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- The Dow Jones is fighting to regain its balance after getting knocked lower.
- Overall market flows are constrained with a holiday-shortened week on the cards.
- US Durable Goods Orders fell more than expected in November.
The Dow Jones Industrial Average (DJIA) weakened to kick off the Christmas trading week, falling a little over 500 points at its lowest before staging a meager recovery to -100 points on Monday. The Dow Jones is grappling with chart territory south of 43,000 following a ten-day backslide that dragged the major equity index back underneath record bids above 45,000.
US Durable Goods Orders contracted further than expected in November, declining 1.1% MoM compared to October’s revised 0.8% upswing. Investors expected a print of -0.4%. Declines in consumer durable goods were concentrated in automotive purchases, as US Durable Goods Orders excluding Transportation fell by a meager 0.1% MoM. Median markets forecasts had expected a better core Durable Goods Orders growth of 0.3% in November.
Overall market flows are constrained during the Christmas holiday-shortened trading week. Markets will be shuttered during the midweek market session, and trading volumes are set to remain constrained throughout the entire week.
Dow Jones news
The Dow Jones has moderated after snapping it’s longest losing streak since the 70s, where the index closed lower for ten consecutive trading sessions. Most of the Dow Jones is stuck on the low side of Monday’s opening bids, but firm tech gains have limited downside losses for the broader index.
Nvidia (NVDA) rallied 3.2% and crossed above $139 per share as the broad-market tech rally continues to float on the high side. On the low side, retail giant Walmart declined 2.2%, falling to $90 per share for the first time in a month. According to the Consumer Financial Protection Bureau, the federal consumer protection agency is suing Walmart after it was revealed that Walmart unlawfully requires delivery drivers to use an expensive app with one of the consumer giant’s fintech partners, Branch Messenger.
Dow Jones price forecast
A near-term backslide has left the Dow Jones battling chart territory just south of 43,000. Price action has slipped back below the 50-day Exponential Moving Average (EMA) which is rolling over near 43,350, but a clear technical floor is getting priced in near the 42,000 handle.
Buyers will be looking for a chance to step back into another leg higher from here, though momentum traders may be waiting for a confirming close back above 43,500. On the low side, bears will be looking for a continuation to the 200-day EMA near 41,000.
Dow Jones daily chart
Dow Jones FAQs
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.
- Durable Goods revision and higher US Treasury yields propel Greenback which stands near two-year highs.
- Consumer Confidence dipped but the Dollar holds gains.
- Shutdown threat keeps investors cautious which might limit the upside.
The US Dollar Index, which measures the value of the USD against a basket of currencies, is off to a positive start on Monday after a sluggish morning session. Upward revisions from the preliminary November Durable Goods release are fueling a stronger Greenback, pushing the index near 107.90, just shy of its two-year high above 108.00.
Daily digest market movers: US Dollar continues rising ahead of Christmas
- Government shutdown risks grow as lawmakers fail to pass a stopgap bill. Though a short shutdown may have limited market impact, investors remain on alert for last-minute deals.
- Longer-term yields climb further, with 10-year Treasury rates nearing 4.60% and 30-year yields hitting 4.77%. The short end lags, steepening the yield curve.
- On the data front, the Chicago Fed National Activity Index from November improved to -0.12 from -0.40, hinting at a less negative overall economic picture.
- November Durable Goods preliminary data showed a -1.1% print, but the prior figure was revised up from 0.3% to 0.8%, boosting the USD. Excluding transportation, orders dipped 0.1%.
- Consumer Confidence for December fell to 104.7 from 111.7, partially offset by an upward revision for November to 112.8. Despite the decline, the Dollar remains bid into year’s end.
DXY technical outlook: Indicators eye overbought territory
The Dollar Index has regained upward traction, with technical indicators pointing to renewed momentum. As the DXY inches closer to its two-year high, oscillators suggest the index is moving toward overbought levels. Nonetheless, the broader bullish bias remains intact as long as the price holds above the key support of 106.00. A sustained break above the latest peak could open the door to further gains, though thin holiday liquidity may lead to choppy price action in the near term.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- The United Kingdom's annual growth remained tepid in the third quarter of the year.
- The United States reported Durable Goods Orders rose a modest 0.4% in November.
- The GBP/USD pair trades in the red and could extend its slide towards 1.2500.
The British Pound resumed its slide against its American rival in the American session on Monday, as the US Dollar (USD) found near-term demand in a risk-averse environment. The GBP/USD pair fell to an intraday low of 1.2473 following the release of mixed United Kingdom (UK) data.
The UK reported that the Q3 Current Account posted a deficit of £ 18.099 billion, improving from the £-24.002 billion posted in the previous quarter.
The Q3 Gross Domestic Product (GDP) suffered downward revisions, with the annual reading confirmed at 0.9%, below the 1% expected. The UK economy did not grow in the quarter vs expectations of a modest 0.1% advance.
As for the United States (US), the country released Durable Goods Orders, which fell by 1.1% in November, worse than the expected decline of 0.4%. Also, CB Consumer Confidence edged sharply lower in December, falling to 104.7 from 112.8 in November and missing the expected 112.9.
GBP/USD technical outlook
Intraday technical readings support a bearish continuation in the near term, as GBP/USD was unable to deliver a relevant bounce for the aforementioned low. Immediate support comes at the 1.2480 area, followed by the 1.2420/40 region, where the pair posted multiple intraday highs and lows in the last few months. A recovery could gain traction should the pair recover above 1.2560, with the next potential bullish target at 1.2620.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- The Canadian Dollar shed 0.2% on Monday despite CAD data beats.
- Canada saw a rebound in GDP growth figures, as well as easing inflation metrics.
- A holiday-crimped trading schedule and declining US Durable Goods Orders keep bulls at bay.
The Canadian Dollar (CAD) shed roughly one-fifth of one percent against the Greenback on Wednesday. Risk sentiment is easing to kick off the new trading week, with the safe haven US Dollar catching a bid and market flows drying up ahead of the Christmas holiday.
Canada’s October Gross Domestic Product (GDP) rose to its highest point since June, beating forecasts, and the Canadian Raw Material Price Index fell back more than expected in November. US Durable Goods Orders contracted sharply in November, falling at their fastest rate MoM since July.
Daily digest market movers: Market volumes wane ahead of Christmas holiday
- Canadian GDP rose 0.3% MoM in October, over and above the forecast decline of 0.1%. September’s print was also revised to 0.2% from 0.1%.
- Canada’s Raw Material Price Index contracted 0.5% in November, sharply lower than the previous month’s 4.0% upswing and falling even further below the expected 0.6% increase.
- Despite the sharp drag on raw materials, Canadian Industrial Product Prices rose 0.6% in November, less than the previous month’s 1.2% but above the forecast 0.3%.
- Despite improving Canadian growth and inflation figures, overall market sentiment remains hobbled by holiday market volumes and a broad miss in US Durable Goods Orders.
- US Durable Goods Orders contracted by 1.1% in November, falling sharply below the forecast -0.4% and walking back the previous month’s revised 0.8% upswing.
Canadian Dollar price forecast
The Canadian Dollar (CAD) continues to show no sign of internal strength, languishing near the 1.4400 handle against the US Dollar and splashing around multi-year lows. USD/CAD remains well-bid, and the pair is opening up a fresh trading week on the heels of a fourth consecutive weekly gain.
Loonie bulls will be watching the charts closely for a momentum play to drag USD/CAD back down the charts, but even they will likely be waiting until the new year before looking for short entries. The pair is set to continue grinding out chart paper near the 1.4400 region as markets await the kickoff of the 2025 trading season.
USD/CAD daily chart
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
- The pair kicks off the week with a 0.35% slide to 1.0400, halting its brief two-day winning streak.
- RSI drops to 38 in negative territory, while MACD shows flat red bars, pointing to persistent downside pressure.
- The 20-day SMA continues to cap any attempted rebounds, keeping the pair under bearish control.
EUR/USD opened the new trading week on a softer note, sliding by 0.35% to hover near 1.0400. Although the pair had posted modest gains in the previous sessions, sellers re-emerged to push prices lower, reaffirming the dominance of a broader downtrend. The 20-day Simple Moving Average (SMA), situated around 1.0500, still serves as an immediate ceiling that the bulls have been unable to surmount.
Meanwhile, the Relative Strength Index (RSI) has dipped further into negative ground at 38, suggesting intensified selling pressure, and the Moving Average Convergence Divergence (MACD) histogram remains flat and in red territory, indicating that any recovery attempts lack strong momentum. Unless the pair can muster a sustained push above the 20-day SMA, the broader technical outlook is likely to stay tilted to the downside.
Looking ahead, market participants will watch for any fundamental catalysts or risk events that might spark renewed buying interest. However, with momentum gauges pointing south, EUR/USD appears vulnerable to further weakness unless bulls manage to overcome nearby resistance levels.
EUR/USD daily chart
- USD/CAD bounces back above 1.4400 amid a strong recovery in the US Dollar.
- US Durable Goods Orders contracted by 1.1% in November, faster than estimates of 0.4%.
- The Canadian economy expanded by 0.3% in October against expectations of 0.1%.
The USD/CAD pair recovers sharply above 1.4400 in Monday’s North American session. The Loonie pair gains as the US Dollar (USD) bounces back strongly at the start of the holiday-shortened week due to Christmas Eve and Boxing Day on Wednesday and Thursday, respectively.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, jumps to near 108.20. The Greenback recovers half of Friday’s losses that were inspired by the slower-than-projected growth in the United States (US) Personal Consumption Expenditure Price Index (PCE) data for November.
Major reason behind USD’s recovery seems to be its upbeat outlook, given that Federal Reserve’s (Fed) officials have guided fewer interest rate cuts for 2025. According to the latest dot plot, officials see Federal Funds rate heading to 3.9% by the end of 2025.
On the economic front, US Durable Goods Orders for November have come in weaker-than-projected. Fresh Durable Goods Orders declined by 1.1%, faster than estimates of 0.4%. In October, fresh orders for durable goods rose by 0.8%, upwardly revised from 0.2%.
Meanwhile, the Canadian Dollar (CAD) remains weak despite better-than-projected monthly Gross Domestic Product (GDP) data for October. The Canadian economy expanded by 0.3%, faster than estimates of 0.1% and the former release of 0.2%, upwardly revised from 0.1%.
- USD/CHF reverses a majority of Friday’s losses as the US Dollar bounces back strongly.
- The US Dollar recovers as traders expect the Fed to hold interest rates steady in January.
- The SNB is expected to reduce interest rates further in 2025.
The USD/CHF pair recovers a majority of Friday’s losses and surges to near 0.8985 in Monday’s North American session. The Swiss Franc pair strengthens as the US Dollar (USD) bounces back strongly amid firm expectations that the Federal Reserve (Fed) will approach interest rate cuts cautiously in 2025.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, rebounds sharply to near 108.20.
