Celokupna Forex analiza, novosti i prognoze od 31 октобар 2024

23:13

EUR/USD extends upside above 1.0850, with all eyes on US NFP data EURUSD

EUR/USD edges higher to 1.0885 in Thursday’s early Asian session.
US inflation increased slightly in September and moved closer to the Fed’s target.
ECB policymakers expect a temporary increase in inflation later this year.

The EUR/USD pair extends the rally to 1.0885 during the early Asian session on Friday. The uptick of the major pair is bolstered by the weakening of the US Dollar (USD). All eyes will be on the US Nonfarm Payrolls (NFP), which is due later on Friday.

The US Personal Consumption Expenditures (PCE) Price Index, rose 2.1% on a yearly basis in September, compared to 2.2% in August, the US Bureau of Economic Analysis (BEA) reported on Thursday. This figure came in line with market expectations. On a monthly basis, the PCE increased 0.2%, as expected.

Meanwhile, the core PCE Price Index, which excludes volatile food and energy prices, jumped 2.7% in the same period, matching August's rise and above the market estimation of 2.6%. The core PCE Price Index rose 0.3% on a monthly basis, in line with the consensus.

Traders will keep an eye on the release of US employment data on Friday, including the Nonfarm Payrolls (NFP), Unemployment Rate and Average Hourly Earnings. The stronger-than-expected outcome could dampen the hope for larger bets of the US Federal Reserve (Fed) rate cut, boosting the Greenback against the Euro (EUR).

Across the pond, the European Central Bank (ECB) noted that inflation pressures remain high, driven by wage growth. During its latest meeting in October, the ECB reiterated its commitment to a "data-dependent and meeting-by-meeting" approach to future policy decisions. The money markets are currently pricing in a 34 basis points (bps) rate cut, down from 42 bps in the previous day, suggesting that the possibility of a larger 0.5% cut is diminishing.

Euro FAQs

What is the Euro?

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%).

What is the ECB and how does it impact the Euro?

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.

How does inflation data impact the value of the Euro?

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.

How does economic data influence the value of the Euro?

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.

How does the Trade Balance impact the Euro?

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.

22:42

Australia Judo Bank Manufacturing PMI came in at 47.3, above expectations (46.6) in October

22:31

Gold price retreats from record highs after mixed US data

Gold dips from all-time high amid strong US jobs data and steady core inflation.
Investors remain risk-averse ahead of November 5 US election, polls show a narrow race between Trump and Harris.
Nonfarm Payrolls and Fed’s upcoming rate decision keep traders cautious.

Gold price retreated from all-time high on Thursday as traders failed to capitalize on falling US Treasury bond yields. Nevertheless, the precious metal is set to end the month with gains of over 4% and to remain above the $2,700 threshold.

The XAU/USD trades at $2745, down 1.49%. The US 10-year Treasury bond yield dropped almost two basis points to 4.284%.

Risk aversion is the name of the game ahead of the US Presidential Election on November 5. Meanwhile, the release of the Federal Reserve’s preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index, alongside a strong jobs report, weighed on the precious metal price.

In the meantime, the latest opinion polls show that the race for the White House is narrowing between the Republican candidate, former US President Donald Trump, and the Democratic candidate, Vice President Kamala Harris.

US data from the Bureau of Economic Analysis (BEA) showed that headline inflation dipped. However, the core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge, remained unchanged in October compared to September's level.

The US Department of Labor revealed that the number of Americans filing for unemployment benefits in the week ending October 26 dipped to its lowest level in five months.

Geopolitical tensions remain high in the Middle East, even though US Secretary of State Anthony Blinken stated “good progress” towards a ceasefire in Lebanon. Meanwhile, the Israeli military revealed the movement of ballistic missiles in Iran, hinting that a truce is far from being reached.

Bullion traders await the Nonfarm Payrolls report and have priced in a 95% chance of the Fed cutting interest rates by 25 basis points next week.

Daily Digest Market Movers: Gold price retreats amid goodish US data

The US Dollar Index (DXY), which tracks the Dollar's value against a basket of six currencies, dropped 0.18% at 104.08.
The US headline PCE decreased from 2.3% to 2.1% year-over-year (YoY), moving closer to the Fed’s 2% target. However, the Core PCE, which excludes volatile items, remained unchanged at 2.7% YoY, slightly above forecasts of 2.6%.
US Initial Jobless Claims for the week ending October 26 fell from 228K to 216K, coming in below the forecast of 230K.
Data from the Chicago Board of Trade, based on the December fed funds rate futures contract, indicates that investors estimate 49 basis points (bps) of Fed easing by the end of the year.

XAU/USD Technical Outlook: Gold price retreats below $2,750 as bulls take a breather

Gold retreated from record highs, yet it remains bullishly biased. If XAU/USD bulls keep the spot price above $2,700, look for further gains once it clears the psychological $2,750 figure, ahead of the all-time high at $2,790. A breach of the latter, and the $2,800 threshold is up for grabs.

On the other hand, if sellers move in and push prices below $2,708 where the October 23 daily low lies, it will expose the $2,700 mark. Up next is the September 26 swing high, which turned support at $2,685, followed by the 50-day Simple Moving Average (SMA) at $2,603.

Momentum suggests the non-yielding metal could consolidate as the Relative Strength Index (RSI) remains bullish. This means that buyers are gathering momentum.

Gold FAQs

Why do people invest in Gold?

