prices.

The Greenback has been strengthening in recent weeks on the back of positive economic data, which has bolstered expectations for interest rate cuts by the Federal Reserve (Fed) in November. US JOLTs data from September came in mixed but somewhat below consensus. On the other hand, several home price indices from August beat expectations, demonstrating continued strength in shelter inflation.

Daily digest market movers: Canadian Dollar pressured by lower Oil prices

• WTI Oil price hovers around $67.50, weighing on the commodity-linked CAD as Canada is a major oil exporter.
• Iran's response to Israeli military actions could further impact oil prices and CAD. However, the lack of response to Israel’s weekend missile strikes has reduced market anxiety.
• BoC Governor Macklem explains that the recent aggressive rate cut was justified, considering previous inflation-fighting hikes.
• BoC aims to find the neutral rate that balances economic stimulation and restraint.
• On the US side, JOLTS Job Openings declined to 7.44 million in September, falling short of market estimates. Hires and total separations in the US economy remained stable, while quits and layoffs showed minimal changes.
• Markets await the Nonfarm Payrolls report from September to be released on Friday. Gross Domestic Product (GDP) revisions on Wednesday will also be important.

AUD/USD technical outlook: Bullish momentum steady despite overbought RSI

The Relative Strength Index (RSI) is currently at 79, indicating that the pair is heavily overbought. The RSI's slope is rising sharply, suggesting that buying pressure is rising. The Moving Average Convergence Divergence (MACD) is green and rising, suggesting that buying pressure is increasing. The overall technical outlook is bullish, but a correction is still possible.

Key support levels are at 1.3870, 1.3850 and 1.3830, while resistance levels are at 1.3900, 1.3915 and 1.3930.

• Dow Jones dips from 42,500 as US Treasury yields rise.
• US job openings drop to lowest since January 2021, supporting rate cut bets.
• Consumer Confidence jumps to 108.7, the highest since March 2021.
• Boeing leads Dow gains, up 2.93% after share sale, while Chevron, Coca-Cola, and Home Depot lag behind, posting notable losses.

The Dow Jones Industrial Average (DJIA) trims off its Monday’s gains, retreats from daily highs at around 42,500, and edges down over 0.25% while US Treasury bond yields cling to gains. US jobs market data augmented the odds that the Federal Reserve (Fed) will cut interest rates at the November meeting, while Consumer Confidence improved sharply.

US bond yields continued to rise, as the 10-year Treasury note yield rose three and a half basis points to 4.32% after the US Department of Labor revealed that job openings in the US tumbled to their lowest level in three and a half years.

US job vacancies slumped to 7.44 million in September from 7.86 million a month before, the fewest job openings since January 2021. At the same time, the Conference Board (CB) showed that Americans grew the most optimistic about the economy, as the index increased from 99.2 to 108.7, its most strongly gain since March 2021.

Following the data, the CME FedWatch Tool shows odds for a 25-basis-point (bps) rate cut by the Fed jumping to 98%, up from 96% a day ago. This would leave rates in the 4.50%-4.75% range.

Dow Jones news

The earnings season continued, and among the leading companies that compose the Dow Jones Industrial Average, McDonald’s (MCD) reported earnings per share (EPS) of $3.23, above estimates of $3.20. Revenue was also above forecasts of $6.82 billion at $6.87 billion. Despite this, MCD clings to minuscule gains of 0.03% at $296.88 per share.

In the meantime, Boeing (BA) raised over $21 billion via its share sale on Monday, selling 112.5 million shares at $143.00 each as the company prepares to repair its balance sheet.

Following the shares sale, Boeing was the foremost leader in the session, gaining 2.93% at $155.10 per share, followed by Salesforce Inc (CRM), up 1.31% at $297.61 a share, and Cisco Systems Inc (CSCO) up 0.94% at $55.80. The laggard of the session was Chevron (CXP), losing 1.14% at $148.82; Coca-Cola Co. (KO), down by 1.27% at $65.82 a share; and Home Depot Inc (HD) edged 1.80% lower, down at $395.65.

Dow Jones price forecast

The Dow Jones consolidated just below the 42,350 area for the second straight day after forming an “inside day,” which could have opened the door for further upside. However, the DJIA slipped below Monday’s close, paving the way for further downside.

If sellers move in and push the DJIA below the October 25 swing low of 42,043, look for a test of the 42,000 mark. Up next lies the 50-day Simple Moving Average (SMA) at 41,879.

For a bullish continuation, the DJIA must clear the October 25 peak at 42,596. Once surpassed, the next resistance would be 43,000, followed by a record high at 43,322.

Momentum remains bullish as depicted by the Relative Strength Index (RSI), which pierced above its neutral line. This hints that buyers bought the dip and are eyeing higher levels.

Dow Jones daily chart

In the past few weeks, China’s Politburo, several ministries and the PBOC have announced a slew of stimulus packages, Rabobank’s economist Teeuwe Mevissen notes.

Balance of stimulus set to shift towards fiscal stimulus measures

“While these, seen together, are significant, it is unlikely that they will be enough for a strong and durable recovery. We therefore expect more stimulus measures going forward.”

“The balance of stimulus will probably shift from mainly monetary- towards fiscal stimulus measures. For a maximum impact arising from economic stimulus, measures should aim at increasing domestic (private) demand.”

“Our expectations of more fiscal stimulus, could (depending on the size and focus) lead to higher growth in 2025, which means that, if so, we would have to revise our GDP forecast of 4.8% higher.”

• GBP/USD moves past 1.3000 as investors eye UK budget and potential Fed rate cuts following positive US jobs data.
• Buyers maintain support at the 100-day SMA (1.2971), with a close above 1.3000 targeting resistance at 1.3100 and 50-day SMA at 1.3139.
• A close below 1.2971 could open the door for sellers to test 1.2900, with further downside risk to the 200-day SMA at 1.2804.

The Pound Sterling climbed past 1.3000 for the first time in five days after a US jobs report increased the chances that the Federal Reserve (Fed) would cut rates at the last two meetings in 2024. The GBP/USD trades at 1.2998, posting gains of over 0.21%.

GBP/USD Price Forecast: Technical outlook

The GBP/USD has been range-bound within the 1.2900/1.3000 mark, unable to break the bottom/top of the area. Investors remain reluctant to position themselves as they eye the release of the UK budget, seen as traders as the next catalyst, ahead of the policy decisions of the Bank of England and the Federal Reserve next week.

In the near term, the pair is tilted to the downside, but buyers are leaning toward the 100-day Simple Moving Average (SMA) at 1.2971, keeping sellers at bay. If the former pushes the GBP/USD above 1.3000 and achieves a daily close above the latter, further upside is seen, and 1.3100 would be the next key resistance level. Once surpassed, the 50-day SMA at 1.3139 emerges as the next supply zone.

Conversely, if sellers drive the exchange rate below the 100-day SMA at 1.2971, it could exacerbate a test of 1.2900. Bears could drive prices to the 200-day SMA at 1.2804 on further weakness.

GBP/USD Price Chart – Daily

Energy supply risk premia continues to melt out of crude oil prices, but the set-up for a tactical rebound is strengthening, TDS’ Senior Commodity Strategist Daniel Ghali notes.

Rebound risks are strengthening

“Traders have concluded that this chapter of the conflict in the Middle East has ended, despite continued risks surrounding a potential tit-for-tat escalation and, regardless of its limited implications for global oil markets, some evidence that energy infrastructure in the Abadan refinery may have been damaged during the attacks.”

“Our return decomposition framework highlights that over the course of yesterday's session alone, supply risk premia sapped approximately -4.5% from Brent crude prices, whereas CTA selling activity added nearly -1% to the downmove. Looking forward, however, the set-up for a rebound is strengthening.”

“Trend following algos are now 'max short', continued evidence of reflationary tailwinds in demand may ultimately provide a cross-current to continued headwinds from supply risk, and our simulations of future prices suggest that nearly all scenarios over the coming week will lead to algo buying activity in Brent crude markets.”

• USD/CAD rallies up to a zone of resistance from historic highs at the top of a long-term range. 
• The pair’s strong rally could begin to wane in the face of the firm resistance. 
• There are no signs yet of a reversal lower, however, and the short and medium-term trends remain “up”.

USD/CAD reaches the top of a multi-year range and it is probable the pair will meet stiff technical resistance at these levels.

USD/CAD Daily Chart

USD/CAD has reached a zone (orange shaded rectangle) in the 1.3800s and 1.3900s composed of resistance from historic highs. These include the August 2024 high, the November 2023 high and the October 2022 high. The peaks have been highlighted with blue circles in the chart above. They comprise the top of the pair’s long-term sideways range. 

It is possible this may mark a turning point for USD/CAD and price will roll over and begin a leg down within its range, however, there are no signs yet from price confirming this. Although the pair has formed two Doji Star Japanese candlesticks in a row over the last two days (so far), it would require a long bearish candle to confirm that these formed part of a reversal pattern. Such a down day has not yet materialized. 

The short and medium-term trends remain bullish and given the principle that “the trend is your friend” the odds are tilted in favor of more upside. As such, USD/CAD could still go higher to the very top of the range at 1.3977. 

The Moving Average Convergence Divergence (MACD) momentum indicator is at relatively high levels and is bending over. It looks like it might cross below the red signal line giving a sell signal – but that has not happened yet. If it does, it will be further evidence of a bearish reversal. 

• Silver price surges to near $34.50 as the US JOLTS Job Openings data for September has come in weaker-than-expected.
• The US Dollar surrenders its intraday gains as soft job vacancy data pointed to a slowdown in labor demand.
• Investors will focus on a slew of US economic data.

Silver price (XAG/USD) discovers strong buying interest in Tuesday’s North American session as the United States (US) Bureau of Labor Statistics (BLS) has reported weak set of JOLTS Job Openings data for September. The white metal extends its rally to near $34.50 as soft job opening numbers have pointed to a slowdown in the job market.

Weak US job openings data has weighed on the US Dollar (USD), which has given up its entire intraday gains. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, falls back to nearly 104.30 after refreshing an almost three-month high of around 104.60. 10-year US Treasury yields surrender some of its intraday gains but hold the key support of 4.20%.

This week, investors will pay close attention to the US Q3 Gross Domestic Product (GDP), Personal Consumption Expenditure Price Index (PCE) data for September, the Nonfarm Payrolls (NFP), and the ISM Manufacturing PMI data for October published this week.

The economic data will indicate how the Federal Reserve’s (Fed) monetary policy will shape the remainder of the year.

Meanwhile, the outlook of the Silver price will remain firm amid uncertainty over US presidential elections on November 5. Traders expect former US President Donald Trump to return to power, while national polls have shown fierce competition with current Vice President Kamala Harris. The risk profile has remained favorable for safe-haven assets as Trump is expected to implement protectionist policies, which will result in an inflationary environment and will have an adverse impact on the currencies of the US's major trading partners.

Silver technical analysis

Silver price aims to recapture a fresh over 12-year high near $35.00 after a breakout of three-day consolidation. The horizontal support plotted from the May 21 high of $32.50, on a daily timeframe, will act as a key cushion for Silver price bulls from where it delivered a five-month consolidation breakout. Upward-sloping 20-day Exponential Moving Average (EMA) near $32.70 signals more upside ahead.

The 14-day Relative Strength Index (RSI) stays in the 60.00-80.00, pointing to an active bullish momentum.

Silver daily chart

• NZD/USD is steadily declining in what could be the final wave of a large zig-zag pattern. 
• It is not yet oversold and could reach lower lows given the bearish short and medium-term trends. 

NZD/USD is falling in what might be the C wave of a bearish ABC pattern which began life at the September 30 highs.

ABCs are zig-zag patterns in which waves A and C are usually of a similar length or a Fibonacci 61.8% of the other.

NZD/USD Daily Chart 

NZD/USD will probably fall to a target at 0.5911, the point where wave C is 61.8% of A. A break below the 0.5956 low would provide confirmation. 

It is possible it could fall all the way to the major support level at 0.5849 (August 5 low). A really bearish move could even see an extension to 0.5784, the point where wave C = A.

The outlook is supported by the fact that the pair is in a bearish short and medium-term downtrend and “the trend is your friend”. The Kiwi pair is, however, in a sideways long-term consolidation. 

The Relative Strength Index (RSI) momentum indicator is not yet oversold (below 30) suggesting there could be more downside to come. When it reaches oversold traders will be advised to not add to their existing short positions. 

• EUR/JPY eyes above 166.00 amid weakness in the Japanese Yen.
• The BoJ seems incapable of hiking interest rates further.
• Investors await Eurozone macroeconomic data and the BoJ policy announcement.

The EUR/JPY pair aims to extend its rally above the immediate resistance of 166.00 in Tuesday’s North American. The cross remains firm as the Japanese Yen (JPY) weakens across the forex domain amid expectations that the Bank of Japan (BoJ) is incapable of hiking interest rates further in the remaining year.

Market speculation for the BoJ to leave interest rates unchanged at their current levels by the year-end has strengthened after the outcome of Japan elections in which the ruling party failed to gain a majority. This has raised uncertainty over economic growth stability.

Meanwhile, investors await the BoJ’s interest rate decision on Thursday in which the central bank is expected to leave its key borrowing rates unchanged at 0.25%. Therefore, investors will keenly focus on the interest rate guidance.

