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.
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.
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.
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 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 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.
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.
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 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.
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.
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 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.
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.
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.
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
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 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.
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.
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.
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 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.
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.
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
EUR/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.
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.
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,
“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.”
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.
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.
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.
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.
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.
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%.
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.
Read more.Last release: Thu Oct 31, 2024 12:30
Frequency: Weekly
Actual: 216K
Consensus: 230K
Previous: 227K
Source: US Department of Labor
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.
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.
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.
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.
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.
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.
“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.”
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”.
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.
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.
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.
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 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.
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.
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 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 US Dollar is on the back foot on Thursday, with investors bracing for the release of October’s PCE Prices Index data. The USD/CHF is testing the support area at 0.8645 after being rejected at the 0.8700 area.
The US PCE Prices Index is expected to show that inflationary pressures kept cooling at a gradual pace in October. If there are no surprises, these figures would endorse the idea of a 25 bps cut next week.
The week’s highlight, however, is Friday’s NFP report, which is expected to show a significant decline in job creation. A too-weak reading might trigger speculation of steeper rate cuts by the Fed, which would hurt the US Dollar.
From a technical perspective, a break of 0.8645 would confirm a double-top formation at 0.8700. This figure is a common indicator of a trend shift and would increase bearish pressure towards 0.8615.
Resistances are 0.8700 and 0.8745.
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.
The UK budget update largely conformed to expectations. The government will raise taxes and borrowing significantly but will also spend heavily on priority projects, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
“UK markets largely took the news in their stride. UK Gilts weakened in the budget aftermath but losses reflected the generally weaker tone of fixed income markets (where core European bonds actually performed worse).”
“UK rates markets continue to anticipate a November rate cut from the BoE but, with the budget expected to give the economy a lift relative to its prior state, expectations for a December follow up have been pared back significantly. Rate sentiment continues to weigh on Gilts today but may add to GBP underpinning in the short run at least.”
“Choppy markets yesterday have muddied the near-term outlook for the GBP. While spot is holding within its recent trading range, heavy selling pressure yesterday has left a dent in the intraday and daily charts which may stifle the week-long grind higher in Cable from the low 1.29s. Intraday support does look firm around 1.2935 but a move above 1.3043, yesterday’s high, is needed to give the pound a clearer technical lift now.”
Eurozone CPI rose 2.0% this month, according to the preliminary estimate released earlier. That is a little above the forecast of 1.9% and above September’s 1.7% read, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
“The data helped sway market pricing further towards a 25bps ECB cut in December (29bps of easing now priced in) and narrow 2Y EZ/US spreads a little further to provide the EUR with a small tailwind.”
“Consolidation signals from earlier this week are developing into a little more obvious technical strength for the EUR on the short-term chart. EUR gains through 1.0840/45 yesterday suggest a short-term low is in while gains through 1.0875 should allow for the EUR rebound to develop a little more momentum to test the low/mid 1.09s.”
Silver Prices (XAG/USD) are trading lower for the second consecutive day on Thursday, with price action approaching a key support area at $33.10.following Wednesday’s reversal at the $34.50 area.
The lower high posted on Wednesday and price action breaking below the 4 H 50 SMA suggest that the pair might have reached the end of its bullish cycle and is ready for a corrective reversal.
On the other hand, the US Dollar is showing a moderately bearish tone over the last sessions. This will likely keep precious metals from retreating further until the US PCE prices index and especially Friday’s NFP report are out.
A clear break of the previous resistance, now turned support at the mentioned $33.10 area would confirm that view and add selling pressure towards the 38.6% Fibonacci retracement of the September-October bullish run, at $32.10 ahead of $31.30.
To the upside, resistance levels remain at $34.50, and the long-term high, at $34.85.
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/JPY pair recovers some of its intraday losses in the European trading hours on Thursday. The cross faced sharp selling pressure in the Asian session after the Bank of Japan’s (BoJ) interest rate decision in which it left interest rates unchanged at 0.25%, as expected.
The asset has bounced back after BoJ Governor Kazu Ueda’s commentary in an early European session in which he refrained from providing any significant cues about whether the central bank will raise interest rates again in the last monetary policy meeting of this year in December. “We will scrutinize data available at the time at each policy meeting, and update our view on the economy and outlook in deciding policy,” Ueda said, The Japan Times reported.
The Japanese economy needs to be vigilant to domestic recovery and the impact of the United States (US) economy on them due to presidential elections on November 5 in which the traders seem to be pricing in the victory of former President Donald Trump over current Vice President Kamala Harris.
Though investors have underpinned the Euro (EUR) against the Japanese Yen (JPY) on Thursday, the shared currency is more than 6% higher versus the Yen in the past six weeks. Still, the Euro is outperforming its major peers on Eurozone robust preliminary Q3 Gross Domestic Product (GDP) growth and flash hot inflation data for October.
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Canadian Dollar.
USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
---|---|---|---|---|---|---|---|---|
USD | -0.08% | -0.19% | -0.46% | 0.15% | 0.12% | 0.09% | -0.07% | |
EUR | 0.08% | -0.09% | -0.37% | 0.24% | 0.21% | 0.17% | 0.02% | |
GBP | 0.19% | 0.09% | -0.26% | 0.34% | 0.31% | 0.26% | 0.12% | |
JPY | 0.46% | 0.37% | 0.26% | 0.59% | 0.58% | 0.48% | 0.37% | |
CAD | -0.15% | -0.24% | -0.34% | -0.59% | -0.02% | -0.08% | -0.22% | |
AUD | -0.12% | -0.21% | -0.31% | -0.58% | 0.02% | -0.05% | -0.21% | |
NZD | -0.09% | -0.17% | -0.26% | -0.48% | 0.08% | 0.05% | -0.14% | |
CHF | 0.07% | -0.02% | -0.12% | -0.37% | 0.22% | 0.21% | 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).
The Eurozone economy expanded at a faster-than-expected pace of 0.9% compared to the same quarter of the preceding year against 0.6% growth in the previous quarter. Meanwhile, the flash Harmonized Index of Consumer Prices (HICP) accelerated at a faster pace to 2% from 1.7% in September.
The Canadian Dollar (CAD) is modestly softer on the session amid weak risk appetite but it is at least holding recent ranges, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
“My fair value model is unchanged at 1.3931 today which may herald a minor reprieve for the CAD, especially if we do see a broader pullback in the USD develop. Scope for CAD gains is, however, fundamentally quite limited in the short run. Industry-level GDP is expected to come in flat for August, in line with the flash estimate released with the July data (+0.2% M/M).”
“Sluggish growth should already be factored into the CAD at this point so an on expectations outcome may not have too much impact on spot. Still, the contrast between Canadian and US growth momentum will underscore the cyclical headwinds which will limit scope for CAD gains now.”
“There is no obvious relenting in the USD uptrend and spot got pretty close to a retest of the August peak (1.3947) yesterday before drifting back. Another potential inside range signal is developing on the daily chart today, however, and the USD rise remains very, very stretched, according to the daily studies. Resistance remains 1.3945/50. Support is 1.3890/95.”
The risk mood has spilled over into FX where high beta currencies are underperforming somewhat while the Japanese Yen (JPY) and Swiss Franc (CHF) are leading gains among the majors, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
“The JPY got an added kicker from BoJ Governor Ueda who kept the door open to higher policy after today’s hold decision. Ueda noted that the domestic political backdrop would not stop the central bank from tightening policy.”
“Swaps reflect a little more risk of a 10bps tightening (8.5bps priced in) for the December BoJ decision.”
It’s month-end and there is a clear whiff of risk aversion across (most) markets this morning. There is a lot of red across the equity screens after disappointing earnings data from Microsoft and Meta, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
“US growth data came in a little shy of expectations yesterday but the general trend in positive US data surprises is extending overall and, under the hood, the Q3 GDP data looked pretty solid, with real final sales to domestic purchasers (ex-ing out government, inventories and net exports) rising 3.2%.”
“Today brings ECI, weekly claims and personal income/spending and core PCE data at 8.30ET (plus the Chicago PMI at 9.45ET). Spending is expected to be up 0.4% M/M while the core PCE is forecast to rise 0.3% in the month but slow to 2.6% in the year. While G10 FX is mixed, the DXY retains a somewhat softer undertone despite the positive data run.”
“It’s marginal but the index is putting a little more pressure on noted support at 103.93. After the DXY’s three failures at 104.55 over the past week, a break under support would suggest a drop in the index to 103.3 or so. Some consolidation in FX would not surprise ahead of next week’s major event risk.”
Headline inflation rose more-than-expected to the ECB's inflation target at 2.0% in October. Core inflation and core services inflation remained unchanged, while the unemployment rate was revised to a record low at 6.3%, Nordea’s economists Anders Svendsen and Tuuli Koivu note.
“The ECB had clearly stated that inflation was expected to rise towards year-end due to base effects, yet markets reacted to higher inflation in Germany and Spain yesterday. Because what matters most to the ECB, we think, is the seasonally-adjusted momentum in core services prices, and those were also the ones that increased in yesterday’s German release.”
“When we’re still not too worried, it is because those increases were likely temporary, driven by two specific categories, and because of the news from the German car industry about factory closures, adding weakness to the labour markets going forward and lowering the risk to too high wage growth. Most ECB speakers including President Lagarde have argued that inflation victory is within sight.”
If the ECB is to cut rates by 50bp it will most likely be because of uncertainty over the growth and the labour markets rather than too low inflation. Today's release of the uneployment rate was revised to a record-low at 6.3%! It still looks like the ECB will have a big downward revision to its inflation projection to do at it’s December meeting, which will keep markets speculating about a 25 or 50bp rate cut.”
The Mexican economy grew surprisingly strongly in the third quarter, according to the first estimate. Instead of 0.6%, according to the Bloomberg median, it grew by almost 1% quarter-on-quarter, the highest rate in a year, Commerzbank’s FX analyst Michael Pfister note.