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.

Who buys the most Gold?

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.

How is Gold correlated with other assets?

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.

What does the price of Gold depend on?

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.

20:25

Australian Dollar declines after US data and Aussie Retail Sales

US PCE Prices Index remained steady in September, as well as the core measure.
US jobless claims fell to 216K in the week of October 25.
Retail Sales in Australia grew in September slightly below expectations.

The AUD/USD declined by 0.45% to 0.6545 in Thursday's session, remaining near an 11-week low of 0.6540 ahead of the US Nonfarm Payrrolls data on Friday. This decline comes after the recent surge in US inflation and mid-tier economic data.

Additionally, Retail Sales in Australia grew marginally in September, falling below expectation, which seems to be weighing on the Aussie Dollar.

Daily digest market movers: Australian Dollar declines amid weakening weakening economy and steady USD

On the Aussie front, Retail Sales somewhat tanking in September is making investors dump the AUD as it may prompt a more dovish stance from the Reserve Bank of Australia.
On the other hand, Market expectations for the upcoming Federal Open Market Committee (FOMC) meeting next week currently suggest a 25 -basis-point rate cut, influenced by recent economic indicators.
A key focus for investors will be October’s NFP data, with forecasts indicating 113K new jobs were added, a notable drop from September’s 254K.
The latest US jobless claims report showed a decline to 216K for the week of October 25, contradicting predictions of a rise to 230K, which underscores ongoing labor market resilience.
The core PCE Price Index, closely monitored by the Federal Reserve, held steady at 2.7% in September, despite projections of a decrease to 2.6%.
Additionally, the broader PCE Price Index grew at 2.1% annually in September, down slightly from August’s 2.2% and below the anticipated 2.2% rate.

AUD/USD technical outlook: Pair remains bearish, indicators oversold

The daily Relative Strength Index (RSI) is currently at 30, which is in the oversold area. The RSI's slope is declining sharply, suggesting that selling pressure is rising. The Moving Average Convergence Divergence (MACD) is flat and in the red, indicating that selling pressure is flat. Both suggest that the selling pressure might have become over-extended and that a consolidation is coming.

Australian Dollar FAQs

What key factors drive the Australian Dollar?

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.

How do the decisions of the Reserve Bank of Australia impact the Australian Dollar?

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.

How does the health of the Chinese Economy impact the Australian Dollar?

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.

How does the price of Iron Ore impact the Australian Dollar?

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.

How does the Trade Balance impact the Australian Dollar?

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.

19:58

Mexican Peso gains on past data, weak US Dollar

Mexican Peso appreciates after Q3 GDP growth of 1% QoQ, surpassing expectations.
Peso remains vulnerable to US election results, as Trump’s tariff threats on Mexican auto imports weigh on sentiment.
Upcoming Mexican data on Business Confidence and employment, along with US Nonfarm Payrolls and ISM Manufacturing PMI, could influence USD/MXN.

The Mexican Peso appreciated over 0.60% against the US Dollar on Thursday after posting losses for the fourth straight day. Upbeat Gross Domestic Product (GDP) figures revealed in Mexico outweighed upbeat data from the United States (US), which failed to boost the Greenback. The USD/MXN trades at 20.01 after hitting a daily high of 20.18.

Mexico’s economy in the third quarter of 2024 grew 1% QoQ, above the consensus of 0.8%, revealed the Instituto Nacional de Estadistica Geografia e Informatica (INEGI). Meanwhile, annual GDP expanded by 1.5%, above estimates of 1.2% but missed the second quarter's 2.1% growth.

Despite posting solid gains, the Mexican currency will remain pressured by the outcome of the US Presidential Elections. Former President Donald Trump's victory at the November 5 election could weigh on the Peso after his comments that he would impose 200% tariffs on automobiles manufactured in Mexico.

Joaquin Monfort, an Analyst at FX Street, mentioned, “The election model on polling website FiveThirtyEight gives Trump a 52% chance of winning versus Vice President Kamala Harris’ 48%.” However, Monfort added that the latest opinion polls favor Harris, who leads 48.1% to 46.7% of former President Donald Trump.

Across the north of the border, US data revealed that headline inflation dipped, revealing the US Bureau of Economic Analysis (BEA). However, the core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge, remained unchanged in October compared to September’s data.

Other data showed that the number of Americans filing for unemployment benefits in the week ending October 26 dipped to its lowest level in five months.

Ahead of the week, the Mexican economic schedule will feature Business Confidence figures, employment data, and the S&P Global Manufacturing PMI for October. On the US front, traders are eyeing the US Nonfarm Payrolls for October and the Institute for Supply Management (ISM) Manufacturing PMI.

Daily digest market movers: Mexican Peso rises after strong GDP figures

The USD/MXN remains adrift to political turmoil in Mexico after the approval of the controversial judiciary reform. Eight of the eleven Supreme Court judges announced their resignation effectively in August 2025.
Money market futures hint that the Bank of Mexico (Banxico) is expected to cut rates between 175 to 200 basis points over the next 12 months.
The US headline PCE retreated from 2.3% to 2.1%YoY, approaching the Fed’s goal of 2%. However, excluding volatile items, the so-called Core PCE remained unchanged at 2.7% YoY, exceeding forecasts of 2.6%.
US Initial Jobless Claims for the week ending October 26 fell from 228K to 216K, below forecasts of 230K.
ADP National Employment Change in October rose by 233K, above estimates of 115K and September’s 159K.
Data from the Chicago Board of Trade, via the December fed funds rate futures contract, shows investors estimate 49 bps of Fed easing by the end of the year.