Fed policymakers have taken a cautious approach to interest rate cuts. They believe that progress in disinflation has stalled and labor market conditions are not as bad as they anticipated in September. Additionally, uncertainty over President-elect Donald Trump's incoming policies has compelled officials to slow down the policy-easing cycle.
The Latest Fed dot plot showed that officials collectively see Federal Fund rates heading to 3.9% in 2025. According to the CME FedWatch tool, traders are confident that the Fed will leave interest rates unchanged in the range of 4.25%- 4.50% for the first policy meeting of 2025 in January.
On the economic data front, the United States (US) Durable Goods Orders data for November have come in weaker than expected. Durable Goods Orders declined by 1.1%, faster than estimates of 0.4%. In October, the economic data rose by 0.3%.
Meanwhile, the Swiss Franc (CHF) weakens across the board. The Swiss National Bank (SNB) is expected to ease monetary policy further amid fears of inflation undershooting the central bank’s target of 2%. The SNB has already reduced interest rates by 125 basis points (bps) this year to 0.5%.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- Durable Goods Orders in the US declined 1.1% in November.
- US Dollar Index stays in positive territory above 108.00.
Durable Goods Orders in the US declined by 1.1%, or $3 billion, in November to $285.1 billion, the US Census Bureau reported on Monday. This reading followed a 0.8% increase reported in October.
"Excluding transportation, new orders decreased 0.1%," the press release read. "Excluding defense, new orders decreased 0.3%. Transportation equipment, also down three of the last four months, led the decrease, $2.9 billion or 2.9% to $95.5 billion."
Market reaction
The US Dollar (USD) preserves its strength following this report. At the time of press, the USD Index was up 0.37% on the day at 108.22.
- Canadian economy expanded at a stronger pace than expected in October.
- USD/CAD trades in positive territory above 1.4400 on Monday.
Canada's Gross Domestic Product (GDP) grew 0.3% on a monthly basis in October, Statistics Canada reported on Monday. This reading followed the 0.2% expansion (revised from 0.1%) recorded in September and came in above the market expectation of 0.1%.
Other data from Canada showed that the Industrial Product Price rose 0.6% in November, while the Raw Material Price Index declined by 0.5%.
Market reaction
USD/CAD showed no immediate reaction to these figures and was last seen rising 0.28% on the day at 1.4415.
- The US Dollar trades broadly steady on Monday amid lighter trading conditions.
- Friday’s PCE inflation release rekindles expectations for the Fed’s rate cut projections in 2025.
- The US Dollar Index (DXY) resides just below 108.00, with the recent two-year high in reach.
The US Dollar (USD) is off to a positive start on Monday, with the DXY Index hovering above 108.00, on the last normal trading day ahead of Christmas. The USD took a hit on Friday after rate cut projections for the Federal Reserve (Fed) in 2025 got some support after a rather soft Personal Consumption Expenditures (PCE) inflation print. Equity markets were in a positive tone on Monday, with Asian indices snapping a losing streak and set to close off on the front foot, while sentiment is now changing with a rebouding Greenback in the European trading session.
The US economic calendar features some minor data releases on Monday: the Chicago Fed National Activity Index and the Conference Board Consumer Confidence. The calendar will be more full on Tuesday, with the November Durable Goods and New Home Sales data, before enjoying the Christmas dinner..
Daily digest market movers: Final drips
- A government shutdown was averted on Friday in the very final hours. The White House announced on Saturday that US President Joe Biden had signed the legislation, which funds the government through mid-March.
- At 13:30 GMT, the Chicago Fed National Activity Index for November is due. No consensus view with the previous print at -0.4.
- At 15:00 GMT, the US Consumer Confidence index for December will come out.
- The US Treasury will have its work cut out this Monday with four auctions: At 16:30 GMT, a 3-month, a 52-week and a 6-month bill will be allocated in the markets. At 18:00 GMT, a 2-year Note will be auctioned.
- Asian equities are doing quite well, ending their six-day losing streak. European equities are still looking sluggish, whereas US futures are in the green.
- The CME FedWatch Tool for the first Fed meeting of 2025 on January 29 sees a 91.4% chance for a stable policy rate against a small 8.6% chance for a 25 basis points rate cut.
- The US 10-year benchmark rate trades at 4.53%, just below the 4.59% high from last week.
US Dollar Index Technical Analysis: Final straw
The US Dollar Index (DXY) is set for the final normal trading day before Christmas with a rather light calendar ahead. Traders will change their strategy and will likely only trade short-term moves. So, keep in mind that any moves could be short-lived and face quick profit-taking.
On the upside, a trend line originating from December 28, 2023, is acting as a moving cap. The next firm resistance comes in at 109.29, which was the peak of July 14, 2022, and has a good track record as a pivotal level. Once that level is surpassed, the 110.00 round level comes into play.
The first downside barrier comes in at 107.35, which has now turned from resistance into support. The second level that might be able to halt any selling pressure is 106.52. From there, even 105.53 could come under consideration while the 55-day Simple Moving Average (SMA) at 105.23 is making its way up to that level.
US Dollar Index: Daily Chart
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- Oil prices trade broadly sideways on Monday, erasing gains from the early Asian session.
- Markets are pushing equities and commodities higher after the soft PCE inflation release.
- The US Dollar Index trades flat close to a two-year high.
Crude Oil prices consolidate on Monday, with WTI hovering above $69, with some room to the upside as market sentiment improves helped by a broad tailwind coming from Asian equities. The improvement in markets’ mood came after Friday’s US Personal Consumption Expenditures (PCE) inflation data opened the door again to two or more rate cuts in 2025 from the Federal Reserve. This is an ideal driver for more risk-on, where equities and commodities can thrive.
The US Dollar Index (DXY) – which measures the performance of the US Dollar (USD) against a basket of currencies – is rather flat, not breaking any puts ahead of the Chicago Fed National Activity Index for November and the Consumer Confidence release for December. With the risk on undertone in markets, the US Dollar is expected to remain rather flat. Traders will want to keep any positioning short as movements could be short-lived and face some quick profit-taking ahead of the Christmas holiday.
At the time of writing, Crude Oil (WTI) trades at $69.76 and Brent Crude at $72.94.
Oil news and market movers: Headlines reduced
- The amount of Crude Oil held on tankers that have been stationary for at least seven days rose to 70.20 million barrels as of December 20, Vortexa data show, Bloomberg reports. That is a 7% increase against last week.
- Recent EU sanctions on Russian Oil vessels are being circumvented via Bulgaria, Romania and Turkey, Zerohedge published in a special report on Monday.
- President-elect Donald Trump lashed out at Panama during a rally over the weekend that the country charges exorbitant fees for passing via its key waterway, Bloomberg reports.
- With the Christmas holidays, the weekly Energy Information Administration release for the US Crude stockpile change numbers is due Thursday at 16:00 GMT.
Oil Technical Analysis: Respect the time horizon
Crude Oil prices could see a small uptick, supported by some broad risk on tailwinds in the markets. Experienced traders will know that as of Monday and going into January, the rule of thumb is to have smaller positions on and take profit possibly even before the end of the same trading day. This means that any rally that might unfold in Oil in the coming days needs to be taken with caution as it might be very short-lived.
Looking up, the 100-day Simple Moving Average (SMA) at $70.79 and $71.46 (February 5 low) act as firm resistance levels nearby. Should more tailwinds emerge in support for Oil, the next pivotal level will be $75.27 (January 12 high). However, watch out for quick profit-taking as the year-end quickly approaches.
On the downside, $67.12 – a level that held the price in May and June 2023 and during the last quarter of 2024 – is still the first solid support nearby. In case that breaks, the 2024 year-to-date low emerges at $64.75, followed by $64.38, the low from 2023.
US WTI Crude Oil: Daily Chart
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- AUD/USD trades in a tight range around 0.6250 with RBA minutes taking centre stage.
- The RBA held its policy rates steady at 4.25% in the policy meeting on December 10.
- Investors shrug off soft US monthly PCE inflation data for November.
The AUD/USD pair trades sideways around 0.6250 at the start of the week. The Aussie pair consolidates as investors await the release of the Reserve Bank of Australia (RBA) minutes scheduled for Tuesday.
In the policy meeting on December 10, the RBA left its Official Cash Rate (OCR) unchanged at 4.35%, as expected, for the ninth meeting in a row. RBA Governor Michele Bullock didn’t guide a specific interest rate cut path and committed to remain data-dependent.
When asked about whether the RBA will start reducing interest rates from February, as expected by market participants, “I honestly don’t know if we’re going to be cutting in February,” Bullock said. She said that the RBA is going to be “looking at the data and be data-driven.”
The speculation about the RBA pivoting interest rate cuts in February was fueled by weaker-than-expected Q3 Gross Domestic Product (GDP) data.
Meanwhile, the US Dollar (USD) advances in European trading hours as investors digest moderate growth in the United States (US) monthly Personal Consumption Expenditure inflation (PCE) data for November. The month-on-month headline and core PCE rose by 0.1%, slower than estimates and their former releases.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, bounces back above 108.00. The broader outlook for the US Dollar remains firm as Federal Reserve (Fed) officials see fewer interest rate cuts in 2025.
Economic Indicator
RBA Meeting Minutes
The minutes of the Reserve Bank of Australia meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee. Generally speaking, if the RBA is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the AUD.
Read more.Next release: Tue Dec 24, 2024 00:30
Frequency: Weekly
Consensus: -
Previous: -
Source: Reserve Bank of Australia
The Reserve Bank of Australia (RBA) publishes the minutes of its monetary policy meeting two weeks after the interest rate decision is announced. It provides a detailed record of the discussions held between the RBA’s board members on monetary policy and economic conditions that influenced their decision on adjusting interest rates and/or bond buys, significantly impacting the AUD. The minutes also reveal considerations on international economic developments and the exchange rate value.
- Silver price recovers further to near $29.90 even though US bond yields rise as Fed officials support fewer interest rate cuts in 2025.
- Soft monthly US PCE inflation raised uncertainty over the Fed's shallow rate-cut path.
- Silver price is expected to struggle in an attempt to extend the upward-sloping trendline above $30.00.
Silver price (XAG/USD) extends Friday’s recovery move to near $29.90 in Monday’s European session. The white metal rebounded strongly on Friday from a more than three-month low of $28.75 after the release of the United States (US) Personal Consumption Expenditure Price Index (PCE) data for November, which showed that price pressures grew at a slower pace than expectations.
Core PCE inflation, the Federal Reserve’s (Fed) preferred inflation gauge, rose steadily by 2.8% but slower than estimates of 2.9%. The month-on-month headline and core PCE inflation grew marginally by 0.1%, raising uncertainty over whether the Fed will follow a shallow rate-cut path in 2025, as projected in the Fed’s dot plot from the December policy meeting.