“This was probably mainly due to a surprisingly strong increase in agricultural products, which seem to have recovered from the natural disasters in the first half of the year. However, one should not hope that this means the end of Mexico's period of weakness. It is more likely that this was an outlier and that growth in the coming quarter will be more in line with the recent trend.”
“Despite the surprisingly good figures, the Mexican peso did not really benefit from them. In fact, USD/MXN hit a two-year high shortly after the data was released. For now, the peso is focused on other things: the more likely it becomes that Donald Trump will become the new US president, the more the peso will come under pressure.”
“This is because significant tariffs against Mexico become much more likely. So it should come as no surprise that the exchange rate is unlikely to react to Mexican news in the coming days.”
The US Dollar Index (DXY) edges down on Thursday, extending the mild losses seen over the last four sessions. Still, the US Dollar (USD) remains near three-month highs and is on track to close its best monthly performance in more than two years.
US macroeconomic data continues endorsing the rhetoric of a strong economy in a period of global slowdown, which gives the USD a competitive advantage against the rest of the major currencies.
The ADP employment report beat expectations on Wednesday, easing concerns about a deterioration of the labour market and improving investors’ expectations about Friday’s Nonfarm Payrolls (NFP) report.
The DXY index maintains its bullish bias intact but failure to break the resistance area above 104.55 has increased the bearish pressure, sending prices to test the bottom of the recent range at 103.90.
The 4-hour Relative Strength Index (RSI) shows a bearish divergence, and price action has crossed below the 50-period Simple Moving Average (SMA). These are negative signs. Further depreciation below 103.90 would confirm a deeper correction and bring 103.40 into focus. Resistances remain at at the 104.55-104.75 area and 105.20.
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 AUD/USD pair trades sideways above more than 11-week low of 0.6540 in Thursday’s European session. The Aussie asset consolidates as investors await United States (US) Nonfarm Payrolls (NFP) data for October, which will influence market expectations for the Federal Reserve (Fed) interest rate path in the remainder of the year.
Market sentiment remains risk-averse as investors turn cautious ahead of US presidential elections on November 5. While national polls have indicated tough competition between former President Donald Trump and current Vice President Kamala Harris, traders seem to be pricing in Trump’s victory. Trump is expected to implement protectionist policies, which will have a significant impact on nations that are leading trading partners of the US.
S&P500 futures have posted significant losses in the European session, exhibiting the weak risk appetite of investors. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, drops slightly below 104.00.
The US NFP report is expected to show that the economy added 115K jobs lower than 254K in September, with the Unemployment Rate remaining steady at 4.1% on Friday. Investors will also focus on the US ISM Manufacturing PMI for October, which is expected to have contracted again but at a slower pace to 47.6 from 47.2 in September.
In the Aussie region, slower-than-expected inflation growth in the third quarter of the year has pushed back market expectations for the Reserve Bank of Australia (RBA) keeping its Official Cash Rate (OCR) at its current levels for a longer period. Year-on-year Consumer Price Index (CPI) decelerated at a faster-than-expected pace to 2.8% from 3.8% in the previous quarter of the year. Annual Trimmed Mean CPI, which is RBA’s preferred inflation gauge, grew slower by 3.5%, as expected.
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 Dollar has extended its pullback against a somewhat stronger Yen on Thursday as the Bank of Japan Governour, Kazuo Ueda hinted at a further interest rate hike “if conditions are met”.
The BoJ maintained its benchmark interest rate at 0.25%, as widely expected, but Ueda reiterated that the Bank remains committed to normalizing its monetary policy. The Yen appreciated across the board following the press release.
The focus today is on the US PCE Prices Index release, which is expected to show that inflation continued easing towards the Fed’s 2% target rate.
The highlight of the week, however, will be Friday’s Nonfarm Payrolls. The market consensus anticipates a significant decline although the strong ADP has improved market expectations.
The pair is now approaching the support area above 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.
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
The Hungarian forint’s depreciation is accelerating relative to eastern European peers, especially after a negative Q3 GDP reading. Against the euro, the forint has surpassed the 405 level and seems headed towards the 410 mark. Commerzbank’s EUR/HUF forecast is 415.0 for end-2025. But, this current development does not seem to be just an orderly progression towards such a target, Commerzbank’s FX analyst Tatha Ghose notes.
“The forint is prone to greater volatility and high-beta swings during risk-off episodes, and can get somewhat out of hand, needing emergency responses by MNB. In such scenarios, exchange rate pass-through can become a dominant inflation driver – hence, MNB should like to arrest developments early.”
“What we mean by intervention is that MNB might have to come out and further tweak its monetary policy guidance verbally – possibly warning about a reversal into rate hikes in case the situation worsens.”
“If things were to progress in this direction, government backing in the media would be crucial. Any contradictory remarks by government officials could have a rapidly destabilising effect. Thereafter, in the event that market conditions continued to worsen for external reasons, and EUR/HUF reached say 420, actual rate hikes would become necessary. Even if they would not be strictly necessary for inflation targeting, they would be necessary for the exchange rate – because this would be the market’s way of testing the central bank.”
The United States Bureau of Economic Analysis (BEA) is set to release the Personal Consumption Expenditures (PCE) Price Index data for September, which is the Federal Reserve’s preferred measure of inflation, at 12:30 GMT.
Although PCE inflation data is usually seen as a big market-mover, this time its impact could be limited due to the fact that quarterly PCE inflation figures were already released within the Gross Domestic Product (GDP) report on Wednesday.
The core PCE Price Index, which excludes volatile food and energy prices, is projected to rise 0.3% in August on month, at a stronger pace than the 0.1% increase recorded in August. Over the last twelve months, the core PCE inflation is expected to edge lower to 2.6% from 2.7%. Meanwhile, the headline annual PCE inflation is seen retreating to 2.1% from 2.2% in the same period.
On Wednesday, the BEA reported that the PCE Price Index and the core PCE Price Index rose 1.5% and 2.2%, respectively, on a quarterly basis in the third quarter.
Previewing the PCE inflation report, “core PCE is projected to rise 0.3% m/m and print at 2.6% y/y vs. 2.7% in August,” BBH analysts expect, adding that“risks are skewed to the upside because CPI inflation in September ran hot.”
The CME Group FedWatch Tool shows that markets have already fully priced in a 25 basis points (bps) rate cut in November. At the last policy meeting of the year, the probability of another 25 bps rate reduction stands at around 70%, against a 30% chance of a no change in the policy rate. The PCE Price Index figures are unlikely to alter these odds in a noticeable way.
Eren Sengezer, European Session Lead Analyst at FXStreet, shares a brief technical outlook for EUR/USD:
“The Relative Strength Index (RSI) indicator on the daily chart remains below 50 even though EUR/USD closed the previous three days modestly higher, highlighting a lack of bullish momentum.”
“On the upside, the 200-day Simple Moving Average (SMA) aligns as a pivot level at 1.0870. In case EUR/USD rises above this level and starts using it as support, technical buyers could take action. In this scenario, 1.0940 (100-day SMA) could be seen as next resistance before 1.1000-1.1010 (round level, 50-day SMA). On the downside, 1.0800 (round level) aligns as first support ahead of 1.0670 (static level from June).”
The Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The YoY reading compares prices in the reference month to a year earlier. Price changes may cause consumers to switch from buying one good to another and the PCE Deflator can account for such substitutions. This makes it the preferred measure of inflation for the Federal Reserve. Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
Read more.Next release: Thu Oct 31, 2024 12:30
Frequency: Monthly
Consensus: 2.1%
Previous: 2.2%
Source: US Bureau of Economic Analysis
The Harmonized Index of Consumer Prices (HICP), the European Central Bank's (ECB) preferred gauge of inflation, rose 2% on a yearly basis in October's flash estimate, Eurostat reported on Thursday. This reading followed the 1.7% increase recorded in September and came in above the market expectation of 1.9%. On a monthly basis, the HICP rose 0.3% after falling 0.1% in September.
The core HICP, which excludes prices of volatile items such as food and energy, rose 2.7% annually, matching the September print.
EUR/USD edges slightly higher following this report and was last seen trading at around 1.0870.
The BoJ's statement didn't present many changes with the fireworks mainly happening during Governor Ueda's press conference, TDS’ FX and Macro Strategist Alex Loo notes.
No Big Changes to the Statement
“Gov Ueda reverts to a policy hawk by offering more hawkish remarks today. He tried to present an open-minded BoJ Board by noting that there is no "preconception on timing of rate hike" but the punchline was his capitulation of his previous comment that the BoJ "has time to mull" on policy options.”
“We maintain our view that the BoJ could hike in Dec'24 given firmer inflation prints and the possibility of a strong wage talk discussion result (i.e., Rengo is suggesting a 5% wage raise next year).”
“While JPY can see some near-term weakness as markets digest the domestic political situation and US elections outcome, we still maintain a medium-term bullish view on the JPY. Note that JPY's massive undervaluation (>20% on LFFV) dovetails with waning government support, and it is in the new government's interest to stem further JPY weakness.”
European Central Bank (ECB) Governing Council Member Fabio Panetta argued on Thursday that monetary conditions in the Eurozone remain restrictive, adding that rates need to come down, per Reuters.
"With the decline in inflation, we need to pay attention to the weakness of the real economy," Panetta said and noted that the ECB must avoid the risk of pushing inflation well below the target.
These comments failed to trigger a noticeable market reaction. At the time of press, EUR/USD was trading at 1.0865, rising 0.1% on a daily basis.
Yesterday, when the British Chancellor of the Exchequer, Rachel Reeves, delivered her budget speech, there was visibly a lot of volatility in the gilt market, the market for British government bonds, and in the foreign exchange market in GBP rates. No wonder. Everyone still remembers that in 2022, the then Tory government under Liz Truss triggered a rather spectacular collapse in the gilt market with its budget plan, Commerzbank’s Head of FX and Commodity Research Ulrich Leuchtmann notes.
“The events of that time may be a cautionary reminder that even governments can only manage their finances under the restriction of a budget constraint. In other words, for finance ministers, too, there is no free lunch. No matter how many supporters of ‘modern monetary theory’ may claim the opposite. But it's just not that easy with the government budget constraint.”