USD/MXN technical outlook: Mexican Peso recovers as USD/MXN eyes 20.00

The USD/MXN uptrend remains in place, though sellers had stepped in, ahead of the upcoming US election week. Despite this, unless they clear the 20.00 psychological figure, buyers could remain hopeful of higher prices.

If USD/MXN tumbles below 20.00, the next support would be the October 24 daily low of 19.74, followed by the 50-day Simple Moving Average (SMA) at 19.62.

Otherwise, if USD/MXN stays above 20.00, the next resistance would be the year-to-date (YTD) high of 20.22. Once cleared, up next would be the psychological 20.50 level, September 28, 2022, high at 20.57, and August 2, 2022, peak at 20.82. Once surpassed, the next stop would be March 8, 2022, swing high at 21.46.

Oscillators indicate that buyers are gathering steam, as displayed by the Relative Strength Index (RSI) above its neutral line, clearing previous highs reached on September 10 and August 22.

Mexican Peso FAQs

What key factors drive the Mexican Peso?

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.

How do decisions of the Banxico impact the Mexican Peso?

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.

How does economic data influence the value of the Mexican Peso?

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.

How does broader risk sentiment impact the Mexican Peso?

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.

19:08

Forex Today: The continuation of the Dollar rally now looks at US NFP

The US Dollar lost additional momentum on Thursday, primarily as the Japanese yen gained strong support following a slightly hawkish tone from the BoJ meeting, preventing the dollar from recovering any upward traction. Friday’s release of the US labour market report is expected to be pivotal for determining the Fed’s near-term rate path.

Here is what you need to know on Friday, November 1:

The US Dollar Index (DXY) deflated to multi-day lows and flirted with the critical 200-day SMA in the 103.80 region. The publication of October’s Nonfarm Payrolls will take centre stage, seconded by the final S&P Global Manufacturing PMI, the ISM Manufacturing PMI, and Construction Spending.

EUR/USD picked up further upside impulse and traded closer to the key barrier at 1.0900 the figure amidst sticky inflation figures in the bloc and shrinking bets for a jumbo rate cut by the ECB in December.

GBP/USD faced increasing selling pressure and receded to fresh two-month lows in the 1.2840 zone despite the US Dollar’s offered stance and the perceived as favourable release of the Autumn Budget on Wednesday. The Nationwide Housing Prices are due seconded by the final S&P Global Manufacturing PMI.

USD/JPY plummeted to weekly lows and retested the sub-152.00 region after the BoJ kept rates unchanged but left a potential hike on the table for later in the year. The final Jibun Bank Manufacturing PMI will be published.

AUD/USD left behind the initial weakness and advanced modestly, although another test or surpass of the 0.6600 hurdle remained elusive. The final Judo Bank Manufacturing PMI will be unveiled along with Producer Prices, Home Loans, and Investment Lending for Homes.

Prices of WTI rose markedly and managed to reclaim the key $70.00 mark per barrel and above in response to prospects for strong US demand and speculation that the OPEC+ could delay its planned oil output boost in December.

Gold prices retreated to three-day lows near $2,730 per ounce troy on the back of some profit taking, while the broader outlook is seen constructive. Silver prices followed suit and tumbled to multi-day lows near $32.50 per ounce.

18:22

US Dollar struggles as buyers digest inflation and labor market data

US Dollar continues struggling as buyers take a breather.
US PCE Prices Index fell to 2.1% yearly in September, while the core inflation remains steady at 2.7%.
US Jobless Claims fall to 216K, against market expectations of an increase to 230K.

The US Dollar Index (DXY) trades softer on Thursday despite persistent inflation in the United States, as measured by the Personal Consumption Expenditure (PCE) Prices Index. Additionally, the number of Initial Jobless Claims decreased more than expected for the last week of October, but the Greenback continues struggling for traction in the latter half of the week.

The DXY index has displayed a mixed path amid conflicting economic data. Strong ADP Employment Change figures and upwardly revised September ADP data were offset by downwardly revised Q3 GDP growth. The upcoming Nonfarm Payrolls (NFP) report on Friday could significantly impact the DXY's direction.

Daily digest market movers: US Dollar eases on profit-taking despite strong data

The US PCE Prices Index rose moderately by 2.1% YoY in September, lower than the previous 2.2% but below the consensus of 2.2%.
Core PCE, more relevant for the Fed, remained steady at 2.7%, against market expectations of a decline to 2.6%.
Despite market consensus expecting an increase to 230K, Initial Jobless Claims fell to 216K in the week of October 25.
Economists predict the the NFP to hit 113K new payrolls in October, significantly lower than September's 254K. The Unemployment Rate is anticipated to remain unchanged at 4.1%.
Market participants will closely monitor employment data for insights into the Fed's interest rate decision-making.
As for now, markets are expecting a 25 bps cut at next week’s Federal Open Market Committee meeting next week.

DXY technical outlook: DXY index consolidates near 104.50 support

The DXY index remains consolidating, possibly preparing to retest the 200-day SMA support at 103.50. The Relative Strength Index (RSI) remains elevated near overbought territory but is trending down. The Moving Average Convergence Divergence (MACD) indicator is generating smaller green bars, indicating a weakening momentum.