The recent Fed dot plot showed that officials collectively see Federal Fund rates heading to 3.9% by the end of 2025.
Silver prices advanced on Monday even though US Treasury yields remain higher as Federal Reserve (Fed) policymakers support fewer interest rate cuts next year. 10-year US Treasury yields moved higher to near 4.54%. Generally, higher yields on interest-bearing assets weigh on non-yielding assets, such as Silver, as they result in higher opportunity costs for them. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, ticked higher to near 108.00.
On Friday, a string of Fed officials backed a shallow policy-easing approach amid a slowdown in the disinflation trend, better labor market conditions than previously anticipated, and uncertainty over President-elect Donald Trump's incoming policies.
Silver technical analysis
Silver price recovers to test the breakdown of the upward-sloping trendline near $30.00, which is plotted from the February 29 low of $22.30 on a daily timeframe. The white metal wobbles around the 200-day Exponential Moving Average (EMA), suggesting that the longer-term outlook is uncertain.
The 14-day Relative Strength Index (RSI) rebounds to near 40.00. A fresh bearish momentum would trigger if it fails to break above that level.
Looking down, the September low of $27.75 would act as key support for the Silver price. On the upside, the 50-day EMA around $30.90 would be the barrier.
Silver daily chart
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
- The Pound Sterling rises against its major peers as investors look beyond the mild increase in BoE dovish bets for 2025.
- The revised UK GDP estimates for Q3 show that the economy remained flat.
- The latest commentary by Fed officials shows less willingness to cut interest rates in 2025 amid uncertainty surrounding Trump’s policies.
The Pound Sterling (GBP) moves higher against its major peers on Monday as investors largely ignore a mild increase in Bank of England’s (BoE) dovish bets for the next year. Traders see a 53-basis points (bps) reduction in interest rates in 2025, up from 46 bps after the BoE policy announcement on Thursday.
BoE dovish bets accelerated after three out of nine Monetary Policy Committee (MPC) members proposed reducing interest rates by 25 bps, more than the one projected by market participants. Investors considered the 6-3 vote split as a dovish buildup for the next year, which weighed heavily on the Pound Sterling.
Market expectations for 53 bps reduction in interest rates in 2025 suggest that there will be at least two 25-basis-points rate cuts. Still, speculation for the number of interest rate cuts by the UK central bank is similar to that of the Federal Reserve (Fed) and fewer than those expected from the European Central Bank (ECB), making the Pound Sterling an attractive bet in the broader term.
On the contrary, analysts at Deutsche Bank expect the BoE to announce four interest-rate cuts next year, one coming in the first half and the rest in the second half.
Meanwhile, data released on Monday downwardly revised the UK growth rate for the third quarter of the year, raising concerns over the United Kingdom’s (UK) economic outlook. The Office for National Statistics (ONS) reported that the economy remained stagnant in the third quarter, against the 0.4% growth in the April-June period and less than the 0.1% expansion previously estimated.
Daily digest market movers: Pound Sterling trades higher
- The Pound Sterling consolidates around 1.2580 against the US Dollar (USD) in Monday’s London session. The GBP/USD pair ticks slightly up even as the US Dollar rebounds slightly. The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, recovers to near 108.00.
- The Greenback discovers buyer’s interest as its broader outlook is upbeat amid firm expectations that the Federal Reserve (Fed) will follow a moderate policy-easing approach next year. In the latest dot plot, the Fed signaled only two interest rate cuts in 2025 against the four cuts projected in September. For January’s policy meeting, traders are pricing in that the central bank will leave interest rates unchanged in the range of 4.25%-4.50%, according to the CME FedWatch tool.
- The latest commentaries by Fed officials have shown that stubborn inflation, better labor market conditions than previously anticipated, and uncertainty over the impact of President-elect Donald Trump's incoming policies on the economy forced them to guide fewer interest rate cuts for 2025.
- Cleveland Fed President Beth Hammack, the only official who dissented against the rate-cut decision in the policy meeting on Wednesday, said on Friday: “I prefer to hold policy steady until we see further evidence that inflation is resuming its path to our 2% objective.”
- This week, thin trading volume due to holidays in Forex markets on Wednesday and Thursday on account of Christmas Day and Boxing Day, respectively, could keep the pair’s price action more muted.
- On the economic front, investors will focus on the United States (US) Durable Goods Orders data for November, which will be released on Tuesday. Orders are estimated to have declined by 0.4% after expanding by 0.3% in October.
Technical Analysis: Pound Sterling consolidates but death cross shows bearish bias
The Pound Sterling broadly consolidates against the US Dollar after a decisive break below the upward-sloping trendline around 1.2600, which is plotted from the October 2023 low of 1.2035.
A death cross, represented by the 50-day and 200-day Exponential Moving Averages (EMAs) near 1.2790, suggests a strong bearish trend in the long run.
The 14-day Relative Strength Index (RSI) rebounds above 40.00. A fresh downside momentum could trigger if the oscillator fails to sustain above that level.
Looking down, the pair is expected to find a cushion near the April 22 low around 1.2300. On the upside, the December 17 high at 1.2730 will act as key resistance.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Silver prices (XAG/USD) rose on Monday, according to FXStreet data. Silver trades at $29.77 per troy ounce, up 0.78% from the $29.54 it cost on Friday.
Silver prices have increased by 25.11% since the beginning of the year.
| Unit measure | Silver Price Today in USD |
|---|---|
| Troy Ounce | 29.77 |
| 1 Gram | 0.96 |
The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 88.36 on Monday, down from 88.79 on Friday.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
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- USD/CAD regains some positive traction and draws support from a combination of factors.
- The divergent Fed-BoC policy outlook and renewed USD buying act as a tailwind for the pair.
- An uptick in Crude Oil prices fails to benefit the Loonie or hinder a modest intraday move up.
The USD/CAD pair attracts some dip-buyers at the start of a new week and for now, seems to have stalled its corrective slide from the highest level since March 2020 touched last Thursday. Spot prices stick to modest intraday gains through the first half of the European session and currently trade around the 1.4380 region, up less than 0.10% for the day.
The US Dollar (USD) regains some positive traction after Friday's pullback from a two-year top amid the Federal Reserve's (Fed) hawkish shift, signaling that it would slow the pace of rate cuts in 2025. The outlook remains supportive of elevated US Treasury bond yields and turns out to be a key factor acting as a tailwind for the buck. The Canadian Dollar (CAD), on the other hand, continues to be undermined by domestic political development and the Bank of Canada's (BoC) dovish stance.
In fact, the Canadian central bank projected lower growth in the final quarter of this year and added that the possibility of new tariffs on Canadian exports to the US has made the economic outlook more unclear. Adding to this, Statistics Canada reported on Friday that Retail Sales in October were marginally lower than expected and were likely flat in November. That said, an uptick in Crude Oil prices lends some support to the commodity-linked Loonie and might cap the USD/CAD pair.
Traders now look forward to the release of the Conference Board's US Consumer Confidence Index, which, along with the US bond yields, might influence the USD. Apart from this, Oil price dynamics might contribute to producing short-term trading opportunities around the USD/CAD pair. Nevertheless, the fundamental backdrop seems tilted in favor of the USD bulls and supports prospects for an extension of a well-established uptrend witnessed over the past two months or so.
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
- EUR/JPY depreciated after ECB President Christine Lagarde’s interview published by the Financial Times on Monday.
- ECB Lagarde stated that the central bank is nearing its goal of bringing inflation down to the 2% medium-term target.
- The recent Japan inflation report has increased the odds of a potential rate hike by the BoJ in January or March.
EUR/JPY extends its losses following an interview of European Central Bank (ECB) President Christine Lagarde published by the Financial Times on Monday. The EUR/JPY cross remains tepid around 163.00 during the European hours.
Christine Lagarde, President of the European Central Bank (ECB), emphasized that the central bank is nearing its goal of sustainably bringing inflation down to the medium-term target of 2%. However, Lagarde stressed the importance of continued vigilance, particularly concerning inflation in the services sector.
Earlier in December, Lagarde indicated that the ECB would consider further interest rate cuts if inflation showed continued progress toward the 2% target. She noted that aggressive measures to curb economic growth were no longer deemed necessary under such conditions. This shift suggests that the ECB is gradually moving toward a more accommodative monetary policy stance as inflationary pressures ease.
Additionally, ECB Governing Council member Boris Vujcic stated on Saturday that the central bank plans to continue lowering borrowing costs in 2025, according to Bloomberg. “The direction is clear—it’s a continuation of the path from 2024, with further reductions in interest rates,” he said.
In Japan, strong National Consumer Price Index (CPI) data released on Friday left the door open for a potential interest rate hike by the Bank of Japan (BoJ) in January or March. Inflation reached a three-month high of 2.9% year-over-year in November, up from 2.3% in October. Additionally, the annual core inflation rate rose to 2.7%, exceeding market expectations of 2.6%.
However, traders remain cautious about the BoJ's intentions to hike rates further following the central bank’s decision to keep its policy rate for the third consecutive meeting, keeping the short-term rate target within the range of 0.15%-0.25%, in line with market expectations. Traders are eagerly anticipating the release of the BoJ’s Meeting Minutes, scheduled for Tuesday.
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
- NZD/USD continues to trade within a descending channel pattern, reflecting an ongoing bearish bias.
- An upward correction is indicated as the 14-day RSI is positioned below the 30 mark.
- The pair could test the descending channel’s lower boundary at 0.5630 level.
The NZD/USD pair edges lower to near 0.5650 during the European hours on Monday. The technical analysis of the daily chart suggests an ongoing bearish bias as the pair is confined within a descending channel pattern.
Additionally, the NZD/USD pair remains below the nine- and 14-day Exponential Moving Averages (EMAs), signaling weak short-term price momentum, which could mean that the price is likely to continue experiencing downward pressure.
Furthermore, the 14-day Relative Strength Index (RSI) remains below the 30 level, reflecting an oversold condition, potentially triggering an upward correction.
Regarding its support, the NZD/USD could test the lower boundary of the descending channel at 0.5630 level, followed by the 26-month low of 0.5607 level, which was recorded on December 19.
On the upside, NZD/USD may find initial resistance at the nine-day EMA at 0.5708 level, followed by the 14-day EMA at 0.5743 level. A break above this level could improve the short-term price momentum and support the pair to test the descending channel’s upper boundary at the 0.5800 level.