“Because a rapidly growing economy generates more tax revenue for the treasury, a budget policy that chokes off growth by saving too much is not always the best way to achieve fiscal stability. In theory, a finance minister can even save her way into national bankruptcy. Therefore, every budget is a balancing act.”
“The fact that the British government is relying on tax increases in its budget rather than excessively cutting spending is probably the right decision from the point of view of fiscal stability. But this will only become clear later. Until then, it depends on the gilt traders' opinions. But because every trader knows that it is not their opinion that matters, but the average opinion of all the others, it sometimes takes a little back and forth in prices until an equilibrium is found and every trader believes that all the other traders will be satisfied. In the GBP and Gilt markets alike. That is market mechanics and not a warning from the market to Chancellor Reeves.”
The expanded BRICS – composition now also including Egypt, Ethiopia, Iran and the UAE – met in October in Kazan, Russia, Danske Bank macro analysts report.
“The meeting was hosted by President Vladimir Putin who was able to attract heads of states from nearly 20 countries, including Turkey, to Russia. According to Putin, more than 30 countries have expressed a desire to join the forum, and a list of 13 countries for possible expansion has been agreed on. Saudi Arabia has been invited but is yet to formally join.”
“Anti-western attitudes are on the rise in many places across the global south, so it is no surprise many governments sympathise the BRICS whose central aim is to counterbalance the US-led world order. One of the themes in the BRICS+ group is to build an alternative global financial infrastructure to reduce dependence on Western-dominated systems such as SWIFT. We doubt the group can pose a credible challenger any time soon, also, due to internal conflicts.”
“For example, Ethiopia and Egypt have a long-standing dispute related to Ethiopia’s dam project which Egypt says is jeopardizing their water security. There is even a real risk of a proxy war between the two as tensions grow in Somalia’s breakaway region, Somaliland. Egypt signed a defence agreement with Somalia in July, while Ethiopia struck a deal with Somaliland in January to use its Red Sea shores for naval operations.”
The Pound Sterling (GBP) outperforms its majority of peers on Thursday as traders have pared back bets that the Bank of England (BoE) will cut interest rates aggressively after the United Kingdom (UK) Labour government announced its first Autumn Forecast Statement on Wednesday.
The budget presentation from UK Chancellor of the Exchequer Rachel Reeves was filled with the biggest tax increase in almost three decades to repair the hole in public services, which she referred to as “inheritance from Conservatives”.
The major highlight of the UK budget was the collection of taxes worth 40 billion pounds through an increase in employers’ contribution to National Insurance (NI), higher duty on alcohol and tobacco, and a sharp increase in Capital Gains Tax. Reeves allocated higher spending to various areas such as the National Health Service (NHS), affordable housing, funding duty freeze on fuel, and setting up green hydrogen projects.
Meanwhile, the UK’s Office for Business Responsibility (OCR) has upwardly revised inflation forecasts for 2024 to 2.5% from 2.2% projected in March, a revision that also led traders to expect less interest rate cuts by the BoE. The agency also revised inflation forecasts for 2025 significantly higher, to 2.6% from 1.5% previously anticipated.
Going forward, investors will shift focus to the BoE monetary policy meeting, which will be announced on November 7. The BoE is expected to cut interest rates by 25 basis points (bps) 4.75%, according to an October 22-28 Reuters poll.
The Pound Sterling struggles to break above 1.3000 decisively against the US Dollar. The near-term trend of the GBP/USD pair remains uncertain as it stays below the 50-day Exponential Moving Average (EMA), which trades around 1.3060.
The GBP/USD pair continues to put efforts to hold the lower boundary of a Rising Channel chart formation around 1.2900 on the daily time frame.
The 14-day Relative Strength Index (RSI) strives to hold above 40.00. A fresh bullish momentum would trigger if it manages to do so.
Looking down, the 200-day EMA near 1.2845 will be a major support zone for Pound Sterling bulls. On the upside, the Cable will face resistance near the 50-day EMA around 1.3060.
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.
Silver prices (XAG/USD) fell on Thursday, according to FXStreet data. Silver trades at $33.59 per troy ounce, down 0.55% from the $33.77 it cost on Wednesday.
Silver prices have increased by 41.14% since the beginning of the year.
Unit measure | Silver Price Today in USD |
---|---|
Troy Ounce | 33.59 |
1 Gram | 1.08 |
The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 82.70 on Thursday, up from 82.54 on Wednesday.
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.)
After the excitement of yesterday’s GDP data, today investors are granted another peek into the hedonistic lifestyle of the US consumer. Personal income and consumption data are due, and both should be relatively buoyant. Job security and rising real incomes are powerful forces for supporting economic activity through consumer spending, UBS macro analyst Paul Donovan notes.
“The US personal consumer expenditure deflator is also due. This is less dependent on fantasy than the US consumer price measure, although there is still a fantasy element. Market determined prices (very definitely a subset of the overall index) showed a less than 2% y/y increase last month, which does not suggest a meaningly imbalance in economic supply and demand.”
“European October consumer price inflation will be published (the flash estimate) with Italy completing the data from the major economies. Germany’s data was higher yesterday, which may be an idiosyncrasy. Markets are unlikely to be deterred from expecting regular rate cuts.”
“US initial and continuing jobless claims data may be of more interest as these are reliable snapshots of a subset of the US labor market.”
As expected, the Bank of Japan left its key interest rate unchanged at 0.25% at the end of its meeting this morning. It's a way of acknowledging the current political risks, given the uncertain outcome of the parliamentary elections at home and the upcoming US elections, Commerzbank’s FX analyst Volkmar Baur notes.
“The Bank of Japan also left its economic forecasts pretty much the same as they were three months ago. Next year's growth was revised up a little, while inflation expectations for the coming year were revised down a little in the wake of lower energy prices. The Bank of Japan still thinks rates should go up if the economy keeps growing as expected.”
“We're still waiting to hear why. They're expecting growth of around 1% and inflation of 1.9%. Other central banks would probably be happy – job done – and would simply wait and see how the economy develops, in order to be able to react to any unforeseen events by tightening or loosening. It's not clear why they're pushing to raise interest rates when the forecasts show that price stability will be achieved.”
“I can see this desire to raise interest rates again leading to a further interest rate hike in December. This would also make the yen stronger in the meantime. I don't think there'll be any more interest rate hikes next year though, which should mean the JPY will start to weaken again.”
Silver price (XAG/USD) continues to decline, trading at around $33.60 during the European session on Thursday. Analysis of the daily chart indicates a bullish bias, as Silver price consolidates within an ascending channel.
Furthermore, the 14-day Relative Strength Index (RSI) remains above the 50 mark, supporting the prevailing bullish outlook. However, a decline below 50 could signal a shift toward bearish sentiment.
However, the Moving Average Convergence Divergence (MACD) line is positioned above the signal line, indicating a potential bearish signal. A bearish crossover could suggest a shift in momentum from bullish to bearish, signaling a possible sell opportunity. Nonetheless, since both lines remain above the centerline (zero line), this suggests that the overall trend remains bullish.
On the upside, the Silver price may target the psychological level of $35.00, followed by the upper boundary of the ascending channel at $35.10. A breakout above this level could propel the price of the grey metal toward the psychological level of $36.00.
Regarding support, Silver price is testing the nine-day Exponential Moving Average (EMA) at $33.60, with the 14-day EMA at $33.27 serving as the next support level. A drop below this latter level could increase selling pressure, potentially pushing XAG/USD down to the lower boundary of the ascending channel around the psychological level of $33.00.
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.
Yesterday's GDP data for the third quarter disappointed, especially in Hungary, confirming a return to technical recession, but the data in the Czech Republic was also slightly weaker, below central bank expectations, ING’s FX analyst Frantisek Taborsky notes.
“Inflation numbers in Poland for October will be published today, the first in the Central and Eastern Europe (CEE) region. Our economists expect a slight pick-up from 4.9% to 5.1% YoY, one-tenth above market expectations. However, core inflation in particular surprised to the upside in September and may get more attention this time.”
“CEE currencies remain under pressure and we maintain a bearish view going forward. EUR/HUF moved to new highs and traded above 408 for a while yesterday. Valuations show significant cheapness of HUF assets, on the other hand, the market is risk-off ahead of the US elections and not much willingness to take too much risk ahead of the risk event. Thus, we do not see much reason for improvement and approaching 410 EUR/HUF seems to be the next test, which could be an uncomfortable level for the central bank.”
“In Poland, it was only at the end of yesterday's trading that the POLGBs market reflected the surprisingly high deficit increase announced a day earlier and today we could see further reverberations of market fears of higher bond supply, exposing PLN as well. In the Czech Republic, the CNB blackout period starts later today and so far we haven't heard much. That means today is the last chance to see any headlines, but the 25bp November cut seems like a done deal.”
Today, Eurostat will release the eurozone inflation figures for October, Commerzbank’s Head of FX and Commodity Research Ulrich Leuchtmann notes.
“After the German figures surprised on the upside yesterday (and were responsible for the euro being the strongest G10 currency yesterday), the market is likely to be waiting for a similar surprise for the currency area as a whole today. If that were to happen, the market's view of the ECB would be put to the test.”
“Whatever one may think of the ECB, if inflationary pressure remains high, it simply has no room to cut interest rates. Even most critics of the ECB would probably agree on that.”
“A high inflation figure today would complete the trend of the EUR recovery that we have been observing since the publication of the PMI indices. These had not even been surprisingly good. They just hadn't fallen any further. Should the market reaction today follow a similar pattern, it would not take a particularly high eurozone inflation rate for the euro to continue its recovery.”
The USD/CAD pair attracts fresh buying on Thursday and for now, seems to have stalled its corrective pullback from the 1.3940 area, or the highest level since August 5 touched the previous day. Spot prices trade above the 1.3900 mark through the first half of the European session as traders keenly await important macro data from the US and Canada.