Supports: 104.50, 104.30, 104.00Resistances: 104.70, 104.90, 105.00

US Dollar FAQs

What is the US Dollar?

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.

How do the decisions of the Federal Reserve impact the US Dollar?

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.

What is Quantitative Easing and how does it influence the US Dollar?

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.

What is Quantitative Tightening and how does it influence the 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.

17:47

Dow Jones Industrial Average sinks over 200 points on risk aversion

Dow Jones index pressured by rising Treasury yields and significant losses in Microsoft (-5.37%) and Meta (-4%) amid disappointing mega-cap tech guidance.
Sentiment turns cautious as investors brace for the US presidential election, VIX up over 11%.
Key support levels for DJIA lie at 41,564 and the 100-day SMA at 40,856, while resistance remains at 42,122 and the October 31 high of 42,460.

The Dow Jones Industrial Average (DJIA) plummeted over 200 points or more than half a percentage point during the North American session on Thursday. US Treasury bond yields spiked, sparked by a jump in global bond yields as traders digested the UK budget. At the same time, Microsoft (MSFT) and Meta (META) dropped by over 5.8% and 4% each, while investors braced for the release of Apple (APPL) and Amazon (AMZN) earnings reports.

Sentiment shifted sour as investors prepare for next week's US election, while US data hinted the Federal Reserve (Fed) wouldn’t need to take aggressive steps to ease policy as jobs data was solid. The US 10-year Treasury note rose as high as 4.333% in the session, while the US Dollar Index (DXY) clung to the 104.00 figure.

Quincy Krosbye of LPL Financial said, “The market overall has been disappointed with mega-tech guidance.” He added that the US presidential election on November 5 would bring more uncertainty, causing a spike in volatility. The CBOE Volatility Index (VIX) rises over 11.46% to 22.67 at the time of writing.

The US Personal Consumption Expenditures (PCE) Price Index dipped in October from 2.2% to 2.1% YoY as expected. Meanwhile, the Fed’s favorite inflation gauge, the core PCE, rose by 2.7% annually, unchanged from September, decreasing traders' hopes for a more dovish US central bank.

Other data showed that Initial Jobless Claims for the week ending October 26 fell to a five-month low. It came at 216K, below estimates of 230K and the previous reading of 227K.

After the data, the CME FedWatch Tool shows odds for a 25 bps rate cut by the Fed reaching 95%, down from 97% a day ago. This would leave rates in the 4.50%-4.75% range.

Dow Jones news

On Wednesday, Microsoft revealed its fiscal Q1 2025 earnings. The company revealed that earnings per share (EPS) were $3.30, exceeding estimates of $3.11, and revenue was $65.59 billion, above forecasts of $64.51 billion. Digging deep into the data, cloud revenue rose to $38.9 billion, above estimates of $38.11 billion, while Intelligent Cloud revenue was $24.09 billion.

At the same time, Amgen (AMGN) earnings beat estimates, but revenue fell short of Wall Street’s consensus. EPS was $5.58 (consensus of $5.11), while revenue was expected at $8.52 billion but was reported at $8.50 billion.

Although the DJIA extends its losses, Verizon (VZ) is up 2.69% at $42.39 a share, followed by Amgen, up 2.69% at $320.59, and Walt Disney (DIS), gaining 1.12% at $96.15. The three main losers are Microsoft, losing over 5.37% to $409.30, followed by Amazon, down 3.12% at $186.72, and Boeing (BA) fell 3.09% at $149.52.

Dow Jones price forecast

The Dow Jones Industrial Average dropped below 42,000 points and extended its losses toward 41,692, below the 50-day Simple Moving Average (SMA) at 41,928. If bears push the DJIA below the 50-day SMA, look for further losses, as they could test the September 2 high turned support at 41,564. If surpassed, traders could test 41,000 ahead of the 100-day SMA at 40,856.

Conversely, if buyers reclaim 42,000, look for a test of the October 30 low, which turned resistance at 42,122. Once cleared, the next stop would be the October 31 high at 42,460.

Otherwise, if the Dow extends its losses below 42,000, then 41,500 would provide the first support.

The momentum shifted to bearish even though the Relative Strength Index (RSI) remains bullish. Nevertheless, it’s aiming downward, accelerating to clear its neutral line.

Dow Jones daily chart

Dow Jones FAQs

What is the Dow Jones?

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.

What factors impact the Dow Jones Industrial Average?

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.

What is Dow Theory?

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.

How can I trade the DJIA?

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.

16:25

Canadian Dollar continues struggling after GDP data

USD/CAD regains footing as anticipation for another Bank of Canada interest rate cut mounts due to flat economic growth in August.
US PCE core inflation remains at 2.7% in October, slightly above market expectations.
US Initial Jobless Claims fell to 216K in the week ending October 25, below the market’s consensus.

The USD/CAD pair gained traction on Thursday, rising by 0.15% to 1.3920. This uptick came as markets digest the United States Personal Consumption Expenditures (PCE) Price Index from September and weekly US Jobless Claims unexpectedly fell.

The Canadian Dollar (CAD) remains under pressure following the Bank of Canada's (BoC) decision to aggressively cut interest rates by 50 basis points (bps) to 3.75%, a larger-than-expected move. The market anticipates further policy easing by the BoC at its next meeting in December, contributing to the CAD's weakness. The dovish bet also rose due to soft Canadian Gross Domestic Product (GDP) data released on Thursday.

