Silver price advanced on Friday and finished the session with gains of over 1.33%, yet printed losses of 2.30% in the week. A weak US Dollar sponsored a leg up in the grey metal, which has cleared the 100-day Simple Moving Average (SMA) of $30.35. At the time of writing, the XAG/USD trades at $30.60.
XAG/USD Price Forecast: Technical outlook
The grey metal is neutral to downward biased, consolidated, and fluctuated around the 100-day SMA. Neither buyers nor sellers have been able to move Silver’s price outside of the $29.64-$31.52 range.
Oscillators such as the Relative Strength Index (RSI) remain bearish, though there have been signs that buyers are gathering steam.
Hence, for a bullish continuation, buyers must clear the $31.00. Once cleared, the next stop would be the top of the range at $31.52 before buyers could target the 50-day SMA at $31.74, ahead of the $32.00 figure.
On the other hand, if XAG/USD drops below the 100-day SMA of $30.35, the next support would be the $30.00 mark. On further weakness, sellers could aim to the 200-day SMA at $29.10.
XAG/USD Price Chart – Daily
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
The NZD/USD pair surged by 0.61% on Friday's session, continuing the recovery from last week's lows and reaching 0.5930.
The pair has resumed its upward trajectory, fueled by positive technical indicators. The Relative Strength Index (RSI) has moved near positive territory at around 49, signaling increasing buying pressure and bullish sentiment. Moreover, the Moving Average Convergence Divergence (MACD) indicator displays a rising green histogram, further confirming the bullish momentum.
The Kiwi's pair's recent rally has seen it conquer the 20-day Simple Moving Average (SMA) of 0.5905, signaling potential for a bullish reversal. However, the lingering bearish crossover between the 100-day and 200-day SMAs at 0.6060 raises concerns about the sustainability of the gains. Positive technical indicators, including the RSI and MACD, suggest buying pressure is rising and support bullish momentum..
Gold's price advanced late during the North American session on Friday, up by 0.67%, yet it remains set to print monthly losses of over 3%. Geopolitical risks continue to drive price action with the non-yielding metal fluctuating at around $2,600. The XAU/USD trades at $2,652 after hitting a daily low of $2,634.
Geopolitical tensions eased in the Middle East after Israel and Lebanon agreed to a ceasefire. Nevertheless, both countries accused each other of violating the agreement.
Recently, Sky News Arabia revealed that the Israeli Army announced the bombing of a mobile rocket platform belonging to Hezbollah in southern Lebanon in an air strike.
Gold prices could remain bid after the escalation of the Russia-Ukraine conflict. During the week, Russia attacked Ukraine’s energy infrastructure and threatened to attack with ballistic missiles. Russia’s response is a retaliation to the US and UK authorizing the deployment of missiles manufactured in both countries inside Russia.
In November, Bullion prices were hampered by US President-elect Donald Trump's victory on November 5. Some of his proposals are inflation-prone, like imposing tariffs and cutting taxes.
This bolstered the Greenback, which is set to end November with gains of over 2%, according to the US Dollar Index (DXY). Speculation that the new US administration's fiscal policy is expansionary might prevent the Federal Reserve (Fed) from continuing to lower interest rates.
The choice of Scott Bessent as Treasury Secretary for the upcoming Trump administration calmed the markets and bolstered Gold prices last week. Investors see Bessent as market-friendly, which could moderate harsh Trump trade policies.
Consequently, market participants are optimistic that the Fed will cut rates by 25 basis points at the December meeting. According to the CME FedWatch Tool, the swaps market sees a probability of 66% of such a decision.
Gold prices remain upwardly biased yet contained within the 50 and 100-day Simple Moving Averages (SMAs), each at $2,668 and $2,572, respectively. Buyers need to clear the 50-day SMA so they can test $2,700. On further strength, XAU/USD's next resistance level would be the psychological $2,750 and the all-time high at $2,790.
On the other hand, if sellers drag the non-yielding metal below $2,600, they could target the 100-day SMA, ahead of the November 14 swing low of $2,536.
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
The AUD/USD pair extends gains for the third straight day on Friday, although it has trimmed a portion of its intraday gains and holds above the 0.6500 psychological threshold. The pair recently reached a multi-day high before retracing some of its intraday gains. The positive momentum in the pair is influenced mainly by broad-based US Dollar weakness.
Despite showing signs of resilience and gaining, the US Dollar remains under pressure against most major currencies. The weakness in the US Dollar is primarily due to dovish comments from Federal Reserve Chairman Jerome Powell, who hinted at a pause in the US interest rate hiking cycle. This has led market participants to speculate that the Fed may not raise interest rates as aggressively as previously anticipated.
The AUD/USD pair continued to gain ground and approached the 20-day Simple Moving Average (SMA) but faced rejection. However, the outlook remains positive as bullish momentum continues to build.
The AUD/USD pair is likely to find support at the 20-day SMA and the ascending trendline from the August low. On the upside, immediate resistance is at the 50-day SMA and the 0.6600 round figure. A break above this resistance area could lead to further gains toward the 0.6700 mark.
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
The Dow Jones Industrial Average (DJIA) explored territory north of the 45,000 handle for the second time this week. With little on the data docket and Friday’s Post-Thanksgiving holiday trading hours cut short, investors scrambled to push equities into record territory before closing up shop for the weekend.
Tech stocks, specifically chipmakers, are helping to bolster stock indexes after it was revealed that additional restrictions on the sale of semiconductor goods to China being considered by the Biden administration may not be as stiff as many investors had originally feared. Lacking any other fundamental reasons to sell short, traders are bidding stocks higher for the day as markets continue to brush off renewed threats of wide-reaching tariffs set to be imposed by incoming President-elect Donald Trump in January.
Next week will see a fresh round of employment and labor figures that will draw eyes from all corners of the market. This will culminate in another print of monthly Nonfarm Payrolls (NFP) numbers next Friday.
Equities broadly found higher ground on holiday-shortened Friday, with two-thirds of the Dow Jones printing in the green from the day’s opening bids at the closing bell. Nvidia (NVDA) rallied over 2%, closing north of $138 per share as the chipmaker recovers from a recent downturn. Investors soured on NVDA after it was revealed that the major tech sector player, which is expected to see revenues soar by another 100% YoY in 2025, may see extended gross inflows shrink to a paltry 50% YoY in 2026. NVDA has fallen over 7% from its all-time high of $148.88 set earlier this month, but still up over 1,000% from 2022’s lows near $12.
The DJIA continues to find higher ground, vexing traders looking to amass short positions as price action shows little disregard for any precise definition of overbought conditions. The Dow Jones is up nearly 20% YTD, and has closed in the green for all but two of the last 11 consecutive months.
Traders looking to get into an exhaustion play will be looking for an eventual decline to the 50-day Exponential Moving Average (EMA) rising through 43,000, but a long-running pattern of bouncing from the key moving average means they should just get out of the way and follow the crowd into a fresh leg higher.
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
The US Dollar Index (DXY), which measures the value of the USD against a basket of currencies, trades near 106.10 with mild losses but trimmed most of its daily losses, which saw the index below 106.00.
Overall, the US Dollar maintains a bullish outlook, supported by strong economic data and a hawkish Federal Reserve (Fed) stance. Despite profit-taking and geopolitical uncertainty, the uptrend remains intact.
This week, thin liquidity and market holidays have resulted in reduced trading activity, but the DXY is expected to continue its upward trajectory due to robust US economic growth.
Technical indicators for the DXY suggest a period of consolidation with the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicators hovering around neutral levels.
Despite a recent dip below the 20-day Simple Moving Average (SMA), the index has quickly recovered, indicating that the uptrend remains intact. Key support is found at 106.00-106.50, while resistance is at 108.00. The overall bullish momentum suggests that the uptrend is likely to continue in the medium term as the US economy remains robust and the Fed is expected to cool down rate cut bets. Traders should monitor the 106.00 level closely as a break below this level could trigger further downside.
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
The Mexican Peso appreciated against the US Dollar during the North American session as the Greenback extended its downfall and is about to hit its most significant weekly loss in three months. Speculation that US President-elect Donald Trump may moderate his trade rhetoric weighed on the American currency. Therefore, the USD/MXN trades at 20.29, down 0.59%.
Mexico’s economic docket was light on Friday, but the Bank of Mexico (Banxico) revealed its November 14 monetary policy meeting minutes on Thursday.
Banxico’s board members voted unanimously to lower rates, and according to the minutes, members agreed that the rate cut cycle “should continue.” Nevertheless, one of the officials suggested “a larger rate adjustment” at the December meeting in light of expectations that core inflation would continue to trend lower.
Even though this opens the door for a 50 bps rate cut at the next meeting, the USD/MXN trended lower after Mexican President Claudia Sheinbaum and US President-elect Donald Trump sustained conversations on Wednesday, calming fears and underpinning the emerging market currency.
Earlier on Friday, President Sheinbaum said she is convinced that she would reach a deal with the US to avoid President-elect Trump's threat of 25% tariffs, according to Bloomberg. She added, “I’m convinced we’re going to reach an agreement while defending our sovereignty, with respect for Mexicans and respect for Mexico, with the collaboration that one government should have with another.”
Meanwhile, US data suggests the economy might be slowing faster than expected. Earlier, the Chicago Purchasing Managers Index (PMI) for November tumbled. It was the second monthly decline from September levels.
The USD/MXN remains upwardly biased despite being set to finish the week with losses. Nevertheless, the pair carved a successive series of higher highs and higher lows, suggesting buyers are in charge. If buyers keep the exchange rate above the November 19 swing low of 20.06, this could pave the way for further upside.
The first resistance would be 20.50, followed by the year-to-date (YTD) peak at 20.82. If surpassed, the next stop would be 21.00, ahead of March 8, 2022 peak at 21.46, followed by the November 26, 2021 high at 22.15.
Conversely, if bears drag the exchange rate below 20.06, the next support would be 20.00. On further weakness, bears could challenge the 50-day Simple Moving Average (SMA) at 19.92. Key support levels lie beneath the latter with the 100-day SMA at 19.48 before the psychological 19.00 figure.
The Mexican Peso (MXN) is the most traded currency among its Latin American peers. Its value is broadly determined by the performance of the Mexican economy, the country’s central bank’s policy, the amount of foreign investment in the country and even the levels of remittances sent by Mexicans who live abroad, particularly in the United States. Geopolitical trends can also move MXN: for example, the process of nearshoring – or the decision by some firms to relocate manufacturing capacity and supply chains closer to their home countries – is also seen as a catalyst for the Mexican currency as the country is considered a key manufacturing hub in the American continent. Another catalyst for MXN is Oil prices as Mexico is a key exporter of the commodity.