In the Eurozone region, investors await a string of macroeconomic data such as preliminary Gross Domestic Product (GDP) and the Harmonized Index of Consumer Prices (HICP) data for October, which will be published on Wednesday and Thursday, respectively. The economic data will significantly influence market expectations for the European Central Bank’s (ECB) likely size for interest rate cuts in its last monetary policy meeting of this year in December.

A few ECB officials are worried about the risks of price pressures remaining below the bank’s target of 2% for a longer period due to growing downside risks to economic growth.

Late tonight (or early tomorrow morning, depending on your perspective) Australia will release its Q3 inflation figures. This will be the prelude to next week's meeting of the Reserve Bank of Australia (RBA). And what the markets will see tomorrow is likely to please the central bankers, Commerzbank’s FX analyst Volkmar Baur notes.

Lower inflation can lead to AUD weakness in the short term

“The majority of analysts expect an annual inflation rate of 2.9% in the third quarter. In my view, however, the risk is more to the downside. For the month of September, the rate could even be around 2.3%. While the quarterly rate has probably returned to the target range of 2-3%, the monthly rate is therefore likely to have ended up even below the implicit target of 2.5%.”

“But while all of this is likely to please central bankers, it is unlikely to persuade them to cut rates next week. Although the lower inflation rate meets one of the conditions for a rate cut, the Reserve Bank of Australia still sees the risk to inflation as being on the upside, with the labour market still very strong and wage growth still too high.”

“For the Australian dollar, this means that lower inflation, especially if it surprises to the downside, could lead to weakness in the short term. In this case, the market would certainly consider the possibility of an earlier RBA rate cut. However, the weakness is likely to be short-lived as I do not expect the RBA to cut rates next week.”

• EUR/GBP weakens to almost two-and-a-half year lows on Tuesday on diverging monetary policy expectations. 
• Interest rates are expected to fall more quickly in Europe than in the UK, weakening the Euro versus the Pound. 
• Wednesday promises to be a big day for the pair with Eurozone GDP data for Q3 and the UK Chancellor presenting the Budget.

EUR/GBP exchanges hands just above 0.8300 on Tuesday, down a quarter of a percent on the day and close to the two-and-a-half year lows of 0.8295 set on October 18. A break below these lows would be a considerable bearish development. 

EUR/GBP is falling as the Euro (EUR) depreciates against the Pound Sterling (GBP) due to diverging central bank monetary policy expectations. The European Central Bank (ECB) is foreseen as cutting interest rates lower than the Bank of England (BoE) in the remaining months of 2024 and this is pressuring the Single Currency – and EUR/GBP – lower. This is because currencies with relatively lower interest rates tend to depreciate because of capital outflows.

EUR/GBP Daily Chart

The market’s pricing of Interest Rate Swaps provides a method for predicting what central banks will do in the future, and these are showing “nearly 50% odds of the ECB” cutting interest rates by 50 basis points (bps) (0.50%) at the December meeting, according to Lallalit Srijandorn, Editor at FXStreet. This compares to the UK where, a Reuters poll of economists expect the BoE to cut its Bank Rate by only 25 bps (0.25%) on November 7. In addition, of those surveyed, a nearly-two-thirds majority expect the BoE to leave interest rates unchanged in December. 

Recent comments from ECB Governing Council members have on the whole emphasized the possibility of the central bank cutting rates more aggressively since inflation has declined more quickly amid softer-than-expected economic growth. 

Commentary somewhat softened so far this week, however, providing some relief to the Euro on Monday. The European Central Bank (ECB) Vice President Luis de Guindos said that the ECB has made significant progress in bringing down inflation but can’t declare victory just yet. Whilst he said “domestic inflation remains high” – implying interest rates should remain elevated – he also highlighted the risks to growth, which by implication could be remedied by lowering interest rates and easing the availability of credit.   

Prior to De Guindos, European Central Bank (ECB) policymaker Pierre Wunsch said on Monday that “it is premature to discuss December policy decision.” Further adding that he felt “no urgency in further accelerating easing of monetary policy,” and that the undershoot in September inflation data could be explained as due to lower energy prices from cheaper Oil. 

Wednesday could be a pivotal day for EUR/GBP due to the release of preliminary Eurozone Gross Domestic Product (GDP) data for Q3 which will help clarify the growth situation in the region, and the delivery of the UK Budget statement in the UK. 

Given the new Labor government’s highlighting of the 22 billion (GBP) black hole in the nation’s accounts left by the previous Conservative government, the UK Budget is likely to incorporate a mixture of higher taxes and moderate government spending. According to Capital Economics, even with higher taxes expected, UK consumers are not reacting by tightening their belts and growth is expected to continue at a “healthy clip”. This suggests Sterling will remain underpinned.

“Overall, there’s little evidence that the prospect of tax rises has caused households to become more cautious with their borrowing. While household borrowing and spending may be a bit softer after the scale of tax rises is revealed in tomorrow’s Budget, our central forecast is that the economy expanded in September and will grow by a decent 0.4% q/q or so in Q4,” says  Paul Dales, Chief UK Economist at Capital Economics. 

Eurozone GDP data, meanwhile, is expected to show a 0.8% rise in Q3 YoY, from 0.6% in Q2, and a 0.2% increase QoQ, the same as it did in the previous quarter.  An undershoot would weaken the Euro and see more losses for EUR/GBP, whilst an overshoot would strengthen the case for a more cautious approach to cutting interest rates reflected in Monday’s commentary and see the Euro, and EUR/GBP recover. 

The Pound Sterling (GBP) is little changed while Gilts are a little softer in line with the broader tone in fixed income as UK markets are brace for tomorrow’s budget announcement, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

GBP little changed in tight range near 1.2975

“More spending (investment in health services, for example) and more debt issuance is expected after Chancellor Reeves announced changes in the way the government measures indebtedness to give it more room to manoeuver and achieve its policy goals.”

“GBP’s late week rebound has not developed any further upside momentum so far this week. In fact, spot has tended to stick very close to the 100-day MA (1.2974) over the past couple of sessions after rebounding to that point last Thursday.”

“Price action still holds some promise of improvement though and gains through 1.2995/00 could still see the pound extend to the 1.3070/75 area. Support is 1.2910.”

• The US Dollar has resumed its upside trend and is testing mid-term highs at 153.90.
• The uncertain political and monetary scenario in Japan is hammering the Yen.
• The broader bias is positive but a bearish divergence warns of a potential correction.

The Dollar has resumed its broader bullish trend during Tuesday’s European session and is testing resistance right below 154.00 with all eyes on the US JOLTS Job Openings data.

The pair draws support from the image of a solid US economy, with all the other main economies slowing down. This endorses the idea that Fed easing will be only gradual, and keeps US Treasury yields and the USD buoyed.

In Japan, the uncertain political and monetary scenario after Sunday’s elections is weighing on the Yen. The Bank of Japan meets this week and is widely expected to keep interest rates on hold until the political context is clarified.

In the calendar today US Consumer confidence is expected to have improved in October, while the JOLTS Job Openings are seen declining moderately yet at levels consistent with a healthy labour market.

From a technical perspective, the bullish bias remains intact but the RSI shows a bearish divergence, warning that a correction might be ahead. Resistances are 153.90 and 155.10. Supports lie at 152.50 and 151.60.

The price of Palladium continued its upward trend that began on Thursday at the start of the new trading week. It reached its highest level in more than 10 months today at $1,240 per troy ounce, Commerzbank’s commodity analyst Carsten Fritsch notes.  

Extent of the current price rise seems excessive

“This means that the price of Palladium has risen by more than 15% in just over three trading days. On Friday, we reported on the trigger for the price jump, namely the US government's call to the G7 to consider further ways to reduce Russian revenues in the metals sector, including restrictions on Palladium exports. The price increase was likely to have been exacerbated by the covering of speculative short positions.”

“According to the CFTC, net short positions on 22 October were still around 5,500 contracts. However, positions had already been scaled back in the preceding weeks. By comparison, the record level for net short positions was reached at the beginning of August at 16,300 contracts. It seems that the speculative investors have become less pessimistic in their price expectations for Palladium.”

“There are further arguments for this, in addition to the feared restriction of Russian Palladium supplies. The low price levels of Platinum and Palladium are likely to lead to production curtailments in South Africa. Fears that the transition to e-mobility could mean that hardly any Palladium will be needed in car production just a few years from now have proved to be exaggerated. Nevertheless, the extent of the current price rise seems excessive to us.”

ECB VP Guindos remarked that despite evidence that the disinflationary process in the Eurozone was ‘well on track’, there were substantial risks around the outlook for prices, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

EUR holds tight range in low 1.08s

“The comments are perhaps a further indication that ECB officials are not keen to ease policy as aggressively as market participants expect at this point.”

“Swaps continue to price in some 35bps of easing risk for December’s policy decision which looks a little rich on the basis of the past week’ more cautious messaging from officials. November Gfk Consumer Confidence improved to a slightly better than forecast –18.3 in November.”

“EUR/USD continues to consolidate. The recent pattern of trade does not preclude more losses but the EUR remains deeply oversold and the risk of a short-squeeze should not be underestimated. Note the daily RSI signal is edging marginally higher, reversing from over-extended levels. This is a potentially positive signal.”

• The US Dollar consolidates near highs with the broader bullish trend losing steam.
•  US Consumer confidence and JOLTS Job Openings data will determine USD's direction on Tuesday.
• A bearish engulfing candle on Monday and bearish divergence warns about an upcoming correction.

The US Dollar is moving sideways below two-month highs near 0.8700. The pair remains buoyed on the back of broad-based USD strength with the overall bullish trend losing momentum

The recent strong US data, which has crushed hopes of further large cuts by the Fed and rising hopes that Trump will win a second term next week are underpinning US Dollars strength.

The market awaits a batch of key data releases this week, starting with the US Consumer Confidence and JOLTS Job openings data, due later on Tuesday.

The technical picture shows the bullish trend losing momentum. The bearish engulfing candle printed on Monday is a negative sign and the bearish divergence on the 4-hour RSI points in the same way.

Support at 0.8645 is holding bears for now. Below here, the next targets are 0.8615 and 0.8555. Resistances are 0.8700 and 0.8745.

The Gold price is approaching its all-time high of $2,758 per troy ounce again, Commerzbank’s commodity analyst Carsten Fritsch notes, Commerzbank’s commodity analyst Carsten Fritsch notes.

Near all-time high again

“There is further evidence that the high price level is having a visible dampening effect on Gold demand in China. According to data from the China Gold Association, Chinese Gold demand in the first three quarters was down 11% year-on-year at 742 tons. Jewellery demand suffered particularly, falling 27.5% to 400 tons. By contrast, demand for bars and coins rose 27% to 283 tons.”

“This reflects demand for Gold as a safe haven and as a store of value. However, this was not nearly enough to compensate for the weakness in price- and cyclical-sensitive jewellery demand. Using the available data, Bloomberg has calculated that demand in the third quarter was down 22%.”

“Here, too, the decline in jewellery demand was disproportionately high at 29%. In addition, demand for bars and coins was also 9% lower than in the previous year. Thus, traditional demand for Gold is currently creating a headwind rather than a tailwind, which is likely to limit the further upside potential for the Gold price.”

The Canadian Dollar (CAD) is marginally higher on the day so far. Slightly firmer risk appetite and a small rebound in crude oil prices are helping at the margin but, absent some real improvement in spreads, which are the drain on the CAD’s performance at the moment, there is little chance of the CAD picking up much ground in the short run, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

USD remains heavily overbought

“USD/CAD fair value is estimated at 1.3932 this morning. Governor Macklem reiterated Monday that Canadian rates were heading lower but the pace, timing and scope of monetary easing was still the be determined. The Governor and Senior DG Rogers are addressing parliamentary committees today (15.30ET) and tomorrow on recent policy decisions.”

“The intraday chart holds out the potential for some—minor—CAD improvement in the next day or so after spot’s movement so far this week set up a minor double top (1.3905) and pushed below the low point (1.3883) between the two tests of the low 1.39s. That might mean USDCAD pushing back to the 1.3860 area.”

“The USD remains heavily overbought so even minor losses warrant attention as they could tip the balance in favour of a deeper correction in the USD’s recent gains.”

Oil prices started the new trading week with significant losses, Commerzbank’s commodity analyst Carsten Fritsch notes.

Price reaction in the oil market may be exaggerated

“The Brent oil price fell by more than 4% or a good 3 USD per barrel right at the opening. The same applies to the WTI oil price. As trading progressed, the losses deepened, with both oil prices ending the day down 6% and falling to their lowest level since early October. Brent temporarily fell to almost $71 per barrel, WTI to $67.”

“Israel's retaliatory strike against Iran over the weekend is apparently being interpreted defensively by the market, as only military targets such as missile launchers were hit. Iran's oil and nuclear facilities were spared. Iran reported only minor damage over the weekend. As a result, market participants believe that the risk of a spiral of escalation and supply disruptions in the oil market has decreased, which is reflected in the noticeable decline in the risk premium.”

“From a purely fundamental perspective, Brent oil in the low 70s is appropriately priced, since the oil market is sufficiently supplied and there is a looming oversupply in the coming year. However, since it is not yet clear whether and how Iran will react to the Israeli strike, it would be premature to completely rule out an escalation. Therefore, yesterday's price reaction in the oil market may have been exaggerated.”