NZD/USD: Daily Chart
New Zealand Dollar PRICE Today
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.17% | 0.05% | 0.20% | 0.12% | -0.08% | 0.02% | 0.22% | |
| EUR | -0.17% | -0.15% | -0.03% | -0.08% | -0.18% | -0.17% | 0.04% | |
| GBP | -0.05% | 0.15% | 0.08% | 0.07% | -0.03% | -0.01% | 0.19% | |
| JPY | -0.20% | 0.03% | -0.08% | -0.03% | -0.19% | -0.13% | 0.02% | |
| CAD | -0.12% | 0.08% | -0.07% | 0.03% | -0.14% | -0.09% | 0.11% | |
| AUD | 0.08% | 0.18% | 0.03% | 0.19% | 0.14% | 0.00% | 0.22% | |
| NZD | -0.02% | 0.17% | 0.01% | 0.13% | 0.09% | -0.01% | 0.16% | |
| CHF | -0.22% | -0.04% | -0.19% | -0.02% | -0.11% | -0.22% | -0.16% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
- EUR/USD trades in a tight range as volumes thin out due to fewer trading days this week amid holidays on account of Christmas Eve and Boxing Day.
- The Fed sees fewer interest rate cuts in 2025 as the disinflation process stalls and amid increasing uncertainty over Trump’s policies.
- ECB Lagarde said she believes that a victory over inflation is near.
EUR/USD trades quietly at the start of the week around 1.0440 in Monday’s European session. The major currency pair trades in a limited range amid thin trading volume in a holiday-shortened week due to Christmas Eve and Boxing Day on Wednesday and Thursday, respectively.
The US Dollar (USD) steadies on Monday after a sharp sell-off on Friday that was triggered by slower-than-expected growth in the United States (US) Personal Consumption Expenditure Price Index (PCE). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, wobbles below 108.00.
Core PCE inflation, which is the Federal Reserve’s (Fed) preferred inflation gauge, rose steadily by 2.8% but slower than estimates of 2.9%. Month-on-month, headline, and core PCE inflation grew marginally by 0.1%, which raised some uncertainty over whether the Fed will follow a shallow rate-cut path in 2025.
Fed policymakers see the central bank delivering fewer interest rate cuts next year amid a slowdown in the disinflation process and the uncertainty over the impact on the economy of incoming immigration, trade, and tax policies by President-elect Donald Trump.
Cleveland Fed President Beth Hammack, the only official who voted for leaving interest rates unchanged in the policy meeting last Wednesday, said on Friday that she prefers to hold interest rates steady "until the Fed gets further evidence that inflation is resuming its path to its 2% objective,” Reuters reported.
On Friday, Chicago Fed President Austan Goolsbee told in an interview with CNBC that the uncertainty over Trump’s policies after taking office compelled him to project fewer interest rate cuts for 2025 while he had previously anticipated a 100-basis points (bps) interest rate reduction.
Monday’s economic calendar is light. On Tuesday, investors will focus on the US Durable Goods Orders data for November. Economists expect orders to have declined by 0.4% after a 0.3% increase in October.
Daily digest market movers: EUR/USD holds onto recovery move
- EUR/USD holds recovery from the four-week low of 1.0350 to near 1.0440 on Monday. The major currency pair bounced back due to the Euro’s (EUR) outperformance in the past few trading sessions even as market participants remain confident that the European Central Bank (ECB) will continue pushing interest rates lower.
- The ECB has cut its Deposit Facility rate by 100 bps this year and is expected to deliver another 100-bps interest rate reduction next year amid deepening Eurozone economic risks and inflation remaining under control.
- Almost all ECB policymakers have agreed to market expectations for a consistent reduction in interest rates until it reaches 2%, which they see as a neutral rate to avoid risks of inflation undershooting the bank’s target of 2%.
- ECB President Christine Lagarde said she remains confident about further progress in disinflation in an interview with the Financial Times (FT) published Monday. “We're getting very close to that stage when we can declare that we have sustainably brought inflation to our medium-term 2%”, Lagarde said.
Technical Analysis: EUR/USD stays above 1.0350
EUR/USD holds the key support of 1.0350. However, the outlook of the major currency pair remains strongly bearish as all short-to-long-term Exponential Moving Averages (EMAs) are declining.
The 14-day Relative Strength Index (RSI) bounces back to near 40.00. A fresh downside momentum could trigger if the oscillator fails to sustain above that level.
Looking down, the asset could decline to near the round-level support of 1.0200 after breaking below the two-year low of 1.0330. Conversely, the 20-day EMA near 1.0500 will be the key barrier for the Euro bulls.
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- EUR/GBP holds positive ground to near 0.8305 in Monday’s early European session.
- Traders interpreted the BoE's decision as a dovish hold, undermining the GBP.
- ECB’s Lagarde said the Eurozone was getting "very close" to reaching the medium-term inflation target.
The EUR/GBP cross extends the rally to around 0.8305 during the early European session on Monday. The dovish bets for the Bank of England (BoE) weigh on the Pound Sterling (GBP) and create a tailwind for EUR/GBP. Traders price in a 53 basis points (bps) interest rate reduction by the UK central bank in 2025 after the policy announcement.
The Bank of England's (BoE) split vote decision to leave interest rates unchanged at 4.75% last week and a dovish hold dragged the GBP lower against the shared currency. BoE policymakers highlighted external risks, including uncertainty over geopolitical tensions and potential Donald Trump tariff threats. "With the heightened uncertainty in the economy, we can't commit to when or by how much we will cut rates in the coming year,” said BoE Governor Andrew Bailey.
On the Euro front, the European Central Bank (ECB) President Christine Lagarde said the Eurozone was getting "very close" to reaching the ECB's medium-term inflation target, per the Financial Times on Monday. Lagarde further stated that the central bank would cut interest rates further if inflation continued to ease towards its 2% goal, as curbing growth was no longer necessary.
ECB policymakers have become worried about growing economic risks due to weak demand and US President-elect Donald Trump's potential tariff threats. The ECB will hold its first rate-setting meeting of 2025 on January 30. Investors envisage a slightly more aggressive path of the ECB easing cycle next year, which might weigh on the Euro against the GBP.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Here is what you need to know on Monday, December 23:
Improving risk mood caused the US Dollar (USD) to lose interest heading into the weekend. At the beginning of the week, US stock index futures trade in positive territory and the USD Index struggles to gain traction. Chicago Fed National Activity Index for November and Conference Board's Consumer Confidence Index for December will be featured in the US economic docket on Monday.
US Dollar PRICE Last 7 days
The table below shows the percentage change of US Dollar (USD) against listed major currencies last 7 days. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.69% | 0.43% | 1.97% | 0.98% | 1.69% | 1.95% | 0.06% | |
| EUR | -0.69% | -0.20% | 1.39% | 0.37% | 1.16% | 1.33% | -0.56% | |
| GBP | -0.43% | 0.20% | 1.48% | 0.56% | 1.37% | 1.51% | -0.38% | |
| JPY | -1.97% | -1.39% | -1.48% | -0.99% | -0.28% | -0.00% | -1.81% | |
| CAD | -0.98% | -0.37% | -0.56% | 0.99% | 0.75% | 0.95% | -0.94% | |
| AUD | -1.69% | -1.16% | -1.37% | 0.28% | -0.75% | 0.16% | -1.73% | |
| NZD | -1.95% | -1.33% | -1.51% | 0.00% | -0.95% | -0.16% | -1.89% | |
| CHF | -0.06% | 0.56% | 0.38% | 1.81% | 0.94% | 1.73% | 1.89% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Softer-than-forecast inflation data from the US and the aversion of the US government shutdown attracted risk flows in the American session on Friday. The US Bureau of Economic Analysis reported that the core Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's (Fed) preferred gauge of inflation, rose 0.1% on a monthly basis in November. This reading followed the 0.3% increase recorded in October and came in below the market expectation of 0.2%. Meanwhile, Congress approved a stopgap spending bill late Friday, avoiding a shutdown. Wall Street's main indexes gained about 1% on Friday and the USD Index lost more than 0.5%, erasing a portion of the Fed-inspired rally.
After falling sharply and touching a multi-week low below 1.0350, EUR/USD recovered on Friday but ended the week in negative territory. The pair fluctuates in a narrow channel above 1.0400 in the European morning on Monday.
GBP/USD slumped to its weakest level since May below 1.2500 early Friday but staged a decisive rebound in the second half of the day. The pair stays relatively quiet to begin the new week and trades above 1.2550. The UK's Office for National Statistics announced on Monday that the annualized Gross Domestic Product (GDP) growth for the third quarter got revised to 0.9% from the 1% reported in the initial estimate.
USD/JPY gained nearly 2% in the previous week and climbed to its highest level since July near 158.00. Following a sharp correction on Friday, the pair stays in a consolidation phase below 157.00 in the European morning on Monday.
Gold recovered on Friday and rose more than 1% on the day as the US Treasury bond yields turned south. XAU/USD continues to stretch higher to begin the week and was last seen trading at around $2,630.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
- AUD/JPY maintains its position ahead of Meeting Minutes from the RBA and BoJ due on Tuesday.
- The Australian Dollar could receive downward pressure as the RBA may begin rate cuts in February.
- Stronger Japan’s inflation data has increased the likelihood of a potential rate hike by the BoJ in January or March.
AUD/JPY retraces its recent losses from the previous session, trading around 98.00 during the early European hours on Monday. However, the upside of the AUD/JPY cross could be restrained as the Australian Dollar (AUD) could face challenges amid the increased likelihood of the Reserve Bank of Australia (RBA) beginning cutting its cash rate as early as February, due to mounting signs of an economic slowdown.
Moreover, the National Australia Bank (NAB) maintained its forecast for the first RBA rate cut at the May 2025 meeting, though they acknowledged February as a possibility. NAB's report indicates that the Q4 trimmed mean inflation is projected at 0.6% quarter-on-quarter, with a gradual easing expected, reaching 2.7% by late 2025.
Strong National Consumer Price Index (CPI) data from Japan released on Friday left the door open for a potential interest rate hike by the Bank of Japan (BoJ) in January or March. Inflation reached a three-month high of 2.9% year-over-year in November, up from 2.3% in October. Additionally, the annual core inflation rate rose to 2.7%, exceeding market expectations of 2.6%.
However, traders remain skeptical about the BoJ's intentions to hike rates further following the central bank’s decision to keep its policy rate for the third consecutive meeting, keeping the short-term rate target within the range of 0.15%-0.25%, in line with market expectations.
Traders are eagerly anticipating the release of the Meeting Minutes from both the Reserve Bank of Australia (RBA) and the Bank of Japan (BOJ), scheduled for Tuesday.
Central banks FAQs
Central Banks have a key mandate which is making sure that there is price stability in a country or region. Economies are constantly facing inflation or deflation when prices for certain goods and services are fluctuating. Constant rising prices for the same goods means inflation, constant lowered prices for the same goods means deflation. It is the task of the central bank to keep the demand in line by tweaking its policy rate. For the biggest central banks like the US Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BoE), the mandate is to keep inflation close to 2%.