Daily digest market movers: CAD weak due to soft GDP figures

Flat economic performance in Canada, with GDP remaining stagnant in August and growing by a mere 0.1% in July, weighs on the Canadian Dollar .
Subdued economic growth in Canada is expected to prompt the BoC to lower interest rates again in December.
On the US front, the US PCE grew at a steady 2.1% yearly pace in October, down from September's 2.2%.
Core inflation was maintained at 2.7%, above the market consensus expectation of 2.6%.
US Jobless Claims unexpectedly fell to 216K in the week of October 25, indicating a robust labor market. 230K was expected.
For Friday, economists estimate a modest 113K job creation figure in the October Nonfarm Payrolls number, lower than the previous month's 254K.
The Unemployment Rate is projected to remain steady at 4.1%.

USD/CAD technical outlook: Pair trades sideways with bullish bias

The USD/CAD is trading sideways with a slightly bullish bias. The Relative Strength Index (RSI) is at 76, in the overbought area, suggesting that buying pressure is intense. The Moving Average Convergence Divergence (MACD) is flat, suggesting that buying pressure is taking a breather. This combination of signals indicates that the pair is poised to consolidate in the next several sessions.

Canadian Dollar FAQs

What key factors drive the Canadian Dollar?

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.

How do the decisions of the Bank of Canada impact 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.

How does the price of Oil impact the Canadian Dollar?

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.

How does inflation data impact the value of the Canadian Dollar?

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.

How does economic data influence the value of 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.

15:32

United States 4-Week Bill Auction fell from previous 4.65% to 4.58%

15:09

Colombia National Jobless Rate fell from previous 9.7% to 9.1% in September

15:01

EUR/GBP Price Forecast: Bounces off multi-year lows, risk of trend reversal EURGBP

EUR/GBP bounces off key lows and rallies strongly.
Too soon to say whether the pair is reversing trend or correcting, however, upside is strong so far.

EUR/GBP has bounced off key support (gray dashed line) at multi-year lows and risen over a percentage point to trade above 0.8400 on Thursday.

EUR/GBP 4-hour Chart

The pair has risen very steeply over the last two days and this could be a sign the short-term trend is reversing and turning higher. If so the bias will be to the upside given the technical analysis principle that “the trend is your friend”. It is too early to be sure this is the case however.

It is also possible to characterize EUR/GBP as merely correcting back and forming a common three-wave abc correction in the process. This would imply price will roll over after wave c ic completed and possibly even fall back down to the 0.8300 lows.

The speed and strength of the rally over the last 48 hours, however, suggests EUR/GBP may not just be forming an abc correction, but that it could be completely reversing trend and turning bullish. Ultimately, evidence is required to be confident of such a reversal.

The Relative Strength Index (RSI) momentum indicator entered the overbought zone (above 70) this period, however, we will not know whether it remains there until the current candle closes. At the moment that looks likely.

If RSI closes above 70 then it will be a sign for long-holders not to add to their positions, since there is a material risk of the price pulling back.

15:00

US Payrolls, Oct: Blame it on the rain – TDS

Hurricanes and the Boeing strike are the name of the game in October, and we expect this combination of shocks to heavily (but temporarily) distort this month's jobs figures. Underlying this, though, high-frequency data was already pointing to a slower month of hiring than September, TDS’ analysts note,

US elections may cause further USD rallies

“Given the crowded data and event schedule, markets may struggle with the reaction to the payroll report unless it is significantly above or below consensus. We expect rates to bull steepen if our forecast for a notably weaker payroll report proves correct, but the upcoming US election and FOMC meeting could blunt the impact of a data surprise.”

“Given the unique and noisy circumstances of this report, markets should not draw any meaningful signal and as US data in aggregate has been relatively more resilient. Our positioning indicators now flag the USD as long which does pose a risk to further USD strength.”

“Catalysts for further USD rallies now lie in the outcome of US elections particularly if the risk of a Trump Presidency is realized with tariffs and tax cuts.”

14:47

GBP/USD Price Forecast: Tumbles to two-month low, traders ditch GBP on UK's budget GBPUSD

GBP/USD breaks below the 100-day SMA at 1.2975, with further downside possible if it closes below the 1.2900 mark.
Key support lies at 1.2885, with the 200-day SMA at 1.2807 as the next target for sellers.
Resistance emerges at 1.2950/60, with RSI signaling bearish momentum approaching oversold conditions, potentially capping a rebound.

The Pound Sterling dropped to a new two-month low of 1.2885 against the Greenback during the session, as UK Gilts rose sharply following the budget release. However, the GBP/USD has recovered some ground yet is losing over 0.30% and trades at 1.2918.

GBP/USD Price Forecast: Technical outlook

The GBP/USD has broken below the 100-day Simple Moving Average (SMA) at 1.2975, extending its losses below the ascending channel support trendline, paving the way for further downside.

Although the 1.2900 figure was cleared, Pound sellers must achieve a daily close below it. In that outcome, the GBP/USD's next support would be 1.2885, the day’s low, followed by the 200-day SMA at 1.2807.

Conversely, if buyers keep the GBP/USD afloat above 1.2900, the first resistance would be a previous support trendline at around 1.2950/60 before bulls can test 1.2999.

Oscillators favor further GBP/USD downside, as the Relative Strength Index (RSI) deepened its fall in bearish territory, about to reach oversold conditions.