The main objective of Mexico’s central bank, also known as Banxico, is to maintain inflation at low and stable levels (at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%). To this end, the bank sets an appropriate level of interest rates. When inflation is too high, Banxico will attempt to tame it by raising interest rates, making it more expensive for households and businesses to borrow money, thus cooling demand and the overall economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.
Macroeconomic data releases are key to assess the state of the economy and can have an impact on the Mexican Peso (MXN) valuation. A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only does it attract more foreign investment but it may encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this strength comes together with elevated inflation. However, if economic data is weak, MXN is likely to depreciate.
As an emerging-market currency, the Mexican Peso (MXN) tends to strive during risk-on periods, or when investors perceive that broader market risks are low and thus are eager to engage with investments that carry a higher risk. Conversely, MXN tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
EUR/USD kicked Friday off with a mild rally into the 1.0600 handle as broader markets took advantage of the US holiday session to sell off the Greenback and bid up riskier assets, but another contraction in key pan-European inflation figures pulled the plug on Fiber bulls. Despite an intraday softening of the Euro’s stance, EUR/USD is poised for its first weekly gain in a month.
According to the Harmonized Index of Consumer Prices (HICP), headline European inflation sank to -0.3% in November, falling from the previous month’s 0.3%. Core HICP inflation also declined to -0.6% MoM compared to the previous print of 0.2%, sending core monthly inflation measures into contraction territory for the third time this year and the lowest print since February.
Annualized HICP inflation ticked higher, with core HICP rising to 2.8% YoY from the previous 2.7%, but the bump in yearly inflation is likely due to previous bumps in the road as the European Central Bank (ECB) grapples with whipsaw inflation prints. ECB officials noted that still-declining inflation metrics bode well for further rate cuts. Still, too-steep of an inflation easing curve is raising investor concerns of a deepening slowdown within the broader European economy.
The Euro’s bullish turnaround from two-year lows is already running into trouble as intraday bidding runs aground of the 1.0600 handle. Bullish momentum has achieved a moderate 2.5% recovery from November’s bottom bids near 1.0330, but momentum remains limited. Looking higher up, a rapidly-descending 50-day Exponential Moving Average (EMA) falling through 1.0750 while the 200-day EMA rolls over into bear country near 1.0840.
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
The EUR/CAD pair saw a slight uptick in Friday's session, climbing by 0.26% to reach 1.4825. However, despite this modest gain, the pair remains below its 20-day Simple Moving Average (SMA), having recently completed a bearish crossover between the 20 and 200-day SMAs. While buyers attempt to reclaim the 20-day SMA, indicators suggest a struggle, with the Relative Strength Index (RSI) recovering buying pressure and the Moving Average Convergence Divergence (MACD) indicating rising buying pressure and overall bullish momentum.
However, until the pair breaks above 1.4800, the short-term outlook remains negative. The mentioned crossover, combined with momentum not being entirely recovered, suggests that further gains may be limited.
The Pound Sterling clings to earlier gains yet trades off the weekly highs, which reached around 1.2749 during the European session. At the time of writing, the GBP/USD trades at 1.2684, virtually unchanged.
Although the GBP/USD is set for weekly gains of over 1.2%, price action suggests Cable didn’t find acceptance above 1.2700, which could exacerbate a pullback toward the 1.2600 figure. In that outcome, the pair’s next support would be the November 27 daily low of 1.2564, followed by the November 26 low of 1.2506. On further weakness, the November 22 pivot low of 1.2486 is on the cards.
Conversely, if GBP/USD finishes the week above 1.2700, this could pave the way for testing the 200-day Simple Moving Average (SMA) at 1.2818. However, buyers must clear the current week’s peak of 1.2749.
Oscillators such as the Relative Strength Index (RSI) hint that buyers are gathering momentum, even though the RSI remains below its neutral line.
Therefore, in the short-term, the GBP/USD upside is seen if it clears at 1.2700.
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Canadian Dollar.
USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
---|---|---|---|---|---|---|---|---|
USD | 0.06% | -0.01% | -0.93% | 0.07% | -0.12% | -0.44% | -0.08% | |
EUR | -0.06% | -0.06% | -1.01% | 0.01% | -0.18% | -0.50% | -0.14% | |
GBP | 0.00% | 0.06% | -0.97% | 0.07% | -0.12% | -0.44% | -0.08% | |
JPY | 0.93% | 1.01% | 0.97% | 1.02% | 0.81% | 0.48% | 0.86% | |
CAD | -0.07% | -0.01% | -0.07% | -1.02% | -0.20% | -0.51% | -0.15% | |
AUD | 0.12% | 0.18% | 0.12% | -0.81% | 0.20% | -0.32% | 0.04% | |
NZD | 0.44% | 0.50% | 0.44% | -0.48% | 0.51% | 0.32% | 0.36% | |
CHF | 0.08% | 0.14% | 0.08% | -0.86% | 0.15% | -0.04% | -0.36% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
GBP/JPY is trying to pierce the trendline for the uptrend since the August lows. If it is successful and decisively breaches the trendline, it will suggest a follow-through lower to a fresh downside target at 186.20, the 61.8% Fibonacci of the down move prior to the trendline (blue rectangle on chart).
The pair is now in a short and probably medium-term downtrend (since the October 31 high) and according to technical analysis lore trends have a tendency to extend, suggesting the odds favor even more downside to come.
GBP/JPY is making its way down to the next target for the pair at around 189.56, the low of the Right-Angled triangle that formed in late September and early October.
It is also possible it could bounce from the current level at the trendline which is a support level.
The Relative Strength Index (RSI) is not yet oversold which indicates the pair could still have further to fall before it gets oversold.
A decisive breach of the trendline would be one accompanied by a long red candlestick that closed near its lows and well clear of the trendline, or three consecutive red candles that breached the level.
Silver price (XAG/USD) recovers further to near $31.00 in North American session on Friday. The white metal bounced back on Thursday after posting a fresh 11-week low near $29.60. The asset strengthens as investors fear that Russia could launch a nuclear attack on Ukraine.
Russia threatens a possible nuclear-capable ballistic missile strike on Ukraine, followed by firing a series of Intermediate Range Ballistic Missiles (IRBM) on 17 targets, including defense and energy facilities. The prevailing war between Russia and Ukraine keeps the demand for safe-haven assets intact. This was the second-largest Russian attack on Ukraine, according to Ukraine's energy ministry. Historically, the safe-haven appeal of precious metals such as Silver increases at times of global market uncertainty or heightened geopolitical risks.
In the Middle East, tensions between Israel and Iran have eased, with a ceasefire coming into effect early this week.
Meanwhile, the US Dollar (USD) rebounds strongly as investors shift focus to the United States (US) labor market and business activity data, which will be released next week. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, bounces back after posting a fresh two-week low near 105.60.
Silver price rebounds strongly after sliding to near the upward-sloping trendline around $29.50, which is plotted from the February 29 low of $22.30 on a daily timeframe. Still, the outlook of the Silver price is bearish as a bear cross, represented by 20 and 50-day Exponential Moving Average (EMA) around $31.30, points to an escalation in the downside trend.
The white metal weakened after the breakdown of the horizontal support plotted from the May 21 high of $32.50.
The 14-day Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, suggesting a sideways trend.
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
EUR/JPY extends its downtrend since the Halloween peak and is within spitting distance of hitting key support at the September 30 swing low of 158.11 (red dashed line on chart).
It is now probably in a short-term downtrend and given it is a principle of technical analysis that trends have a tendency to extend themselves, the odds favor EUR/JPY falling to lower lows.
At the September 30 low the pair will probably find its feet and bounce. The Relative Strength Index (RSI) momentum indicator is in the oversold zone (below 30) on an intraday basis. If the pair closes with RSI still in oversold it will be a signal for short-holders not to add to their short positions. The risks of a pullback will also be greater.
A deeper sell-off could take EUR/JPY down to the trendline at around 157.00 or even all the way to 154.00 – 155.00, the August-September lows.
USD/JPY has breached the bottom of a bearish Broadening Formation price pattern and is falling toward the first downside target at 148.54, the 61.8% Fibonacci extrapolation of the height of the pattern extrapolated down.
Further bearishness could carry USD/JPY to the next target at 148.24, the September 2, key swing high.
The (blue) Moving Average Convergence Divergence (MACD) momentum indicator is diverging away from its red signal line – a further bearish sign.
The short-term trend has probably reversed from bullish to bearish after the breakdown. Given it is a principle of technical analysis that trends have a tendency to extend, the odds now favor more weakness in the short-term.
EUR/CHF edges lower to trade on the 0.9300 handle on Friday after the release of Eurozone inflation data continues to suggest European Central Bank (ECB) members will cut interest rates at their December meeting despite the figures meeting economists’ expectations. Lower interest rates are negative for the Euro (EUR) since they decrease net capital inflows, and this puts pressure on the pair.
The Swiss Franc (CHF) meanwhile, gains a mild tailwind after the release of Swiss Gross Domestic Product (GDP) data shows Swiss economic growth outstripped expectations, and accelerated in Q3 on a year-over-year basis. The effect is likely to be blunted, however, with comments from the President of the Swiss National Bank Martin Schlegel, last week, still fresh in traders' minds. Schlegel said that interest rates in Switzerland might fall below zero. Still, EUR/CHF has fallen into negative territory after both sets of data on the back of Swiss Franc outperformance.
The preliminary Eurozone Harmonized Index of Consumer Prices (HICP) rose 2.3% YoY in November in line with expectations and above the 2.0% of the previous month, according to data released Friday from Eurostat. Core HICP rose by 2.8%, which was also in line with expectations.
Despite appearing like inflation was rising, several analysts said the elevated November figures were almost entirely due to “base effects”. A base effect relates to the corresponding month of the previous year, if inflation was too low in that month it only requires a small rise for the data to show a large percentage increase in the current year.
“The increase in headline inflation from 2.0% in October to 2.3% in November was in line with expectations and was almost entirely caused by a base-effects driven by an increase in energy inflation,” said Jack Allen-Reynolds, deputy chief Eurozone economist at Capital Economics.
The view was shared by Anders Svendsen, chief analyst at Nordea, who said, “Inflation rises on base effects but remains on track to return to the ECB's inflation target in the first part of 2025, allowing the ECB to continue cutting policy rates towards neutral.”
Svendsen goes further to argue that inflation will likely fall to the European Central Bank’s (ECB) 2.0% target more quickly than the ECB is currently forecasting.
“Markets and the ECB agree that inflation will close in on 2% but disagrees on the timing. We believe the ECB will change its forecast to reflect an earlier return to 2% at its meeting in December. With that outlook, the ECB can continue cutting policy rates to neutral,” he writes.