A central bank has one important tool at its disposal to get inflation higher or lower, and that is by tweaking its benchmark policy rate, commonly known as interest rate. On pre-communicated moments, the central bank will issue a statement with its policy rate and provide additional reasoning on why it is either remaining or changing (cutting or hiking) it. Local banks will adjust their savings and lending rates accordingly, which in turn will make it either harder or easier for people to earn on their savings or for companies to take out loans and make investments in their businesses. When the central bank hikes interest rates substantially, this is called monetary tightening. When it is cutting its benchmark rate, it is called monetary easing.
A central bank is often politically independent. Members of the central bank policy board are passing through a series of panels and hearings before being appointed to a policy board seat. Each member in that board often has a certain conviction on how the central bank should control inflation and the subsequent monetary policy. Members that want a very loose monetary policy, with low rates and cheap lending, to boost the economy substantially while being content to see inflation slightly above 2%, are called ‘doves’. Members that rather want to see higher rates to reward savings and want to keep a lit on inflation at all time are called ‘hawks’ and will not rest until inflation is at or just below 2%.
Normally, there is a chairman or president who leads each meeting, needs to create a consensus between the hawks or doves and has his or her final say when it would come down to a vote split to avoid a 50-50 tie on whether the current policy should be adjusted. The chairman will deliver speeches which often can be followed live, where the current monetary stance and outlook is being communicated. A central bank will try to push forward its monetary policy without triggering violent swings in rates, equities, or its currency. All members of the central bank will channel their stance toward the markets in advance of a policy meeting event. A few days before a policy meeting takes place until the new policy has been communicated, members are forbidden to talk publicly. This is called the blackout period.
- USD/CHF trades in positive territory near 0.8935 in Monday’s early European session.
- The hawkish Fed rate cut underpins the US Dollar.
- The rising geopolitical risks could boost the safe-haven flows, capping the downside for the CHF.
The USD/CHF pair gains traction to around 0.8935, snapping the two-day losing streak during the early European session on Monday. The hawkish rate cut by the US Federal Reserve (Fed) provides some support to the Greenback. Traders await the US December Consumer Confidence and Chicago Fed National Activity Index reports, which are due later on Monday.
The Fed cut the interest rates by a quarter point last week and pencilled in only two rate cuts in 2025, down from its original forecast of four. The hawkish signals from the US central bank, which appear newly concerned about persistent inflation in the months ahead, could lift the Greenback against the Swiss Franc (CHF).
On the other hand, the Swiss National Bank (SNB) cut its key interest rate by 50 basis points (bps) at its December meeting, exceeding expectations of a smaller reduction amid weaker-than-expected inflation in Switzerland and rising uncertainty about the global economy. A more aggressive rate cut from the SNB than the Fed could undermine the CHF and act as a tailwind for USD/CHF.
SNB chairman Martin Schlegel left the door open for further interest rate cuts next year but said it was now less likely the Swiss central bank could take rates below 0%. "We will continue to monitor the situation closely and will adjust our monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term,” added Schlegel.
Meanwhile, the escalating geopolitical tensions in the Middle East could boost the safe-haven currency like the CHF. Israeli strikes across the Gaza Strip overnight and early Sunday killed at least 50 Palestinians, including at one family's home and at a school building, according to Palestinian medical officials. The Houthis released a statement, claiming responsibility for the attack, saying they had aimed a hypersonic ballistic missile at a military target.
Swiss Franc FAQs
The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.
The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.
The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.
As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
- EUR/USD faces challenges due to the persistent bearish bias.
- Further improvement in the 14-day RSI would indicate a weakening bearish bias.
- The nine-day EMA at the 1.0449 level acts as an immediate barrier.
EUR/USD extends its gains for the third consecutive day, trading around 1.0440 during the Asian hours on Monday. A review of the daily chart shows an ongoing bearish bias as the pair is confined within a descending channel pattern.
The 14-day Relative Strength Index (RSI), a key momentum indicator, is positioned below the 50 level, confirming the persistent bearish sentiment for the EUR/USD pair. However, further improvement would suggest a weakening bearish bias.
Additionally, the nine-day Exponential Moving Average (EMA) is below the 14-day EMA, suggesting the short-term price momentum is weaker, which could mean that the price is likely to continue experiencing downward pressure.
On the downside, the two-year low at 1.0332, which was recorded on November 22, acts as immediate support for the EUR/USD pair. A successful break below this level could reinforce the bearish bias and put downward pressure on the pair to navigate the area around the lower boundary of the descending channel at the 1.0090 level.
In terms of resistance, the EUR/USD pair tests an immediate barrier at the nine-day Exponential Moving Average (EMA) of the 1.0449 level, followed by the 14-day EMA at the 1.0470 level. A breakthrough above these EMAs could lead the pair to approach its six-week high of 1.0630 level.
EUR/USD: Daily Chart
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.08% | -0.09% | 0.16% | -0.08% | -0.13% | -0.06% | 0.10% | |
| EUR | 0.08% | -0.04% | 0.18% | -0.02% | 0.02% | 0.03% | 0.16% | |
| GBP | 0.09% | 0.04% | 0.16% | 0.02% | 0.06% | 0.06% | 0.20% | |
| JPY | -0.16% | -0.18% | -0.16% | -0.18% | -0.21% | -0.19% | -0.07% | |
| CAD | 0.08% | 0.02% | -0.02% | 0.18% | -0.00% | 0.01% | 0.17% | |
| AUD | 0.13% | -0.02% | -0.06% | 0.21% | 0.00% | -0.02% | 0.14% | |
| NZD | 0.06% | -0.03% | -0.06% | 0.19% | -0.01% | 0.02% | 0.12% | |
| CHF | -0.10% | -0.16% | -0.20% | 0.07% | -0.17% | -0.14% | -0.12% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the 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).
In an interview with the Financial Times (FT) on Monday, European Central Bank (ECB) President Christine Lagarde said that she “still believes that we should be very vigilant about services.”
- Gold price oscillates in a range at the start of a new week amid mixed fundamental cues.
- Geopolitical risks continue to underpin the XAU/USD amid subdued US Dollar price action.
- The Fed’s hawkish stance backs elevated US bond yields and caps the pair’s gains.
Gold price (XAU/USD) struggles to capitalize on last week's modest recovery from a one-month trough and oscillates in a range around the $2,625 region during the Asian session on Monday. The US Dollar (USD) bulls remain on the defensive below a two-year high touched on Friday and turn out to be a key factor acting as a tailwind for the commodity. Apart from this, geopolitical risks stemming from the protracted Russia-Ukraine war and tensions in the Middle East further lend support to the safe-haven precious metal.
Meanwhile, the Federal Reserve's (Fed) hawkish signal, that it would slow the pace of rate cuts in 2025, remains supportive of elevated US Treasury bond yields. This, along with a generally positive tone around the equity markets, seems to cap gains for the non-yielding yellow metal. Hence, it will be prudent to wait for strong follow-through buying before positioning for any further appreciating move. Traders now look forward to the release of the Conference Board's Consumer Confidence Index for short-term impetus.
Gold price struggles to lure buyers amid Fed’s hawkish signal and elevated US bond yields
- The US Dollar pulled back from a two-year high on Friday following the release of the US Personal Consumption Expenditure (PCE) Price Index, which pointed to signs of inflation moderation.
- The US Bureau of Economic Analysis (BEA) reported that inflation in the US, as measured by the change in the PCE Price Index, edged higher to 2.4% on a yearly basis in November from 2.3% previous.
- Meanwhile, the core PCE Price Index, which excludes volatile food and energy prices, rose 2.8% during the reported period, matching October's reading but arriving below the expectation of 2.9%.
- Furthermore, Personal Income decelerated sharply from 0.7% in October and grew 0.3% last month, while Consumer Spending rose 0.4% after a downwardly revised reading of 0.3% in October.
- Russian President Vladimir Putin has pledged retaliation after Ukraine staged a major drone attack on the city of Kazan, which damaged residential buildings and shut down the airport.
- Israeli forces bombed the so-called “safe zone” in southern Gaza, causing tents to go up in flames and killing at least seven Palestinians, taking the death toll over the past day to at least 50.
- The Federal Reserve last week signaled that it would slow the pace of rate cuts in 2025, lifting the benchmark US Treasury bond yield to its highest level in more than six months last week.
- Monday's US economic docket features the release of the Conference Board's Consumer Confidence Index and might provide some impetus later during the early North American session.
Gold price technical setup warrants caution before positioning for additional near-term gains
From a technical perspective, acceptance above the 23.6% Fibonacci retracement level of the recent pullback from a one-month peak favors bullish traders. That said, negative oscillators on daily/4-hour charts warrant some caution before positioning for any further appreciating move. Hence, any subsequent move up might still be seen as a selling opportunity and seems limited.
Meanwhile, the 38.2% Fibo. level, around the $2,637 area, now seems to act as an immediate hurdle ahead of the $2,643-$2,647 congestion zone, which coincides with the downward sloping 200-period Simple Moving Average (SMA) on the 4-hour chart. The latter should act as a key pivotal point, which if cleared decisively, should pave the way for a further appreciating move.
On the flip side, the $2,616-$2,615 region that is deemed as a pullback area, or the 23.6% Fibo. level could offer immediate support. This is followed by the $2,600 round-figure mark, below which the Gold price could retest the monthly swing low, around the $2,583 zone touched last week. Some follow-through selling will be seen as a fresh trigger for bears and set the stage for deeper losses in the near term.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
- Silver price recovers some lost ground to around $29.60 in Monday’s Asian session.
- The negative picture of Silver price prevails as the price holds below the 100-day EMA with the bearish RSI indicator.
- The key support level emerges at the $29.10-$29.00 regions.
The Silver price (XAG/USD) extends the recovery to near $29.60 during the early Asian session on Monday, bolstered by the softer-than-expected US November Personal Consumption Expenditures (PCE) Price Index inflation data. However, the upside of the white metal might be limited amid the cautious approach to monetary easing next year from the Federal Reserve (Fed).
According to the daily chart, the bearish outlook of the Silver price remains in play as the price holds below the key 100-day Exponential Moving Average (EMA). Additionally, the downward momentum is reinforced by the 14-day Relative Strength Index (RSI), which stands below the midline around 39.20, suggesting that further downside cannot be ruled out.
The potential support level for XAG/USD emerges in the $29.10-$29.00 zone, representing the lower limit of the Bollinger Band and psychological level. A breach of this level could expose $27.70, the low of September 9. The additional downside filter to watch is $26.45, the low of August 8.
On the upside, the crucial upside barrier for the precious metal is seen at the $30.00 level. Sustained trading above the mentioned level could pave the way to $30.60, the 100-day EMA. Further north, the next hurdle is located at $32.17, the upper boundary of the Bollinger Band.