Markets are relatively quiet overall and perhaps with an eye on Friday’s payrolls data and the US Presidential election just a week away now, that’s not surprising. The USD is mixed to slightly softer overall on the session, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

USD consolidates, trades mixed versus majors

“This morning’s US data round includes Wholesale Inventories at 8.30ET, housing data at 9ET and September JOLTS and October Consumer Confidence data at 10ET. There is a 7Y Treasury auction and results at 13ET will be watched after yesterday saw weak demand for 2Y and 5Y securities.”

“Recall that the rising US term yield premium has suggested that investors are demanding higher returns for holding US Treasury debt ahead of the election. Australia releases Q3 CPI at 20.30ET. Inflation is expected to slow sharply to 2.9% in the year— within the RBA’s 2-3% target range—but markets are reluctant to price in any real risk of rates easing in Australia before Q2 next year.”

“A second day of (so far) narrow losses for the DXY add to the sense that the broader dollar move up is stalling in the mid-104s but losses have not yet made any sort of challenge on short-term support at 103.93, below which the dollar risks extending a little further lower.”

• Gold rises after Oil prices cascade due to Israel’s decision not to target Iranian Oil facilities in its recent bombing raid. 
• Cheaper Oil is likely to keep global inflation capped, leading to lower interest rates, which is positive for Gold.  
• XAU/USD trades up to the top of a mini range, consolidating within a longer-term bullish trend.  

Gold (XAU/USD) pushes higher into the $2,750s on Tuesday, at the top of the previous week’s mini range. The precious metal gains a backwind from falling Oil prices,  which declined 6.0% (Brent) on Monday due to the news that Israel only attacked military targets in Iran, leaving its Oil and nuclear installations unaffected. 

Cheaper Oil is likely to help maintain lower levels of inflation globally as it reduces fuel and energy costs – a major factor in production, transportation and heating. This, in turn, is likely to accelerate the downward progression of global interest rates, boosting Gold’s attractiveness to investors as a non-interest-paying asset. 

Gold also remains underpinned by safe-haven flows due to the ongoing conflict in the Middle East and the escalation of the war in Ukraine following the news that North Korea has sent troops to Russia. 

Gold rally could face resistance on bond rout, US Dollar strength

Despite the overall positive outlook, Gold could face limited upside due to rising US Treasury bond yields, as markets price in the increased risk of former president Donald Trump winning the US presidential election. 

A soft US bond auction as well as the general view that Trump’s lower tax and spend policies will raise inflation and increase US borrowing is leading investors to offload their US Treasury bond holdings. 

The US 10-year Treasury Note yield is up over half a percent at 4.302%, the 5-year is up a similar amount at 4.132% and the 3-month T-bill is up 0.35% at 4.618%. 

Rising yields are having the effect of strengthening the US Dollar (USD), to which they are correlated. This could cap gains for the precious metal as Gold is mostly priced and traded in USD. 

Technical Analysis: Gold tests top of range

Gold has reached the top of its mini range, which stretches from a low of $2,708 to the all-time high at $2,758.  

Overall, the yellow metal is in a steady uptrend on all time frames (short, medium and long), which, given the technical principle that “the trend is your friend,” tilts the odds in favor of more upside. 

XAU/USD Daily Chart

A break above the top of the range at $2,758 would help confirm a continuation up to the next big-figure target level, which lies at $3,000 (round number and psychological level). 

• GBP/JPY strives to visit 200.00 ahead of key events in the United Kingdom and Japan.
• The BoJ is expected to keep interest rates steady at 0.25%.
• Investors await the UK budget to project Pound Sterling’s next move.

The GBP/JPY pair aims to extend its upside towards the psychological resistance of 200.00 in Tuesday’s European session. The cross has shown a strong rally for over six weeks as the Japanese Yen (BoJ) remains weak due to diminishing expectations that the Bank of Japan (BoJ) will hike interest rates again this year.

The BoJ has already raised its key borrowing rates by 35 basis points (bps) to 0.25% this year as inflationary pressures remain above 2% for a longer period. The central bank appears to be incapable of hiking them further amid growing doubts over sustainable economic growth. Market participants worry that the absence of a majority government in national elections could impact the growth prospects of the economy.

This week, investors will focus on the BoJ policy meeting, which is scheduled for Thursday. The BoJ is expected to leave interest rates unchanged at 0.25%. Investors will pay close attention to fresh guidance on interest rates.

Due to weakness in the Yen across the forex domain, Japan's Finance Minister Katsunobu Kato vowed to be vigilant to FX moves. "We will continue to closely monitor foreign exchange moves, including those driven by speculators, with a higher sense of vigilance," Kato said, Reuters reported.

Meanwhile, the Pound Sterling (GBP) will be influenced by the United Kingdom (UK) Autumn Forecast Statement announcement on Wednesday. The Labour Party is expected to raise taxes with a focus on increasing public spending. The UK Chancellor of the Exchequer is expected to provide strong funding for housing affordability and the National Health Service (NHS).

USD/SGD remains better bid; last at 1.3246levels, OCBC’s FX analyst Frances Cheung and Christopher Wong note.

MAS maintains status quo on policy stance

“Daily momentum remains bullish while RSI is near overbought conditions. Resistance at 1.3290 (61.8% fibo retracement of Jun high to Oct low), 1.3350 levels (200 DMA). Support at 1.3190 (50% fibo), 1.31 (38.2% fibo).”

“S$NEER was last at 1.48% above model-implied mid. MAS maintaining status quo on policy stance means that S$NEER strength may linger and only fade at some point when core inflation ease further.”

Room for USD to rise; the 7.1600 level is likely out of reach. In the longer run, upward momentum is building, but USD must break and remain above 7.1600 before further sustained gains are likely, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

USD/CNH looks to test 7.1600

24-HOUR VIEW: “We indicated yesterday that ‘The increasing momentum suggest USD is likely to rise further, potentially reaching 7.1600.’ However, USD rose less than expected, pulling back from 7.1500. Despite pulling back, the underlying tone appears firm. Today, we continue to see room for USD to rise, even though the 7.1600 level is likely out of reach. On the downside, support levels are at 7.1375 and 7.1300.”

1-3 WEEKS VIEW: “Our update from yesterday (28 Oct, spot at 7.1460) remains valid. As highlighted, ‘While upward momentum is building, USD must break and remain above 7.1600 before further sustained gains are likely.’ The likelihood of USD breaking clearly above 7.1600 will remain intact, provided that 7.1200 is not breached in the next few days.”

• Silver prices bounce up on higher demand for safe assets as the US elections approach.
• China asks the US to change its language on Taiwan sparking geopolitical concerns.
• XAG/USD immediate bias turns positive with bulls aiming for $3425 ahead of $34.85.

Silver Prices’ (XAG/USD) resumed their upside trend on Tuesday, with precious metals heading north favoured by political uncertainty as US elections approach, and growing geopolitical tensions.

The outcome of the US election remains uncertain, with the candidates tied in only days away from the voting. This keeps risk appetite subdued and supports precious metals on their safe-haven status.

Beyond that, the Chinese President, Xi Jinping has asked Joe Biden to change the US’s language on the issue of Taiwan’s independence. A new episode of the rift between the two superpowers provides additional support to the white metal.

The immediate bias has turned positive, with the 4-hour RSI moving above 50. The pair might find some resistance at $34.25, ahead of the big target, of $34.85. Supports are $33.15 and $32.40.

• USD/CAD strives to climb above 1.3900 as the US Dollar clings to gains.
• Investors await a slew of US macroeconomic data for fresh interest rate guidance.
• The Canadian Dollar has been battered by weak Oil prices.

The USD/CAD pair struggles to extend its rally above the round-level resistance of 1.3900 in Tuesday’s European session. The rally in the Loonie pair appears to have paused for a while, with investors focusing on a string of the United States (US) economic data to be released this week. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, edges lower in European trading hours but is close to a fresh almost three-month high near 104.60.

This week, investors will pay close attention to the US labor market-related indicators such as JOLTS Job Openings, ADP Employment and the Nonfarm Payrolls, Personal Consumption Expenditure Price Index (PCE), and the flash Q3 Gross Domestic Product (GDP) to get insights about the Federal Reserve’s (Fed) likely interest rate action in both policy meetings in November and December.

Meanwhile, the overall market mood appears to be very quiet, with investors remaining cautious about US presidential elections on November 5. Latest election polls have shown that the competition between Vice President Kamala Harris and former US President Donald Trump will be a tough call.

In the Canadian region, plunging Oil prices have dampened the Canadian Dollar’s (CAD) appeal. It is worth noting that Canada is the leading exporter of Oil to the US and lower fund flows into the oil-exporting region weakens its domestic currency.

USD/CAD is swiftly approaching the upper end of a year-long consolidation range near 1.3980. The outlook of the Loonie pair remains firm as it trades above the 20-week Exponential Moving Average (EMA), which trades around 1.3690.

The 14-day Relative Strength Index (RSI) climbs above 60.00, pointing to an activation in bullish momentum.

The Loonie asset could extend its upside towards the October 2022 high of nearly 1.3977 after breaking above Monday’s high of 1.3910. The asset will enter unchartered territory if it breaks above the annual high.

On the flip side, a downside move could appear if the asset breaks below the October 22 low of 1.3810. This would expose the asset to the 20-day EMA near 1.3770 and the October 16 low of 1.3750.

USD/CAD daily chart

USD/JPY remains better bid, following LDP’s first loss in more than a decade. USDJPY was last seen at 153.47 levels, OCBC’s FX analyst Frances Cheung and Christopher Wong note.

Near term retracement not ruled out

“The coalition needs to find partners now and this may take a while. A hung parliament means that LDP coalition may face challenges passing policies in parliament. Uncertainty may complicate fiscalmonetary policy, and weigh on JPY in the interim. BoJ meeting (Thu) is likely a non-event as Japanese policymakers are likely to hold off rate increases until there is greater clarity with government formation and economic policies.”

“That said, one should not rule out any surprises. Slowing BoJ policy normalisation and Fed in no hurry to cut, alongside US election risks may imply that USDJPY may well stay supported in the interim. For USDJPY, the 9% move higher over the last month may have look excessively stretched.”

“Bullish momentum on daily chart intact while RSI shows signs of falling from near overbought conditions. Near term retracement not ruled out. Support at 151.50 (200 DMA), 150.60/70 levels (50% fibo retracement of Jul high to Sep low, 100 DMA). Resistance at 155 and 156.50 (76.4% fibo).”

The US Dollar (USD) is likely to trade in a range between 152.45 and 153.60. In the longer run, while conditions are severely overbought, there is a chance for the advance in USD to extend to 154.00 before pausing, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Conditions are severely overbought

24-HOUR VIEW: “We expected USD to ‘rise above the major resistance at 153.40’ yesterday. However, we pointed out that ‘the major resistance at 154.00 is likely out of reach.’ Our view was not wrong, as USD rose to 153.87, pulling back to close at 153.28 (+0.64%). The pullback in overbought in overbought conditions suggests USD is unlikely to rise further. Today, USD is more likely to trade in a range between 152.45 and 153.60.”

1-3 WEEKS VIEW: “We have expected a higher USD since early this month. As we tracked the advance, in our most recent narrative from last Thursday (24 Oct, spot at 152.60), we indicated that ‘upward momentum remains strong, and the next level to monitor is 153.40, followed by 154.00.’ Yesterday, USD broke above 153.40, reaching a high of 153.87. While conditions are severely overbought, there is a chance for the advance in USD to extend to 154.00 before pausing. On the downside, a breach of 151.90 (‘strong support’ level previously at 151.50) would indicate that USD is not strengthening further.”

Euro (EUR) continued to trade near recent lows amid broad USD strength, softer EU data and dovish ECBspeaks, which led markets to price in more dovish expectations (near 40% probability of 50bp cut at Dec meeting). EUR was last seen at 1.0818, OCBC’s FX analyst Frances Cheung and Christopher Wong note.

RSI is still near oversold conditions

“EU-UST yield differentials have also widened over the last few weeks, resulting in EUR falling. The risk of a Trump outcome also setup the threat of 10% tariff on all US imports and this may also undermine EUR. But with much negativity in the price, we do caution for the risk of rebound if EU data this week surprise to the upside.3Q GDP will be one to watch on Wed and CPI estimate will be key on Thu.”

“Momentum remains bearish though there are signs of it fading while RSI is still near oversold conditions. Resistance at 1.0830 (61.8% fibo retracement of 2024 low to high), 1.0870 (200 DMA), 1.0910/30 levels (21, 100 DMAs). Support at 1.0780, 1.0740 (76.4% fibo).”

The calendar will become more interesting tomorrow. However, the Polish government is expected to today discuss an increase in the state budget deficit for this year following weaker tax revenues and higher flood-related spending, ING’s FX analyst Frantisek Taborsky notes.

Stabilisation of EUR/USD can bring relief to CEE currencies

“Newspaper rumours most often mention an increase of around 30bn of additional borrowing needs, which corresponds to roughly 1-1.5x the monthly supply of POLGBs at the moment. Also, a POLGBs auction is scheduled for today and MinFin will test market demand after weak demand last week, but at the same time bonds have been posting a bit higher yield since then.”

“The Czech market is back from a public holiday and we will likely see more CNB comments today or tomorrow ahead of Thursday's blackout period. The CZK came under pressure yesterday since domestic demand has been missing from the market while the currency has been catching up with the weakness of Central and Eastern Europe (CEE) peers in the previous days. EUR/CZK stood above 25.350 for the first time in two weeks. Still, the CNB forecasts 25.20 on average for the fourth quarter and the weakening in recent days should not be a major factor in the November decision.”