Capital’s Allen-Reynolds thinks the November data marginally reduces the chance of the ECB making a double-dose 50 basis points (pbs) (0.50%) cut to rates in December, however, in spite of this, there is still a “good chance” of 50 bps reduction nevertheless, as well as lower rates further down the track.
“The continued strength of euro-zone services inflation in November reduces the chance that the ECB will cut interest rates by 50 bps in December,” yet adds, “While we think there is a good case for the ECB to cut interest rates by 50bp in December, several influential members of the Governing Council seem opposed to the idea and the strength of services inflation will arguably bolster their case. But if we’re right that services inflation will decline in December and beyond, and that the economy will remain weak, we think bigger cuts will be on the cards sooner or later.”
A further drag on the Euro is the political risk around the French budget with Prime Minister Michel Barnier struggling to get stringent budget cuts passed through parliament because of his wafer-slim majority.
The political battle highlights France’s weak fiscal position and has led to the spread in yields between French Government Bonds over German Bunds to widen by 82 bps, indicating outsized risks for French bond-holders.
“French Prime Minister Michel Barnier will have to make more concessions to the budget bill to prevent the government from falling. Far-right National Rally President Bardella stressed yesterday that “other red lines” remained. In the meantime, French political uncertainty is not spreading to the rest of the Eurozone which limits the drag on EUR.”
EUR/CHF saw limited downside pressure after Swiss GDP data, even though it would have been expected to strengthen CHF. Swiss GDP recorded a 2.0% rise in Q3 YoY, above the 1.8% forecast and the 1.8% previously. QoQ GDP rose 0.4%, in line with expectations and below the revised-down 0.6% of Q2.
The effect of the data was muted by growing expectations that the Swiss National Bank (SNB) will slash interest rates by 50 bps at its December meeting following comments from SNB President Schlegel in which he warned that negative interest rates cannot be ruled out.
“The SNB has plenty of room to slash the policy rate as Swiss inflation is tracking below the bank’s Q4 forecast of 1.0%. Market is pricing-in about 60% probability of a 50 bps rate cut to 0.50% at the December 12 meeting,” said Elias Haddad, Senior Markets Strategist at Brown Brothers Harriman (BBH).
The USD/CAD pair rebounds after posting a fresh three-day low near 1.3980 in Friday’s North American session. The Loonie pair bounces back as Statistics Canada has reported slower-than-expected Gross Domestic Product (GDP) growth in September month. The agency showed that the Canadian economy expanded by 0.1% after remaining flat in August. Economists expected the economy to have risen by 0.3%
The agency also reported that growth in the third quarter of the year was 0.3%, slower than 0.5% in the previous quarter. Meanwhile, in comparison to the third quarter of the previous year, the GDP growth was 1%, as expected, softer than the 2.2% growth in the second quarter of the current year.
Moderate expansion in the Canadian output is expected to boost expectations of more outsized interest rate cuts by the Bank of Canada (BoC). The BoC reduced its key borrowing rates by 50 bps in October.
Meanwhile, a slight recovery in the US Dollar (USD) has also pushed the Loonie pair higher. The USD recovered some of its intraday losses, suggesting that a near-term low has been formed. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, bounces back after registering a fresh two-week low near 105.60.
The correction in the US Dollar started when United States (US) President-elect Donald Trump nominated Scott Bessent to fill the position of Treasury Secretary. Market participants expect Bessent to execute Trump-stated trade policies strategically and gradually that won’t prompt inflationary pressures swiftly.
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
Canada's Gross Domestic Product (GDP) expanded at an annual rate of 1% in the third quarter, Statistics Canada reported on Friday. This reading followed the 2.2% growth recorded in the second quarter and matched the market expectation.
On a quarterly basis, the Canadian economy grew by 0.3%, while expanding by 0.1% on a monthly basis in September.
USD/CAD edged higher with the immediate reaction to this report and was last seen gaining 0.1% on the day at 1.4028.
The US Dollar (USD) trades softer on Friday on the back of concerns over Europe, with the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, extending this week’s decline and falling below the 106.00 level.
France’s budget talks are not going well, with Prime Minister Michel Barnier having to consent to too many demands from the far-right National Rally from Marine Le Pen. The budget concerns are sending French yields higher, to levels matching weaker European peripheral countries such as Greece, fueling a stronger Euro over the US Dollar.
Meanwhile, US financial markets will close early on Friday after Thanksgiving Day. US equity futures are trading flat while the US bond market opens up under thin liquidity.
The US Dollar Index (DXY) faces some more selling pressure on Friday, with one of its main components, the Euro, weighing the Index down. With the uprising in French yields and spreads, the rate gap between the US and Europe gets narrower, with the Euro catching up with the US Dollar. Pivotal support levels need to be identified, with the “Trump trade” set to pick up soon again as President-elect Donald Trump takes office in January.
With this week’s decline in the DXY, former support levels have now turned into resistance. On the upside, 106.52 (April 16 high) is the first level to watch. Should the Dollar bulls reclaim that level, 107.00 (round level) and 107.35 (October 3, 2023, high) are back on target for a retest.
If the DXY correction continues, the pivotal level at 105.53 (April 11 high) comes into play on Friday as the last man standing before heading into the 104-region. Should the DXY fall all the way towards 104.00, the big figure and the 200-day Simple Moving Average at 104.03 should catch any falling knife formation.
US Dollar Index: Daily Chart
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Crude Oil trades in the red and loses around 1% on Friday. However, it is in a continuous tight range with traders on the sidelines awaiting the outcome of the upcoming Organization of the Petroleum Exporting Countries and its allies (OPEC+) meeting on its output policy, which has been delayed to next Thursday. Markets have already priced in a delay in production normalization to the first quarter of 2025.
The US Dollar Index (DXY), which measures the performance of the US Dollar (USD) against a basket of currencies, eases further on Friday with only a handful of US market participants returning to markets after Thanksgiving Thursday. The weakening of the US Dollar comes with the narrowing of the yield gap between the US and Europe due to French yields spiking higher on political uncertainty. French Prime Minister Michel Barnier has until Monday to propose a severely reduced budget, or the far-right National Rally party of Marine Le Pen threatens to topple the French government if demands are unmet.
At the time of writing, Crude Oil (WTI) trades at $68.18 and Brent Crude at $72.03.
Crude Oil prices are still dragging, facing selling pressure and the risk of more downsides, with a constant reminder in articles and media outlets that there is a supply glut still at hand in the Oil landscape. Markets are already pricing in a simple delay of the inevitable, that supply normalization will happen at one point. The only game-changer that could push Oil prices higher would be when OPEC+ considers deepening production cuts and/or extending them for even a year.
On the upside, the pivotal level at $71.46 and the 100-day Simple Moving Average (SMA) at $72.13 are the two main resistances. The 200-day SMA at $76.22 is still far off, although it could be tested if tensions intensify further. In its rally towards that 200-day SMA, the pivotal level at $75.27 could still slow down any upticks.
On the other side, traders need to look towards $67.12 – a level that held the price in May and June 2023 – to find the first support. In case that breaks, the 2024 year-to-date low emerges at $64.75, followed by $64.38, the low from 2023.
US WTI Crude Oil: Daily Chart
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
Gold (XAU/USD) stages a bigger rebound on Friday and enters the $2,660s during the European session. A rise in safe-haven flows due to a breakdown in the Israel – Hezbollah ceasefire agreement is one of the catalysts, as is Russian President Vladimir Putin’s warning Russia could launch nuclear-capable missiles at Ukraine.
Gold experienced a drop in price of nearly 3.0% Monday on rumors Israel and Hezbollah were close to reaching a ceasefire agreement. An eventual deal emerged with both sides agreeing to a 60-day cessation of hostilities.
Gold is rebounding on Friday, however, after the ceasefire fell apart following a strike by the Israeli airforce on Hezbollah targets in southern Lebanon, who they claim were violating the ceasefire agreement.
Geopolitical risks have further ratcheted up in Ukraine after Russia left over a million inhabitants without electricity following widespread strikes on Wednesday night.
While speaking at a conference in Kazakhstan on Thursday, Putin said “he would consider further launches of Russia’s new Oreshnik medium-range ballistic missile, first fired at Ukraine’s Dnipro region last week,” according to CNN. Oreshnik’s have nuclear capability.
Diminishing tariff fears could also be impacting Gold price after reports that US President-elect Donald Trump and Mexican President Claudia Sheinbaum had a constructive phone conversation on Wednesday. This suggests a lower risk of a costly trade war between the two countries.
The implementation of higher tariffs had been viewed as inflationary for the US and expected to keep interest rates elevated. This, in turn, would be negative for non-interest-paying assets like Gold. However, now many commentators are saying that Trump’s threat to put a 25% tariff on Mexican imports is probably more a negotiating tactic than anything else and, therefore, unlikely to materialize.
A further factor supporting Gold on Friday is a weaker US Dollar (USD). The Dollar Index (DXY), which measures its value against a trade-weighted index of peers, has edged down during trading on Friday. This is positive for Gold, which is mainly priced and traded in USD.
Gold’s recovery on Thursday was partly spurred by increased bets the Fed would cut interest rates by 25 basis points (bps) at its December meeting, and whilst the expectations remain about the same, odds have not further increased as we draw to the end of the week.
The market-based probability of a rate hike is 66%, according to the CME FedWatch tool. This leaves a 34% chance the Fed will leave interest rates unchanged.
Gold extends its recovery along a major trendline and is now entering the fourth day in a row of gains. The trendline reflects the precious metal’s long-term uptrend.
Gold’s short-term trend is unclear, but it is in a medium and long-term uptrend. Given the maxim that “the trend is your friend,” the odds still favor an eventual continuation higher.
A break above $2,721 (Monday’s high) would be a bullish sign and give the green light to a continuation higher. The next target would be at $2,790, matching the previous record high.
Alternatively, a decisive break below the major trendline would likely lead to further losses, probably to the $2,536 November lows. Such a move would confirm the short-term trend as bearish.
A decisive break would be one accompanied by a long red candlestick that broke cleanly through the trendline and closed near its low – or three red candlesticks in a row that broke below the line.
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
The NZD/USD pair holds gains above the round-level support of 0.5900 in Friday’s European session. The Kiwi pair strengthens as the US Dollar Index (DXY) extends its correction after diving below the key support of 106.00 and posts a fresh two-week low near 105.60. However, it manages to recover some losses but is on track to close the week with an almost 1.5% decline.
The US Dollar (USD) weakens as the investors trim so-called ‘Trump Trades’ after United States (US) President-elect Donald Trump nominated Scott Bessent to fill the position of Treasury Secretary. Market participants expect Bessent to execute Trump-stated trade policies strategically and gradually with an intention to avoid a lethal trade war.
Going forward, investors will focus on a slew of US employment-linked data and the ISM Manufacturing and Services PMI data for November, which will be released next week. The array of economic data will influence market expectations for the Federal Reserve’s (Fed) monetary policy action in December.