The US Personal Consumption Expenditure (PCE) Price Index should provide cues about the Federal Reserve's (Fed) interest rate outlook, which, in turn, will play a key role in influencing the US Dollar (USD) price dynamics. Apart from this, the monthly Canadian GDP print should provide some meaningful impetus to the USD/CAD pair. Heading into the key data risk, renewed selling around Crude Oil prices is seen undermining the commodity-linked Loonie and acting as a tailwind for the currency pair.
The USD, on the other hand, languishes near the weekly low amid the hawkish Bank of Japan (BoJ)-inspired buying around the Japanese Yen (JPY). That said, elevated US Treasury bond yields, bolstered by firming expectations for a less aggressive policy easing by the Fed and deficit-spending concerns after the US election, continue to offer some support to the Greenback. Apart from this, the risk-off impulse benefits the USD's relative safe-haven status and contributes to the USD/CAD pair's move up.
The incoming US economic data suggests that the economy remains on strong footing and supports prospects for smaller interest rate cuts by the Fed. Furthermore, investors remain concerned that the spending plans of Vice President Kamala Harris and the Republican nominee Donald Trump will further increase the US fiscal deficit. This, in turn, continues to push the US bond yields higher and favors the USD bulls, suggesting that the path of least resistance for the USD/CAD pair remains to the upside.
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 Canadian economic activity. The MoM reading compares economic activity in the reference month to the previous month. Generally, a high reading is seen as bullish for the Canadian Dollar (CAD), while a low reading is seen as bearish.
Read more.The Mexican Peso (MXN) trades mixed in its key pairs – USD/MXN, EUR/MXN and GBP/MXN – on Thursday after weakening for four days running. The continuation lower comes despite a slight improvement in Mexican fundamentals as technical traders ride the Peso’s downtrend.
The Mexican Peso’s broad weakness could be attributed to the continuing high odds of former President Donald Trump winning the US presidential election on November 5 given his promise to place high tariffs on Mexican imports. In addition, Trump’s preference for lowering taxes despite a rising US debt pile could also potentially lead to higher US Treasury yields and boost the US Dollar (USD), directly impacting USD/MXN.
The election model on polling website FiveThirtyEight 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% for the Democrat nominee versus 46.7% for the Republican.
The direct negative impact of a Trump victory on Mexico might be ameliorated, however, by the reality of modern trade between the countries. US, Mexican and Canadian supply chains and economic ecosystems are now intertwined due to three decades of free trade agreements, Mexican imported goods are actually often composed of an amalgam of the three country’s components so tariffs would harm the US as much as Mexico.
The latest macroeconomic figures, meanwhile, offered some relief to the Peso but not enough to push back the tide. Mexican Gross Domestic Product (GDP) growth came out at 1.5% YoY in Q3, beating estimates of 1.2% but below the 2.1% registered in Q2, according to The Instituto Nacional de Estadistica Geografia e Informatica (INEGI). This follows 1.5% growth In Q1.
The Q3 result was exactly in line with the estimates of the International Monetary Fund (IMF), which downgraded its forecasts for Mexican economic growth by 1.5% for 2024.
On a quarterly basis, Mexican GDP rose by 1.0% QoQ, beating estimates of a 0.8% expansion and the previous quarter’s 0.2% increase.
The growth was broad-based and a positive development, however, it would not “preclude another rate cut in November” from the Bank of Mexico (Banxico), according to Kimberley Sperrfechter, Emerging Markets Economist at London-based advisory service Capital Economics. A cut to Mexico’s relatively attractive 10.50% base interest rate would attract less foreign capital inflows, pressuring the Peso lower.
“We still think the conditions are currently in place for Banxico to press ahead with another interest rate cut at its November meeting. But a lot will depend on the outcome of the US election. A Trump victory – and higher US Treasury yields and a stronger Dollar – would probably prompt Banxico to halt,” said Sperrfechter in a note.
USD/MXN continues unfolding a leg higher, probably the “c wave” of a bullish “abc” pattern, which began at the October 14 swing low.
Wave c will probably reach the Fibonacci 61.8% of the length of wave “a”, giving an upside target of 20.29.
USD/MXN is probably in an uptrend on a short, medium and long-term basis and is trading in a rising channel. Given the technical dictum “the trend is your friend,” the odds favor a continuation higher.
The original break above 19.83 (October 1 high) already confirmed a move up, with a target in the vicinity of the September 10 high at 20.13, which has now been met.
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.
Labour's large tax-and-spend budget – described by some as an ‘old Labour’ policy – is still reverberating across UK asset markets, ING’s FX analyst Chris Turner notes.
“The Pound Sterling (GBP) briefly got a lift yesterday on the view that the budget was stimulative and that the Bank of England easing cycle would need to be repriced higher. We suspect the BoE is unlikely to be swayed by the government's budget plans and we see the risk that yesterday's spike in short-dated sterling interest rates gets reversed.”
“At the same time, it looks as though Labour is sailing very close to the wind with its borrowing plans – with new Gilt supply coming dangerously close to £300bn for FY24/25 and FY25/26. EUR/GBP should be trading a little lower based on short-dated rate spreads and the reason it is not is probably because a modest fiscal risk premium is going back into sterling. Should eurozone CPI surprise on the upside today, EUR/GBP could move closer to 0.8400.”
“Over the medium term, we are slightly bullish on EUR/GBP because of the market under-pricing the forthcoming easing BoE cycle. And it now seems the UK budget may add to that trend if indeed a modest fiscal risk premium gets priced into the pound. “
China’s official PMIs improved in October, probably as a first sign that policy stimulus is having an impact on the economy. Recent measures may take time to filter through to the economy. Also, more details will likely be released during the upcoming meeting of top Chinese policymakers on November 4-8, Commerzbank’s Senior Economist Tommy Wu notes.
“The official manufacturing PMI rose to 50.1 in October, up from 49.8 in September and after it stayed below the 50-neutral mark for five consecutive months. Among the components, production was firmer inside the expansion territory. New orders rose to 50 after indicating a contraction for five months. This reflects an improvement in domestic demand, likely bolstered by the recent policy stimulus. There are also signs that producer prices may start to stabilize, in month-on-month terms. The subindex on factory gate prices rose to 49.9, just below the 50-neutral mark, while prices of raw material inputs rose above 50 to 53.4.”
“Meanwhile, the non-manufacturing PMI rose to 50.2 in October from 50 in September. This was supported by an improvement in services, in which the subindex rose to 50.1, up from 49.9 below the 50-neutral mark previously. This may be in part due to the seasonal effect of the one-week National Day holiday in early October. The government’s trade-in program that supports the sales of cars and big-ticket items may also have a role to play.”
“All eyes are on the upcoming government meeting on November 4-8, in which the Standing Committee of National People’s Congress will discuss and approve economic and financial policies. The meeting is expected to fill in the details of policy measures previously announced. These include stimulus and measures that support consumption, the property sector, and local government financing.”
In contrast to the ADP figure, the publication of the US GDP data (for Q3) did not come as any major surprise. The figure (+2.8% annualized) was close to the median of analyst estimates (2.9%), so it was not a big surprise, Commerzbank’s Head of FX and Commodity Research Ulrich Leuchtmann notes.
“Of course, with growth rates like these, the US continues to have a significant growth advantage over other major developed economies, which are virtually stagnating after the immediate post-corona recovery has ended: the eurozone, the UK, and Japan. And that justifies USD strength. But we have to be careful. This growth advantage is not new. After all, the dollar is already strong. See figure below. US growth strength is already priced into Fed expectations, asset prices and USD exchange rates, it seems to me.”
“Further US growth impulses would be needed for new USD strength. One or the other currency trader may expect a second Trump presidency to provide such impulses. That may well be. I would just like to remind you that other conditions are also needed for this. Among other things, a Fed monetary policy that continues to be guided by reason.”
“Be that as it may, I think it's plausible that some market participants want to wait until the election and do not want to enter active positions based on current real economic data.”
Yesterday was a day for the ECB hawks, ING’s FX analyst Chris Turner notes.
“German and eurozone data surprised on the upside as did German October CPI. And the influential Isabel Schnabel said the ECB should not rush further rate cuts. This prompted around a 12bp repricing higher in the terminal rate for the ECB's easing cycle and finally saw the two-year EUR:USD swap rate differential narrow, supporting EUR/USD.”
“The same dynamic could be present in the European morning should the eurozone October flash CPI surprise on the upside and again pare back expectations for the ECB rate cut in December. These still stand at 34bp.”
“EUR/USD could retest yesterday's 1.0870 high on today's European data – but a move up to 1.09030 might be a bridge too far given the pivotal US elections next Tuesday.”
The published ADP data on employment changes really doesn't have much to do with the data from the Bureau of Labor Statistics (BLS), which is always published two days later. Therefore, it cannot be concluded from yesterday's data release that tomorrow's nonfarm payrolls figure will be particularly high, Commerzbank’s Head of FX and Commodity Research Ulrich Leuchtmann notes.
“Nevertheless, the currency market reacts, when the ADP figure (as yesterday) is miles above analysts' estimates, with USD strength. Not much and not permanently, but visibly.
“In this respect, currency traders remind me a bit of my grandmother. She would have vehemently denied being superstitious, but she would never have hung out the laundry during the “Rough Nights” ("Twelvetide" in English, the period between Christmas and Epiphany). Because then, according to old Germanic mythology, the riders of the Wild Hunt would come. And they would be angry if they got tangled up in the laundry.”
“Apparently, currency traders are a lot like that: you know that the ADP data don't actually provide any information about the nonfarm payrolls, but a small USD long position can't hurt. Isn't it interesting how stubbornly such superstitions persist in the age of data analytics, trading machines and AI?”
The NZD/USD pair extends gains for the second consecutive session, trading near 0.5980 during Thursday's European session. Daily chart analysis shows a bearish bias, with the pair moving within a descending channel. A breakout above this descending channel could signal a potential shift in momentum.