GBP/USD Price Chart – Daily

Pound Sterling FAQs

What is the Pound Sterling?

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).

How do the decisions of the Bank of England impact on the Pound Sterling?

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.

How does economic data influence the value of the Pound?

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.

How does the Trade Balance impact the Pound?

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.

14:30

United States EIA Natural Gas Storage Change below expectations (81B) in October 25: Actual (78B)

14:19

AUD/USD Price Forecast: Downtrend continues but almost oversold AUDUSD

AUD/USD resumes its autumnal descent after a brief pullback.
The pair is close to oversold levels, however, with increased risks of a recovery evolving.

AUD/USD continues its October fall after a brief pull back. The pair is in a short and medium-term downtrend which, given the technical maxim that “the trend is your friend” is likely to extend south.

AUD/USD Daily Chart

Despite the recent run of weakness, the Aussie pair is very close to reaching oversold levels (below 30) according to the Relative Strength Index (RSI) momentum indicator. If it enters oversold on a closing basis it will be a sign advising short holders not to add to their bearish bets as there is an increasing risk of a recovery. The pair looks a little over extended and the meat of the decline appears to have run its course.

Support from previous key lows lies at 0.6465 - 0.6475 (May 1 swing low, cluster of closes in early August), and if the pair falls to that level it will probably bounce, consolidate or possibly even reverse trend.

14:15

NZD/USD posts fresh 11-week low below 0.5950 as US Dollar bounces back NZDUSD

NZD/USD prints a fresh over 11-week low below 0.5950 as the US Dollar rebounds.
The US Dollar bounces back in the aftermath of the lower US Initial Jobless Claims data.
Investors expect the RBNZ to cut interest rates further this year by 50 bps to 4.25%.

The NZD/USD pair refreshes a more than 11-week low slightly below 0.5950 in North American trading hours on Thursday. The Kiwi pair weakens as the US Dollar (USD) bounces back after the release of the United States (US) Initial Jobless Claims data for the week ending October 25. The initial reaction from the US Dollar was bearish after the data release, however, it recovers quickly as claims came in surprisingly lower than expected.

The US Dollar Index (DXY), which tracks the Greenback’s value against ix major currencies, rebounds from the day’s low of 103.80 and turns flat, at the time of writing.

Individuals claiming jobless benefits for the first time were lower at 216K against estimates of 230K and the former reading of 228K. This has diminished fears of labor demand slowing in the near term. On Wednesday, unexpectedly upbeat ADP Employment Change data also pointed to an improvement in the job market. The agency reported that 233K workers were hired by the private sector in October, significantly higher than 159K in September.

For more cues on the current labor market health, investors will focus on the US Nonfarm Payrolls (NFP) data for October, which will be published on Friday.

Meanwhile, the New Zealand Dollar (NZD) remains under pressure on expectations that the Reserve Bank of New Zealand (RBNZ) will cut interest rates gain by a larger-than-usual size of 50 basis points (bps) in its monetary policy meeting on November 27. This would push the Official Cash Rate (OCR) lower to 4.25%.

Economic Indicator

Initial Jobless Claims

The Initial Jobless Claims released by the US Department of Labor is a measure of the number of people filing first-time claims for state unemployment insurance. A larger-than-expected number indicates weakness in the US labor market, reflects negatively on the US economy, and is negative for the US Dollar (USD). On the other hand, a decreasing number should be taken as bullish for the USD.

Last release: Thu Oct 31, 2024 12:30

Frequency: Weekly

Actual: 216K

Consensus: 230K

Previous: 227K

Source: US Department of Labor

Why it matters to traders?

Every Thursday, the US Department of Labor publishes the number of previous week’s initial claims for unemployment benefits in the US. Since this reading could be highly volatile, investors may pay closer attention to the four-week average. A downtrend is seen as a sign of an improving labour market and could have a positive impact on the USD’s performance against its rivals and vice versa.

13:52

USD/CAD Price Forecast: Struggles for firm-footing above 1.3900 USDCAD

USD/CAD exhibits mild correction after revisiting 1.3950.
Lower US Initial Jobless Claims and higher private payrolls have signaled an improvement in labor market health.
Canadian economic growth remained flat in August, as expected.

The USD/CAD pair struggles to establish above the key support of 1.3900 in Thursday’s North American session. A one-sided rally in the Loonie pair appears to have paused, with investors focusing on the United States (US) Nonfarm Payrolls (NFP) data for October, which will be published on Friday.

Canadian Dollar PRICE Last 30 days

The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies last 30 days. Canadian Dollar was the strongest against the New Zealand Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		2.41%	3.18%	6.34%	2.81%	5.47%	6.63%	2.25%
EUR	-2.41%		0.74%	3.84%	0.38%	2.99%	4.11%	-0.18%
GBP	-3.18%	-0.74%		3.09%	-0.36%	2.22%	3.36%	-0.89%
JPY	-6.34%	-3.84%	-3.09%		-3.34%	-0.82%	0.27%	-3.86%
CAD	-2.81%	-0.38%	0.36%	3.34%		2.61%	3.73%	-0.53%
AUD	-5.47%	-2.99%	-2.22%	0.82%	-2.61%		1.10%	-3.08%
NZD	-6.63%	-4.11%	-3.36%	-0.27%	-3.73%	-1.10%		-4.10%
CHF	-2.25%	0.18%	0.89%	3.86%	0.53%	3.08%	4.10%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).