According to the CME FedWatch tool, the likelihood for the Fed to cut interest rates by 25 basis points (bps) to 4.25%-4.50% in the December meeting is 66% while the rest supports leaving them unchanged.
Meanwhile, the New Zealand Dollar (NZD) performs strongly even though market participants expect the Reserve Bank of New Zealand (RBNZ) to cut interest rates again by 50 bps in its next monetary policy meeting in February 2025 after reducing by the same margin on Wednesday.
RBNZ Governor Adrian Orr kept doors for an outsize interest rate cut open but the decision will depend on economic conditions. Orr was confident about a further decline in inflationary pressures.
The Reserve Bank of New Zealand (RBNZ) announces its interest rate decision after its seven scheduled annual policy meetings. If the RBNZ is hawkish and sees inflationary pressures rising, it raises the Official Cash Rate (OCR) to bring inflation down. This is positive for the New Zealand Dollar (NZD) since higher interest rates attract more capital inflows. Likewise, if it reaches the view that inflation is too low it lowers the OCR, which tends to weaken NZD.
Read more.Last release: Wed Nov 27, 2024 01:00
Frequency: Irregular
Actual: 4.25%
Consensus: 4.25%
Previous: 4.75%
Source: Reserve Bank of New Zealand
The Reserve Bank of New Zealand (RBNZ) holds monetary policy meetings seven times a year, announcing their decision on interest rates and the economic assessments that influenced their decision. The central bank offers clues on the economic outlook and future policy path, which are of high relevance for the NZD valuation. Positive economic developments and upbeat outlook could lead the RBNZ to tighten the policy by hiking interest rates, which tends to be NZD bullish. The policy announcements are usually followed by Governor Adrian Orr’s press conference.
The Mexican Peso (MXN) seesaws between tepid gains and losses in its most-traded pairs on Friday as it stabilizes after the previous day’s rally. This came on the back of easing tariff fears after President-elect Donald Trump described his phone call with Mexican President Claudia Sheinbaum as “wonderful”, adding, “She has agreed to stop migration through Mexico.”
The Mexican Peso rebounded on Thursday as fears subsided that Donald Trump would go ahead with his threat to place 25% tariffs on goods entering America from Mexico.
President Claudia Sheinbaum’s counter-threat to raise tariffs on US imports if Trump went ahead, as well as widespread unease in the investment community about the negative consequences of such a trade war on the US economy, could indicate Trump could take a more cautious approach. Many commentators have dismissed his threats as negotiation tools to get a better trade deal out of his close neighbors rather than literal pledges.
Official data on Thursday showed that Mexico recorded its first Trade Surplus in five months in October, of $370 million. This compared positively to the $370 million deficit recorded a year ago and was well up on the $579 million Trade Deficit in September. Of non-Oil exports, those directed to the US grew by 13.9%, while exports to the rest of the world rose by 11.6%, according to data from INEGI.
The Bank of Mexico (Banxico) released the Minutes from its November meeting on Thursday. These showed that the board voted unanimously to cut interest rates to 10.25% in November compared to September when there was one dissenter, Banxico member Jonathan Heath.
The Banxico’s minutes were similar to those of September. However, they revealed a slightly more upbeat assessment of the Mexican economy.
The November meeting Minutes reported that, “Most members pointed out that during the third quarter of 2024, according to timely information, domestic productive activity is estimated to have grown at a higher rate than in the previous three quarters, when it remained practically stagnant.”
This compared to the September Minutes, when it was recorded that “All members agreed that Mexico's economic activity is undergoing a period of weakness. The majority indicated that it has registered a visible loss of dynamism since the last quarter of 2023.”
In regards to inflation, it was noted in the November Minutes that headline inflation had risen.
“All members noted that headline inflation increased in October. They pointed out that this
was due to the increase in non-core inflation, while core inflation continued declining,” recorded the November 14 meeting Minutes.
In September, members were overall positive about the downward trajectory of inflation in the economy.
“Most members agreed that Mexico's inflation outlook has been improving, after the significant
global shocks of previous years. However, they forewarned that it still faces challenges,” said the report.
A chart included in the November Minutes showing the future trajectory of Banxico’s prime interest rate based on Mexican TIIE Swaps, suggested a less steep decline in the future compared to September.
Given that maintaining elevated interest rates is positive for a currency because it increases net foreign capital inflows, the new shallower descent described in November should constitute an underpinning positive factor for MXN.
USD/MXN unfolds a down leg within the mini range (green and red dashed lines on the chart below) formed during November.
USD/MXN is probably range-bound in the short term as it oscillates within this mini range. In the medium and long term, however, it is still in an uptrend within a rising channel.
The pair is likely to continue trading up and down within the parameters of its range. The current move bottomed at 20.20 on Wednesday, but it could go even lower to support at either the 20.06 lows of wave B, the major trendline in the 19.90s, or support in the 19.70s (red dashed line).
The move is supported by the (blue) Moving Average Divergence Convergence (MACD) momentum indicator, which has entered negative territory – a bearish sign.
On the other side, a decisive break above the top of the range at 20.80 would be required to signal the start of a more bullish short-term trend in line with longer-term up cycles.
The Mexican Peso (MXN) is the most traded currency among its Latin American peers. Its value is broadly determined by the performance of the Mexican economy, the country’s central bank’s policy, the amount of foreign investment in the country and even the levels of remittances sent by Mexicans who live abroad, particularly in the United States. Geopolitical trends can also move MXN: for example, the process of nearshoring – or the decision by some firms to relocate manufacturing capacity and supply chains closer to their home countries – is also seen as a catalyst for the Mexican currency as the country is considered a key manufacturing hub in the American continent. Another catalyst for MXN is Oil prices as Mexico is a key exporter of the commodity.
The main objective of Mexico’s central bank, also known as Banxico, is to maintain inflation at low and stable levels (at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%). To this end, the bank sets an appropriate level of interest rates. When inflation is too high, Banxico will attempt to tame it by raising interest rates, making it more expensive for households and businesses to borrow money, thus cooling demand and the overall economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.
Macroeconomic data releases are key to assess the state of the economy and can have an impact on the Mexican Peso (MXN) valuation. A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only does it attract more foreign investment but it may encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this strength comes together with elevated inflation. However, if economic data is weak, MXN is likely to depreciate.
As an emerging-market currency, the Mexican Peso (MXN) tends to strive during risk-on periods, or when investors perceive that broader market risks are low and thus are eager to engage with investments that carry a higher risk. Conversely, MXN tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
The USD/CAD pair discovers some support near 1.3980 in Friday’s European session. The Loonie pair gauges cushion as the US Dollar (USD) rebounds after posting a fresh two-week low, with the US Dollar Index (DXY) getting some buying interest near 105.60.
The Greenback faces an intense sell-off this week after rallying for almost 12 weeks as the nomination of Scott Bessent for the role of United States (US) Treasury Secretary by President-elect Donald Trump forced traders to trim so-called ‘Trump Trades’.
Bessent’s comments in his interview with the Financial Times (FT) last weekend indicated that he will focus on enacting Trump’s economic agenda without hampering geopolitical harmony. He also favored a reduction in fiscal deficit to 3% Gross Domestic Product (GDP), a scenario that won’t be inflationary for the US economy.
However, market experts are confident about the US Dollar’s outlook. Analysts at Brown Brothers Harriman said in a note, “The US dollar falls against other major currencies as end-of-month portfolio rebalancing weighs on the currency.” They added, “The more favorable US economic outlook relative to other major economies suggests the fundamental dollar uptrend is intact.”
Think tanks of financial markets are upbeat over the US economic outlook, given its strong GDP growth and potential Trump tariff policy, which would boost demand for domestically-produced goods and services.
In Friday’s session, investors await Canada’s September month and Q3 GDP data, which will be published at 13:30 GMT. The Canadian GDP is estimated to have grown by 0.3% after remaining flat in August. On a year-on-year basis, the economy is expected to have expanded by 1% slower than 2.1% growth in the previous quarter of this year.
Weak GDP numbers would boost expectations for the Bank of Canada (BoC) to cut interest rates again by 50 basis points (bps) in the December monetary policy meeting. The BoC also reduced its key borrowing rates by 50 bps in October.
The Gross Domestic Product (GDP), released by Statistics Canada on a monthly and quarterly basis, is a measure of the total value of all goods and services produced in Canada during a given period. The GDP is considered as the main measure of Canada’s economic activity. The data is expressed at an annualized rate, which means that the rate has been adjusted to reflect the amount GDP would have changed over a year’s time, had it continued to grow at that specific rate. Generally, a high reading is seen as bullish for the Canadian Dollar (CAD), while a low reading is seen as bearish.
Read more.Next release: Fri Nov 29, 2024 13:30
Frequency: Quarterly
Consensus: 1%
Previous: 2.1%
Source: Statistics Canada
The Pound Sterling (GBP) refreshes a two-week high near 1.2750 against the US Dollar (USD) in Friday’s European session. The GBP/USD pair strengthens as the US Dollar extends this week’s decline in a thin volume trading day due to the Thanksgiving holidays. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, corrects further and posts a fresh more than two-week low near 105.60.
The US Dollar is on course to end the week with a near 1.5% decline. The correction in the US Dollar started on Monday after United States (US) President-elect Donald Trump nominated seasoned hedge fund manager Scott Bessent to fill the position of Treasury Secretary.
Investors watered down the so-called ‘Trump trades’ after financial market participants regarded Bessent as a “safe pair of hands”. In an interview with the Financial Times (FT) last weekend, Bessent said he will focus on enacting Trump’s tariffs but will be “layered in” gradually, a scenario that would maintain geopolitical steadiness. Also, Bessent preferred to reduce the budget deficit to 3% of Gross Domestic Product (GDP), a move that will maintain fiscal discipline.
Going forward, the US Dollar will be guided by market expectations for the Federal Reserve (Fed) interest rate action in the December meeting and next year. According to the CME FedWatch tool, the probability that the Fed will cut interest rates by 25 bps to the 4.25%-4.50% range in the December meeting is 66%, while the rest supports leaving them unchanged. For 2025, traders price in a 75-bps interest rate reduction by the year-end, Reuters reported.
The Pound Sterling posts a fresh two-week high near 1.2750 against the US Dollar on Friday. The GBP/USD pair extends its upside after breaking above the November 20 high of 1.2714 but struggles to sustain above the 20-day Exponential Moving Average (EMA), which trades around 1.2725. The recovery move in the Cable was initiated after finding buying interest near the upward-sloping trendline around 1.2550 earlier this week, which is plotted from the October 2023 low around 1.2040. Before that, the pair had a one-sided fall from more than a two-year high above 1.3400.