Further supporting this outlook, the nine-day Exponential Moving Average (EMA) remains below the 14-day EMA, reinforcing the bearish sentiment for NZD/USD. Short-term momentum appears weak, indicating continued downward pressure.
The 14-day Relative Strength Index (RSI), a key momentum indicator, hovers just above 30. A dip below this threshold would signal an oversold condition, potentially hinting at an impending upward correction for the NZD/USD pair.
On the downside, NZD/USD may approach the lower boundary of the descending channel near 0.5920. A decisive break below this support could drive the pair toward the next "pullback support" around the 0.5850 level.
On the resistance side, the initial hurdle for NZD/USD lies at the upper boundary of the descending channel, aligning with the nine-day Exponential Moving Average (EMA) near 0.6001, followed by the 14-day EMA at 0.6026. A sustained move above these EMAs could shift the pair to a short-term bullish stance, potentially targeting the psychological level of 0.6100.
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
The Dollar Index (DXY) has softened a little this week – largely in response to overseas events. Here the third-quarter eurozone growth data and October German price data were stronger than expected and have prompted the market to scale back expectations of a 50bp ECB rate cut this December, ING’s FX analyst Chris Turner notes.
“And this morning we have just seen USD/JPY drop nearly 1% on Bank of Japan Governor Kazuo Ueda's press conference outlining a plan to continue with rate hikes should the BoJ's forecasts be realised. Most recently the market had felt the BoJ would be less likely to hike on the back of uncertain political developments and potentially a more dovish make-up of the Japanese government.”
“That brings us to the USD. Dollar strength this month has all been about a market positioning for a Donald Trump win and US rate spreads widening in favour of the dollar as the Rest of the World turns more dovish. Well, it seems that the ECB and BoJ may not be quite as dovish as some had feared – news that could potentially cap the dollar's rally for the time being.”
“Given that background, a sticky core PCE deflator today – the Fed's preferred price gauge – at 0.3% month-on-month may not need to send the dollar that much higher. DXY is currently on support at 104.00 and after one-way bullish traffic for over a month, may be due a modest correction to the 103.65 area.”
EUR/GBP trades slightly lower during early European hours on Thursday near 0.8360, following strong gains in the previous session. This downside may be limited, as the Euro could find support from investors scaling back expectations of a large rate cut by the European Central Bank (ECB) in December.
This sentiment shift regarding the ECB’s policy outlook comes after stronger-than-expected economic data from the Eurozone and Germany released on Wednesday. Investors will keep an eye on the Eurozone Harmonized Index of Consumer Prices (HICP) on Thursday.
According to preliminary estimates from Eurostat, the seasonally adjusted Eurozone Gross Domestic Product (GDP) expanded by 0.4% quarter-over-quarter in Q3, surpassing the expected 0.2% increase. Year-over-year, the Eurozone's GDP grew by 0.9%, above the forecasted 0.8% growth.
In Germany, GDP rose by 0.2% QoQ in Q3, recovering from a 0.3% decline in Q2 and exceeding expectations of a 0.1% contraction, based on preliminary data. Additionally, Germany’s Consumer Price Index (CPI) showed an annual inflation rate of 2.0% in October, a three-month high, up from 1.6% in September and above the projected 1.8%, according to preliminary estimates.
The EUR/GBP cross also gained support as the Pound Sterling (GBP) weakened following the UK Labour government’s first budget announcement on Wednesday. This budget includes £40 billion in tax hikes aimed at reducing public finance gaps and bolstering public services, as reported by CNBC. A major revenue source in the budget is a rise in National Insurance (NI) contributions, a tax on earnings paid by employers.
Furthermore, traders are likely watching an upcoming keynote address by Bank of England (BoE) Deputy Governor Sarah Breeden at a conference hosted by the Hong Kong Monetary Authority and Bank for International Settlements on the “Opportunities and Challenges of Emerging Technologies in the Financial Ecosystem.”
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
EUR/USD holds up near 1.0850 in Thursday’s European session following Wednesday’s sharp recovery. The major currency pair strengthened as traders have pared back bets of a large interest-rate cut from the European Central Bank (ECB) in the December monetary policy meeting after a faster-than-expected Eurozone Gross Domestic Product (GDP) growth and hotter-than-forecasted German inflation.
Eurostat reported on Wednesday that the Eurozone expanded at a faster pace of 0.9% in the third quarter of the year compared with the same period a year earlier. A major contribution to higher growth in the Eurozone came from its largest nation, Germany, which managed to dodge a technical recession. The German economy surprisingly rose by 0.2% compared with the previous quarter, beating expectations of a 0.1% contraction. Meanwhile, the growth rate in Spain was higher than expected, as forecasted in France, and slower than anticipated in Italy.
The German flash Harmonized Index of Consumer Prices (HICP) for October accelerated at a faster pace of 2.4% on year, higher than estimates of 2.1% and the prior release of 1.8%, suggesting that the battle against inflation is yet not over.
"The just-released flash estimate of German inflation in October could make some members of the ECB regret the latest rate cut and the European Central Bank's new openness to more aggressive cuts," said analysts at ING.
For more cues on the current status of inflation, investors will focus on the Eurozone flash HICP data for October, which will be published at 10:00 GMT.
Meanwhile, ECB President Christine Lagarde has shown confidence about taming price pressures in an interview with the French newspaper Le Monde published on Thursday. “The objective is in sight, but I am not going to tell you that inflation is under control,” Lagarde said. She reaffirmed her commitment to interest rate reduction, but refrained from committing to a specific rate cut path.
EUR/USD trades close to a fresh more than a week high around 1.0850 in European trading hours. The major currency pair holds onto its recent recovery after breaking above the round-level resistance of 1.0800. However, its broader outlook is still bearish as it trades below the 200-day Exponential Moving Average (EMA) at around 1.0900.
The 14-day Relative Strength Index (RSI) climbs to near 42.00 after staying in the 20.00-40.00 range for almost a month, suggesting that the bearish momentum has terminated.
Looking up, the shared currency pair could rise to near the 200-day EMA around 1.0900 and the September 11 low around 1.1000. On the downside, the upward-sloping trendline near 1.0750, which is plotted from the April 16 low at around 1.0600, will be the key support area for the Euro bulls.
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 USD/CHF pair drifts lower to around 0.8655 during the early European session on Thursday. Persistent safe-haven flows amid the uncertainty surrounding the US presidential election on November 5 and Middle East tensions continue to support the Swiss Franc (CHF).
The US economic data continues to suggest that the US economy remains strong and supports prospects for less aggressive policy easing by the Federal Reserve (Fed). This, in turn, might cap the downside for the Greenback in the near term. Markets are pricing in about 96% odds of a 25 basis points (bps) rate cut by the Fed, according to CME's FedWatch Tool.
Traders will keep an eye on the US Personal Consumption Expenditure (PCE) Price Index, which is due later on Thursday. On Friday, the US employment data will take center stage, including the Nonfarm Payrolls (NFP), Unemployment Rate, and Average Hourly Earnings.
The race between Republican Donald Trump and Democrat Kamala Harris remains close ahead of the November 5 US presidential election. The ongoing geopolitical tensions in the Middle East and the uncertainty related to the outcome of the US election could lift the CHF and act as a headwind for USD/CHF for the time being.
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.
Here is what you need to know on Thursday, October 31:
The Harmonized Index of Consumer Price (HICP) inflation data from the Euro area and the Personal Consumption Expenditures (PCE) Price Index readings from the US will be watched closely on the last day of October. The US economic docket will also feature weekly Initial Jobless Claims data.
The US Dollar (USD) came under modest bearish pressure in the second half of the day on Wednesday following mixed data releases. The Automatic Data Processing reported that employment in the private sector rose by 233,000 in October. This reading followed the 159,000 increase in September and surpassed the market expectation of 115,000 by a wide margin. On a negative note, the US Bureau of Labor Statistics' first estimate showed that the US' Gross Domestic Product (GDP) expanded at an annual rate of 2.8%, falling short of analysts' estimate of 3%. The USD Index edged lower and closed in negative territory. Early Thursday, the index holds steady slightly above 104.00.
The Bank of Japan (BoJ) announced early Thursday that it decided to keep its short-term interest rates target unchanged at 0.25% following the conclusion of its two-day monetary policy review. Speaking on the policy outlook in the post-meeting press conference, BoJ Governor Kazuo Ueda said that the impact of foreign exchange rates on prices has become larger than in the part, adding that firms are now more eager to hike wages and prices. "We will keep adjusting degree of easing if our economic, price outlook is to be realised," Ueda reiterated. After moving sideways on Tuesday and Wednesday, USD/JPY turned south following the BoJ event and was last seen trading deep in the red near 152.00.
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Canadian Dollar.
USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
---|---|---|---|---|---|---|---|---|
USD | 0.03% | -0.09% | -0.79% | 0.08% | -0.04% | -0.07% | -0.23% | |
EUR | -0.03% | -0.12% | -0.81% | 0.06% | -0.07% | -0.09% | -0.26% | |
GBP | 0.09% | 0.12% | -0.69% | 0.18% | 0.05% | 0.03% | -0.14% | |
JPY | 0.79% | 0.81% | 0.69% | 0.86% | 0.76% | 0.68% | 0.54% | |
CAD | -0.08% | -0.06% | -0.18% | -0.86% | -0.11% | -0.15% | -0.33% | |
AUD | 0.04% | 0.07% | -0.05% | -0.76% | 0.11% | -0.02% | -0.22% | |
NZD | 0.07% | 0.09% | -0.03% | -0.68% | 0.15% | 0.02% | -0.17% | |
CHF | 0.23% | 0.26% | 0.14% | -0.54% | 0.33% | 0.22% | 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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
During the Asian trading hours, the data from Australia showed that Retail Sales rose by 0.5% on a quarterly basis in the third quarter. Meanwhile, the NBS Manufacturing PMI in China came in at 50.1 in October, up from 49.8 in September. AUD/USD continues to move sideways below 0.6600 after ignoring these figures.