“Overall, we see that the CEE region remains under pressure and, as mentioned earlier, we don't expect much change here pending the outcome of the US election. At least a stabilisation of EUR/USD could bring some relief to CEE currencies. Overall though, the focus remains on EUR/HUF, which closed at new highs yesterday, heading slowly towards 405. EUR/PLN will be watched as the market accepts the increase in the state budget deficit and the outcome of the POLGBs auction.”

Instead of continuing to decline, NZD is more likely to trade sideways between 0.5965 and 0.6005. In the longer run, there is no significant increase in momentum, but the weakness in NZD has not stabilised. The next level to watch is 0.5950, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

The next level to watch is 0.5950

24-HOUR VIEW: “When NZD was at 0.5985 yesterday, we indicated that ‘as long as 0.6010 is not breached, NZD could dip below 0.5970 before stabilisation is likely.’ We also indicated that ‘the next support at 0.5950 is unlikely to come into view.’ NZD then fell to 0.5958, rebounding to close largely unchanged at 0.5981 (+0.04%). The rebound in oversold conditions and slowing momentum suggest that instead of continuing to decline, NZD is more likely to trade sideways today, probably between 0.5965 and 0.6005.”

1-3 WEEKS VIEW: “Our update from yesterday (28 Oct, spot at 0.5985) still stands. As highlighted, while the recent price action did not result in a significant increase in momentum, the weakness in NZD has not stabilised. The next level to watch is 0.5950. On the upside, a breach of 0.6025 (‘strong resistance’ level previously at 0.6035) would mean that the weakness that started early this month has stabilised.”

The US Dollar (USD) rally paused overnight as markets took stock on the 4% rally in DXY since end of September, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Daily momentum remains bullish

“Today marks the start of a busy, eventful 2 weeks with JOLTS job openings, consumer sentiment (Tue); ADP employment (Wed); core PCE (Thu) and NFP (Fri) before US elections (5 Nov) and FOMC (7 Nov) the following week. Between now and then, we should see 2-way trades in USD. DXY was last at 104.27.”

“Daily momentum remains bullish but there are signs of it fading while RSI eased lower from overbought conditions. We see room for USD to retrace lower. That said, pullback may also be shallow ahead of US elections next week.”

“Support at 103.80 levels (200 DMA, 50% fibo), 102.90/103.20 levels (21, 100 DMAs, 38.2% fibo fibo retracement of 2023 high to 2024 low) and 101.90 (50 DMA). Resistance at 104.60 (61.8% fibo), 105.20 levels.”

• US consolidates near three-month highs following a 3.5% rally in October.
• US JOLTS Job Openings and Consumer Confidence data will be the main attractions.
• The USD Index is on a bullish trend, with the 104.00 support area limiting downside attempts.

The US Dollar Index (DXY) consolidates near a three-month high in Tuesday’s early European session. The Greenback’s downside attempts remain limited, yet investors are wary of placing large US Dollar (USD) bets with key macroeconomic data releases ahead.

The focus on Tuesday will be on the US Consumer Confidence Index and the JOLTS Job Openings figures, which are expected to bolster the case of a solid US economy ahead of Wednesday’s Q3 GDP release.

The USD index, which measures the value of the US Dollar against the six main traded currencies, is on track to its best monthly performance in more than two years. Strong US data has forced markets to dial down expectations of a steep easing cycle by the Federal Reserve (Fed), pushing US yields higher and pushing the USD up with them.

Daily digest market movers: The US Dollar holds its ground with JOLTS jobs on focus

• US JOLTS Job Openings surprised in August with an increase to 8.05 million vacancies and is expected to have remained close to the 8 million openings in September.
   
• The Conference Board’s Consumer Confidence Index is seen improving to 99.5 from September’s 98.7 reading.
   
• These figures are likely to improve the expectations of the preliminary Q3 Gross Domestic Product (GDP) data, to be released on Wednesday. The US economy is expected to have grown at a 3% annualized pace, a strong expansion that could provide additional support to the US Dollar.
   
• On Friday, the Nonfarm Payrolls (NFP) report is expected to show a lower increase in employment than in the previous month. Such an outcome might cap the US Dollar’s rally.

DXY technical outlook: Upside bias remains intact

The DXY index keeps moving within a bullish channel, printing higher highs and higher lows, with 104.55 capping bulls and downside attempts limited above the 104.00 area.

The 4-hour 50 Simple Moving Average (SMA) and last week´s low, at 103.95 are holding the bears’ attempts for now, with the next target below that level at 103.40. To the upside, above 104.50, the next resistance level is at 105.20.

• EUR/USD rises moderately above 1.0800 as investors await an array of macroeconomic data from the US and the Eurozone this week.
• US JOLTS Job Openings are estimated to have declined marginally in September.
• Traders doubt over the size of the ECB’s likely interest rate cut in December.

EUR/USD gains slightly near the round-level figure of 1.0800 in Tuesday’s European session. The major currency pair consolidates as the US Dollar (USD) clings to gains ahead of an array of United States (US) macroeconomic data this week and increasing uncertainty over the US presidential election, which will take place on November 5.

US Personal Consumption Expenditure Price Index (PCE) data for September, flash Q3 Gross Domestic Product (GDP), Nonfarm Payrolls, and ISM Manufacturing Purchasing Managers’ Index (PMI) data for October are lined up for release. The data will be key to influencing market expectations for the Federal Reserve’s (Fed) interest-rate path for the remainder of the year.

Economists expect the US economy to have created half of the jobs it added in September, the Manufacturing PMI to remain below the 50.0 threshold, inflation to have fallen slightly and the GDP to have expanded at a steady pace of 3% on an annualized basis.

Slower job growth would likely support market expectations for Fed interest rate cuts in December. Markets are pricing in a reduction in borrowing rates by 25 basis points (bps) in November and December, according to the CME FedWatch tool. 

In Tuesday’s session, investors will focus on the US JOLTS Job Openings data for September, which will be published at 14:00 GMT. Job vacancies are estimated to have dropped marginally to 7.99 million from 8.04 million in August.

Daily digest market movers: EUR/USD consolidates as investors await US JOLTS Job Openings

• EUR/USD has stayed in a limited range near 1.0800 in the last six trading days. The Euro (EUR) struggles for a direction as investors look for fresh cues about the size of the European Central Bank’s (ECB) likely interest rate cut in the last monetary policy meeting of the year in December. 
• The ECB is widely anticipated to cut Its Deposit Facility Rate again but traders doubt whether the central bank will continue the rate-cut cycle with the usual pace of 25 basis points (bps) or go for a larger trim. Market expectations for an ECB large rate cut increased after a few officials highlighted the risks of inflation remaining below the desired rate of 2%.
• The likelihood of the German economy ending the year with an economic recession has been a major reason behind the doubts about low inflation. For more cues on German and Eurozone economic growth, investors will pay close attention to the flash Q3 GDP for both economies, which will be published on Wednesday. 
• Economists estimate the German GDP to have contracted by 0.3% in Q3 compared with the same quarter a year earlier after remaining flat in Q2. In the same period, the Eurozone GDP is estimated to have expanded by 0.8%, faster than the former reading of 0.6%.
• On the same day, investors will also focus on the preliminary German and Spain Harmonized Index of Consumer Prices (HICP) data for October. Annual German HICP is expected to have grown at a faster rate of 2.1%, while inflation in Spain is estimated to have remained below 2%.

Technical Analysis: EUR/USD remains below 200-day EMA

EUR/USD continues to hold above the upward-sloping trendline near 1.0750, which is plotted from the October 3, 2023, low at around 1.0450 on the daily time frame. However, the broader outlook of the major currency pair remains bearish as it stays below the 200-day Exponential Moving Average (EMA), which trades around 1.0900.

The downside move in the shared currency pair started after a breakdown of a Double Top formation on the daily time frame near the September 11 low at around 1.1000, which resulted in a bearish reversal.

The 14-day Relative Strength Index (RSI) ticks up but remains in the 20.00-40.00 range, pointing to more downside ahead.

On the downside, the major pair could see more weakness towards the round-level support of 1.0700 if it slips below 1.0750. Meanwhile, the 200-day EMA near 1.0900, and the psychological figure of 1.1000, emerge as key resistances.

Silver prices (XAG/USD) rose on Tuesday, according to FXStreet data. Silver trades at $34.18 per troy ounce, up 1.48% from the $33.68 it cost on Monday.

Silver prices have increased by 43.64% since the beginning of the year.

The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 80.59 on Tuesday, down from 81.42 on Monday.

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

• The Mexican Peso recovers marginally as the market turns risk-on, benefiting emerging market FX. 
• A possible revival of carry trade inflows amid a weaker Japanese Yen and reduced domestic political risk are further factors supporting the Peso.  
• USD/MXN is in the midst of unfolding a bullish ‘abc’ pattern move. 

The Mexican Peso (MXN) edges higher on Tuesday, rising by about a quarter of a percent across its most-heavily traded pairs. Positive risk appetite during the US sessions on Monday, which led to further gains for the S&P 500 stock index, may have been a factor supporting the Peso since this tends to benefit emerging market currencies. 

A revival of carry trade inflows might be a further factor providing support for the Mexican Peso. This involves traders borrowing in a currency with low interest rates such as the Japanese Yen (JPY) and purchasing a currency with high interest rates such as the Mexican Peso. The difference between the interest earned on the Peso investment and that paid on the Yen loan represents the profit discounting fluctuations in the exchange rate. 

The outlook for the Japanese Yen (JPY) is not looking bright after the weekend elections saw the ruling Liberal Democratic Party (LDP) coalition lose its grip on power. Opposition parties are generally against raising interest rates in Japan, which is weighing on the Yen and making the carry trade more attractive. Overnight, Yuichiro Tamaki, leader of the Japan Democratic Party for the People (DPP), said he was opposed to further rate hikes by the Bank of Japan (BoJ).

Mexican Peso impacted by political risk

The Mexican Peso may also be finding support after the news that the Mexican Supreme Court Judge, Juan Luis González Alcántara Carrancá, a staunch opponent of the controversial judicial reforms the Sheinbaum administration is trying to implement, attempted a new tactic to block their implementation. The reforms enable the election of judges rather than their appointment, but Carrancá, argued on Monday, that the creation of the “Evaluation Committees” used to short-list candidates for elections in the first step, was unconstitutional in itself, according to El Financiero. 

For context, the Peso depreciated over 10% in value after the June election in which Sheinbaum and her Morena party coalition gained a super majority in the Mexican Congress. Many western investors fretted over the consequences of the result since it would enable the new government to make radical reforms to the constitution, which critics viewed as market unfriendly.

On the data front, the Peso sees a busy week ahead, especially with Mexican preliminary Gross Domestic Product (GDP) data for Q3 and the Fiscal Balance out on Wednesday,  and the Jobless Rate on Friday. 

Recently, the International Monetary Fund (IMF) downgraded its forecasts for growth for the Mexican economy to 1.5% in 2024. GDP grew a robust 2.1% YoY in Q2, but corroboration of the IMF’s gloomy assessment from weak Q3 GDP data might weigh on the Peso.

Technical Analysis: USD/MXN unfolding leg higher

USD/MXN broadly continues unfolding a leg higher after a mild pullback. The up leg is probably the “c wave” of a bullish “abc” pattern, which began at the October 14 swing low. It will probably reach the Fibonacci 61.8% of the length of wave “a”, giving an upside target of 20.29. Such a move would gain confirmation from a break above the high of wave “b” at 20.09.

USD/MXN Daily Chart 

USD/MXN is probably in an uptrend on a short, medium and long-term basis and is trading in a rising channel. Given the technical dictum “the trend is your friend,” the odds favor a continuation higher.

In addition, the original break above 19.83 (October 1 high) has already confirmed a probable move up, with a target in the vicinity of the September 10 high at 20.13.

Oversold decline in Australian Dollar (AUD) could extend to 0.6560 before stabilisation can be expected. In the longer run, potential for AUD to continue to decline to 0.6560, possibly 0.6520, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

AUD can slide towards 0.6520

24-HOUR VIEW: “We expected AUD to ‘decline further’ yesterday. We pointed out that ‘the significant support level at 0.6585 might not be easy to break.’ However, AUD broke below 0.6585, reaching a low of 0.6580. AUD closed on a soft note at 0.6583 (-0.33%). While oversold, the decline could extend to 0.6560 before stabilisation can be expected. A sustained break below 0.6560 is unlikely today. Resistance is at 0.6600; a breach of 0.6615 would mean that the weakness has stabilised.”

1-3 WEEKS VIEW: “In our most recent narrative from last Thursday (24 Oct, spot at 0.6635), we highlighted that AUD ‘is expected to continue to decline, and the level to watch is a significant support at 0.6585.’ Yesterday (Monday), AUD broke below 0.6585 (low has been 0.6580). While oversold, the weakness is not showing signs of stabilisation just yet. Only a breach of 0.6640 (‘strong resistance’ previously at 0.6670) would mean that the weakness that started early this month (as annotated in the chart below) has stabilised. Until then, there is potential for AUD to continue to decline to 0.6560, possibly 0.6525.”

As discussed in the USD section above, when liquidity becomes a discriminating factor in FX, the Euro (EUR) can find some support in the crosses. Part of such support may come from the unwinding in Nordics FX positions that are generally traded vis-as-vis the EUR. We remain on the lookout for any sharp underperformance of NOK, which is often a thermometer of FX liquidity conditions, ING’s FX strategist Francesco Pesole notes.