The 14-day Relative Strength Index (RSI) rebounds after turning oversold. However, the downside bias is still intact.
Looking down, the pair is expected to find a cushion near the upward-sloping trend line around 1.2600, followed by the psychological support of 1.2500. On the upside, the 200-day EMA around 1.2830 will act as key resistance.
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
The Eurozone Harmonized Index of Consumer Prices (HICP) increased at an annual rate of 2.3% in November after reporting a 2.0% growth in October, the official data released by Eurostat showed Friday. The reading matched the market forecast of 2.3% in the reported period.
The Core HICP rose 2.8% YoY in November, a tad quicker than the 2.7% increase in October and met the 2.8% estimate.
On a monthly basis, the bloc’s HICP dropped 0.3% in November compared to October’s 0.3% acceleration. The core HICP inflation came in at -0.6% MoM in the same period versus October’s 0.2%.
The European Central Bank’s (ECB) inflation target is 2.0%. The old continent’s HICP inflation data significantly impacts the market’s pricing of the ECB's future interest rate cuts.
Looking at the main components of euro area inflation, services is expected to have the highest annual rate in November (3.9%, compared with 4.0% in October), followed by food, alcohol & tobacco (2.8%, compared with 2.9% in October), non-energy industrial goods (0.7%, compared with 0.5% in October) and energy (-1.9%, compared with -4.6% in October).
Mixed Eurozone inflation data have little to no impact on the Euro, with EUR/USD defending bids near 1.0560 as of writing. The pair is up 0.05% on the day.
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the US Dollar.
USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
---|---|---|---|---|---|---|---|---|
USD | -0.02% | -0.01% | -0.86% | -0.11% | -0.09% | -0.35% | -0.19% | |
EUR | 0.02% | 0.02% | -0.86% | -0.09% | -0.06% | -0.33% | -0.17% | |
GBP | 0.00% | -0.02% | -0.90% | -0.11% | -0.08% | -0.35% | -0.21% | |
JPY | 0.86% | 0.86% | 0.90% | 0.76% | 0.77% | 0.50% | 0.65% | |
CAD | 0.11% | 0.09% | 0.11% | -0.76% | 0.01% | -0.24% | -0.10% | |
AUD | 0.09% | 0.06% | 0.08% | -0.77% | -0.01% | -0.27% | -0.12% | |
NZD | 0.35% | 0.33% | 0.35% | -0.50% | 0.24% | 0.27% | 0.14% | |
CHF | 0.19% | 0.17% | 0.21% | -0.65% | 0.10% | 0.12% | -0.14% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Most recent article: Silver price today: Silver falls, according to FXStreet data
Silver prices (XAG/USD) rose on Friday, according to FXStreet data. Silver trades at $30.66 per troy ounce, up 1.29% from the $30.27 it cost on Thursday.
Silver prices have increased by 28.85% since the beginning of the year.
Unit measure | Silver Price Today in USD |
---|---|
Troy Ounce | 30.66 |
1 Gram | 0.99 |
The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 86.73 on Friday, down from 87.23 on Thursday.
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
(An automation tool was used in creating this post.)
The latest monthly Consumer Expectations Survey by the European Central Bank showed on Friday that Eurozone inflation is seen slightly higher for the year ahead in October.
Median inflation expectations for the next 12 months picked up to 2.5% from 2.4% previously.
Expectations for three years ahead remained unchanged at 2.1%.
Consumers became more pessimistic on growth, as expectations for the next 12 months fell to -1.1% from -0.9% seen in September.
In line with this growing pessimism, nominal income growth expectations decreased to 1.1% from 1.3%,
EUR/USD is off the weekly highs of 1.0597, currently trading 0.22% higher on the day at 1.0578 as of writing.
The AUD/USD pair trims a part of intraday gains to a multi-day top and trades just above the 0.6500 psychological mark during the first half of the European session on Friday, up for the third consecutive day.
The US Dollar (USD) struggles to capitalize on Thursday's modest gains and touches a fresh two-week low amid bets for another 25 basis points interest rate cut by the Federal Reserve (Fed) in December. This is seen as a key factor lending support to the AUD/USD pair, though bulls seem reluctant amid worries that US President-elect Donald Trump's tariff plans could trigger a US-China trade war.
Meanwhile, the US Personal Consumption Expenditure (PCE) Price Index released on Wednesday showed that the progress in lowering inflation stalled in October. This comes on top of the growing market conviction that Trump's expansionary policies will boost inflation, which should restrict the Fed from easing its policy further. This helps limit the USD losses and caps the AUD/USD pair.
Apart from this, persistent geopolitical tensions stemming from the protracted Russia-Ukraine war warrant some caution before placing aggressive bullish bets around the risk-sensitive Aussie. In the absence of any relevant market-moving economic data from the US on Friday, the AUD/USD pair remains at the mercy of the USD price dynamics and seems poised to end the week on a flattish note.
That said, the official Chinese PMIs, due for release over the weekend, will play a key role in influencing sentiment surrounding the China-proxy Australian Dollar (AUD). The focus will then shift to important US macro data scheduled at the beginning of a new month, including the closely watched Nonfarm Payrolls (NFP) report, and the third quarter Australian GDP growth figures next week.
The NBS Manufacturing Purchasing Managers Index (PMI), released by the China Federation of Logistics & Purchasing (CFLP) and China’s National Bureau of Statistics (NBS), is a leading indicator gauging business activity in China’s manufacturing sector. The data is derived from surveys of senior executives at manufacturing companies. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the Renminbi (CNY). Meanwhile, a reading below 50 signals that activity among goods producers is generally declining, which is seen as bearish for CNY.
Read more.Next release: Sat Nov 30, 2024 01:30
Frequency: Monthly
Consensus: 50.3
Previous: 50.1
The monthly manufacturing PMI is released by China Federation of Logistics and Purchasing (CFLP) on the last day of every month. The official PMI is released before the Caixin Manufacturing PMI, which makes it even more of a leading indicator, highlighting the health of the manufacturing sector, considered as the backbone of the Chinese economy. The data is of high relevance for the financial markets throughout several asset classes, given China’s influence on the global economy.
West Texas Intermediate (WTI) Oil price retraces its recent gains, trading around $68.40 per barrel during the early European hours on Friday. However, this downside of the crude Oil prices could be restrained as markets assess reports that Israel and Hezbollah exchanged accusations of breaching the ceasefire agreement.
Additionally, reports suggest that Russian President Vladimir Putin warned of a possible nuclear-capable ballistic missile strike on Ukraine, following Moscow's recent large-scale attacks on key energy infrastructure.
Traders remained cautious, seeking clarity on the production strategy of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) after a four-day postponement of a key meeting. At the rescheduled meeting on December 5, the alliance will deliberate on whether to proceed with restoring supplies or extend production cuts into 2025 to avoid oversupplying the global market.
Markets are keeping a close watch on upcoming US data for insights into the Federal Reserve's (Fed) monetary policy outlook. Rising borrowing costs in the United States (US), the world’s largest Oil consumer, weigh on economic activity, subsequently reducing Oil demand.
On Wednesday, US core PCE prices for October met expectations, keeping investor hopes alive for another rate cut in December. However, other data indicated a resilient economy, suggesting that the Fed may take a cautious approach in the coming year.
According to the CME FedWatch Tool, futures traders are now pricing in a 66.5% probability of a 25 basis point rate cut in December, up from 55.9% a week ago. However, they expect the Fed to keep rates unchanged during its January and March meetings.
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
EUR/USD posts a fresh weekly high near 1.0580 in the European session on Friday ahead of the flash Eurozone Harmonized Index of Consumer Prices (HICP) data for November, which will be published at 10:00 GMT. The inflation report is expected to show that the annual headline and core HICP – which excludes volatile food and energy prices – accelerated to 2.3% and 2.8%, respectively.
Investors will pay close attention to the inflation report to get fresh cues about the European Central Bank’s (ECB) likely interest rate cut size in the December meeting. The ECB has already reduced its Deposit Facility Rate by 75 basis points (bps) to 3.25% this year.
Traders expect the ECB to cut its key borrowing rates at least by 25 bps in the December meeting. For 2025, traders see the ECB cutting interest rates in every meeting through June, pushing the Rate on Deposit Facility lower to 1.75% by the year-end, according to Reuters.
Market speculation for the ECB to cut interest rates by a larger-than-usual size of 50 bps is upbeat as officials are worried about growing economic risks. The two largest economies of the Eurozone, Germany and France, are going through a rough phase due to political uncertainty, a scenario that slows down government spending activities.
Also, weak German Retail Sales data for October points to economic stagnation. Month-on-month Retail Sales contracted by 1.5% after rising 1.2% in September. Economists expected the Retail Sales data, a key measure of consumer spending, to decline at a slower pace of 0.3%. On year, the consumer spending measure rose by 1%, slower than estimates of 3.2% and the prior release of 3.8%.
ECB Governing Council member and Governor of Bank of France François Villeroy de Galhau kept the option of an outsize interest rate cut on the table in his speech on Thursday. “Seen from today, there is every reason to cut on December 12. Optionality should remain open on the size of the cut, depending on incoming data, economic projections, and our risk assessment,” Villeroy said.
EUR/USD extends its upside to near 1.0580 on Friday. The recovery in the major currency pair appears to be a mean-reversion move, which could extend to near the 20-day Exponential Moving Average (EMA) around 1.0600. Still, the broader outlook would remain bearish as all short-to-long-term day EMAs are declining, pointing to a downside trend.
The 14-day Relative Strength Index (RSI) rebounded after conditions turned oversold and climbed above 40.00, suggesting that the bearish momentum has faded. However, the bearish trend has not been extinguished.
Looking down, the November 22 low of 1.0330 will be a key support for Euro bulls. On the flip side, the 50-day EMA near 1.0747 will be the key barrier.
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
EUR/GBP extends its losses for the fourth consecutive session, trading around 0.8310 during the Asian hours on Friday. The Pound Sterling (GBP) appreciates as traders have been scaling back their bets for another interest rate cut by the Bank of England (BoE) this year after data released last week showed that the underlying price growth in the UK gathered speed in October.
On Monday, during a speech at King’s Business School, BoE Deputy Governor Clare Lombardelli stressed the need for clearer signs of easing inflationary pressures before considering further rate cuts. Lombardelli also warned of the risks associated with inflation staying above the BoE’s target. She highlighted concerns about wage growth stabilizing at 3.5%-4.0% and the Consumer Price Index (CPI) lingering around 3% instead of the 2% target, which could present significant policy challenges.
Economic data releases remain sparse for the United Kingdom (UK), with a similarly light calendar expected in the coming week. The Bank of England’s (BoE) latest Financial Stability Report will drop on markets early during Friday’s upcoming US market session. The release is overwhelmingly unlikely to drive much momentum in Cable markets.