EUR/USD gained more than 0.3% on Wednesday, supported by the better-than-expected GDP and strong inflation readings from Germany. The pair stays relatively quiet in the European morning on Thursday and fluctuates in a narrow band at around 1.0850.
GBP/USD lost its traction and closed in the red on Wednesday as markets assessed the details of the Autumn Budget. The pair holds steady early Thursday and clings to small recovery gains above 1.2950.
Gold seems to have entered a consolidation phase after setting a new record-high of $2,790. At the time of press, XAU/USD was down 0.3% on the day at $2,780.
The Bank of Japan (BoJ) Governor Kazuo Ueda said on Thursday that the central bank will keep adjusting the degree of easing if the economic and price outlook is to be realized. Ueda further stated that he will monitor financial and foreign exchange markets, and their impact on the economy and prices.
Japan's economy is recovering moderately, although some weak moves are seen.
Uncertainties surrounding Japan's economy, and prices remain high.
Must pay due attention to financial, FX markets, impact on japan's economy, prices.
FX impact on prices has become larger than in past, as firms are more eager to wage, price hikes.
Will keep adjusting degree of easing if our economic, price outlook is to be realized.
Need to closely watch impact of overseas economies, including u.s. economy, on japan's economic activities, prices.
To publicise findings of long-term policy review after december meeting.
At the time of writing, USD/JPY is trading 0.35% lower on the day to trade at 152.88.
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
European Central Bank (ECB) President Christine Lagarde said that the rate cuts will continue, but it will be determined by underlying economic data in the coming months, per Le Monde.
To base size and order of cuts on economic data.
No Euro-Area recession expected from 2024-2026.
Reaffirms commitment to continued interest rate reduction.
Remain prudent on inflation outlook, our goal is in sight but cannot say inflation is completely under control.
Future rate cuts are dependent on economic data in coming months.
At the time of writing, EUR/USD was down 0.04% on the day at 1.0851.
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
GBP/USD extends its losses for the second successive day, trading around 1.2950 during the Asian session on Thursday. This downside of the pair could be linked to the solid US Dollar (USD) as a market caution persists amid uncertainty surrounding the upcoming US presidential election.
Former President Donald Trump has made gains among Hispanic men as the November 5 US presidential election approaches. Meanwhile, Harris has seen increased support among white women. The race between the two candidates is extremely close, with Harris holding a slight lead of 46% to 43% in the latest poll conducted from October 16 to 21.
Traders are now focusing on upcoming key US data releases including PCE inflation data on Thursday and Nonfarm Payrolls (NFP) on Friday. On Wednesday, the Greenback encountered headwinds as the US Gross Domestic Product (GDP) annualized expanded by 2.8% in Q3, below 3.0% in Q2 and forecasts of 3.0%. However, the ADP Employment Change reported 233,000 newly added workers in October, marking the largest increase since July 2023.
The Pound Sterling (GBP) dipped following the release of the UK's new Labour government's first budget on Wednesday, which includes £40 billion in tax increases aimed at addressing public finance shortfalls and funding public services, according to CNBC. A significant revenue-generating measure in the budget is an increase in National Insurance (NI) contributions, which are taxes on earnings paid by employers.
Traders are also expected to pay close attention to a keynote speech by Bank of England (BoE) Deputy Governor Sarah Breeden at the Hong Kong Monetary Authority and Bank for International Settlements joint conference on the “Opportunities and Challenges of Emerging Technologies in the Financial Ecosystem.”
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 EUR/USD pair meets with some supply during the Asian session on Thursday and erodes a part of the previous day's gains to the 1.0870 area, or a one-and-half-week top. The downtick is sponsored by the emergence of some US Dollar (USD) dip-buying and drags spot prices below mid-1.0800s in the last hour.
The incoming US macro data continues to suggest that the economy remains on a strong footing and supports prospects for a less aggressive policy easing by the Federal Reserve (Fed), which, in turn, helps revive the USD demand. In fact, the ADP reported on Wednesday that private-sector employers added 233K new jobs in October. The growth in employment is expected to boost consumer spending and contribute to overall growth, validating the view that the Fed will proceed with smaller rate cuts.
Separately, the US Bureau of Economic Analysis' initial estimate indicated that the world's largest economy grew by a 2.8% annualized pace during the April-June period, slower than the 3% in the previous quarter. This, however, did little to influence expectations about the Fed's rate-cut path. Adding to this, concerns about increasing US fiscal deficit push the US Treasury bond yields higher, assisting the USD to stall its corrective slide from a three-month top and exerting pressure on the EUR/USD pair.
Meanwhile, the Eurozone data released on Wednesday showed inflationary pressure in Germany remains sticky. Furthermore, the German economy – the Eurozone's powerhouse – unexpectedly grew by 0.2 % quarter-on-quarter in the third quarter. This forced investors to pare their bets for a jumbo rate cut by the European Central Bank (ECB), which could offer some support to the shared currency and the EUR/USD pair ahead of Thursday's release of the flash Eurozone consumer inflation figures.
Later during the early North American session, the US Personal Consumption Expenditure (PCE) Price Index could provide fresh cues about the Fed's interest rate outlook and drive the US bond yields. Apart from this, the broader risk sentiment will drive demand for the safe-haven Greenback and contribute to producing short-term trading opportunities around the EUR/USD pair.
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: Thu Oct 31, 2024 10:00 (Prel)
Frequency: Monthly
Consensus: 2.6%
Previous: 2.7%
Source: Eurostat
Silver prices (XAG/USD) extends its losses for the second consecutive day, trading around $33.60 during the Asian hours on Thursday. However, the downside of the Silver price could be restrained amid increased demand for safe-haven assets amid uncertainties surrounding the US elections and geopolitical risks.
Former President Donald Trump has made gains among Hispanic men as the November 5 US presidential election approaches, where he will face Democratic candidate Kamala Harris. According to an analysis of Reuters/Ipsos polling, Trump is now trailing Harris by only 2%, with support at 44% compared to her 46%.
Meanwhile, Harris has seen increased support among white women. In late 2020, white women favored Trump over Biden by 12%, but now they lean Republican by a margin of 3%. The race between the two candidates is extremely close, with Harris holding a slight lead of 46% to 43% in the latest poll conducted from October 16 to 21.
Silver prices are likely to rise due to safe-haven demand as traders keep a close eye on escalating geopolitical tensions in the Middle East. This comes in the wake of Israel's military chief warning of a "very hard" strike on Iran if missile attacks continue. Lebanese Prime Minister Najib Mikati mentioned on Wednesday that US envoy Amos Hochstein indicated a possible ceasefire in the Israel-Hezbollah conflict could be achieved before the U.S. elections on November 5.
Additionally, investors are looking forward to China's parliamentary meeting scheduled for November 4-8, where announcements regarding potential stimulus measures from Beijing are anticipated. Reports indicate that China is considering a stimulus package exceeding 10 trillion Yuan to boost its economy.
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.
Gold prices fell in India on Thursday, according to data compiled by FXStreet.
The price for Gold stood at 7,526.42 Indian Rupees (INR) per gram, down compared with the INR 7,535.26 it cost on Wednesday.
The price for Gold decreased to INR 87,786.72 per tola from INR 87,889.82 per tola a day earlier.
Unit measure | Gold Price in INR |
---|---|
1 Gram | 7,526.42 |
10 Grams | 75,264.23 |
Tola | 87,786.72 |
Troy Ounce | 234,098.10 |
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/JPY cross drifts lower for the second straight day on Thursday and retreats further from over a three-month peak, around the 199.80 region touched the previous day. Spot prices slide below the 198.00 mark after the Bank of Japan (BoJ) announced its decision during the Asian session, albeit remain confined in a familiar range held since the beginning of this week.
As was widely anticipated, the BoJ decided to leave monetary policy settings unchanged on the back of the political uncertainty after Sunday's snap elections in Japan. In the accompanying statement, the BoJ reiterated that it will continue to raise policy rates if the economy and prices move in line with the forecast. This, along with fears of possible government intervention and nervousness ahead of the November 5 US presidential election, drive haven flows towards the Japanese Yen (JPY) and exerts some pressure on the GBP/JPY cross.
The British Pound (GBP), on the other hand, is weighed down by the emergence of some US Dollar (USD) dip-buying, which turns out to be another factor dragging spot prices lower. That said, doubts over the BoJ's ability to hike interest rates further, along with diminishing odds for more aggressive interest rate cuts by the Bank of England (BoE), could offer some support to the GBP/JPY cross. This, in turn, warrants some caution for bearish traders and before confirming that spot prices have topped out in the near term.
Investors now look forward to the post-meeting presser where comments by BoJ Governor Kazuo Ueda should influence the JPY and provide some impetus to the GBP/JPY cross in the absence of any relevant macro releases from the UK on Thursday.
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
The EUR/JPY cross attracts some sellers to near 165.85 during the Asian session on Thursday. The Bank of Japan (BoJ) decided to keep its policy rate unchanged, as widely expected.
The Bank of Japan (BOJ) decided to keep the short-term interest rates target unchanged at 0.25% on Thursday and reiterated its forecast that inflation will persist near the 2% target. The upside for the Japanese Yen might be limited amid the uncertainty about Japan's fiscal and monetary policy outlook. "Any strengthening of the yen at present would likely result from a general weakening of the U.S. dollar if interest rates begin to align," noted Sean Teo, a sales trader at Saxo.
Market players will shift their attention to the press conference by BoJ Governor Kazuo Ueda, which might offer some hints about the interest rate path in Japan. Meanwhile, the cautious mood ahead of the US presidential election next week could boost the safe-haven flows, benefiting the JPY.
On the Euro (EUR) front, the encouraging Eurozone flash Gross Domestic Product (GDP) for the third quarter (Q3) might help limit the EUR’s losses. Data released by Eurostat on Thursday showed that the Eurozone economy grew 0.4% QoQ in Q3, stronger than the 0.2% expected. On an annual basis, the Eurozone GDP expands by 0.9% in Q3, above the market consensus of 0.8%.