Economists expect the economy to have added 113K fresh payrolls, significantly lower than 254K in September. The Unemployment Rate is expected to have remained steady at 4.1%. Investors will pay close attention to the employment data as it will significantly influence market expectations for the Federal Reserve (Fed) interest rate path, given that officials are confident about inflation remaining on track to the bank’s target of 2%.

Meanwhile, a few job-related indicators have pointed to an improvement in labor market conditions. Initial Jobless Claims for the week ending October 25 came in lower at 216K than estimates of 230K. Wednesday’s ADP Employment Change data showed a robust addition of payrolls by the private sector.

In the Canadian region, flat economic performance is expected to keep the Canadian Dollar (CAD) on the backfoot. Statistics Canada reported that the monthly Gross Domestic Product (GDP) was flat in August, as expected. While the economy grew by 0.1% in July. Subdued economic performance is expected to prompt the Bank of Canada (BoC) to cut interest rates again in its monetary policy meeting in December.

USD/CAD faces mild correction after revisiting the two-year high of 1.3950. The near-term outlook of the Loonie pair remains firm as the 20-day-Exponential Moving Average (EMA) near 1.3800 is sloping higher.

The 14-day Relative Strength Index (RSI) takes a breather after turning oversold around 75.00. However, the overall status of the RSI (14) points to a strong bullish momentum.

More upside would appear if the asset breaks above the immediate high of 1.3950. The scenario will pave the way for the psychological resistance of 1.4000 and the round-level resistance of 1.4100.

On the contrary, a downside move below October 29 low of 1.3875 will expose the asset to October 15 high near 1.3840, followed by the round-level figure of 1.3800.

USD/CAD daily chart

13:45

United States Chicago Purchasing Managers' Index came in at 41.6 below forecasts (47) in October

13:29

USD/JPY bounces up and approaches 153.00 following upbeat US data USDJPY

Sticky PCE Prices Index data and an unexpected decline in Jobless Claims have provided support to the US Dollar.
Earlier today a hawkishly-tilted Ueda had pushed the Dollar the weekly lows right below 152.
The pair consolidates near highs with all eyes on the NFP report.

The Dollar’s reversal witnessed during Thursday’s Europen session has found support at the 152.00 area. The pair has returned to levels close to 153.00 supported by sticky inflation and lower Jobless Claims data.

The US PCE Prices Index has kept growing at a 2.1% yearly pace, as widely expected. The core reading, with higher relevance from the monetary perspective, has remained steady at 2.7% against expectations of a 2.6% reading.

Beyond that, US Jobless claims declined to 216K in the week of October 25, against market expectations of an increase to 230K, from the upwardly revised 228K in the previous week (227K initially reported).

In Japan, BoJ’s Governour, Kazuo Ueda gave a fresh boost to the Yen earlier today. The bank kept interest rates unchanged but Ueda reiterated its commitment to normalizing monetary policy, hinting at a rate hike in December.

From a technical perspective, the pair remains moving within a horizontal range with investors awaiting Friday's NFP data. Immediate support at 151.65. Below here, the next support is 150.60. Resistances are the previous support, at 152.77, and October’s peak, at 153.85.

Japanese Yen FAQs

What key factors drive the Japanese Yen?

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.

How do the decisions of the Bank of Japan impact the Japanese Yen?

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.

How does the differential between Japanese and US bond yields impact the Japanese 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.

How does broader risk sentiment impact the Japanese Yen?

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.

13:19

Are crude oil markets fairly valued? – TDS

Clearly, the market has now nearly priced out the entire rise in supply risk premia associated with the conflict in the Middle East. Traders have concluded that this chapter of the conflict has ended, but at the very least, this geopolitical equilibrium is fragile. The adage ‘show me the lost barrels’ continues to win out on a more cautious approach, particularly as the market's focus shifts to the OPEC's upcoming decision which could potentially bring back unwanted barrels to market, TDS’ Senior Commodity Strategist Daniel Ghali notes.

OPEC's upcoming decision can bring back unwanted barrels

“Our return decomposition framework suggests that recent reports suggesting the group is considering a further delay to their planned production hikes have supported prices over the last session, but kicking the can may no longer be sufficient to bolster prices and may instead only help crude prices find a floor.”

“In turn, barring a further escalation in the conflict, the onus remains on the demand-side of the equation to sustainably lift prices from their current levels. Nascent signs of reflationary tailwinds in the cross-section of commodities prices have provided a cross-current, but the magnitude of these trends remains to be seen.”

“In the near-term, our simulations of future prices suggest that future CTA flow is fairly distributed, such that potential flows are no longer asymmetric. Overall, this set-up does not point to a mispricing of risks worth engaging in without a geopolitical edge.”

13:07

EUR/MXN Price Prediction: Breaking out of top of Bull Flag pattern

EUR/MXN appears to be breaking out of the top of a Bull Flag price pattern.
Such patterns signal the likelihood of more upside evolving.

EUR/MXN is in a medium and long-term uptrend within which it appears to have completed a Bull Flag continuation pattern. These patterns are bullish and are composed of a steep rally, known as the “flagpole”, followed by a rectangular or square consolidation phase, called the “flag square”.