Risks still tilted to the downside in the near term

“On the domestic side, we heard unusually hawkish-leaning comments by a neutral Governing Council member (Luis de Guindos) yesterday – which is bucking the otherwise dovish trend in post-meeting ECB communication. Guindos stressed how the inflation outlook is ‘surrounded by substantial risks’, which lifts some emphasis from growth concerns and risks of undershooting the inflation target.”

“Guindos’ comments are not enough to turn the tide in the dovish repricing across the EUR curve, and the USD:EUR two-year swap rate spread remains at the widest since April, around 160bp (70bp wider than a month ago). That remains consistent with further pressure on EUR/USD, and despite risks now looking more balanced for the pair, they are still tilted to the downside in the near term.”

“The eurozone and ECB speaker's calendar is empty today.”

The Japanese Yen (JPY) is playing the outlier role, being the developed currency with the greatest influence from domestic events, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Risks of further JPY near-term selling remain elevated

“Speculative shorts on JPY are rising further after the ruling coalition lost parliament majority: now, the focus is back on the level at which authorities will want to put a stop to the USD/JPY rally. Remember that the latest round of FX intervention was initiated right after a JPY-positive market event.”

“Following a similar script, the Minister of Finance may not have a line in the sand for the pair (for example 155.0), but perhaps adopt a more opportunistic approach based on market moves. Anyway, risks of further JPY near-term selling remain elevated into Thursday’s Bank of Japan meeting and the US election next week.”

The Pound Sterling (GBP) is expected to trade in a sideways range of 1.2940/1.2995. In the longer run, downward momentum is slowing; should GBP break above 1.3000, it would indicate that GBP is not declining further, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

GBP has a chance of breaking above 1.3000

24-HOUR VIEW: “We expected GBP to trade sideways between 1.2930 and 1.2990 yesterday. It subsequently traded in a higher range of 1.2942/1.3001, closing largely unchanged at 1.2972. The price action still appears to be part of a sideways trading phase. Today, we expect GBP to trade in a 1.2940/1.2995 range.”

1-3 WEEKS VIEW: “Yesterday (28 Oct, spot at 1.2960), we indicated that ‘downward momentum is slowing, and should GBP break above 1.3000 (‘strong resistance’ level), it would indicate that GBP is not declining further.’ In NY trading, GBP rose briefly to 1.3001, pulling back to close little changed at 1.2972 (+0.09%). As our ‘strong resistance’ has not been clearly breached, we will continue to hold the same view for now. That said, the likelihood for GBP to decline further is not high.”

• NZD/USD continues to depreciate within the descending channel pattern, suggesting a bearish bias.
• A drop in the 14-day RSI to the 30 level would indicate an oversold condition, potentially signaling an upcoming upward correction.
• The immediate barrier appears at the lower boundary of the descending channel near the 0.5940 level.

The NZD/USD pair continues its losing streak for a third consecutive session, trading near 0.5980 during Tuesday's European session. Daily chart analysis indicates the pair moves downward within a descending channel pattern, signaling a bearish bias.

Furthermore, the nine-day Exponential Moving Average (EMA) is positioned below the 14-day EMA, reinforcing the ongoing bearish trend for the NZD/USD pair. Short-term price momentum remains weak, suggesting that downward pressure may persist.

The 14-day Relative Strength Index (RSI), a key momentum indicator, currently sits just above the 30 level. Should it fall below this threshold, it would indicate an oversold condition, potentially signaling a forthcoming upward correction for the NZD/USD pair.

On the downside, the NZD/USD pair may target the lower boundary of the descending channel near the 0.5940 level. A break below this support level could push the pair toward the "pullback support" around 0.5850.

For resistance, the initial hurdle lies at the upper boundary of the descending channel, near the nine-day Exponential Moving Average (EMA) around 0.6016, followed by the 14-day EMA at 0.6043. A sustained break above these EMAs could shift the pair toward a short-term bullish bias, potentially setting up a move toward the psychological 0.6100 level.

NZD/USD: Daily Chart

The Pound Sterling (GBP) is in full wait-and-see mode ahead of tomorrow’s Budget announcement by Chancellor Rachel Reeves. There are two technical factors to consider ahead of a potential market-adverse reaction in the pound tomorrow, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Risks remain skewed to a move to 1.2800-1.2850

“First, there is no political risk premium priced into sterling at the moment, with our model returning a short-term EUR/GBP fair value at 0.834. Remember that in previous instances of political/gilt-related turmoil in the UK, the EUR/GBP risk premium was around 3-5%.”

“Secondly, the latest CFTC figures show speculators are still extensively long on the pound. As of 22 October, net-long GBP positions were the largest in G10 (32% of open interest), having resisted the rotation back into the dollar observed in other developed currencies.”

“GBP/USD continues to look vulnerable ahead of tomorrow’s Budget event and next week’s US election, and risks remain skewed to a move to 1.2800-1.2850.”

Citing two sources with knowledge of the matter, Reuters reported on Thursday that China's top legislative body is considering approving a fresh fiscal package which could be worth over 10 trillion (trln) Yuan on November 8.

Additional takeaways

Market reaction

The AUD/USD pair is little impressed by China’s potential fiscal stimulus, losing 0.10% on the day to trade near 0.6575 at the press time.

The performance since the weekend in G10 suggests there is both a liquidity component and more Trump hedges driving FX at the moment, ING’s FX analyst Francesco Pesole notes.

DXY may come close to 105.0 on Election Day

“The group of more liquid/less Trump-exposed currencies (USD, EUR, CHF and GBP) is outperforming those that are less liquid and more sensitive to protectionism (AUD, NZD, NOK and SEK). We suspect this dynamic will continue in the coming days.”

“On the US macro side, today’s release of September’s JOLTS job openings data can distract markets from election trades. The recent hawkish trend in the USD swap curve pricing can realistically be inverted only with evidence of a softening jobs market, meaning we would need to see job openings reversing the August jump from 7.7m to 8.0m. The consensus is for the series to flatten at 8.0m.”

“The calendar also includes the Conference Board Consumer Confidence index, which is expected to have inched higher in October, and September’s wholesale inventories. Failing to see the US macro story deteriorate this week can pave the way for further dollar gains on the back of US election hedges and broad-based deleveraging. We retain a dollar-positive bias, and wouldn’t be surprised to see DXY close to 105.0 on Election Day.”

• AUD/USD drops to its lowest level since August 8 amid the emergence of fresh USD buying.
• Bets for smaller Fed rate cuts and elevated US bond yields continue to underpin the buck.
• Traders now look to the US macro data ahead of the Australian CPI report on Wednesday.

The AUD/USD pair remains under some selling pressure for the third successive day on Tuesday and drops to its lowest level since August 8, closer to mid-0.6500s during the first half of the European session. The downward trajectory is sponsored by the emergence of fresh US Dollar (USD) buying, which remains well supported by expectations for a less aggressive policy easing by the Federal Reserve (Fed). 

The incoming US macro data suggested that the economy remains on strong footing and boosted market expectations that the Fed will proceed with smaller interest rates over the year. Apart from this, concerns that the spending plans of Vice President Kamala Harris and the Republican nominee Donald Trump will further increase the deficit remain supportive of elevated US Treasury bond yields. This, in turn, assists the USD Index (DXY), which tracks the Greenback against a basket of currencies, to stall its retracement slide from a three-month peak touched on Monday and drags the AUD/USD pair lower.

Meanwhile, expectations that consumer inflation in Australia – due on Wednesday – will land at an annual rate of 2.9% for the September quarter, or the lowest since the March quarter of 2021, fuel speculations about an interest rate cut by the Reserve Bank of Australia (RBA). This turns out to be another factor undermining the Australian Dollar (AUD) and contributing to the offered tone surrounding the AUD/USD pair. The ongoing downfall could further be attributed to some technical selling following last week's breakdown below the 200-day Simple Moving Average (SMA) support near the 0.6630-0.6625 region.

The AUD, however, draws some support from reports that China is looking to approve the issuance of over ¥10 trillion in extra debt over the next few years in order to revive economic conditions as early as next week. Traders now look to Tuesday's US economic docket – featuring the Conference Board's Consumer Confidence Index and Job Openings and Labor Turnover Survey (JOLTS). Apart from this, the US bond yields and the broader risk sentiment will influence the USD. This might provide some impetus to the AUD/USD pair ahead of the Australian Consumer Price Index (CPI) report on Wednesday.

Privately held net marketable borrowing for Q4-2024 was revised down by USD19bn to USD546bn, largely due to a higher beginning-of-quarter cash balance partially offset by lower net cash flows, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Mild downward revision to net borrowings possible

“However, US Treasury plans to borrow a net USD823bn in Q1-2025, which is on the high side of expectation; part of this estimated borrowing is for building up cash balance though, from an estimated USD700bn at end-2024 to an estimated USD850bn at end Q1-2025.”

“Issuances are distorted by the debt ceiling deadline. Estimated end-2024 cash balance is consistent with the expiration of the debt limit suspension on 1 January 2025; the increase in estimated cash balance towards end Q1-2025 assumes enactment of a debt limit suspension or increase. Netting out the expected change in cash balance, the borrowing needs would be USD673bn.”

“In addition, USD75bn of the borrowing in Q1-2025 is due to SOMA redemption; should QT end earlier, there could be a mild downward revision to net borrowings. That all being said, uncertainties abound. Meanwhile, details on individual auctions are to be announced on Wednesday.”

• The US JOLTS data will be watched closely by investors ahead of the release of the October employment report on Friday.
• Job openings are forecast to retreat slightly below 8 million in September.
• The state of the labor market is a key factor for Fed officials when setting policy.

The Job Openings and Labor Turnover Survey (JOLTS) will be released on Tuesday by the US Bureau of Labor Statistics (BLS). The publication will provide data about the change in the number of job openings in September, alongside the number of layoffs and quits.

JOLTS data is scrutinized by market participants and Federal Reserve (Fed) policymakers because it can provide valuable insights regarding the supply-demand dynamics in the labor market, a key factor impacting salaries and inflation. Job openings have been declining steadily since coming in above 12 million in March 2022, pointing to a steady cooldown in labor market conditions. In August, however, the downward trend halted as the number of job openings climbed above 8 million from 7.7 million in August.

What to expect in the next JOLTS report?

Markets expect job openings to come in at 7.99 million on the last business day of September. Federal Reserve (Fed) policymakers have made it clear after the July policy meeting that they are shifting their focus to the labor market, given the encouraging signs of inflation retreating toward the central bank’s target.

It is important to note that, while the JOLTS data refers to the end of September, the official Employment report measures data for October. 

The upbeat employment report for September, which showed that Nonfarm Payrolls (NFP) rose by 254,000, caused market participants to refrain from pricing in another large Fed rate cut at the policy meeting to be held on November 7. Assessing the recent employment data, Kansas City Fed President Jeffrey Schmid argued that the labor market was normalizing after a period of record over-employment and untenable low unemployment rates, rather than an outright deterioration.

The CME FedWatch Tool currently shows that markets are nearly fully pricing in a 25 basis points (bps) rate reduction at the next policy meeting. Meanwhile, the probability of one more 25 bps rate cut in December currently stands at around 72%, against a 27% chance of a policy hold.

In case there is a positive surprise in the job openings data, with a reading of at or above 8.5 million, the immediate reaction could boost the US Dollar (USD) by causing investors to reassess the probability of a December rate cut. On the other hand, a disappointing print at or below 7.5 million could hurt the USD. 

"Over the month, hires changed little at 5.3 million. Total separations changed little at 5.0 million," the BLS noted in its August JOLTS report. "Within separations, quits (3.1 million) continued to trend down and layoffs and discharges (1.6 million) changed little."

When will the JOLTS report be released and how could it affect EUR/USD?

Job openings’ numbers will be published on Tuesday at 14:00 GMT. Eren Sengezer, European Session Lead Analyst at FXStreet, shares his view on the potential impact of JOLTS data on EUR/USD:

“Unless there is a significant divergence between the market expectation and the actual print, the market reaction to JOLTS data is likely to remain short-lived, with investors refraining from taking large positions ahead of the third-quarter Gross Domestic Product (GDP) data and the October employment report, which will be published on Thursday and Friday, respectively.”

“EUR/USD’s near-term technical outlook suggests that the bearish bias remains intact. The Relative Strength Index (RSI) indicator on the daily chart stays below 40 and the 20-day Simple Moving Average (SMA) continues to move away from the 100-day SMA after completing a bearish cross late last week.”

“On the upside, 1.0870 (Fibonacci 23.6% retracement level of October downtrend, 200-day SMA) aligns as key resistance. If EUR/USD rises above this level and starts using it as support, technical buyers could take action. In this scenario, 1.0930 (Fibonacci 38.2% retracement, 100-day SMA) could be seen as the next bullish target before 1.1000 (round level). Looking south, first support could be spotted at 1.0770 (end-point of the downtrend) before 1.0700 (round level) and 1.0620 (static level from April).”

• The Pound Sterling consolidates below 1.3000 against the US Dollar ahead of a US data-heavy week and the UK’s Autumn Forecast Statement.
• UK Chancellor Rachel Reeves is expected to announce massive funding for the health service sector.
• Investors await the US JOLTS Job Openings data for fresh guidance on labor demand.

