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• The AUD/NZD is falling back after peaking on Wednesday.
• Antipodean cross pair is cycling familiar territory as bulls refuse to go down.
• AUD losing upside momentum could signal another turn towards the downside.

The AUD/NZD is trading back into the 1.0900 handle, a level that has been trapping the cross pair for most of 2023. 

The Aussie (AUD) has seen a firm recovery since bottoming out in early October near 1.0625, but bullish momentum appears to be draining out of the charts quickly as intraday action begins to print exhaustion patterns.

On the daily candlesticks, the Relative Strength Index (RSI) has begun to roll over into a bearish trend after tipping into overbought territory last week, but traders will note that the Moving Average Convergence-Divergence (MCAD) oscillator still hasn't seen a slow-MA crossover confirming aa bearish bias in candlesticks yet.

The median point for price action currently sits near 1.0825 where the 50-day and 200-day Simple Moving Averages (SMA) are currently converging as long-term momentum drifts into the middle.

AUD/NZD Hourly Chart

AUD/NZD Daily Chart

AUD/NZD Technical Levels

• EUR/USD holds ground around 1.0620 on the weaker USD. 
• Markets anticipate that the Federal Reserve (Fed) is already done with the hiking cycle.
• France, Italy, and Spain's Manufacturing PMIs plummeting and Germany already indicating a severe recession.
• Investors will focus on the Eurozone Unemployment rate and US Nonfarm Payrolls. 

The EUR/USD pair rally stalled after reaching 1.0667 but remains above the key support of the 1.0600 mark during the early Asian session on Friday. A fall in US Treasury bond yields and the correction of the US Dollar (USD) lend some support to the pair. The 10-year Treasury yield stands at 4.66%, the lowest level since October 13. Traders will take more cues from the US Nonfarm Payrolls (NFP) report on Friday for fresh impetus. The figures are expected to increase 180,000 jobs in October. The major pair currently trades around 1.0620, losing 0.01% on the day. 

Markets anticipate that the Federal Reserve (Fed) is already done with the hiking cycle. Fed Chair Jerome Powell has made it clear that financial conditions will need to remain tight to avoid further rate rises. Powell added that the central bank would take action to bring inflation back to the 2% target, but the policy choices will remain highly data-dependent. According to the CME FedWatch Tool, the probability of a 25 basis-point (bps) rate raise in the December meeting remains low around 20%, putting more pressure on the USD.

On Thursday, the US weekly Initial Jobless Claims rose to the highest level in seven weeks, coming in at 217,000 from 212,000 in the previous reading, higher than the 210,000 estimated. Meanwhile, the Unit Labor Cost for the third quarter dropped by 0.8% from a rise of 2.2% in the previous reading, worse than the expectation.

On the Euro front, HCOB's final Eurozone Manufacturing PMI dropped to 43.1 in October from September’s 43.4, above the first estimation of 43.0. A reading below 50 indicates a contraction in activity. With Manufacturing PMIs in France, Italy, and Spain plummeting and Germany already indicating a severe recession, it is evident that the sector will contract in each of these nations during the current quarter. This, in turn, might cap the Euro’s upside and act as a headwind for the EUR/USD pair. 

Looking ahead, market participants will monitor the Eurozone Unemployment rate and the US employment data, including Nonfarm Payrolls and Average Hourly Earnings. Also, the US ISM Services PMI will be due later on Friday. These data could give a clear direction to the EUR/USD pair. 

• USD/CHF finds support at 0.9010, with buyers lifting pair to 0.9057 in late North American session.
• 'Golden cross' formation of 50-day moving average crossing above 200-day moving average opens door for bullish resumption.
• Sellers must push prices below 0.9000 mark and reclaim latest cycle low at 0.8887 to maintain control.

The USD/CHF finds some support at around the 0.9010 area, though it failed to print a green day on Thursday after market participants speculated the Federal Reserve isn’t raising rates again. However, buyers entered the market late in the North American session and lifted the pair to current exchange rates at 0.9057, almost flat as the Asian session began.

From a technical standpoint, the pair is set to extend its gains as the 50-day moving average (DMA) is about to cross above the 200-DMA, forming a ‘golden cross’ and opening the door for a bullish resumption. However, USD/CHF buyers must reclaim the latest swing high at 0.9112 before setting their sights at the latest cycle high at 0.9245, the October 3 high. Once those two levels are cleared, the year-to-date (YTD) would be exposed at 0.9440.

On the other hand, for sellers to keep in control, they must push prices below the 0.9000 mark, the confluence of the 50 and 200-DMA. Once cleared, they must reclaim the latest cycle low at 0.8887, the October 24 low.