European Central Bank (ECB) policymakers have voiced concerns over the Eurozone's slowing economic growth, heightening expectations of a rate cut in December. However, uncertainty persists regarding the size of the potential reduction, as the market remains divided.
Traders are now closely watching Friday’s release of the Eurozone Harmonized Index of Consumer Prices (HICP) data. Core HICP inflation is projected to edge up to 2.8% YoY in November, compared to 2.7% in October. This uptick could complicate matters for ECB officials, many of whom have recently sought to reassure investors of more rate cuts despite rising inflationary pressures.
The Retail Sales released by the Statistisches Bundesamt Deutschland is a measure of changes in sales of the German retail sector. It shows the performance of the retail sector in the short term. Percent changes reflect the rate of changes of such sales.The changes are widely followed as an indicator of consumer spending. The positive economic growth anticipates "Bullish" for the EUR, while a low reading is seen as negative, or bearish, for the EUR.
Read more.Last release: Fri Nov 29, 2024 07:00
Frequency: Monthly
Actual: 1%
Consensus: 3.2%
Previous: 3.8%
Here is what you need to know on Friday, November 29:
The US Dollar (USD) stays under selling pressure on Friday, with the USD Index dropping to its weakest level in over two weeks below 106.00. The US economic calendar will not feature any high-tier data releases and financial markets in the US will close early. Harmonized Index of Consumer Price (HICP) data from the Eurozone and third-quarter Gross Domestic Product (GDP) data from Canada will be watched closely by investors.
Following the Thanksgiving Day holiday, US stock index futures gain traction early Friday and the benchmark 10-year US Treasury bond yield continues to push lower toward 4.2%, making it difficult for the USD to find demand.
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the Japanese Yen.
USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
---|---|---|---|---|---|---|---|---|
USD | -1.49% | -1.49% | -2.61% | 0.20% | -0.23% | -1.07% | -1.21% | |
EUR | 1.49% | -0.17% | -1.75% | 1.11% | 1.19% | -0.15% | -0.32% | |
GBP | 1.49% | 0.17% | -1.58% | 1.28% | 1.37% | 0.02% | -0.15% | |
JPY | 2.61% | 1.75% | 1.58% | 2.90% | 2.89% | 1.66% | 1.62% | |
CAD | -0.20% | -1.11% | -1.28% | -2.90% | -0.28% | -1.25% | -1.45% | |
AUD | 0.23% | -1.19% | -1.37% | -2.89% | 0.28% | -1.33% | -1.49% | |
NZD | 1.07% | 0.15% | -0.02% | -1.66% | 1.25% | 1.33% | -0.17% | |
CHF | 1.21% | 0.32% | 0.15% | -1.62% | 1.45% | 1.49% | 0.17% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
During the Asian trading hours, the data from Japan showed that the Tokyo Consumer Price Index rose by 2.6% on a yearly basis in November, up sharply from the 1.8% increase recorded in October. Other data revealed that the Unemployment Rate edged higher to 2.5% in October from 2.4% and the annual Industrial Production contracted by 2.6%. After posting small gains on Thursday, USD/JPY turned south early Friday and was last seen trading at its lowest level since late October near 150.00, losing about 1% on the day.
Following Thursday's indecisive action, EUR/USD benefits from the renewed USD weakness and rises toward 1.0600 in the European morning on Friday. The data from Germany showed on Thursday that the Consumer Price Index (CPI) declined by 0.2% on a monthly basis in November's flash estimate, matching the market expectation.
GBP/USD gains traction in the European morning and trades in positive territory above 1.2700. The pair remains on track to snap an eight-week losing streak.
Canada's GDP is forecast to expand at an annual rate of 1% in the third quarter after growing 2.1% in the second quarter. Following the upsurge seen earlier in the week, USD/CAD closed the previous two days in negative territory. The pair extends its slide early Friday and trades below 1.4000.
Gold gathers bullish momentum amid retreating US T-bond yields and trades above $2,660 in the European morning on Friday, rising about 1% on the day.
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
The AUD/JPY cross attracts some sellers to around 97.75 during the early European trading hours on Friday. The Japanese Yen (JPY) gains momentum after data released on Friday showed that Japan’s Tokyp Consumer Price Index (CPI) accelerated for the first time in three months, supporting the case for another interest rate hike by the Bank of Japan (BoJ) in December.
According to the 4-hour chart, the bearish sentiment of AUD/JPY remains intact as the cross holds below the key 100-period Exponential Moving Average (EMA). The downward momentum is supported by the Relative Strength Index (RSI), which stands below the midline. Nonetheless, the oversold RSI condition indicates that further consolidation cannot be ruled out before positioning for any near-term AUD/JPY depreciation.
The initial support level for the cross emerges near the lower limit of the Bollinger Band at 97.45. Further south, the next contention level is seen at 96.60, the low of September 4. The additional downside filter to watch is 96.00, the low of September 19 and the psychological level.
On the bright side, the first upside barrier for the cross is located at 98.76, the high of November 28. Any follow-through buying above this level could pave the way to the 99.00 round mark. Further north, the next hurdle is seen at 99.49, the low of November 19. The 100.00 psychological appears to be a tough nut to crack for the bulls.
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six other major currencies, falls below 106.00 during the Asian hours on Friday, with 2-year and 10-year bond yields standing at 4.21% and 4.23%, respectively, at the time of writing.
The US Dollar faces downward pressure as US Treasury yields decline, driven by rising bond prices following President-elect Donald Trump’s appointment of Wall Street veteran and fiscal conservative Scott Bessent as the next US Treasury Secretary.
Markets are closely monitoring upcoming US data for further clues about the Federal Reserve's (Fed) monetary policy direction. On Wednesday, US core PCE prices for October met expectations, keeping investor hopes alive for another rate cut in December. However, other data indicated a resilient economy, suggesting that the Fed may take a cautious approach in the coming year.
The latest Federal Open Market Committee's (FOMC) Meeting Minutes for the policy meeting held on November 7, indicated that policymakers are adopting a cautious stance on cutting interest rates, citing easing inflation and a robust labor market.
According to the CME FedWatch Tool, futures traders are now pricing in a 66.5% probability of a 25 basis point rate cut in December, up from 55.9% a week ago. However, they expect the Fed to keep rates unchanged during its January and March meetings.
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Japanese Yen.
USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
---|---|---|---|---|---|---|---|---|
USD | -0.13% | -0.16% | -0.84% | -0.17% | -0.18% | -0.30% | -0.16% | |
EUR | 0.13% | -0.04% | -0.75% | -0.03% | -0.05% | -0.18% | -0.03% | |
GBP | 0.16% | 0.04% | -0.73% | -0.00% | -0.01% | -0.14% | 0.00% | |
JPY | 0.84% | 0.75% | 0.73% | 0.69% | 0.67% | 0.53% | 0.68% | |
CAD | 0.17% | 0.03% | 0.00% | -0.69% | -0.02% | -0.14% | 0.00% | |
AUD | 0.18% | 0.05% | 0.01% | -0.67% | 0.02% | -0.13% | 0.01% | |
NZD | 0.30% | 0.18% | 0.14% | -0.53% | 0.14% | 0.13% | 0.14% | |
CHF | 0.16% | 0.03% | -0.00% | -0.68% | -0.01% | -0.01% | -0.14% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
FX option expiries for Nov 29 NY cut at 10:00 Eastern Time via DTCC can be found below.
EUR/USD: EUR amounts
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USD/CAD: USD amounts
The USD/CHF pair loses ground to near 0.8815 during the early European session on Friday, weighed by the softer US Dollar (USD) broadly. Traders await Switzerland’s Gross Domestic Product (GDP) for the third quarter (Q3), which is due later on Friday.
The Greenback weakens as the profit-taking sets in before a long Thanksgiving weekend. The encouraging US economic data and the cautious stance from the US Federal Reserve (Fed) might support the USD in the near term. The FOMC Minutes released on Tuesday showed that Fed officials see interest rate cuts ahead but at a gradual pace as inflation eases and the labor market remains strong.
Switzerland’s third-quarter GDP report will take center stage on Friday. The Swiss economy is expected to expand by 0.4% QoQ in Q3, compared to 0.7% growth in the second quarter. On an annual basis, the Swiss GDP is estimated to remain steady at 1.8% in Q3. In case of a weaker-than-expected outcome, this could undermine the Swiss Franc (CHF) and act as a tailwind for USD/CHF.
Elsewhere, Russia on Thursday unleashed its second big attack on Ukraine's energy infrastructure this month, triggering deep power cuts across the country. An escalation in the Russia-Ukraine war could boost the safe-haven currency like the CHF against the Greenback.
The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.
The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.
The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.
As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
Silver (XAG/USD) continues its upward trend for the second consecutive session, hovering around $30.70 during the Asian trading hours on Friday. This rally in Silver price is largely driven by escalating geopolitical tensions. Reports suggest that Russian President Vladimir Putin warned of a possible nuclear-capable ballistic missile strike on Ukraine, following Moscow's recent large-scale attacks on key energy infrastructure.
Meanwhile, a ceasefire between Israel and the Lebanese militant group Hezbollah was successfully maintained on Wednesday, thanks to a deal brokered by the United States and France. This truce has enabled residents to begin returning to their homes. However, Israel is still engaged in military operations against Hamas in the Gaza Strip.
Furthermore, the weakening of the US Dollar (USD) is making dollar-denominated Silver more affordable for buyers with foreign currencies, boosting its demand. Additionally, the US bond market has strengthened after US President-elect Donald Trump selected Wall Street veteran and fiscal conservative Scott Bessent as the US Treasury Secretary.
Markets are closely monitoring upcoming US data for further clues about the Federal Reserve's (Fed) monetary policy direction. On Wednesday, US core PCE prices for October met expectations, keeping investor hopes alive for another rate cut in December. However, other data indicated a resilient economy, suggesting that the Fed may take a cautious approach in the coming year.
According to the CME FedWatch Tool, futures traders are now pricing in a 66.5% probability of a 25 basis point rate cut in December, up from 55.9% a week ago. However, they expect the Fed to keep rates unchanged during its January and March meetings.
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
The EUR/USD pair regains positive traction following the previous day's modest downtick and climbs back closer to the weekly top during the Asian session on Friday. Spot prices, however, remain below the 1.0600 mark, which if cleared decisively should set the stage for an extension of the recent recovery from a two-year low touched last Friday.
The US Dollar (USD) struggles to capitalize on Thursday's modest gains and touches a fresh two-week low amid bets for another 25 basis points interest rate cut by the Federal Reserve (Fed) in December. This, in turn, is seen as a key factor lending support to the EUR/USD pair, though bulls seem reluctant ahead of the Eurozone consumer inflation figures. The data could offer hints on the European Central Bank's (ECB) next policy move, which, in turn, will drive demand for the shared currency and determine the next leg of a directional move for the currency pair.