The Pound Sterling (GBP) trades in a tight range below the psychological resistance of 1.3000 against the US Dollar (USD) in Tuesday’s London session. The GBP/USD pair consolidates as investors await a slew of United States (US) economic data, which will provide cues about the direction of the Federal Reserve’s (Fed) monetary policy by the year-end.

This week, investors will mainly focus on the first estimate of the Q3 Gross Domestic Product (GDP), the Personal Consumption Expenditure Price Index (PCE), the Nonfarm Payrolls (NFP), and the ISM Manufacturing Purchasing Managers’ Index (PMI) data to understand the current status of economic growth and inflation.

Meanwhile, recent commentaries from an array of Fed officials have shown that they are more worried about downside risks to economic growth, with firm confidence that inflation remains on track toward the bank’s target of 2%.

If the data to be published later this week show signs of robust economic expansion and upbeat labor demand, bets that the Fed will cut interest rates sharply will diminish. On the contrary, Fed rate cut bets would strengthen if the data points to slower growth and a weak job market.

According to the CME FedWatch tool, 30-day Federal Fund Futures pricing data shows that the central bank is expected to cut interest rates by 25 basis points (bps) in both policy meetings in November and December.

In Tuesday’s New York session, investors will pay close attention to the US JOLTS Job Openings data for September, which will be published at 14:00 GMT. Economists expect US employers to have posted 7.99 million job vacancies, marginally lower than the 8.04 million in August.

Daily digest market movers: Pound Sterling performs cautiously against its major peers

• The Pound Sterling exhibits a subdued performance against its major peers on Tuesday. The British currency trades cautiously ahead of the United Kingdom (UK) Autumn Forecast Statement, which will be unveiled on Wednesday. This will be the first budget announcement by a Labor government in over 15 years.
• UK Chancellor of the Exchequer Rachel Reeves is expected to raise taxes and increase public spending as suggested by Prime Minister Keir Starmer in his speech at Birmingham on Monday, reported by BBC News. The government would take "tough decisions", opting to raise taxes in order to “prevent austerity and rebuild public services", Starmer said.
• Meanwhile, Rachel Reeves discussed the need to spend heavily on the National Health Service (NHS) in order to improve medical facilities, Reuters reported. "I am putting an end to the neglect and underinvestment (the NHS) has seen for over a decade now”, Reeves said.
• Market participants will keenly focus on the overall spending plans as these will influence the Bank of England’s (BoE) interest rate path. According to a Reuters poll, the BoE is all set to cut interest rates by 25 basis points (bps) to 4.75% in its monetary policy meeting on November 7. This will be the BoE’s second interest rate cut this year. The central bank left its key borrowing rates unchanged at 5% in its last policy meeting in September.

Technical Analysis: Pound Sterling consolidates below 1.3000

The Pound Sterling trades inside Monday’s trading range against the US Dollar (USD) in European trading hours on Monday. The GBP/USD pair remains at make or a break near the lower boundary of a Rising Channel chart formation around 1.2900 on the daily time frame. 

The near-term trend of the Cable remains uncertain as it stays below the 50-day Exponential Moving Average (EMA), which trades around 1.3070.

The 14-day Relative Strength Index (RSI) rebounds to nearly 40.00. A fresh bearish momentum would trigger if it fails to climb above it.

Looking down, the 200-day EMA near 1.2845 will be a major support zone for Pound Sterling bulls. On the upside, the Cable will face resistance near the 20-day EMA around 1.3060.

• AUD/JPY loses ground despite a hawkish sentiment surrounding the RBA regarding its policy outlook.
• The Australian Dollar may limit its downside as an RBA rate cut is unlikely in the near term.
• The Japanese Yen may depreciate as the loss of the LDP coalition has increased uncertainty regarding the BoJ rate-hike plans.

AUD/JPY retraces its recent gains from the previous session, trading around 100.50 during the early European hours on Tuesday. The downside of the AUD/JPY cross could be limited due to the Reserve Bank of Australia's (RBA) hawkish stance on its policy outlook.

The Reserve Bank of Australia has indicated that the current cash rate of 4.35% is restrictive enough to steer inflation back within the target range of 2%-3% while still supporting employment. Consequently, a rate cut is unlikely in the near term, especially as early as next month.

Traders are now focused on Australia’s third-quarter Consumer Price Index (CPI) data, due for release on Wednesday, as they seek further insights into the RBA’s potential monetary policy direction.

On the JPY’s front, Japan’s Liberal Democratic Party (LDP)-coalition lost its parliamentary majority in Sunday's election, which has increased uncertainty regarding the Bank of Japan's (BoJ) rate-hike plans, which puts downward pressure on the Japanese Yen (JPY).

The Bank of Japan’s interest rate decision is set to be the focal point on Thursday, with nearly 86% of economists surveyed by Reuters expecting the central bank to maintain its current rates at the October meeting.

On Tuesday, Japan’s Finance Minister Katsunobu Kato stated that he is “closely watching FX movements, including those driven by speculators, with heightened vigilance,” but refrained from commenting on specific forex levels. Kato emphasized the importance of stable currency movements that reflect economic fundamentals.

Here is what you need to know on Tuesday, October 29:

Financial markets seem to have adopted a cautious tone following Monday's choppy action. The US economic calendar will feature Goods Trade Balance and JOLTS Job Openings data for September, alongside the Conference Board's Consumer Confidence Index for October. 

Investors refrain from taking large positions while gearing up for key risk events. Later in the week, third-quarter Gross Domestic Product (GDP) data, Personal Consumption Expenditures (PCE) Price Index figures for September and October employment report from the US will be scrutinized by market participants, who will also keep a close eye on key earnings reports heading into the US presidential election. After closing the first trading day of the week virtually unchanged, the US Dollar (USD) Index continues to move sideways above 104.00. Meanwhile, US stock index futures trade mixed in the early European session.

USD/JPY started the week with a bullish gap as markets reacted to political developments in Japan. After reaching its highest level since late July near 154.00 in the Asian trading hours on Monday, the pair staged a downward correction and closed the day near 153.30. Early Tuesday, USD/JPY continues to edge lower and trades slightly below 153.00. Japan’s Finance Minister Katsunobu Kato said on Tuesday that he is closely watching the moves in foreign exchange markets with a higher sense of vigilance, including those driven by speculators. In the meantime, the data from Japan showed that the Unemployment Rate declined to 2.4% in September from 2.5%. 

EUR/USD closed marginally higher on Monday and seems to have entered a consolidation phase slightly above 1.0800 on Tuesday. The European Central Bank (ECB)  Vice President Luis de Guindos said on Monday that the central bank has made significant progress in bringing down inflation but added that they can’t declare victory just yet.

GBP/USD failed to gather directional momentum and ended the first day of the week flat. The pair extends its sideways grind above 1.2950 in the European morning. The Bank of England (BoE) will release Consumer Credit data for September later in the session.

AUD/USD posted daily losses on Monday and extended its slide early Tuesday. In the Asian session on Wednesday, third-quarter Consumer Price Index (CPI) data from Australia will be watched closely by investors. At the time of press, the pair was down 0.2% at 0.6570.

Gold benefited from the souring risk mood and registered small gains on Monday. XAU/USD holds its ground early Tuesday and trades within a touching distance of the all-time high it set at $2,758 last Wednesday.

• EUR/GBP strengthens to near 0.8340 in Tuesday’s early European session. 
• ECB’s Wunsch said it is premature to discuss December policy decision. 
• BoE is likely to cut its rate by a quarter-point in the November meeting to 4.75%, according to a Reuters poll. 

The EUR/GBP cross trades in positive territory around 0.8340 on Tuesday during the early European session. The comments from the European Central Bank (ECB) policymaker Pierre Wunsch lift the Euro (EUR) against the Pound Sterling (GBP). Investors await the preliminary Gross Domestic Product (GDP) data for the third quarter from Germany and the Eurozone, which are due on Wednesday. 

ECB officials are divided on the necessity of a large reduction. On Monday, the ECB policymaker and Belgian central bank chief Pierre Wunsch noted that there is no urgency for the central bank to cut interest rates quicker and it could even live with a small. The less dovish comments provide some support for the shared currency. Meanwhile, ECB Vice President Luis de Guindos said on Monday that the central bank has made significant progress in bringing down inflation but can’t declare victory yet. 

Nonetheless, money markets are still pricing in nearly 50% odds of the ECB rate reductions by half a percentage point in the December meeting. The GDP numbers on Wednesday could offer some hints about the health of the German and Eurozone economies. The weaker-than-expected outcome could increase the likelihood of the ECB rate cuts in December and might drag the EUR lower. 

On the other hand, the expectation that the Bank of England's (BoE) rate-cutting cycle might be slower than in the Eurozone could help limit the GBP’s losses. According to a Reuters poll, economists expect the BoE to cut its Bank Rate by a quarter-point on November 7 to 4.75%, but a near-two-thirds majority anticipates no move in December. 

FX option expiries for Oct 29 NY cut at 10:00 Eastern Time, via DTCC, can be found below.

EUR/USD: EUR amounts

• 1.0800 3.7b
• 1.0820 713m
• 1.0860 666m

GBP/USD: GBP amounts     

• 1.3000 1b

USD/JPY: USD amounts                     

• 151.00 924m
• 151.15 1.3b
• 153.00 655m

AUD/USD: AUD amounts

• 0.6470 676m
• 0.6750 582m

USD/CAD: USD amounts       

• 1.3810 818m
• 1.3815 610m
• 1.3870 522m

NZD/USD: NZD amounts

• 0.6070 580m

• USD/CHF may appreciate further due to a stronger US Dollar amid higher Treasury yields.
• The US Dollar also receives support from the market caution ahead of the US presidential election.
• The safe-haven demand for the Swiss Franc is undermined due to easing all-out war fear in the Middle East.

USD/CHF remains subdued following the losses from the previous session, hovering around 0.8650 during Asian trading hours on Tuesday. This downside of the pair could be limited due to solid US Dollar (USD) amid higher Treasury yields.

The US Dollar gains support due to market caution ahead of the upcoming US election in November. Market sentiment increasingly favors Former President Donald Trump. According to polling site FiveThirtyEight, Trump's possibility of winning the US election has increased to 52% compared to 48% for Vice President Kamala Harris.

The US Dollar Index (DXY), which measures the value of the US Dollar against its six major currencies, trades around 104.30 with 2-year and 10-year yields on US Treasury bonds standing at 4.12% and 4.27%, respectively, at the time of writing.

The Swiss Franc (CHF) faced challenges due to rising expectations for another interest rate cut by the Swiss National Bank (SNB) at its upcoming December meeting. Traders are likely to monitor the Consumer Price Index (CPI) for October, which is scheduled for release later this week.

Moreover, the demand for the Swiss Franc as a safe haven may decline as concerns over a potential all-out war in the Middle East have eased with the reduction in military operations. However, according to Reuters, Iran’s Foreign Ministry spokesperson, Esmaeil Baghaei, has suggested the possibility of employing "all available tools" to respond to Israel’s recent attacks on military targets within Iran.

• Silver price drifts higher to around $33.90 in Tuesday’s early European session, adding 0.71% on the day. 
• Growing fears of rising Middle East tensions, and uncertainties surrounding the US presidential election could support white metal. 
• Bets for smaller Fed rate cuts might cap the Silver’s upside. 

Silver price (XAG/USD) gains traction to near $33.90 during the early European session on Tuesday. The ongoing geopolitical tensions in the Middle East and the uncertainties surrounding the global economy and the US presidential election lift the white metal. 

Iran's Supreme Leader Ali Khamenei has given a measured response to Israeli strikes on the country, stating that the attack should not be "exaggerated or downplayed" but refraining from pledging quick retaliation. According to the BBC, Iran's President Masoud Pezeshkian said that the country will "respond appropriately" to an attack that killed at least four troops. 

Market players will monitor the development surrounding geopolitical risks in the region. Any signs of further escalation could boost the safe-haven flows, benefiting the silver price. 

Major central banks worldwide have largely begun easing monetary policy and cutting interest rates. Furthermore, the additional US Federal Reserve (Fed) rate cuts expected in the November meeting could support the non-yielding precious metal. 

However, bets for a less aggressive policy easing by the Fed could cap the upside for the Silver. Financial markets anticipate the US central bank to cut interest rates by 25 basis points (bps) in both the policy meetings in November and December.

Later this week, the advanced US Q3 Gross Domestic Product (GDP), the Personal Consumption Expenditures (PCE) Price Index for September and Nonfarm Payrolls (NFP) will be the highlights. These reports could offer some hints about the size and pace of US Fed rate reductions. 

• EUR/USD may return to the descending channel pattern as bearish bias is still in play.
• The nine-day Exponential Moving Average (EMA) is below the 14-day EMA, suggesting an ongoing bearish bias for the pair.
• The pair finds support at a psychological level of 1.0800, aligned with the upper boundary of the descending channel.

EUR/USD retraces its recent gains from the previous session, trading around 1.0810 during the Asian hours on Tuesday. A review of the daily chart shows that the pair tests the upper boundary to return to the descending channel pattern. which could reinforce a bearish bias for the pair.

The 14-day Relative Strength Index (RSI), a key momentum indicator, is slightly above the 30 level. A drop below this threshold would indicate an oversold condition, suggesting the possibility of an upward correction for the EUR/USD pair in the near future.