USD/CHF Price Chart– Daily

USD/CHF Technical Levels

• The USD/JPY is testing flat heading into Friday's US NFP report.
• Japanese markets dark for a long weekend, Asia market session to see muted volumes.
• US NFP to be closely watched following a dovish Fed in the mid-week.

The USD/JPY is taking a bumpy ride around the 150.50 level as Friday's trading window gets underway. Volumes in the Asia market session are expected to be reduced with Japanese exchanges and banks shuttered in observance of Culture Day. 

It's another US Non-Farm Payrolls (NFP) on the cards, and investors will be keeping a close eye on this release as markets are anticipating a notable decline in US jobs growth for October, with headline NFP forecast to come in at 180K versus September's bumper print of 336K.

NFP Preview: Forecasts from nine major banks, employment remains fairly healthy

Markets have been dropping the US Dollar since the Federal Reserve (Fed) gave a dovish showing on Wednesday, and markets are heralding the potential end of the Fed's rate hike cycle as investors turn their attention to waiting for a future Fed rate cut.

Forex Today: Dollar weakens further ahead of NFP

Celebrations may prove to be premature, with money markets currently pricing in the first rate cut from the Fed sometime in the midpoint of 2024.

USD/JPY Technical Outlook 

Despite the mid-week's Fed-fueled USD decline, the USD/JPY remains firmly well-bid in the long-term, trading well above moving averages and hasn't made contact with the 50-day Simple Moving Average (SMA) currently lifting into the 149.00 handle.

Technical resistance is thin on the topside with the USD/JPY inching towards thirty-year highs beyond 2022's peak of 151.94.

USD/JPY Daily Chart

USD/JPY Technical Levels

• AUD/JPY resumes uptrend, trading near Thursday's highs, with a 2.29% rally since Monday.
• Buyers aim to challenge the YTD high 97.67, with first resistance levels at 97.00 and June 20 high at 97.41.
• If sellers push prices toward Tenkan-Sen at 95.58, AUD/JPY could turn neutral, exposing the bottom of Ichimoku Cloud at 94.33.

the AUD/JPY appears to have resumed its uptrend, though it remains below the year-to-date (YTD) high of 97.67. Still, it’s exchanging hands at around Thursday’s highs as buyers stepped into the market. However, as the Asian session begins, the pair trades at 9674, almost flat.

Since Monday, the AUD/JPY has rallied 2.29%, breaking on its way north, crucial resistance levels, lie at the 96.00 figure, and the psychological 96.50 area. Nevertheless, the rally was caped on September 29 high at 96.92. It should be said that if buyers would like to challenge the YTD high, first, they need to conquer 97.00, followed by the June 20 high at 97.41, which, once cleared, would expose the aforementioned YTD high.

On the other hand, the AUD/JPY could turn neutral if sellers push prices toward the Tenkan-Sen at 95.58, followed by the Kijun-Sen at 94.97. That would drag prices inside the Ichimoku  Cloud (Kumo), exposing the bottom of the latter at 94.33.

AUD/JPY Price Chart – Daily

AUD/JPY Key Technical Level

• XAU/USD advanced slightly to $1,985, seeing 0.15% gains.
• Short-term US Treasury yields are weak, near monthly lows.
• Eyes on Friday's Nonfarm Payrolls.  

In Thursday's session, the XAU/USD Gold Spot price gained limited momentum, jumping to $1,985, benefited by lower US yields and a weaker US Dollar following Wednesday's Federal Reserve (Fed) decision. 

Markets are confident that the Fed is approaching the end of its tightening cycle after Chair Powell highlighted that the bank covered significant ground and that for the next decisions, it will consider the tighter financial conditions and the cumulative effects of the tightening. As a reaction, US yields, often seen as the opportunity cost of holding Gold, sharply declined, which allowed the metal to gain some ground with the 2,5 and 10-year rates standing near monthly lows at 4.99%,4.64% and 4.66%. In addition, the hawkish bets on the Fed from December declined, with the swaps markets discounting only 20% chances of a 25 basis point hike which also added to the Greenback's weakness.

That being said, the US will report October's Nonfarm Payrolls on Friday, which are expected to follow last month's tendency, showing a decelerating job creation. Average Hourly Earnings are also seen decelerating while the Unemployment rate is forecasted to remain steady at 3.8%. It is worth noticing that a hot reading may revive the hawkish bets on the Fed as despite welcoming the recent data which showed a cooling in the sector, the bank clarified that it is ready to adjust further in case needed.

XAU/USD Levels to watch

The technical analysis of the daily chart points to a neutral to bullish outlook for XAU/USD, indicating a decline in bullish strength as the metal seems to be correcting overbought conditions after hitting $2,000 last week.