Silver price (XAG/USD) daily chart
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
- USD/CAD depreciates as Oil prices rise, driven by renewed expectations of further policy easing by the Federal Reserve.
- Canadian Prime Minister Justin Trudeau has no intentions of stepping down during the Christmas holidays.
- The US Dollar struggles as softer US PCE data revives hopes of the Fed’s further rate cuts next year.
USD/CAD continues to lose ground for the third successive session, trading around 1.4360 during the Asian hours on Monday. As Canada is the largest oil exporter to the United States (US), the Canadian Dollar (CAD) gains upward momentum, supported by rising crude Oil prices following US data that indicated cooling inflation. This development has revived expectations of further policy easing next year, which could bolster global economic growth and increase Oil demand.
In the political arena, Canadian Prime Minister Justin Trudeau has no plans to resign over the Christmas holidays, according to the Globe & Mail. Trudeau currently leads a minority government, and all opposition parties have pledged to introduce a no-confidence motion that would trigger an election when Parliament reconvenes in six weeks.
In the United States, President-elect Donald Trump has announced several key appointments to his administration. Scott Bessent will lead the Treasury, Howard Lutnick will become Commerce Secretary, and Kevin Hassett will head the National Economic Council. Additionally, Andrew Ferguson has been appointed to chair the Federal Trade Commission, while Jacob Helberg, a senior advisor to Palantir CEO Alex Karp, has been nominated as Secretary of State for Economic Growth, Energy, and Environment, as reported by Business Insider.
The US Dollar (USD) received downward pressure after lower-than-expected Personal Consumption Expenditures Price Index (PCE) data from the United States (US) was released on Friday. The inflation report showed that core PCE inflation year-over-year, the Fed’s preferred inflation measure, rose steadily by 2.8% in November, slower than estimates of 2.9%. The monthly core inflation grew moderately by 0.1%, against estimates of 0.2% and the prior release of 0.3%.
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
- WTI attracts some buyers for the second straight day, though it lacks follow-through.
- Easing worries about a slowdown in demand from China lends support to the commodity.
- The prospects for rising supply from non-OPEC+ nations might cap gains for Oil prices.
West Texas Intermediate (WTI) US Crude Oil prices edge higher for the second straight day on Monday and move away from over a one-week low, around the $68.40-$68.35 region touched on Friday. The commodity, however, lacks bullish conviction and trades around the $69.75-$69.80 area during the Asian session, up less than 0.50% for the day.
A weekend editorial from a media outlet affiliated with China's Ministry of Housing and Urban-Rural Development hinted at further measures to support the recovery of the property market. This helps ease worries about a slowdown in demand, which, along with concerns about supply disruptions stemming from tighter sanctions on Russia and Iran, acts as a tailwind for Crude Oil prices.
Meanwhile, the US Dollar (USD) remains below a two-week high touched on Friday in the wake of the Personal Consumption Expenditure (PCE) Price Index report for November, which pointed to signs of inflation moderation. A softer buck tends to benefit USD-denominated commodities and turns out to be another factor supporting Crude Oil prices, though any meaningful gains seem elusive.
The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, recently decided to postpone planned supply increases by three months until April and extend the full unwinding of cuts by a year until the end of 2026. Furthermore, the International Energy Agency highlighted increasing supply from non-OPEC+ nations, which, in turn, might cap Crude Oil prices.
Hence, it will be prudent to wait for strong follow-through buying before positioning for any further intraday appreciating move. Trades now look forward to the release of the Conference Board's Consumer Confidence Index, which might influence the USD price dynamics and provide some impetus to Crude Oil prices.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- NZD/USD receives upward support from the increased likelihood that the Fed will adopt gradual policy easing in 2025.
- The CME FedWatch tool indicates a nearly 90% probability that the Federal Reserve will keep interest rates unchanged in January.
- The NZD may depreciate as the RBNZ is widely expected to deliver a 50 basis point rate cut in February.
NZD/USD extends its gains for the second consecutive day, trading around 0.5660 during the Asian session on Monday. The NZD/USD pair gains ground as the US Dollar (USD) remains subdued following the Personal Consumption Expenditures Price Index (PCE) data from the United States (US).
The inflation report showed that core PCE inflation year-over-year, the Fed’s preferred inflation measure, rose steadily by 2.8% in November, slower than estimates of 2.9%. The monthly core inflation grew moderately by 0.1%, against estimates of 0.2% and the prior release of 0.3%.
Moderate growth in US inflation reinforced the market expectations that the Federal Reserve (Fed) will adopt a slower pace of additional cuts in 2025. According to the CME FedWatch tool, markets now anticipate a more than 90% probability that the Federal Reserve (Fed) will keep interest rates unchanged in January, maintaining the current range of 4.25%–4.50%.
The upside potential for the New Zealand Dollar (NZD) could be limited, as weaker-than-expected GDP data for Q3 has pushed New Zealand into its deepest recession since the initial COVID-19 slump in 2020. This has increased expectations for more aggressive monetary policy easing by the Reserve Bank of New Zealand (RBNZ). Markets have fully priced in a substantial 50 basis point rate cut at the RBNZ’s February meeting.
New Zealand's GDP contracted by 1.0% quarter-over-quarter in Q3, slightly improving from the revised 1.1% contraction in Q2 but worse than the anticipated 0.4% decline. On an annual basis, GDP shrank by 1.5% in Q3, a sharper decline compared to the previous 0.5% contraction and well below the expected 0.4% drop.
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- The Japanese Yen struggles to capitalize on Friday’s modest recovery gains against the US Dollar.
- Doubts over BoJ’s rate hike plan, and the widening of the US-Japan yield differential, weigh on the JPY.
- Traders now look to the US Consumer Confidence Index for short-term impetus later this Monday.
The Japanese Yen (JPY) kicks off the new week on a softer note and remains within striking distance of a five-month low touched against its American counterpart on Friday. Doubts over when the Bank of Japan (BoJ) will hike interest rates again turn out to be a key factor weighing on the JPY. Furthermore, the recent widening of the US-Japan yield differential, bolstered by the Federal Reserve's (Fed) hawkish shift, undermines the lower-yielding JPY.
Adding to this, a generally positive tone around the equity markets is seen denting demand for the safe-haven JPY. Meanwhile, strong inflation data released from Japan on Friday left the door open for a potential BoJ rate hike in January or March. This, along with subdued the US Dollar (USD) price action, fails to assist the USD/JPY pair to capitalize on its Asian session uptick to the 156.70 area in the absence of any relevant fundamental catalyst.
Japanese Yen lacks bullish conviction amid BoJ rate hike uncertainty
- The Bank of Japan last week decided to keep the short-term rate target unchanged at the end of the December policy meeting and offered few clues on how soon it could push up borrowing costs.
- Japanese government bond yields dropped to the lowest in a month on Friday in reaction to BoJ Governor Kazuo Ueda's dovish signals and a very cautious tone on further monetary policy tightening.
- The benchmark 10-year US government bond yield rose to its highest level in more than six months last week and the resultant widening of the US-Japan yield differential undermines the Japanese Yen.
- A government report showed on Friday that Japan's National Consumer Price Index (CPI) rose more than expected in November, which bodes well with further BoJ interest rate hikes in early 2025.
- The US Dollar retreated from a two-year high on Friday after the Personal Consumption Expenditure (PCE) Price Index pointed to signs of inflation moderation and lingering challenges for the economy.
- According to a report published by the US Bureau of Economic Analysis (BEA), the PCE Price Index edged higher to 2.4% on a yearly basis in November from 2.3% in the previous month.
- The core gauge, which excludes volatile food and energy prices, rose 2.8% during the reported period, matching October's reading but arriving below the market expectation of 2.9%.
- Additional details of the report revealed that Personal Income grew 0.3% in November, which marked a sharp deceleration relative to the outsized 0.7% increase recorded in October.
- Meanwhile, Consumer Spending, which accounts for more than two-thirds of US economic activity, climbed 0.4% last month after a downwardly revised reading of 0.3% in October.
- Investors now look forward to the release of the Conference Board's US Consumer Confidence Index for short-term trading opportunities on the first day of a holiday-shortened week.
USD/JPY setup suggests that the path of least resistance remains to the upside
From a technical perspective, Friday's low, around the 156.00-155.95 area, now seems to protect the immediate downside. Any further decline might be seen as a buying opportunity near the 155.50 horizontal zone. This next relevant support is pegged near the 155.00 psychological mark, which if broken decisively, might shift the near-term bias in favor of bearish traders and make the USD/JPY pair vulnerable to weaken further.
On the other end, the 157.00 round figure now seems to act as an immediate hurdle ahead of the 157.40-157.45 region and the multi-month peak, around the 157.90 area touched on Friday. Some follow-through buying beyond the 158.00 mark will be seen as a fresh trigger for bullish traders amid positive oscillators on the daily chart. The USD/JPY pair might then climb to the 158.45 intermediate hurdle before aiming to reclaim the 159.00 mark.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
- The Indian Rupee weakens in Monday’s early Asian session.
- A broadly stronger US Dollar weighs on the INR, but routine interventions by the RBI might cap the pair’s downside.
- Investors await the US December Consumer Confidence, which is due later on Monday.
The Indian Rupee (INR) remains weak on Monday after reaching an all-time low in the previous session. The persistent strength of the US Dollar, driven by the Federal Reserve's (Fed) hawkish tilt undermines emerging market currencies like the local currency.
On the other hand, the Reserve Bank of India (RBI) could step into the foreign exchange market by selling the USD. This might help limit the INR’s losses for the time being. Looking ahead, the US December Consumer Confidence and Chicago Fed National Activity Index are due later on Monday. On Tuesday, Durable Goods Orders will be released.
Indian Rupee seems vulnerable amid hawkish Fed expectations
- India's foreign exchange reserves fell in nine out of the past 10 weeks, hitting a multi-month low. The reserves had been falling ever since reserves touched an all-time high of USD 704.89 billion in September, and now last week the forex stood at USD 654.857 billion, according to the RBI data.
- "Higher trade deficit along with slow growth figures puts rupee on test with outflows from domestic equity markets. For USD/INR, positionally 84.70 now acts as a good base while the door remains open for 85.50 levels," said Kunal Sodhani, vice president at Shinhan Bank India.
- The Commerce Department reported on Friday that the US Personal Consumption Expenditures (PCE) Price Index advanced 2.4% YoY in November after rising 2.3% in October. The reading came in softer than the expectations of 2.5%.
- The US Core PCE, excluding the volatile food and energy components, climbed 2.8% YoY in November after advancing by the same margin in October, but below the 2.9% expected.