Additionally, the nine-day Exponential Moving Average (EMA) is below the 14-day EMA, confirming the prevailing bearish trend in the EUR/USD pair’s price. The short-term price momentum is weaker, which could mean that the price is likely to continue experiencing downward pressure.

On the downside, the immediate support level appears to be at a psychological level of 1.0800, which coincides with the upper boundary of the descending channel. If the price falls back within this channel, it could increase the likelihood of a decline toward the psychological level of 1.0600.

A break below the 1.0600 level would likely heighten selling pressure, pushing the EUR/USD pair further down to test the lower boundary of the descending channel, estimated at around 1.0680.

In terms of resistance, the EUR/USD pair may encounter an immediate barrier around the nine-day Exponential Moving Average (EMA) at the 1.0826 level, followed by the 14-day EMA at the 1.0855 level. A breakthrough above these EMAs could lead the pair to approach the psychological level of 1.0900.

EUR/USD: Daily Chart

• GBP/USD meets with a fresh supply on Tuesday and seems vulnerable to sliding further.
• Bets for smaller Fed rate cuts revive the USD demand and exert pressure on the pair.
• The technical setup favors bears and supports prospects for a further depreciating move.

The GBP/USD pair attracts fresh sellers following the previous day's good two-way price move and slides closer to mid-1.2900s during the Asian session on Tuesday. Spot prices, however, hold above the lowest level since August 16 touched last week and remain at the mercy of the US Dollar (USD) price dynamics. 

Bets for a less aggressive policy easing by the Federal Reserve (Fed) assist the USD in stalling its overnight pullback from a three-month peak and drag the GBP/USD pair lower. Apart from this, rising bets for more interest rate cuts by the Bank of England (BoE) in November and December suggest that the path of least resistance for spot prices remains to the downside. 

From a technical perspective, the recent repeated failures near the 1.3000 psychological mark and a breakdown below the 100-day Simple Moving Average (SMA) validate the near-term negative outlook. Moreover, oscillators on the daily chart are holding deep in negative territory and are still away from being in the oversold zone. Hence, a subsequent slide back towards the 1.2900 mark, or the monthly swing low, looks like a distinct possibility. 

Some follow-through selling will be seen as a fresh trigger for bearish traders and pave the way for an extension of a downtrend from the 1.3435 region, or the highest level since February 2022 touched last month. The GBP/USD pair might then aim to test the very important 200-day SMA, currently pegged near the 1.2800 round-figure mark, with some intermediate support near the 1.2860 region.

On the flip side, the 1.3000 mark now seems to have emerged as an immediate strong barrier, above which spot prices could climb to the 1.3050 supply zone. A sustained strength beyond the latter might trigger a short-covering move and lift the GBP/USD pair beyond the 1.3100 round figure, towards the 1.3115-1.3120 resistance zone. Some follow-through buying will negate the negative outlook and shift the bias in favor of bulls.

GBP/USD daily chart

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

The price for Gold stood at 7,443.71 Indian Rupees (INR) per gram, up compared with the INR 7,413.38 it cost on Monday.

The price for Gold increased to INR 86,820.03 per tola from INR 86,468.16 per tola a day earlier.

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

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

• The Japanese Yen gains positive traction and draws support from a combination of factors.
• An unexpected dip in Japan’s unemployment rate and intervention fears underpin the JPY. 
• The BoJ rate-hike uncertainty should cap gains ahead of this week’s central bank event risk.

The Japanese Yen (JPY) strengthened a bit against its American counterpart during the Asian session on Tuesday and moved away from a nearly three-month low touched the previous day. An unexpected fall in Japan's unemployment rate during September pointed to tighter labor market conditions, which could fuel consumer spending and demand-driven inflation. Adding to this, remarks by Japan's Finance Minister Katsunobu Kato revived fears of a possible government intervention and offer support to the JPY. This, along with subdued US Dollar (USD) price action, exerts some downward pressure on the USD/JPY pair. 

Meanwhile, Japan Democratic Party for the People (DPP) leader Yuichiro Tamaki opposed further Bank of Japan (BoJ) rate hikes. Apart from this, a positive risk tone should keep a lid on any meaningful appreciation for the safe-haven JPY. Furthermore, the recent upsurge in the US Treasury bond yields, bolstered by bets for a less aggressive policy easing by the Federal Reserve (Fed) and deficit-spending concerns after the US election, should contribute to capping the lower-yielding JPY. Traders might also refrain from placing aggressive directional bets ahead of the BoJ meeting and important US macro releases this week. 

Daily Digest Market Movers: Japanese Yen draws some support from the upbeat domestic data and intervention fears

• According to a report published by Japan's Statistics Bureau this Tuesday, the unemployment rate dipped from 2.5% previous to 2.4% in September and the job-to-applicant ratio rose to 1.24. 
• The data reflects strong demand for labor and supports prospects of rising wages, which might lead to a higher inflation outlook and should allow the Bank of Japan to hike interest rates again.
• Japan's Finance Minister Katsunobu Kato said that he is closely watching FX moves, including those driven by speculators, with a higher sense of vigilance, reviving intervention fears.
• Japan's Prime Minister Shigeru Ishiba is reportedly seeking a coalition with the Democratic Party for the People (DPP) after failing to retain a majority in the lower house election over the weekend.
• DPP leader Yuichiro Tamaki said that the BoJ should avoid big policy change now with real wages still at a standstill and wants policymakers to scrutinize whether real wages turn positive stably in guiding fiscal, monetary policy.
• The US Treasury bond yields retreat further from a multi-month top and keep the US Dollar bulls on the defensive below the highest level since July 30, exerting pressure on the USD/JPY pair. 
• The recent upbeat US macro data dampened hopes for a more aggressive easing by the Federal Reserve and should act as a tailwind for the US bond yields amid deficit-spending concerns after the US election.
• With the US presidential election approaching, the latest poll indicates a tight race to the White House between Vice President Kamala Harris and the Republican nominee Donald Trump. 
• Traders now look to Tuesday's US economic docket – featuring the Conference Board's Consumer Confidence Index and Job Openings and Labor Turnover Survey (JOLTS) – for short-term impetus. 
• The focus, however, will remain on the BoJ decision on Thursday and the key US macro data – the Advance Q3 GDP print, the Personal Consumption Expenditures (PCE) Price Index and the Nonfarm Payrolls (NFP) report. 

Technical Outlook: USD/JPY corrective slide could be seen as a buying opportunity and is more likely to remain limited

From a technical perspective, last week's breakout through the 150.65 confluence – comprising the 100-day Simple Moving Average (SMA) and the 50% Fibonacci retracement level of the July-September downfall – was seen as a fresh trigger for bulls. That said, the overnight failure to find acceptance or build on the momentum beyond the 61.8% Fibo. level warrants some caution. Moreover, the Relative Strength Index (RSI) on the daily chart remains close to the overbought zone, making it prudent to wait for some near-term consolidation or a further pullback before positioning for further gains. 

Any subsequent slide, however, is likely to attract some dip-buyers and remain limited near the overnight swing low, around the 152.65 region. Some follow-through selling, however, could drag the USD/JPY pair to the 152.00 mark en route to the 151.45 support and the 151.00 mark. The downward trajectory could extend further towards challenging the 150.65 confluence resistance breakpoint, which should now act as a key pivotal point and a strong base for spot prices.

On the flip side, the 154.00 mark could offer some resistance ahead of the 154.35-154.40 supply zone. Some follow-through buying should pave the way for a move towards reclaiming the 155.00 psychological mark, above which the USD/JPY pair seems all set to test the late-July swing high, around the 155.20 region.

• EUR/JPY rises to a three-month high of 166.07 on Monday.
• The Japanese Yen received downward pressure as the loss of the LDP coalition increased uncertainty regarding the BoJ rate-hike plans.
• ECB’s Pierre Wunsch said that there is no urgency for the central bank to cut interest rates quickly.

EUR/JPY edges lower around 165.50 during the Asian trading hours on Tuesday, following a three-month high of 166.07 reached on Monday. The Japanese Yen (JPY) has been under pressure due to increasing uncertainty regarding the Bank of Japan's (BoJ) rate-hike plans, particularly after Japan’s Liberal Democratic Party (LDP)-coalition lost its parliamentary majority.

The Bank of Japan’s interest rate decision is set to be the focal point on Thursday, with nearly 86% of economists surveyed by Reuters expecting the central bank to maintain its current rates at the October meeting.

On Tuesday, Japan’s Finance Minister Katsunobu Kato stated that he is “closely watching FX movements, including those driven by speculators, with heightened vigilance,” but refrained from commenting on specific forex levels. Kato emphasized the importance of stable currency movements that reflect economic fundamentals.

On the Euro’s front, policymakers at the European Central Bank (ECB) have expressed differing opinions on monetary policy in recent days. Pierre Wunsch, the Governor of the National Bank of Belgium and a member of the ECB's Governing Council stated on Monday that there is no urgency for the central bank to accelerate interest rate cuts, suggesting it could even tolerate a modest rate.

In contrast, Mario Centeno, Governor of the Bank of Portugal, argued that a 50 basis point rate cut should be considered as a potential option for December. Meanwhile, Governor of the Bank of Italy Fabio Panetta raised concerns about whether the ECB could halt rate cuts once it reaches a neutral level, where monetary policy no longer restricts growth.

• The Indian Rupee weakens in Tuesday’s Asian session. 
• Significant foreign institutional investor (FII) outflows and higher US bond yields undermine the INR. 
• The RBI's FX intervention might help limit the INR’s losses. 

The Indian Rupee (INR) softens on Tuesday, pressured by sustained foreign outflows from domestic stocks and the rising US bond yields on the back of rising odds of Donald Trump winning the US presidential election. However, the fall in crude oil prices could provide some support to the local currency. The significant depreciation of the INR might be limited as the Reserve Bank of India (RBI) is likely to sell the USD via public sector banks to support the local currency.

Traders will closely monitor the key US economic data released this week, including the advanced US Gross Domestic Product (GDP) Annualized for the third quarter (Q3), the Personal Consumption Expenditures (PCE) Price Index for September and the highly anticipated US Nonfarm Payrolls (NFP). 

Daily Digest Market Movers: Indian Rupee remains weak amid multiple headwinds

• "In the run-up to and immediate aftermath of U.S. elections, RBI's aim will be to curb volatility in the rupee," said A Prasanna, head of research at ICICI Securities Primary Dealership.
• Foreign investors have withdrawn $10 billion from India's equity and debt markets in October, the heaviest month of selling this year.
• Nomura said on Monday that the Indian economy has entered a phase of "cyclical growth slowdown" and the RBI's estimate of 7.2% GDP expansion is "overly optimistic." 
• The Indian economy is projected to expand between 6.5% and 7.0% in the current financial year, the Department of Economic Affairs stated in its monthly bulletin.
• According to the CME FedWatch tool, traders have priced in nearly 96.8% odds of a usual size rate cut of 25 basis points (bps) in November and expect a similar move in the December meeting.

Technical Analysis: USD/INR’s constructive outlook prevails in the longer term

The Indian Rupee trades softer on the day. Technically, the USD/INR pair keeps the bullish vibe above the key 100-day Exponential Moving Average (EMA) on the daily chart. The upward momentum is supported by the 14-day Relative Strength Index (RSI), which stands above the midline near 60.15, indicating the support is likely to hold rather than break. 

Bullish candlesticks and sustained trading above the upper boundary of the ascending trend channel of 84.22 could set USD/INR to 84.50, en route to the 85.00 psychological level. 

On the downside, consistent trades under the lower limit of the trend channel near 84.05 could see a drop to 83.76, the 100-day EMA. 

• USD/CAD receives support as the commodity-linked CAD struggles due to lower Oil prices.
• Crude Oil prices plunge due to easing fears of a potential all-out war in the Middle East.
• CME FedWatch Tool suggests a 95.8% probability of a 25-basis-point rate cut in November.

USD/CAD holds its position near 1.3890 during the Asian trading hours on Tuesday, close to its three-month high of 1.3908, recorded on Monday. The commodity-linked Canadian Dollar (CAD) faces challenges due to lower Oil prices as Canada is the largest crude exporter to the United States (US).

West Texas Intermediate (WTI) oil price trades around $67.50 at the time of writing. Oil prices have fallen sharply as the limited military operations have alleviated fears of a potential all-out war in the Middle East. Iran’s Foreign Ministry spokesperson, Esmaeil Baghaei, indicated the possibility of using "all available tools" to respond to Israel’s recent attacks on military targets in Iran, according to Reuters.

On Monday, Governor Tiff Macklem provided further details on the Bank of Canada’s (BoC) decision to implement an aggressive interest rate cut last week, explaining that the easing is reasonable given the aggressive hikes in borrowing costs aimed at controlling inflation in recent years. Macklem also noted that the central bank will need to "discover" the neutral rate that neither stimulates nor restricts economic activity, according to Bloomberg News.

The US Dollar (USD) strengthens as positive economic data from last week suggests ongoing resilience in the US economy. This bolsters expectations for nominal interest rate cuts by the Federal Reserve (Fed) in November. The CME FedWatch Tool indicates a 95.8% probability of a 25-basis-point rate cut in November, with no anticipation of a larger 50-basis-point reduction.

Additionally, the US Dollar receives support amid higher US bond yields. This increase is driven by market sentiment increasingly favoring Former President Donald Trump in the upcoming US presidential election and expectations that the Fed may adopt a more cautious stance on future rate cuts. According to polling site FiveThirtyEight, Trump's possibility of winning the US election has increased to 52% compared to 48% for Vice President Kamala Harris.