In the meantime, hawkish comments from ECB's Isabel Schnabel earlier this week, which forced investors to scale back their bets for a more aggressive easing in December, underpins the shared currency and acts as a tailwind for the EUR/USD pair. The markets, however, are still pricing in a small chance for a 50 bps rate cut next month. The expectations were lifted by the release of flash German consumer inflation figures on Thursday, which rose less than expected in November. This, in turn, warrants some caution before placing fresh bullish around the pair.
Furthermore, expectations that US President-elect Donald Trump's expansionary policies will boost inflation and limit the scope for the Fed to cut rates further, along with geopolitical risk, might help limit losses for the safe-haven buck. This further makes it prudent to wait for strong follow-through buying and acceptance above the 1.0600 mark before positioning for an extension of the EUR/USD pair's multi-day-old uptrend. Nevertheless, spot prices remain on track to snap a three-week losing streak and end on a positive note heading into the weekend.
The Core Harmonized Index of Consumer Prices (HICP) measures changes in the prices of a representative basket of goods and services in the European Monetary Union. The HICP, – released by Eurostat on a monthly basis, is harmonized because the same methodology is used across all member states and their contribution is weighted. The YoY reading compares prices in the reference month to a year earlier. Core HICP excludes volatile components like food, energy, alcohol, and tobacco. The Core HICP is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as bullish for the Euro (EUR), while a low reading is seen as bearish.
Read more.Next release: Fri Nov 29, 2024 10:00 (Prel)
Frequency: Monthly
Consensus: 2.8%
Previous: 2.7%
Source: Eurostat
Gold prices rose in India on Friday, according to data compiled by FXStreet.
The price for Gold stood at 7,226.99 Indian Rupees (INR) per gram, up compared with the INR 7,173.99 it cost on Thursday.
The price for Gold increased to INR 84,294.86 per tola from INR 83,676.01 per tola a day earlier.
Unit measure | Gold Price in INR |
---|---|
1 Gram | 7,226.99 |
10 Grams | 72,270.47 |
Tola | 84,294.86 |
Troy Ounce | 224,784.80 |
FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
(An automation tool was used in creating this post.)
The GBP/USD pair gains some follow-through positive traction during the Asian session on Friday and touches a two-week top, around the 1.2715 region in the last hour. Spot prices have now rallied over 200 pips from the weekly trough and look to build on the recent recovery from sub-1.2500 levels, or the lowest since May 2024 touched last Friday amid subdued US Dollar (USD) demand.
The USD Index (DXY), which tracks the Greenback against a basket of currencies, struggles to capitalize on the overnight modest gains and languishes near a two-week low amid bets for another interest rate cut by the Federal Reserve (Fed) in December. In fact, the current market pricing indicates a 70% chance that the US Central Bank will lower borrowing costs by 25 basis points next month. This, along with the recent decline in the US Treasury bond yields, keeps the USD bulls on the defensive and turns out to be a key factor acting as a tailwind for the GBP/USD pair.
Meanwhile, traders have been scaling back their bets for another interest rate cut by the Bank of England (BoE) this year after data released last week showed that the underlying price growth in the UK gathered speed in October. This further contributes to the British Pound's (GBP) relative outperformance against its American counterpart and validates the positive outlook for the GBP/USD pair. However, a combination of factors might hold back traders from placing aggressive bearish bets around the USD and cap any meaningful appreciating move for the currency pair.
The US PCE data released on Wednesday showed that the progress in lowering inflation in the US stalled in October. Moreover, investors now seem convinced that US President-elect Donald Trump's expansionary policies will boost inflation. This comes on top of hawkish FOMC meeting minutes earlier this week, which revealed that the Committee could pause its easing of the policy rate if inflation remained elevated. Apart from this, geopolitical risks and trade war fears could benefit the Greenback's relative safe-haven status and cap the upside for the GBP/USD pair.
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Euro.
USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
---|---|---|---|---|---|---|---|---|
USD | -0.18% | -0.21% | -1.02% | -0.23% | -0.32% | -0.38% | -0.20% | |
EUR | 0.18% | -0.03% | -0.81% | -0.04% | -0.15% | -0.20% | -0.02% | |
GBP | 0.21% | 0.03% | -0.80% | -0.03% | -0.12% | -0.17% | 0.00% | |
JPY | 1.02% | 0.81% | 0.80% | 0.76% | 0.66% | 0.59% | 0.79% | |
CAD | 0.23% | 0.04% | 0.03% | -0.76% | -0.09% | -0.14% | 0.04% | |
AUD | 0.32% | 0.15% | 0.12% | -0.66% | 0.09% | -0.06% | 0.12% | |
NZD | 0.38% | 0.20% | 0.17% | -0.59% | 0.14% | 0.06% | 0.18% | |
CHF | 0.20% | 0.02% | -0.01% | -0.79% | -0.04% | -0.12% | -0.18% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
NZD/USD recovers from its recent losses, trading around 0.5910 during the Asian session on Friday. A closer look at the daily chart suggests a potential shift in momentum from a bearish to a bullish bias, as the pair has broken above the descending wedge pattern. Simultaneously, another descending channel pattern has formed, and a breakout above this channel would further strengthen the bullish outlook.
Additionally, NZD/USD has moved above both the nine- and 14-day Exponential Moving Averages (EMAs), indicating strength in short-term price momentum. However, the 14-day Relative Strength Index (RSI) remains below the 50 level, suggesting that the prevailing bearish sentiment is still in play. A move above the 50 level would confirm a shift to bullish sentiment.
On the upside, NZD/USD is testing the upper boundary of the descending channel pattern at the 0.5920 level. A break above this level could pave the way for the pair to target the psychological 0.6000 level, followed by minor resistance at 0.6038.
Immediate support for NZD/USD lies at the 14- and nine-day EMAs at 0.5892 and 0.5883, respectively. A break below these levels could exert downward pressure on the pair, with the next key "throwback support" level of 0.5850, followed by a two-year low at 0.5772, last seen in November 2023.
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the strongest against the US Dollar.
USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
---|---|---|---|---|---|---|---|---|
USD | -0.15% | -0.18% | -0.90% | -0.20% | -0.29% | -0.36% | -0.17% | |
EUR | 0.15% | -0.04% | -0.79% | -0.05% | -0.13% | -0.22% | -0.02% | |
GBP | 0.18% | 0.04% | -0.76% | -0.02% | -0.11% | -0.18% | 0.01% | |
JPY | 0.90% | 0.79% | 0.76% | 0.73% | 0.62% | 0.54% | 0.74% | |
CAD | 0.20% | 0.05% | 0.02% | -0.73% | -0.10% | -0.17% | 0.03% | |
AUD | 0.29% | 0.13% | 0.11% | -0.62% | 0.10% | -0.07% | 0.12% | |
NZD | 0.36% | 0.22% | 0.18% | -0.54% | 0.17% | 0.07% | 0.19% | |
CHF | 0.17% | 0.02% | -0.01% | -0.74% | -0.03% | -0.12% | -0.19% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
Gold price (XAU/USD) spikes to a four-day top, around the $2,662-2,663 area during the Asian session on Friday as geopolitical risks and trade war fears continue to boost demand for safe-haven assets. Adding to this, bets that the Federal Reserve (Fed) will lower borrowing costs again in December and the recent decline in the US Treasury bond yields offer additional support to the non-yielding yellow metal.
Meanwhile, the US Dollar (USD) languishes near a two-week low amid the prospects for more rate cuts by the Fed and turns out to be another factor benefiting the Gold price. That said, the US Personal Consumption Expenditure (PCE) Price Index pointed to stalling inflation progress, suggesting that the Fed might slow its rate-cutting cycle. This could act as a tailwind for the USD and cap gains for the XAU/USD.
From a technical perspective, an intraday breakout above the $2,649-2,650 confluence hurdle – comprising the 100-hour Simple Moving Average (SMA) and the 38.2% Fibonacci retracement level of the weekly decline – was seen as a key trigger for bulls. The subsequent move up, however, stalls near the $2,663-2,664 region, which coincides with the 50% retracement level and should act as a pivotal point. Some follow-through buying has the potential to lift the Gold price to the $2,677 region, or the 61.8% Fibo. level, en route to the $2,700 round figure.
On the flip side, the $2,650 confluence resistance breakpoint now seems to protect the immediate downside, below which the Gold price could slide back to the $2,633 area (23.6% Fibo. level) and the overnight swing low, around the $2,620 region. The next relevant support is pegged near the monthly trough, around the $2,605 region. Some follow-through selling below the $2,600 mark should pave the way for deeper losses towards the 100-day SMA, currently pegged near the $2,573 area, en route to the monthly low, around the $2,537-2,536 region.
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
The Indian Rupee (INR) extends its decline near its all-time low on Friday. The rise in US Treasury bond yields, the month-end US Dollar (USD) demand and Foreign Portfolio Investors (FPIs) selling domestic equities exert some selling pressure on the local currency. Despite these challenges, the Reserve Bank of India (RBI) is likely to routinely intervene in the foreign exchange (forex) market by selling USD to prevent the INR from depreciating amidst global volatility.
Later on Friday, India's Federal Fiscal Deficit for October and Gross Domestic Product (GDP) growth data for the July-September 2024 quarter (Q2 FY25) will be in the spotlight. If the GDP report shows a stronger-than-expected outcome, this could help limit the INR's losses.
The Indian Rupee softens on the day. The strong uptrend of the USD/INR pair prevails, with the price holding above the key 100-day Exponential Moving Average (EMA) on the daily timeframe. The 14-day Relative Strength Index stands above the midline near 62.90, suggesting that the support is likely to hold rather than break.
In the bullish case, the crucial resistance level emerges at the 84.50-84.55 region. Consistent trading above this level could attract enough momentum traders to push USD/INR to the 85.00 psychological mark.
On the flip side, sustained trading below the lower limit of the trend channel of 84.27 could open the possibility of a retest of 83.96, the 100-day EMA. A break below the mentioned level could lead to a downside breakout. The next support level to watch is 83.65, the low of August 1.
The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee.
The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference.
Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee.
Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
The EUR/JPY pair loses momentum, trading around 158.80 during Friday's Asian session, as the Japanese Yen (JPY) gains strength. This follows the release of Japan's Tokyo Consumer Price Index (CPI) data for November, which exceeded expectations.
Headline Tokyo CPI rose by 2.6% year-over-year in November, a significant increase from 1.8% in October. Similarly, the Tokyo CPI excluding Fresh Food and Energy climbed 2.2% YoY, compared to 1.8% previously, and surpassed the market consensus of 2.1%.