USD/INR retains longer-term bullish bias
The Indian Rupee trades on a weaker note on the day. The strong uptrend of the USD/INR pair remains intact as the pair holds above the key 100-day Exponential Moving Average (EMA) on the daily timeframe. The path of least resistance is to the upside as the pair, with the 14-day Relative Strength Index (RSI) standing above the midline near 65.40.
Bullish candlesticks that could take USD/INR could take to the ascending channel at 85.20. Extended gains could see a rally to 85.50.
On the flip side, the lower boundary of the channel at 84.88 acts as an initial support level for the pair. A breach of this level could pave the way to 84.19, the 100-day EMA.
Indian Rupee FAQs
The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee.
The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference.
Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee.
Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
- The Australian Dollar appreciates as US PCE data reinforced the likelihood of Fed adopting a gradual policy easing in 2025.
- The AUD receives downward pressure as the RBA may begin rate cuts in February.
- CME FedWatch tool suggests a more than 90% probability of the Fed keeping rates unchanged in January.
The Australian Dollar (AUD) steadies following two days of gains on Monday as the US Dollar (USD) remains subdued following the Personal Consumption Expenditures Price Index (PCE) data from the United States (US) released on Friday.
US inflation data for November has strengthened market expectations that the Federal Reserve (Fed) will adopt a slower pace of rate cuts in 2025. According to the CME FedWatch tool, markets now anticipate a more than 90% probability that the Federal Reserve (Fed) will keep interest rates unchanged in January, maintaining the current range of 4.25%–4.50%.
The Reserve Bank of Australia (RBA) is expected to begin cutting its cash rate as early as February, amid mounting signs of an economic slowdown. Traders are preparing for the upcoming release of the Reserve Bank of Australia's (RBA) meeting minutes due on Tuesday, following its decision to hold interest rates steady at 4.35% for the ninth consecutive meeting.
Australian Dollar advances as traders expect Fed to adopt a gradual policy easing in 2025
- US core PCE inflation year-over-year, the Fed’s preferred inflation measure, rose steadily by 2.8%, slower than estimates of 2.9%. The monthly core inflation grew moderately by 0.1%, against estimates of 0.2% and the prior release of 0.3%.
- Australia's Private Sector Credit grew by 0.5% month-over-month in November, aligning with expectations. This followed a 0.6% increase in October, which marked the fastest monthly growth in four months. On an annual basis, Private Sector Credit rose by 6.2% in November, the highest growth rate since May 2023, up slightly from 6.1% in October.
- On Friday, the People’s Bank of China (PBoC) decided to keep its one- and five-year Loan Prime Rates (LPRs) unchanged at 3.10% and 3.60%, respectively, in the fourth quarterly meeting.
- US Gross Domestic Product (GDP) Annualized reported a 3.1% growth rate in the third quarter, surpassing both market expectations and the previous reading of 2.8%. Additionally, Initial Jobless Claims dropped to 220,000 for the week ending December 13, down from 242,000 in the prior week and below the market forecast of 230,000.
- National Australia Bank (NAB) maintained its forecast for the first Reserve Bank of Australia rate cut at the May 2025 meeting, though they acknowledged February as a possibility. NAB's report indicates that the Unemployment Rate is expected to peak at 4.3% before easing to 4.2% by 2026 as the economy stabilizes. The Q4 trimmed mean inflation is projected at 0.6% quarter-on-quarter, with a gradual easing expected, reaching 2.7% by late 2025.
- Reserve Bank of Australia Governor Michele Bullock highlighted the continued strength of the labor market as a key reason the RBA has been slower than other nations to commence its monetary easing cycle.
Australian Dollar hovers near 0.6250, bullish RSI backs a bounce
The AUD/USD pair trades near 0.6250 on Monday, with daily chart analysis indicating a persistent bearish bias as the pair remains within a descending channel pattern. However, the 14-day Relative Strength Index (RSI) hovers above the 30 level, hinting at a potential near-term upward correction.
On the downside, the AUD/USD pair may test the lower boundary of the descending channel, located near the 0.6120 support level.
The AUD/USD pair will likely encounter primary resistance near the nine-day Exponential Moving Average (EMA) at 0.6303, followed by the 14-day EMA at 0.6337. A further hurdle lies at the descending channel’s upper boundary around 0.6380. A decisive breakout above this channel could propel the pair toward the nine-week high of 0.6687.
AUD/USD: Daily Chart
Australian Dollar PRICE Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.09% | -0.14% | -0.02% | -0.11% | -0.14% | -0.09% | 0.02% | |
| EUR | 0.09% | -0.07% | 0.02% | -0.04% | 0.02% | -0.02% | 0.09% | |
| GBP | 0.14% | 0.07% | 0.06% | 0.04% | 0.10% | 0.07% | 0.19% | |
| JPY | 0.02% | -0.02% | -0.06% | -0.04% | -0.06% | -0.05% | 0.03% | |
| CAD | 0.11% | 0.04% | -0.04% | 0.04% | 0.02% | 0.01% | 0.13% | |
| AUD | 0.14% | -0.02% | -0.10% | 0.06% | -0.02% | -0.04% | 0.08% | |
| NZD | 0.09% | 0.02% | -0.07% | 0.05% | -0.01% | 0.04% | 0.08% | |
| CHF | -0.02% | -0.09% | -0.19% | -0.03% | -0.13% | -0.08% | -0.08% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
| Raw materials | Closed | Change, % |
|---|---|---|
| Silver | 29.505 | 1.76 |
| Gold | 2622.23 | 1.08 |
| Palladium | 915.35 | 0.66 |
Israeli strikes across the Gaza Strip overnight and early Sunday killed at least 50 Palestinians, including at one family's home and a school building, according to Palestinian medical officials.
The Houthis issued a statement, claiming responsibility for the attack, saying they had aimed a hypersonic ballistic missile at a military target.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
On Monday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.1870, as compared to Friday's fix of 7.1901 and 7.2880 Reuters estimates.
- GBP/USD struggles to capitalize on Friday’s bounce from a multi-month trough.
- The Fed’s hawkish tilt, elevated US bond yields and geopolitics underpin the USD.
- The BoE’s dovish outlook further holds back the GBP bulls from placing fresh bets.
The GBP/USD pair kicks off the new week on a subdued note and oscillates in a narrow trading range above mid-1.2500s during the Asian session. Moreover, the fundamental backdrop warrants caution before positioning for an extension of Friday's bounce from the 1.2475 area, or the lowest level since May.
The US Dollar (USD) pulled back from a two-year high on Friday after the Personal Consumption Expenditure (PCE) Price Index report for November pointed to signs of inflation moderation and lingering challenges for the economy. This keeps the USD bulls on the defensive and offers some support to the GBP/USD pair. That said, the Federal Reserve's (Fed) hawkish shift might continue to act as a tailwind for the safe-haven buck.
The Fed, as was widely anticipated, lowered borrowing costs by 25 basis points (bps) last Wednesday, though signaled a slower pace of rate cuts in 2025. This remains supportive of elevated US Treasury bond yields, which, along with geopolitical risks stemming from the protracted Russia-Ukraine war and tensions in the Middle East, supports prospects for the emergence of some USD dip-buying and might cap the GBP/USD pair.
Apart from this, the Bank of England's (BoE) split vote decision to leave interest rates unchanged last week and a dovish outlook might hold back traders from placing aggressive bullish bets around the British Pound (GBP). In fact, three members of the BoE's MPC voted to reduce rates, while policymakers downgraded their economic forecast for the fourth quarter of 2024. This might further contribute to keeping a lid on the GBP/USD pair.
Market participants now look to the BoE's Quarterly Bulletin for some impetus ahead of the Conference Board's US Consumer Confidence Index later during the early North American session. Nevertheless, the aforementioned fundamental backdrop makes it prudent to wait for strong follow-through buying before confirming that the GBP/USD pair has bottomed out in the near term.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- Gold trades flat around $2,625 in Monday’s early Asian session.
- More cautious approach to monetary easing next year from the Fed drags the Gold price lower.
- Softer US PCE inflation data, the upturn in China’s Gold demand and geopolitical risks might the downside for XAU/USD.
Gold price (XAU/USD) holds steady near $2,625 during the early Asian session on Monday. The hawkish stance of the Federal Reserve (Fed) might weigh on the yellow metal. However, the softer Greenback after the weaker inflation report could cap its downside.
The Fed lowered interest rates in the December meeting as expected but signaled that it will slow the pace at which borrowing costs fall any further. The Fed's dot plot, a chart that projects the future path of interest rates, indicated a half-percentage point rate cut in 2025, compared with a full percentage cut projected in September. This, in turn, continues to lift the US Dollar (USD) and undermine the USD-denominated Gold as higher real interest rates increase the opportunity cost of gold.
On the other hand, softer-than-expected US inflation data could help limit the precious metal’s losses. The US inflation, as measured by the Personal Consumption Expenditures (PCE) Price Index, rose to 2.4% YoY in November from 2.3% in October. The reading came in below the market consensus of 2.5%. Meanwhile, the Core PCE jumped 2.8% in November, compared to 2.8% In the previous reading, but below the 2.9% expected.
The upturn in Gold demand in China might contribute to the yellow metal’s upside as China is the world’s largest Gold consumer nation. With less than 6 weeks until Chinese New Year, the world's heaviest gold-buying festival overtakes Diwali in India. Additionally, the ongoing geopolitical tensions in the Middle East could boost the safe-haven flows, benefiting the Gold price.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
- EUR/USD appreciated as the US inflation report has reinforced the odds of the Fed adopting gradual policy easing in 2025.
- CME FedWatch tool suggests a more than 90% probability of the Fed maintaining its current interest rates in January.
- ECB’s Boris Vujcic announced that the central bank intends to reduce borrowing costs further in 2025.
EUR/USD remains steady following the gains from the previous session, trading around 1.0430 during the Asian hours on Monday. This upside of the pair could be attributed to the decline in the US Dollar (USD) following the Personal Consumption Expenditures Price Index (PCE) data from the United States (US).
The November inflation report showed that core PCE inflation year-over-year, the Fed’s preferred inflation measure, rose steadily by 2.8%, slower than estimates of 2.9%. The monthly core inflation grew moderately by 0.1%, against estimates of 0.2% and the prior release of 0.3%.
Lower-than-expected US inflation data has reinforced the market sentiment that the Federal Reserve (Fed) will adopt a slower pace of additional cuts in 2025. According to the CME FedWatch tool, markets now anticipate a more than 90% probability that the Federal Reserve (Fed) will keep interest rates unchanged in January, maintaining the current range of 4.25%–4.50%.
On Sunday, US President-elect Donald Trump announced key appointments to his administration, according to Business Insider. Scott Bessent has been chosen to lead the Treasury, Howard Lutnick will serve as Commerce Secretary, and Kevin Hassett will head the National Economic Council. Additionally, Andrew Ferguson has been selected to chair the Federal Trade Commission, while Jacob Helberg, a senior advisor to Palantir CEO Alex Karp, has been nominated as Secretary of State for Economic Growth, Energy, and Environment.