Japan’s Finance Minister Katsunobu Kato on Tuesday that he is ”closely watching FX moves, including those driven by speculators, with a higher sense of vigilance.”

Further comments

Market reaction

USD/JPY remains in the red near 153.00 following these above comments, down 0.25% on the day.

• Gold price catches fresh bids on Tuesday amid Middle East tensions and US election jitters.
• Bets for smaller Fed rate cuts remain supportive of elevated US bond yields and the USD.
• A positive risk tone might further contribute to capping the XAU/USD ahead of US data.

Gold price (XAU/USD) ticks higher during the Asian session on Tuesday and moves closer to the top end of a short-term trading range held over the past week or so. Against the backdrop of safe-haven demand stemming from Middle East tensions and US election jitters, subdued US Dollar (USD) price action is seen as a key factor offering support to the commodity. However, bets for a less aggressive policy easing by the Federal Reserve (Fed) continue to act as a tailwind for the buck and hold back bullish traders from placing fresh bets around the non-yielding yellow metal.

Apart from this, the underlying bullish tone across the global equity markets contributes to capping the upside for the Gold price. Investors also seem reluctant and prefer to move to the sidelines ahead of this week's important macro releases from the US – the Advance Q3 GDP print, the Personal Consumption Expenditures (PCE) Price Index and the Nonfarm Payrolls (NFP) report. The crucial data will play a key role in influencing market expectations about the Fed's rate-cut path, which, in turn, will drive the USD demand and provide a fresh directional impetus to the XAU/USD. 

Daily Digest Market Movers: Gold price continues to attract haven flows amid geopolitical risks and US political uncertainty

• Retreating US Treasury bond yields triggered an intraday US Dollar pullback from its highest level since July 30 and assisted the Gold price in attracting some dip-buyers near the $2,725 region at the start of an eventful week. 
• The recent upbeat US macro data dampened hopes for another jumbo rate cut by the Federal Reserve, which should act as a tailwind for the US bond yields amid deficit-spending concerns after the November 5 US election.
• With the US presidential election approaching, Vice President Kamala Harris and the Republican nominee Donald Trump are caught in a knife-edge battle to the White House, adding a layer of uncertainty in the markets. 
• The US warned Iran at the United Nations Security Council of severe consequences if it undertakes any further aggressive acts against Israel in retaliation to the latter's strikes on military targets across Iran over the weekend.
• China's gold consumption in the first three quarters of 2024 slid 11.18% from the same period a year ago as high prices dented buying interest for jewelry products, the state-backed gold association said on Monday.
• Investors now look to Tuesday's US economic docket – featuring the release of the Conference Board's Consumer Confidence Index and Job Openings and Labor Turnover Survey (JOLTS) – for short-term opportunities. 
• This, along with a string of US economic data due this week, should provide cues about the Fed's interest rate outlook, which will influence the USD price dynamics and provide a fresh directional impetus to the XAU/USD. 

Technical Outlook: Gold price could aim to challenge a multi-month-old ascending trend-line hurdle near the $2,770-2,775 area

From a technical perspective, acceptance above the $2,750 supply zone could be seen as a fresh trigger for bullish traders. The subsequent move up could lift the Gold price beyond the all-time peak, around the $2,759 region, towards testing a nearly four-month-old ascending trend-line resistance near the $2,770-2,775 region. The momentum could extend further towards the $2,800 round-figure mark.

That said, the Relative Strength Index (RSI) on the daily chart is on the verge of breaking into the overbought territory and warrants some caution for bulls. Hence, it will be prudent to wait for some near-term consolidation or a modest pullback before positioning for any further near-term appreciating move. 

Meanwhile, any corrective pullback now seems to find some support near the overnight swing low, around the $2,725 region, ahead of the $2,715 zone. The latter marks the lower boundary of the one-week-old range, which if broken decisively might prompt some technical selling. The Gold price might then weaken further below the $2,700 mark, towards the $2,675 area en route to the $2,657-2,655 horizontal support.

• NZD/USD receives downward pressure as RBNZ is widely expected to deliver another 50-basis-point rate cut in November.
• The NZD could gain support from favorable results stemming from China's initiatives, its largest trading partner.
• The US Dollar appreciates as recent positive economic data reinforces expectations for nominal rate cuts by the Fed.

The NZD/USD pair steadies near 0.5980 during the Asian session on Tuesday after two days of losses. However, downside risks for the New Zealand Dollar (NZD) remain as the Reserve Bank of New Zealand (RBNZ) is expected to deliver another 50-basis-point rate cut in its final policy meeting of the year in November, with markets even considering the possibility of a 75-basis-point cut.

On Monday, China's Vice Minister of Finance, Liao Min, announced plans to enhance countercyclical adjustments in macroeconomic policies to foster economic recovery in the fourth quarter. Positive outcomes from these initiatives could bolster the NZD, considering China's importance as a key trading partner for New Zealand.

UOB Group’s FX analysts, Quek Ser Leang and Lee Sue Ann observed that while there hasn't been a significant increase in momentum over the long term, the weakness in the New Zealand dollar (NZD) has yet to stabilize. If the NZD does not breach the 0.6010 level, it could fall below 0.5970 before any stabilization occurs, with the next key level to monitor being 0.5950.

Read More: A dip below 0.5970 is possible – UOB Group

The US Dollar (USD) strengthens as positive economic data from last week suggests ongoing resilience in the US economy. This bolsters expectations for nominal interest rate cuts by the Federal Reserve (Fed) in November. The CME FedWatch Tool indicates a 95.8% probability of a 25-basis-point rate cut in November, with no anticipation of a larger 50-basis-point reduction.

Traders await the release of the preliminary US Q3 Gross Domestic Product (GDP) figures and October's Nonfarm Payrolls (NFP) report, which are expected to offer crucial insights into the timing and pace of the Federal Reserve's anticipated rate cuts. Additionally, PMI data from China will be closely monitored later in the week.

• WTI price edges lower to near $67.55 in Thursday’s Asian session. 
• Easing fear of crude supply and China’s demand woes could weigh on the WTI price. 
• Investors will monitor the US advanced Q3 GDP on Wednesday ahead of the employment data. 

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $67.55 on Tuesday. The WTI price plunges as the limited military operation eased concerns about a potential all-out war in the Middle East.

On Saturday, Israel targeted Iran's military installations in three provinces in reaction to Tehran launching ballistic missiles at Israel on October 1. However, Israel did not strike Iran's oil or nuclear facilities in retaliation for Iran's ballistic missile attack, and Iran's official media claimed that oil output was normal. This, in turn, undermines the WTI price as a fear of significant disruption in the crude supply fades.

Furthermore, weak demand outlooks and China's economic slowdown contribute to the WTI’s downside. Data released by China's National Bureau of Statistics on the weekend showed the country's industrial profits fell by 27.1% YoY in September, the steepest decline since the pandemic.

A report from the International Energy Agency (IEA) indicated that oil demand is estimated to grow at only half the pace in 2024 and 2025 compared to 2022 and 2023, primarily due to a decline in Chinese demand.

The flash Gross Domestic Product (GDP) data from the United States (US) for the third quarter will be published on Wednesday, which is estimated to expand 3% in Q3. The US Nonfarm Payrolls will be released on Friday. If the data show a stronger-than-expected outcome, this could lift the US Dollar and weigh on the USD-denominated WTI price. 
 

• The Australian Dollar falls as the US Dollar remains solid amid a resilient US economy.
• The Aussie Dollar may limit its downside as an RBA rate cut is unlikely in the near term.
• The US Dollar appreciates as recent positive US data supports the sentiment of nominal rate cuts by the Fed.

The Australian Dollar (AUD) extends its decline against the US Dollar (USD) for the third consecutive session on Tuesday. Traders are now focused on Australia’s third-quarter Consumer Price Index (CPI) data, due for release on Wednesday, as they seek further insights into the Reserve Bank of Australia’s (RBA) potential monetary policy direction.

The AUD's downside may be limited by the Reserve Bank of Australia's hawkish stance on its policy outlook. The RBA has indicated that the current cash rate of 4.35% is restrictive enough to steer inflation back within the target range of 2%-3% while still supporting employment. Consequently, a rate cut is unlikely in the near term, especially as early as next month.

The US Dollar (USD) gains strength as positive US economic data from last week indicates continued resilience in the economy. This supports the sentiment of nominal interest rate cuts by the Federal Reserve (Fed) in November.

Traders await the release of the preliminary US Q3 Gross Domestic Product (GDP) figures and October’s Nonfarm Payrolls (NFP) report, which could provide key insights into the timing and pace of the Federal Reserve’s (Fed) anticipated rate cuts.

Daily Digest Market Movers: Australian Dollar depreciates as US Dollar gains ground

• According to the CME FedWatch Tool, there is a 95.8% probability of a 25-basis-point rate cut by the Fed in November, with no expectation of a more substantial 50-basis-point cut.
• ANZ-Roy Morgan Australia Consumer Confidence dropped to 86.4 this week, down from 87.5 the previous week.
• Australia's 10-year government bond yield hovers near 4.5%, mirroring a rise in US bond yields. This increase is driven by market sentiment increasingly favoring Former President Donald Trump in the upcoming US presidential election and expectations that the Fed may adopt a more cautious stance on future rate cuts.
• According to polling site FiveThirtyEight, Trump's possibility of winning the US election has increased to 52% compared to 48% for Vice President Kamala Harris.
• Over the past three weeks, allies of former President Donald Trump have faced at least 10 court defeats in key battleground states that could impact the outcome of the November 5 election between Republican candidate Trump and his Democratic opponent, Vice President Kamala Harris.
• Recent comments from Iran’s Foreign Ministry spokesperson, Esmaeil Baghaei, about potentially using "all available tools" to respond to Israel’s recent attacks on military targets in Iran, signal a risk of further escalation. Such statements increase global uncertainty, fueling investor demand for safe-haven assets like the USD as they brace for potential conflict.
• Last week, Federal Reserve Bank of San Francisco President Mary Daly stated in a post on the social media platform X that the economy is clearly in a better position, with inflation having fallen significantly and the labor market returning to a more sustainable path.
• RBA Deputy Governor Andrew Hauser highlighted the country's strong labor participation rate last week and stressed that although the RBA relies on data, it is not overly fixated on it.

Technical Analysis: Australian Dollar falls toward 0.6550, lower boundary of the descending channel

AUD/USD trades near 0.6570 on Tuesday. The daily chart analysis points to a short-term bearish bias as the pair continues to move lower within a descending channel. The 14-day Relative Strength Index (RSI) is nearing 30, reinforcing the bearish bias.

On the support side, the pair could test the lower boundary of the descending channel around the 0.6540 level.

For resistance, the first hurdle lies at the psychological level of 0.6600, followed by the descending channel's upper boundary at 0.6610. A breakout above this point could open the door for a move toward the nine-day Exponential Moving Average (EMA) at 0.6634.

AUD/USD: Daily Chart

The People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead on Tuesday at 7.1283, as compared to the previous day's fix of 7.1307 and 7.1271 Reuters estimates.

• USD/JPY loses ground to near 152.95 in Tuesday’s early Asian session, down 0.22% on the day. 
• Political and monetary policy uncertainty in Japan weighs on the Japanese Yen. 
• The prospect of less aggressive policy easing by the Fed might help limit the USD’s losses. 

The USD/JPY pair loses ground to around 152.95 during the early Asian session on Tuesday. The pair edges lower as the US Dollar (USD) retreats from a nearly three-month high in the previous session. However, the downside for the pair might be limited amid the uncertainty surrounding the next government’s makeup and the Bank of Japan's (BoJ) rate hike plan. 

An election loss by Japan's ruling coalition raises political and monetary policy uncertainty and might exert some selling pressure on the Japanese Yen (JPY). “The ruling LDP and its coalition partner lost their majority in the lower house, raising concerns about the shape and policy direction of the next government. Markets have also trimmed BoJ tightening expectations marginally (helping boost local stocks),” noted Scotiabank’s Chief FX Strategist Shaun Osborne.

The BoJ interest rate decision will take center stage on Thursday. Nearly 86% of economists polled by Reuters anticipate the Japanese central bank to leave its rates unchanged at its October meeting on Thursday. 

Elsewhere, data released by the Statistics Bureau of Japan showed on Tuesday that the country’s Unemployment Rate ticked lower to 2.4% in September, down from the previous reading and the market consensus of 2.5%. 

The bets for a less aggressive policy easing by the Federal Reserve (Fed) could provide some support to the Greenback in the near term. According to the CME FedWatch tool, traders have priced in a nearly 96.8% chance of a usual size rate cut of 25 basis points (bps) in November and expect a similar move in the December meeting.

Nonetheless, traders will keep an eye on the advanced US Gross Domestic Product (GDP) for the third quarter, the Personal Consumption Expenditure Price Index (PCE) for September, the ISM Manufacturing PMI, and the Nonfarm Payrolls (NFP) data for October, which will be released this week for fresh impetus. Any signs of weakness in the US economy or the labor market could undermine the USD against the JPY. 

The European Central Bank (ECB)  Vice President Luis de Guindos said on Monday that the central bank has made significant progress in bringing down inflation but can’t declare victory just yet, per Bloomberg.  

Key quotes

Market reaction

At the time of writing, EUR/USD was up 0.04% on the day at 1.0816.