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
AUD/JPY retraces its recent gains from the previous session, trading around 100.50 during Thursday's Asian hours. The decline in the AUD/JPY cross comes as the Japanese Yen (JPY) strengthens following the Bank of Japan's (BoJ) policy announcement. The BoJ opted to maintain its short-term interest rate target at 0.25% after concluding its two-day monetary policy review, a decision that aligned with market expectations for stability.
According to the BoJ Outlook Report for Q3, the central bank plans to continue raising policy rates as long as the economy and prices align with its forecasts, particularly given that real interest rates are currently very low. The Bank of Japan aims to conduct monetary policy with a focus on sustainably and stably achieving its 2% inflation target.
However, there are expectations that Japan's political landscape could necessitate expansionary fiscal policies, complicating the BoJ's ability to raise interest rates further. Concerns about potential government intervention, coupled with cautious market sentiment, are providing some support to the safe-haven Japanese Yen. Investors are now awaiting the post-meeting press conference, where comments from BoJ Governor Kazuo Ueda are anticipated.
On the AUD’s front, the seasonally adjusted Australian Retail Sales rose by 0.1% month-over-month in September, falling short of the expected 0.3% and significantly down from the 0.7% growth seen in the previous month. On a quarterly basis, Retail Sales increased by 0.5% in Q3, rebounding from a 0.3% decline in the prior quarter.
In addition, China's NBS Non-Manufacturing PMI increased to 50.2 in October, up from 50.0 in the previous month, although it fell short of market expectations of 50.4. Meanwhile, the NBS Manufacturing PMI rose to 50.1, surpassing the previous reading of 49.8 and slightly exceeding the forecast of 50.0. Given the close trade relationship between China and Australia, any shifts in the Chinese economy could significantly impact the Australian market.
The Bank of Japan (BoJ) announces its interest rate decision after each of the Bank’s eight scheduled annual meetings. Generally, if the BoJ is hawkish about the inflationary outlook of the economy and raises interest rates it is bullish for the Japanese Yen (JPY). Likewise, if the BoJ has a dovish view on the Japanese economy and keeps interest rates unchanged, or cuts them, it is usually bearish for JPY.
Read more.Last release: Thu Oct 31, 2024 02:48
Frequency: Irregular
Actual: 0.25%
Consensus: 0.25%
Previous: 0.25%
Source: Bank of Japan
Gold price (XAU/USD) is seen oscillating in a narrow range during the Asian session on Thursday and consolidating its recent strong gains to a record high. The US Dollar (USD) attracts some dip-buying and for now, seems to have stalled its corrective slide from a three-month top amid bets for a slower path of rate cuts by the Federal Reserve (Fed), bolstered by robust economic data. This, along with concerns about the increasing US fiscal deficit, continues to push the US Treasury bond yields higher and caps the upside for the non-yielding yellow metal on the back of slightly overbought conditions on the daily chart.
Traders also seem reluctant to place fresh bullish bets around the Gold price and opt to wait for the release of the US Personal Consumption Expenditure (PCE) Price Index. Apart from this, the closely watched US Nonfarm Payrolls (NFP) report on Friday will be looked upon for cues about the Fed's interest rate outlook, which, in turn, will drive demand for the precious metal. In the meantime, any meaningful corrective pullback for the XAU/USD seems elusive in the wake of persistent safe-haven demand stemming from the US political uncertainty ahead of the November 5 presidential election and Middle East tensions.
From a technical perspective, the recent move up along an upward-sloping channel from the August monthly swing low points to a well-established short-term bullish trend. That said, the Relative Strength Index (RSI) on the daily chart is already flashing overbought conditions. Hence, any subsequent move up is more likely to remain capped near the $2,800 mark. The said handle represents the top boundary of the channel, which if broken decisively will be seen as a fresh trigger for bulls and set the stage for an extension of the appreciating move.
On the flip side, any meaningful corrective decline now seems to find decent support near the $2,750-2,748 region or a trading range resistance breakpoint. Some follow-through selling could make the Gold price vulnerable to extend the fall further towards the $2,732-2,730 intermediate support en route to the $2,715 area. This is followed by the $2,700 mark, which if broken should pave the way for a decline towards the next relevant support near the $2,675 zone en route to the $2,657-2,655 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.
USD/CAD appreciates to near its three-month high of 1.3940, recorded in the previous session, trading around 1.3920 during Thursday's European session. This upside of the pair could be linked to the solid US Dollar (USD) as market caution lingers amid uncertainty surrounding the upcoming US presidential election.
Traders are now focusing on upcoming key US data releases including PCE inflation data on Thursday and Nonfarm Payrolls (NFP) on Friday. On Wednesday, the Greenback encountered headwinds as the US Gross Domestic Product (GDP) annualized expanded by 2.8% in Q3, below 3.0% in Q2 and forecasts of 3.0%.
However, the ADP Employment Change report showed that private businesses in the United States added 233,000 workers in October, marking the largest increase since July 2023. This followed an upward revision to 159,000 in September and significantly exceeded forecasts of 115,000.
The commodity-linked Canadian Dollar (CAD) might have received support from stronger Oil prices, as Canada remains the largest crude supplier to the United States (US). crude prices found support amid optimism surrounding US fuel demand after an unexpected decline in crude inventories. West Texas Intermediate (WTI) Oil price trades around $68.70 at the time of writing.
The US Energy Information Administration (EIA) reported that crude Oil stockpiles fell by 0.515 million barrels in the week ending October 25, contrary to market expectations of a 2.3 million-barrel increase.
Bank of Canada Governor Tiff Macklem addressed the House of Commons Finance Committee on Wednesday to discuss the bank's monetary policy. Macklem stated that if the economy aligns broadly with their forecast, they expect to cut the policy rate further to support demand and maintain inflation on target.
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.
West Texas Intermediate (WTI) Oil price dips slightly to around $68.70 during Thursday's Asian trading hours. However, crude prices found support amid optimism surrounding US fuel demand after an unexpected decline in crude inventories.
The US Energy Information Administration (EIA) reported that crude Oil stockpiles fell by 0.515 million barrels in the week ending October 25, contrary to market expectations of a 2.3 million-barrel increase.
Additionally, crude Oil prices may gain further support amid expectations that OPEC+, which includes the Organization of the Petroleum Exporting Countries and allies like Russia, might delay a planned production increase.
Reuters reported that OPEC+ could postpone its December output hike by at least a month due to concerns about weak Oil demand and rising supply. The group had scheduled an increase of 180,000 barrels per day (bpd) for December but previously postponed this from October due to declining prices.
Meanwhile, markets are closely monitoring ongoing geopolitical tensions in the Middle East, particularly following a warning from Israel's military chief of a 'very hard' strike on Iran if further missile attacks occur.
Lebanese Prime Minister Najib Mikati told Lebanese broadcaster Al-Jadeed on Wednesday that US envoy Amos Hochstein suggested a potential ceasefire in the Israel-Hezbollah conflict could be reached before the US elections on November 5. Hochstein traveled to Israel to discuss ceasefire terms with Hezbollah, as confirmed by US State Department spokesperson Matthew Miller.
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.
Raw materials | Closed | Change, % |
---|---|---|
Silver | 33.756 | -1.94 |
Gold | 278.654 | 0.47 |
Palladium | 1146.32 | -5.09 |
The Australian Dollar (AUD) edges lower following the release of mixed economic data from Australia and China’s NBS Purchasing Managers Index (PMI) on Thursday. However, hawkish expectations for the Reserve Bank of Australia's (RBA) policy outlook continued to support the Aussie Dollar and limit the downside of the AUD/USD pair.
In September, seasonally adjusted Australian Retail Sales rose by 0.1% month-over-month, falling short of the expected 0.3% and significantly down from the 0.7% growth seen in the previous month. On a quarterly basis, Retail Sales increased by 0.5% in Q3, rebounding from a 0.3% decline in the prior quarter.
The US Dollar (USD) gains some traction as market caution lingers amid uncertainty surrounding the upcoming US presidential election. The Greenback, however, encountered headwinds as the US Gross Domestic Product (GDP) annualized expanded by 2.8% in Q3, below 3.0% in Q2 and forecasts of 3.0%.
Traders are now focusing on upcoming key US data releases: PCE inflation data on Thursday and Nonfarm Payrolls (NFP) on Friday.
AUD/USD hovers near 0.6570 on Thursday. The daily chart shows a short-term bearish trend as the pair trades within a descending channel. The 14-day Relative Strength Index (RSI) is trending lower and sits just above the 30 level, reinforcing the bearish sentiment.
On the support side, the AUD/USD may test the lower boundary of the descending channel around 0.6510, followed by the key psychological level of 0.6500.
For resistance, the AUD/USD pair challenges the upper boundary of the descending channel near 0.6580, with another psychological barrier at 0.6600. A breakout above this could open the path toward the nine-day Exponential Moving Average (EMA) at 0.6608.
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the Swiss Franc.
USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
---|---|---|---|---|---|---|---|---|
USD | 0.07% | 0.12% | 0.02% | 0.10% | 0.00% | -0.05% | -0.06% | |
EUR | -0.07% | 0.06% | -0.07% | 0.03% | -0.06% | -0.13% | -0.13% | |
GBP | -0.12% | -0.06% | -0.12% | -0.02% | -0.12% | -0.18% | -0.18% | |
JPY | -0.02% | 0.07% | 0.12% | 0.07% | -0.01% | -0.12% | -0.09% | |
CAD | -0.10% | -0.03% | 0.02% | -0.07% | -0.09% | -0.16% | -0.16% | |
AUD | -0.00% | 0.06% | 0.12% | 0.00% | 0.09% | -0.07% | -0.09% | |
NZD | 0.05% | 0.13% | 0.18% | 0.12% | 0.16% | 0.07% | 0.00% | |
CHF | 0.06% | 0.13% | 0.18% | 0.09% | 0.16% | 0.09% | -0.00% |
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).