With a flat slope above its midline, the Relative Strength Index (RSI) suggests a period of stability in positive territory, while the Moving Average Convergence (MACD) displays weaker green bars. Furthermore, the pair is above the 20,100,200-day Simple Moving Average (SMAs), suggesting that the bears are struggling to challenge the overall bullish trend.  

Support levels: $1,970, $1,950, $1,930.

Resistance levels: $2,000,$2,015, $2,030.

XAU/USD Daily chart

Strategists from Toronto-Dominion Securities are out with a note explaining why they're expecting a deeper contraction in both the US Non-Farm Payrolls (NFP) Friday report and US Average Hourly Earnings (AHE) compared to the median market forecast.

Payrolls to soften at a steeper rate for October

• The AUD/USD has pulled back to around 0.6430 after rallying to three-week high.
• Profit-taking likely on the cards heading into the Friday market session.
• The US Dollar is broadly lower after global markets turned heel post-Fed.

The AUD/USD saw a two-day rally that saw the Aussie (AUD) lift nearly 1.9% against the US Dollar (USD) after broader markets dumped the Greenback following a dovish Federal Reserve (Fed) on Wednesday that has investors cheering for the perceived end of the Fed rate hike cycle.

Despite the overall market's risk-on mood, hopes for the beginning of an impending Fed rate cut cycle may prove to be a touch premature; money markets are currently pricing in the first Fed rate cut to take place sometime in the back half of 2024.

Forex Today: Dollar weakens further ahead of NFP

Another US Non-Farm Payrolls (NFP) Friday is on the cards to close out the trading week, but first Australian Retail Sales for the 3rd quarter will land early in the Asia market session. Aussie Retail Sales last printed to the downside at -0.5%, and the near-term Aussie bull run will need a healthy rebound in the headline figure to maintain the week's bullish lean.

Investors will be mostly looking out for US NFP and wage growth figures to close out Friday's trading session. Markets are expecting the pace of US jobs growth to slow to 180K for October, down from September's 336K printing.

US Average Hourly Earnings are expected to show a month-on-month acceleration, with the annualized figure forecasting a minor downtick.

MoM wage growth for October is forecast to increase from 0.2% to 0.3%, while wages for the year into October is expected to shift down from 4.2% to a flat 4.0%.

AUD/USD Technical Outlook

The Aussie has rallied past the 50-day Simple Moving Average (SMA) currently churning just south of the 0.6400 handle, and the intraday pullback from today's high is seeing potential for a near-term rejection of the 0.6450 level.

A sustained bull run will need to gather enough momentum to break through the 0.6600 handle, with the 200-day SMA turning down into 0.6625 just above.

On the low end, a return to the 0.6300 level will see the AUD/USD set to make a fresh challenge of 2023's low bids.

AUD/USD Daily Chart

AUD/USD Technical Levels

It's NFP Day. During the Asian session, Australia will report Q3 Retail Sales. Also due is the China Caixin Service PMI. Later in the day, Eurostat will report the Unemployment Rate. The US and Canada will release their employment reports.

Here is what you need to know on Friday, November 3:

On Thursday, the US Dollar lost ground, extending the weakness that began after Federal Reserve Chair Jerome Powell's press conference on Wednesday. The decline has been gradual and it stopped on Thursday when many currency pairs approached critical levels.

Economic data from the US released on Thursday showed that Initial Jobless Claims rose to the highest level in seven weeks, while Continuing Claims reached the highest since April. In another report, the Unit Labor Cost during the third quarter dropped by 0.8%, contrary to expectations of a modest increase. These figures did not support the US Dollar, although it stabilised during the American session.

On Friday, the critical report will be the US official employment report. Nonfarm Payrolls are expected to show an increase of 180,000 jobs, with the Unemployment Rate remaining at 3.8%. Later, the ISM Service PMI will be released.

NFP Preview: Forecasts from nine major banks, employment remains fairly healthy

The US Dollar index reached a weekly low but then trimmed its losses, ending the day above 106.00. It maintains a bearish bias, although the negative momentum eased. The 10-year Treasury yield closed at 4.66%, the lowest level since October 13.

EUR/USD rose and closed above 1.0600, but once again, the upside was limited by the 55-day Simple Moving Average (SMA) near 1.0665. The short-term bias is skewed to the upside, but there is a lack of conviction.

The Bank of England (BoE) kept its rate unchanged at 5.25%, with a 6-3 vote. The Pound initially strengthened due to an upward revision to inflation forecasts but later retreated. EUR/GBP rose to monthly highs but then pulled back to 0.8700, erasing its gains. GBP/USD posted its highest close in more than a week above 1.2200.