EUR/MXN Daily Chart

In the case of EUR/MXN the flagpole probably began life on August 15, leading to a rally up to a peak on September 5 before which price fell and began forming the flag square section. This now looks complete and the price is actually in the process of breaking out of the top of the flag – a sign it is about to start rallying higher again.

A break above the 22.07 September 26 high would provide confirmation for the pattern and likely lead to a continuation up to a preliminary target at 22.40, the September 5 peak followed by 22.52 (flat gray dashed line on chart), the actual target calculated using the pattern. The target is calculated by extrapolating the length of the flagpole higher, in the usual method for forecasting these patterns.

13:00

Russia Central Bank Reserves $ climbed from previous $624.9B to $628.5B

12:40

US: Initial Jobless Claims increased less than estimated last week

Initial Jobless Claims rose to 216K, down from the previous week's 228K.
Continuing Jobless Claims climbed to 1.862M in the week ending October 18.

US citizens filing new applications for unemployment insurance rose to 216K for the week ending October 25, as reported by the US Department of Labor (DoL) on Thursday. This print came in below the consensus forecast and the previous week's tally of 228K (revised from 227K).

The report also highlighted a seasonally adjusted insured unemployment rate of 1.2%, while the four-week moving average retreated to 236.50K, marking an decrease of 2.250K from the prior week’s revised average.

Moreover, Continuing Jobless Claims shrank by 26K to reach 1.862M for the week ending October 18.

Market reaction

The Greenback extends its weekly leg lower and drags the US Dollar Index (DXY) to multi-day lows in the 103.90-103.85 band, a region also coincident with the key 200-day SMA.

12:30

United States Personal Consumption Expenditures - Price Index (MoM) meets forecasts (0.2%) in September

12:30

United States Core Personal Consumption Expenditures - Price Index (MoM) in line with expectations (0.3%) in September

12:30

Gold bulls make handbrake turn after reaching milestone high

Gold edges lower after topping at a new record high of $2,790 on Thursday.
The yellow metal sees downside pressure from rising US Treasury bond yields following stronger US employment data.
Hopes of a Middle East ceasefire and the probability of a Trump victory are also weighing on Gold.

Gold (XAU/USD) pulls up and reverses from its new record high of $2,790 on Thursday. The precious metal is pulling back partly due to rising US Treasury bond yields, which reflect elevated interest rate expectations. These, in turn, reduce the attractiveness of non-interest-paying assets such as Gold.

Strong US ADP employment data on Wednesday helped provide an antidote to the weak US JOLTS Job Openings data released earlier in the week because it suggested the US labor market was not in as bad shape as feared. This is reducing bets the Federal Reserve (Fed) will need to slash interest rates to boost employment. The market-based probabilities, using the price of interest-rate swaps as a guide, forecasts an almost 100% chance of a 25 basis point (bps) or 0.25% cut by the Fed in November but a 70% probability in December.

Bond yields might be further rising because of the increasing odds of the Republican nominee Donald Trump winning the race to the White House. Trump’s preference for lower taxes, higher government borrowing and tariffs on foreign imports would probably be inflationary for the economy and lead the Fed to keep interest rates higher for longer.

This, and the emergence of a glimmer of hope on the horizon for a ceasefire in the Middle East – thereby lowering safe-haven demand for the yellow metal – is creating a headwind for Gold price in its onward march higher.

Gold dips as bearish factors coalesce

Gold price is backing off from the record highs it scaled on Wednesday as the chances of a Trump presidency steadily increase.

Polling website FiveThirtyEight’s prediction model gives Trump a 52% chance of winning versus Vice President Kamala Harris’ 48%. Betting website OddsChecker offers fractional odds of 11/18 (or 62.1%) for a Trump win against 28/17 (or 37.8%) for a Kamala Harris victory. The latest opinion polls, however, still place Harris marginally in the lead with 48.1% versus 46.7% for Trump.

In addition, Gold may be falling on reduced safe-haven flows amid hopes of a ceasefire in the Middle East. The US has sent a new envoy to broker a peace deal between Israel Hamas and Hezbollah. Early signs suggest Israel is open to negotiation after successfully pushing back Hezbollah from southern Lebanon, decapitating its hierarchy and severely reducing Hamas’ capabilities in Gaza, according to Bloomberg News. The threat of Iran opening a direct front against Israel, however, remains a potential spoiler.

That said, the war in Ukraine continues to fuel geopolitical risks after the escalation of North Korean troops entering the war on the side of Russia.

Gold could also continue to see gains as the US Dollar leaks lower, despite rising bond yields (normally bullish for the Greenback) because Gold is mostly priced and traded in USD. The US Dollar Index (DXY) is down over a tenth of a percent on Thursday – down almost a third of a percent overall this week so far – trading just below 104.00.

Technical Analysis: Gold pulls back after breaking to new highs

Gold has broken out of the mini range it was stuck in between $2,708 and $2,758 and risen up to a new all-time high of $2,790 on Wednesday.

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

XAU/USD Daily Chart

The break above the top of the range helps confirm a continuation up to the next target level, probably at the big-figure $3,000 level (round number and psychological level).

A deeper pullback would find support initially from the top of the old range at $2,758, then $2,750. The overall uptrend, however, would be likely to resume afterward.

A break above $3,000 would activate the next upside target at $3,050.

Gold FAQs

Why do people invest in Gold?

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.

Who buys the most Gold?

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.

How is Gold correlated with other assets?

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.

What does the price of Gold depend on?

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.