In November, Tokyo's core CPI increased by 2.2% year-on-year, up from 1.8% in October. This rise surpassed market expectations of a 2.1% increase and marked the highest inflation reading in three months. Tokyo's inflation data is closely watched as a leading indicator for national price trends, with nationwide CPI figures usually released about three weeks later.
The core CPI has remained above the Bank of Japan’s (BoJ) 2% target, fueling expectations for a potential near-term rate hike. BoJ Governor Kazuo Ueda reaffirmed that the central bank would continue raising rates if inflation stays on course to sustainably achieve the 2% target.
European Central Bank (ECB) policymakers have voiced concerns over the Eurozone's slowing economic growth, heightening expectations of a rate cut in December. However, uncertainty persists regarding the size of the potential reduction, as the market remains divided.
Traders are now closely watching Friday’s release of the Eurozone Harmonized Index of Consumer Prices (HICP) data. Core HICP inflation is projected to rise by 2.8% YoY in November, compared to 2.7% in October. This uptick could complicate matters for ECB officials, many of whom have recently sought to reassure investors of more rate cuts despite rising inflationary pressures.
The Tokyo Consumer Price Index (CPI), released by the Statistics Bureau of Japan on a monthly basis, measures the price fluctuation of goods and services purchased by households in the Tokyo region excluding fresh food, whose prices often fluctuate depending on the weather. The index is widely considered as a leading indicator of Japan’s overall CPI as it is published weeks before the nationwide reading. The YoY reading compares prices in the reference month to the same month a year earlier. Generally, a high reading is seen as bullish for the Japanese Yen (JPY), while a low reading is seen as bearish.
Read more.Last release: Thu Nov 28, 2024 23:30
Frequency: Monthly
Actual: 2.2%
Consensus: 2.1%
Previous: 1.8%
Source: Statistics Bureau of Japan
Raw materials | Closed | Change, % |
---|---|---|
Silver | 30.224 | 0.41 |
Gold | 2638.01 | 0.01 |
Palladium | 976.11 | 0.14 |
The Japanese Yen (JPY) strengthens across the board following the release of strong November consumer inflation figures from Tokyo, Japan’s capital, which backs the case for another Bank of Japan (BoJ) interest rate hike in December. Apart from this, geopolitical risks stemming from the Russia-Ukraine war, concerns about US President-elect Donald Trump's tariff plans and a slight deterioration in the global risk sentiment drive haven flows towards the JPY.
Meanwhile, the recent downfall in the US Treasury bond yields, which followed Scott Bessent's nomination as the US Treasury secretary, turns out to be another factor benefiting the lower-yielding JPY. The US Dollar (USD), on the other hand, languishes near a two-week low amid bets that the Federal Reserve (Fed) will cut rates in December and contributes to the USD/JPY pair's slide below the 150.00 psychological mark or the lowest level since October 21.
From a technical perspective, an intraday breakdown below the 38.2% Fibonacci retracement level of the September-November rally and the 150.00 mark could be seen as a key trigger for bearish traders. Moreover, oscillators on the daily chart have been gaining negative traction and are still away from being in the oversold zone. This, in turn, supports prospects for a further near-term depreciating move for the USD/JPY pair, towards the next relevant support near the 149.45 region. The downward trajectory could extend further to the 148.00 neighborhood, or the 50% retracement level.
On the flip side, the previous monthly trough, around the 150.45 zone, now seems to act as an immediate hurdle ahead of the 152.00 mark. The latter coincides with the very important 200-day Simple Moving Average (SMA) support breakpoint and should act as a key pivotal point. A sustained strength beyond might trigger a short-covering rally towards the 152.65-152.70 intermediate hurdle en route to the 153.00 round figure and the 153.30-153.35 congestion zone.
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $68.85 on Friday. The WTI price steadies as the escalation in the Russia/Ukraine conflict offsets a less aggressive rate cut expectation from the Federal Reserve (Fed).
Oil traders will closely monitor the developments in the Russia/Ukraine conflict. Any signs of escalation could raise concerns about energy supplies, particularly winter gas flows to Central and Eastern Europe, boosting the WTI price. On Thursday, Russian President Vladimir Putin said that if Ukraine gets nuclear weapons, Russia will use all means of destruction.
Wednesday’s US economic data suggested that the progress on lowering inflation appears to have stalled in recent months, which could diminish the expectation for the Federal Reserve (Fed) to cut interest rates in 2025. However, they expect the Fed will leave rates unchanged at its meetings in January and March. It’s worth noting that slower-than-expected rate reductions would keep borrowing costs high, which could slow economic activity and lower oil demand.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) postponed its December meeting, fueling speculation about delayed production hikes and supply adjustments. OPEC+, which accounts for about half of world oil output, is scheduled to meet on December 5 after delaying its earlier meeting.
Key considerations include whether to prolong the voluntary production cuts of 2.2 million barrels per day slated to phase out in December. Reports suggest members are considering delaying planned output increases for January amid persistent demand uncertainties. A further delay has mostly been factored into oil prices already, said Suvro Sarkar at DBS Bank. "The only question is whether it's a one-month pushback, or three, or even longer.”
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
The Australian Dollar (AUD) extends its winning streak for the third successive session on Friday following the hawkish comments from Reserve Bank of Australia (RBA) Governor Michele Bullock. However, the AUD/USD pair may face downward pressure as the United States (US) is set to unveil additional measures on Monday aimed at curbing China’s ability to advance in artificial intelligence technology.
RBA Governor Bullock stated on Thursday that Australia’s core inflation remains “too high” to contemplate interest rate cuts in the near future. She emphasized that there is still progress to be made before inflation returns sustainably to the target level, according to Bloomberg.
The downside of the US Dollar (USD) may be limited, as the Federal Reserve (Fed) is expected to remain cautious about cutting interest rates following robust inflation data released on Wednesday. The report revealed strong consumer spending growth in October but also indicated little progress in reducing inflation, prompting the Fed to stay vigilant.
The AUD/USD pair trades near 0.6500 on Friday, with bearish momentum strengthening based on technical analysis. The pair remains within a descending channel, and the 14-day Relative Strength Index (RSI) stays below 50, signaling persistent negative sentiment.
On the downside, the AUD/USD pair may revisit its four-month low of 0.6434, marked on November 26. A breach of this level could pave the way toward the yearly low of 0.6348, last reached on August 5. Additional support is found near the descending channel's lower boundary around 0.6300.
The immediate resistance lies at the nine-day Exponential Moving Average (EMA) at 0.6502, followed by the 14-day EMA at 0.6513. Further resistance is positioned near the channel's upper boundary at 0.6530. A clear breakout above these levels could set the stage for a move toward the four-week high of 0.6687.
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the US Dollar.
USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
---|---|---|---|---|---|---|---|---|
USD | -0.05% | -0.12% | -1.00% | -0.11% | -0.11% | -0.25% | -0.21% | |
EUR | 0.05% | -0.07% | -0.97% | -0.05% | -0.05% | -0.20% | -0.16% | |
GBP | 0.12% | 0.07% | -0.93% | 0.02% | 0.01% | -0.13% | -0.09% | |
JPY | 1.00% | 0.97% | 0.93% | 0.92% | 0.90% | 0.75% | 0.80% | |
CAD | 0.11% | 0.05% | -0.02% | -0.92% | -0.01% | -0.14% | -0.10% | |
AUD | 0.11% | 0.05% | -0.01% | -0.90% | 0.01% | -0.14% | -0.09% | |
NZD | 0.25% | 0.20% | 0.13% | -0.75% | 0.14% | 0.14% | 0.04% | |
CHF | 0.21% | 0.16% | 0.09% | -0.80% | 0.10% | 0.09% | -0.04% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
On Friday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.1877, as compared to the previous day's fix of 7.1894 and 7.2244 Reuters estimates.
Russian President Vladimir Putin issued a series of military threats towards Ukraine and reiterated earlier statements that the US and other European allies now have "direct involvement" in Ukraine's conflict with Russia during a press conference in the Kazakhstan capital city, per Sky news.
Putin said that If Ukraine becomes a nuclear power, Russia will use all means of destruction.
In reaction to Ukrainian long-range attacks on Russian territory using Western weaponry, Russia is seeking targets in Ukraine, including "decision-making centres" in Kyiv, noted Vladimir Putin.
At the time of writing, the gold price (XAU/USD) is trading 0.08% lower on the day to trade at $2,638.
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
Index | Change, points | Closed | Change, % |
---|---|---|---|
NIKKEI 225 | 214.09 | 38349.06 | 0.56 |
Hang Seng | -236.17 | 19366.96 | -1.2 |
KOSPI | 1.61 | 2504.67 | 0.06 |
ASX 200 | 37.6 | 8444.3 | 0.45 |
DAX | 163.98 | 19425.73 | 0.85 |
CAC 40 | 36.22 | 7179.25 | 0.51 |
The USD/JPY pair loses traction to around 150.95 during the early Asian session on Friday. The Japanese Yen (JPY) edges higher after the hotter-than-expected Japan’s Tokyo Consumer Price Index (CPI) inflation report for November.
Data released by the Statistics Bureau of Japan on Friday showed that the headline Tokyo Consumer Price Index (CPI) climbed by 2.6% YoY in November, compared to 1.8% in the previous month. Meanwhile, the Tokyo CPI ex Fresh Food, Energy rose by 2.2% YoY in November versus 1.8% prior. Tokyo CPI ex Fresh Food increased 2.2% YoY in November, compared to a 1.8% increase in October, and was above the market consensus of 2.1%.
The core CPI has stayed above the Bank of Japan’s (BoJ) 2% target and kept alive market expectations for a near-term interest rate hike. This, in turn, boosts the JPY and creates a headwind for USD/JPY. BoJ Governor Kazuo Ueda stated the Japanese central bank will keep raising rates if inflation remains on track to stably hit 2% as it projects.
On the other hand, Wednesday's US PCE data indicated that the progress on lowering inflation appears to have stalled in recent months, which could diminish the expectation for the Federal Reserve (Fed) to cut interest rates in 2025. This might trigger a modest bounce in the US bond yields, which provides some support to the Greenback. The markets are now pricing in nearly 62.8% odds that the Fed will cut rates by a quarter point in December, up from 55.7% earlier this week, according to the CME FedWatch Tool.
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
Pare | Closed | Change, % |
---|---|---|
AUDUSD | 0.64996 | 0.12 |
EURJPY | 159.925 | 0.32 |
EURUSD | 1.05546 | -0.07 |
GBPJPY | 192.245 | 0.44 |
GBPUSD | 1.26873 | 0.11 |
NZDUSD | 0.58894 | -0 |
USDCAD | 1.40125 | -0.07 |
USDCHF | 0.88295 | 0.24 |
USDJPY | 151.52 | 0.31 |
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