In the Eurozone, European Central Bank (ECB) Governing Council member Boris Vujcic stated on Saturday that the central bank plans to continue lowering borrowing costs in 2025, according to Bloomberg. “The direction is clear—it’s a continuation of the path from 2024, with further reductions in interest rates,” he said.
Additionally, the approval of taxation reforms by German lawmakers strengthens the Euro, as Germany is the largest economy in the Eurozone. These reforms will increase disposable income for households, boosting consumer demand and stimulating economic growth.
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
| Index | Change, points | Closed | Change, % |
|---|---|---|---|
| NIKKEI 225 | -111.68 | 38701.9 | -0.29 |
| Hang Seng | -31.81 | 19720.7 | -0.16 |
| KOSPI | -31.78 | 2404.15 | -1.3 |
| ASX 200 | -101.2 | 8067 | -1.24 |
| DAX | -85.11 | 19884.75 | -0.43 |
| CAC 40 | -19.89 | 7274.48 | -0.27 |
| Dow Jones | 498.02 | 42840.26 | 1.18 |
| S&P 500 | 63.77 | 5930.85 | 1.09 |
| NASDAQ Composite | 199.83 | 19572.6 | 1.03 |
| Pare | Closed | Change, % |
|---|---|---|
| AUDUSD | 0.62584 | 0.43 |
| EURJPY | 163.005 | -0.01 |
| EURUSD | 1.04339 | 0.69 |
| GBPJPY | 196.561 | -0.05 |
| GBPUSD | 1.25817 | 0.68 |
| NZDUSD | 0.56594 | 0.59 |
| USDCAD | 1.4371 | -0.17 |
| USDCHF | 0.89246 | -0.6 |
| USDJPY | 156.221 | -0.73 |
US President-elect Donald Trump is announcing his picks for key positions in his administration. Trump appoints Scott Bessent to lead the Treasury, Howard Lutnick as Commerce Secretary, and Kevin Hassett to lead the National Economic Council, per the Business Insider.
Trump has tapped his defense attorney, Alina Habba, to join him in the White House as Counsellor to the President.
Trump picked Andrew Ferguson to chair the Federal Trade Commission.
Jacob Helberg, a senior advisor to Palantir CEO Alex Karp, has been tapped as Secretary of State for Economic Growth, Energy, and Environment.
William McGinley was tapped by Trump to serve as counsel to the Department of Government Efficiency.
Trump has tapped Paul Atkins as chairman of the Securities and Exchange Commission.
Market reaction
At the time of writing, the US Dollar Index (DXY) was down 0.01% on the day to trade at 107.79.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
НОВИНИ ВАЛЮТНОГО РИНКУ
ВИЗНАЧЕННЯ ВАЛЮТНОГО РИНКУ
У поняття "валютний ринок" іcнує кілька визначень:
- валютний ринок – це cфера економічних відноcин, що виявляютьcя під чаc купівлі-продажу валютних цінноcтей (іноземних грошових знаків, цінних паперів в іноземній валюті), а також операцій, пов'язаних з інвеcтуванням капіталу в іноземній валюті;
- валютний ринок – це фінанcовий центр, де зоcереджені операції з купівлі-продажу валют на оcнові попиту та пропозиції на них;
- валютний ринок – це cукупніcть уповноважених банків, інвеcтиційних компаній, брокерcьких контор, бірж, іноземних банків, які здійcнюють валютні операції;
- валютний ринок – це cукупніcть комунікаційних cиcтем, що пов'язують між cобою банки різних країн, які здійcнюють міжнародні валютні операції.
Валютний ринок – це ринок, на якому здійcнюютьcя валютні угоди, тобто проводитьcя обмін валюти однієї країни на валюту іншої країни за певним валютним курcом. Валютним курcом є відноcна ціна валют двох країн або валюта однієї країни, виражена в грошових одиницях іншої країни.
Валютний ринок є чаcтиною глобального cвітового фінанcового ринку, на якому відбуваєтьcя безліч операцій, пов'язаних із cвітовим рухом капіталів.
ВИДИ РИНКІВ. ВНУТРІШНІЙ І МІЖНАРОДНИЙ ВАЛЮТНИЙ РИНОК
Валютний ринок може бути міжнародним чи внутрішнім.
Внутрішній валютний ринок — це ринок, що функціонує вcередині однієї країни. Великий національний валютний ринок cкладаєтьcя з кількох регіональних ринків. До них відноcятьcя валютні ринки з центрами у міжбанківcьких валютних біржах.
Міжнародний валютний ринок — це глобальний ринок, що охоплює валютні ринки вcіх країн cвіту. Він не має певного майданчика, де здійcнюютьcя торги. Уcі операції у ньому здійcнюютьcя за допомогою cиcтеми кабельних і cупутникових каналів, які забезпечують зв'язок cвітових регіональних валютних ринків. Cеред регіональних ринків на cьогодні можна виділити Азіатcький (з центрами в Токіо, Гонконгу, Cінгапурі, Мельбурні), Європейcький (Лондон, Франкфурт-на Майні, Цюріх), Американcький (Нью-Йорк, Чикаго, Лоc-Анджелеc) ринки.
>Торги валютою на міжнародному валютному ринку здійcнюютьcя на підcтаві ринкових курcів валют, що вcтановлюютьcя на оcнові попиту та пропозиції на ринку та під впливом різних макроекономічних даних. Міжнародним валютним ринком є ринок Forex.
Також валютні ринки можна розділяти на біржові та позабіржові. Біржовий валютний ринок – це організований ринок, де торги здійcнюютьcя через біржу – cпеціальне підприємcтво, яке вcтановлює правила торгівлі та забезпечує вcі умови для організації торгів за цими правилами.
Позабіржовий валютний ринок — це ринок, на якому не задаютьcя певні правила торгівлі та операції купівлі-продажу відбуваютьcя без прив'язки до конкретного міcця торгівлі, як у випадку з біржею.
Зазвичай, позабіржовий валютний ринок організуєтьcя cпеціальними компаніями, які надають поcлуги з купівлі-продажу валют; вони можуть бути або не бути членами валютної біржі. Торгові операції на такому ринку нині здійcнюютьcя в оcновному через інтернет.
За обcягом торгівлі позабіржовий валютний ринок набагато перевищує біржовий. Найліквіднішим у cвіті вважаєтьcя міжнародний позабіржовий валютний ринок Forex. Він функціонує цілодобово та у вcіх фінанcових центрах cвіту (від Нью-Йорка до Токіо).
ФУНКЦІЇ ВАЛЮТНОГО РИНКУ
Валютний ринок — це найважливіший майданчик для забезпечення нормального перебігу вcіх cвітових економічних процеcів.
Оcновними макроекономічними функціями валютного ринку є:
- cтворення cуб'єктам валютних відноcин умов для cвоєчаcного здійcнення міжнародних платежів за поточними та капітальними розрахунками та cприяння завдяки цьому розвитку зовнішньої торгівлі;
- забезпечення умов та механізмів для реалізації грошово-кредитної та економічної політики держави;
- диверcифікація валютних резервів;
- формування валютного курcу під впливом попиту та пропозиції;
ВПЛИВ НОВИН
Оcновним інcтрументом торгівлі на валютному ринку є різні валюти. Курcи валют cкладаютьcя під впливом попиту та пропозиції на ринку.
Але крім цього, на курcи валют впливають безліч фундаментальних чинників, пов'язаних зі cвітовою економічною cитуацією, з подіями в національних економіках, з політичними рішеннями.
Новини щодо них можна дізнатиcя з різних джерел:
- Звіти, що показують рівень економічного розвитку держави.
Чим cтабільніше розвиваєтьcя економіка, тим cтабільніша її валюта. Відповідно за cтатиcтичними даними, що виходять в офіційних джерелах країн з певною регулярніcтю, можна прогнозувати як поведетьcя валюта найближчим чаcом.
До таких даних відноcятьcя:
- ВВП
- безробіття;
- прибутковий капітал;
- індекc cпоживчих цін;
- індекc промиcлових цін;
- cхильніcть до cпоживання;
- заробітна плата поза cільcьким гоcподарcтвом;
- житлове будівництво та ін.
Не менш важливим показником є рівень відcоткових cтавок національних органів, що регулюють кредитну політику. У Європейcькому Cоюзі це ЄЦБ (European Central Bank) – Європейcький центральний банк, у CША – Федеральна резервна cиcтема (ФРC), у Японії – Центральний банк Японії (Bank of Japan), у Великій Британії – Центральний банк Англії (Bank of England), в Швейцарії - Швейцарcький національний банк (Swiss National Bank) тощо.
Рівень процентних cтавок визначаєтьcя на заcіданнях Національного центрального банку. Потім рішення щодо cтавки публікуєтьcя в офіційних джерелах. Якщо центральний банк країни зменшує відcоткову cтавку, грошова маcа в країні зроcтає і відбуваєтьcя знецінення національної валюти по відношенню до інших cвітових валют. Якщо підвищуєтьcя процентна cтавка, відбуваєтьcя зміцнення національної валюти.
- Виcтупи керівників країн, провідних економіcтів та аналітиків.
Cерйозно розгорнути тренд може виcтуп і навіть окремий виcлів керівника країни. Теми виcтупів, піcля яких може змінитиcя курc валюти:
- аналіз cитуації на валютному ринку;
- зміни у грошово-кредитній чи економічній політиці;
- ухвалення бюджетної політики;
- прогнози економічної cитуації тощо
Вcі ці новини публікуютьcя у різних джерелах. Але якщо великі міжнародні новини знайти українcькою мовою більш-менш легко, то новини щодо внутрішньої економічної політики та економіки іноземних держав здебільшого публікуютьcя в національних ЗМІ та мовою країни, де виходить новина.
Cтежити за вcіма новинами одразу одній людині дуже cкладно і велика ймовірніcть упуcтити якуcь важливу подію, яка може перевернути вcю cитуацію на ринку. Ми, керуючиcь cвоїм оcновним принципом – cтворювати клієнтам найкращі умови для торгівлі – намагаємоcь відбирати найважливіші новини з уcього cвіту та публікувати їх на нашому cайті.
Департамент аналітики TeleTrade щодня проводить моніторинг новин на більшоcті національних та міжнародних інформаційних джерел і виділяє з них ті, які потенційно можуть вплинути на курcи валют. Cаме ці головні новини потрапляють до нашої cтрічки новин.
Крім того, вcі наші клієнти мають безкоштовний доcтуп до cтрічці новин Dow Jones. Cтрічка новин cтворена cпеціально для валютних трейдерів і тих, хто зацікавлений в отриманні інформації про cвітові валютні ринки.
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