The Retail Sales data, released by the Australian Bureau of Statistics on a monthly basis, measures the value of goods sold by retailers in Australia. Changes in Retail Sales are widely followed as an indicator of consumer spending. Percent changes reflect the rate of changes in such sales, with the MoM reading comparing sales values in the reference month with the previous month. Generally, a high reading is seen as bullish for the Australian Dollar (AUD), while a low reading is seen as bearish.
Read more.Last release: Thu Oct 31, 2024 00:30
Frequency: Monthly
Actual: 0.1%
Consensus: 0.3%
Previous: 0.7%
Source: Australian Bureau of Statistics
The primary gauge of Australia’s consumer spending, the Retail Sales, is released by the Australian Bureau of Statistics (ABS) about 35 days after the month ends. It accounts for approximately 80% of total retail turnover in the country and, therefore, has a significant bearing on inflation and GDP. This leading indicator has a direct correlation with inflation and the growth prospects, impacting the Reserve Bank of Australia’s (RBA) interest rates decision and AUD valuation. The stats bureau uses the forward factor method, ensuring that the seasonal factors are not distorted by COVID-19 impacts.
The Japanese Yen (JPY) extends its consolidative price move against its American counterpart on Thursday and remains close to a three-month low touched earlier this week. Traders opt to wait on the sidelines and refrain from placing aggressive directional bets ahead of the Bank of Japan (BoJ) policy decision later today. In the meantime, expectations that Japan's political landscape could force expansionary fiscal policy, and make it difficult for the Bank of Japan (BoJ) to hike interest rates further, continue to act as a headwind for the JPY.
That said, fears of possible government intervention and the cautious market mood offer some support to the safe-haven JPY. Apart from this, a subdued US Dollar (USD) price action keeps a lid on the USD/JPY pair through the Asian session. Meanwhile, bets for smaller interest rate cuts by the Federal Reserve (Fed) and deficit-spending concerns after the US election continue to push the US Treasury bond yields higher. This, in turn, favors the USD bulls and should contribute to capping the upside for the lower-yielding JPY.
From a technical perspective, the recent repeated failures to find acceptance beyond the 61.8% Fibonacci retracement level of the July-September downfall warrant some caution for bulls. Moreover, the Relative Strength Index (RSI) on the daily chart is on the verge of breaking into the overbought zone. This further makes it prudent to wait for some near-term consolidation or a modest pullback before positioning for additional gains.
In the meantime, weakness below the 153.00 mark might continue to find some support near the 152.75-152.65 region ahead of the 152.40 area or the weekly low. Some follow-through selling could drag the USD/JPY pair to the 152.00 mark en route to the 151.45 support and the 151.00 mark. The downward trajectory could extend further towards challenging the 150.65 confluence resistance breakpoint, which should now act as a key pivotal point and a strong base for spot prices.
On the flip side, the 153.85-153.90 region now seems to have emerged as an immediate strong barrier. A sustained strength beyond, leading to a breakout through the 154.00 round-figure mark, has the potential to lift the USD/JPY pair towards the 154.35-154.40 supply zone en route to the 155.00 psychological mark. Spot prices could extend the momentum and eventually climb to test the late-July swing high, around the 155.20 region.
The Bank of Japan (BoJ) announces its interest rate decision after each of the Bank’s eight scheduled annual meetings. Generally, if the BoJ is hawkish about the inflationary outlook of the economy and raises interest rates it is bullish for the Japanese Yen (JPY). Likewise, if the BoJ has a dovish view on the Japanese economy and keeps interest rates unchanged, or cuts them, it is usually bearish for JPY.
Read more.Next release: Thu Oct 31, 2024 03:00
Frequency: Irregular
Consensus: 0.25%
Previous: 0.25%
Source: Bank of Japan
The NZD/USD pair recovers some lost ground to near 0.5980 on Thursday during the Asian trading hours. The upbeat New Zealand business confidence and Chinese Manufacturing Purchasing Managers' Index (PMI) data underpin the China-proxy New Zealand Dollar (NZD).
New Zealand business confidence jumped further in October, rising to 65.7 from 60.9 in September, according to a survey by the ANZ bank. Despite the improvement in confidence, the markets expect the Reserve Bank of New Zealand (RBNZ) to cut its Official Cash Rate (OCR) by 75 basis points (bps) at a policy meeting next month. This, in turn, might drag the Kiwi lower against the Greenback.
The latest data released by the National Bureau of Statistics (NBS) showed on Thursday that China’s Manufacturing PMI jumped to 50.1 in October, up from 49.8 in September. This figure came in better than the expectation of 50.0. Meanwhile, the NBS Non-Manufacturing PMI improved to 50.2 in October versus 50.0 prior, below the consensus of 50.4.
On the USD’s front, the economic readings have pointed to a resilient jobs market and economy, prompting traders to pare back their bets on the Federal Reserve (Fed) rate cuts. The anticipation that the Federal Reserve (Fed) will proceed with smaller interest rate cuts might lift the Greenback and cap the pair’s upside.
Investors will closely monitor the release of US Personal Consumption Expenditures (PCE) - Price Index data on Thursday. On Friday, the employment data will be in the spotlight. "With the focus more on employment data, a strong non-farm payroll print would provide Fed ammunition for a December pause," said Uto Shinohara, senior investment strategist at Mesirow Currency Management in Chicago.
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
China’s official Manufacturing Purchasing Managers' Index (PMI) rose to 50.1 in October, compared to 49.8 in the previous reading. The reading beated the market consensus of 50.0 in the reported month.
The NBS Non-Manufacturing PMI improved to 50.2 in October versus September’s 50.0 figure and the estimates of 50.4.
At the time of writing, the AUD/USD pair is trading around 0.6573, up 0.02% on the day.
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
The People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead on Thursday at 7.1250, as compared to the previous day's fix of 7.1390 and 7.1242 Reuters estimates.
Australia’s Retail Sales, a measure of the country’s consumer spending, increased 0.1% MoM in September, compared to a rise of 0.7% in August, the official data published by the Australian Bureau of Statistics (ABS) showed on Thursday.
The reading came in below the market expectations of a 0.3% growth.
At the time of writing, the AUD/USD pair is down 0.08% on the day at 0.6566.
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.
Index | Change, points | Closed | Change, % |
---|---|---|---|
NIKKEI 225 | 373.71 | 39277.39 | 0.96 |
Hang Seng | -320.5 | 20380.64 | -1.55 |
KOSPI | -24.01 | 2593.79 | -0.92 |
ASX 200 | -68.8 | 8180.4 | -0.83 |
DAX | -220.73 | 19257.34 | -1.13 |
CAC 40 | -82.75 | 7428.36 | -1.1 |
Dow Jones | -91.51 | 42141.54 | -0.22 |
S&P 500 | -19.25 | 5813.67 | -0.33 |
NASDAQ Composite | -104.82 | 18607.93 | -0.56 |
The GBP/USD pair extends the decline to around 1.2955 during the early Asian session on Thursday. The Pound Sterling (GBP) edges lower after the UK budget announcement. The attention will shift to the US Personal Consumption Expenditures (PCE) - Price Index data later on Thursday.
The UK's new Labour government released its first budget on Wednesday, which includes £40 billion in tax rises to plug a hole in the public finances and allow for investment in public services, per CNBC. One of the measures that is projected to be one of the most revenue-generating for the UK Treasury is a hike in the amount employers pay out in National Insurance (NI), a tax on earnings.
The US Gross Domestic Product (GDP) for the third quarter fell below expectations. The ADP Employment Change report for October revealed that private companies hired more people than expected. According to the CME FedWatch tool, traders have priced in a nearly 95.2% chance of a 25 bps rate cut by the Fed in the November meeting.
The release of the US PCE inflation data on Thursday could offer some hints about the size and pace of the US Federal Reserve's (Fed) rate reduction path. The headline PCE is expected to see an increase of 0.2% MoM in September, while the core PCE is estimated to see a rise of 0.3% MoM in the same reported period. The softer-than-expected outcome could trigger the hope of deeper rate cuts and might exert some selling pressure on the USD.
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.
Pare | Closed | Change, % |
---|---|---|
AUDUSD | 0.6572 | 0.2 |
EURJPY | 166.445 | 0.34 |
EURUSD | 1.08562 | 0.37 |
GBPJPY | 198.72 | -0.4 |
GBPUSD | 1.29622 | -0.37 |
NZDUSD | 0.59733 | 0.06 |
USDCAD | 1.39006 | -0.12 |
USDCHF | 0.86632 | -0.13 |
USDJPY | 153.316 | -0.02 |
© 2000-2024. Sva prava zaštićena.
Sajt je vlasništvo kompanije Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).
Svi podaci koji se nalaze na sajtu ne predstavljaju osnovu za donošenje investicionih odluka, već su informativnog karaktera.
The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.
Izvršenje trgovinskih operacija sa finansijskim instrumentima upotrebom marginalne trgovine pruža velike mogućnosti i omogućava investitorima ostvarivanje visokih prihoda. Međutim, takav vid trgovine povezan je sa potencijalno visokim nivoom rizika od gubitka sredstava. Проведение торговых операций на финанcовых рынках c маржинальными финанcовыми инcтрументами открывает широкие возможноcти, и позволяет инвеcторам, готовым пойти на риcк, получать выcокую прибыль, но при этом неcет в cебе потенциально выcокий уровень риcка получения убытков. Iz tog razloga je pre započinjanja trgovine potrebno odlučiti o izboru odgovarajuće investicione strategije, uzimajući u obzir raspoložive resurse.
Upotreba informacija: U slučaju potpunog ili delimičnog preuzimanja i daljeg korišćenja materijala koji se nalazi na sajtu, potrebno je navesti link odgovarajuće stranice na sajtu kompanije TeleTrade-a kao izvora informacija. Upotreba materijala na internetu mora biti praćena hiper linkom do web stranice teletrade.org. Automatski uvoz materijala i informacija sa stranice je zabranjen.
Ako imate bilo kakvih pitanja, obratite nam se pr@teletrade.global.