The improvement in risk sentiment, higher crude oil prices, and a weaker Dollar pushed USD/CAD sharply lower. The pair tumbled from 1.3850 to 1.3745, experiencing its worst day in months. The Canadian Dollar outperformed. On Friday, Canada will release its jobs report, with a positive net change in employment expected at 22,500.

AUD/USD posted the highest daily close in months above 0.6400, but it finished far from the daily high it reached at 0.6455. The pair maintains a bullish bias. 

Gold moved sideways throughout the day, hovering around $1,985, while Silver dropped to $22.70, erasing Wednesday's gains.

• EUR/JPY climbs in North American session, gaining 0.22% and trading at 159.86.
• Buyers aim for a daily close above latest cycle high at 159.91 to open the door for further upside.
• If EUR/JPY prints a daily close below 159.91, potential reversal could see first support at Tenkan-Sen at 159.27.

The EUR/JPY climbs late in the North American session, with the cross recovering from a 78 pip fall on Wednesday, courtesy of risk-off impulse. On Thursday, the story is different, as the pair gains 0.22% and trades at 159.86 after bouncing off a daily low of 159.06.

After reaching a new YTD high, the EUR/JPY uptrend remains intact, though at the brisk of reversing as buyers must achieve a daily close above the latest cycle high seen at 159.91, which, once cleared, could open the door for further upside. Up next would be the 160.00 mark, followed by the November 1 high at 160.43 before challenging the current YTD high at 160.84. A breach of the latter will expose the 161.00 mark.

On the other hand, if EUR/JPY prints a daily close below 159.91, that could open the door for a reversal. First support would emerge at the Tenkan-Sen at 159.27 before the pair dives to 159.00. The next support would emerge at the Senkou Span A level at 158.43 before the cross aims to the 158.00 mark

EUR/JPY Price Action – Daily chart

EUR/JPY Technical Levels

• EUR/USD higher for Thursday, but fighting for gains.
• Risk appetite is back on the cards as investors celebrate the end of Fed rate hikes.
• US NFP Friday still on the cards to close out the week.

The EUR/USD caught some lift for Thursday, rising as broader markets continue to climb, fueled by a dovish Federal Reserve (Fed) on Wednesday that sees investors flocking to risk assets in celebration of the (perhaps premature) perceived end of the Fed's rate hike cycle.

Rate cut eagerness may prove to be short-lived despite the Fed's softly dovish tone on Wednesday. Money markets are currently expecting the beginning of a rate cut cycle for the Fed beginning sometime in the back half of 2024, but that's still a long way away.

The European Unemployment Rate figures are due early on in the Friday trading session, but overall markets are set to be entirely focused on the US' Non-Farm Payrolls (NFP) for October, slated for tomorrow's US trading session.

The Fed's pause can see further demand for carry – ING

Investors, eager to get a rate cut cycle underway, are forecasting a decline in headline US jobs creation growth, forecast to print at 180K compared to the previous month's 336K.

A miss-or-match for the headline NFP figure could see the US Dollar pare losses as investors pile back into the safe haven, while a beat for US jobs reporting could see traders get a splash of cold water on adjusting interest rate forecasts.

EUR/USD Technical Outlook

Despite Thursday's risk-on rally, The EUR/USD continues to trade near familiar territory on the daily candlesticks, testing technical resistance to the upside from the 50-day Simple Moving Average (SMA).

The pair got knocked back from the 1.0650 handle mid-Thursday at the outset of the US trading window, and Euro bulls look set to dig their heels in and find a rebound point from the day's low near 1.0566.

EUR/USD Daily Chart

EUR/USD Technical Levels

• USD/NOK jumped from a low around 11.108 to 11.150, seeing mild losses.
• The USD weakness is driven the pair downwards.
• As well as the Fed, the Norges Bank held rates steady and showed a dovish tone.
• All eyes are now on Nonfarm Payrrolls from the US on Friday.

In Thursday’s session, the USD/NOK cleared part of its daily losses after the Norges Bank decided to hold rates steady jumping from 11.108 to 11.150, still holding daily losses. On the other hand, the Greenback is performing poorly due to the Federal Reserve’s (Fed) dovish tone on Wednesday’s decision and a positive market enviroment.

Jerome Powell suggested that the Federal Reserve has covered significant ground, hinting that the rate hike cycle is nearly ending. He also indicated that future decisions will involve considering tighter financial conditions and the overall impact of the cumulative effects of the monetary policy. This sparked a surge in risk-on flows and a weakening of the US Dollar as markets are confident that interest rates have already hit their peak. 

Ahead of Friday's Nonfarm Payroll report, the US Department of Labor reported that Initial Jobless Claims for the week ending on October 28 surpassed expectations at 217,000, higher than the consensus of 210,000 and up from the previous 212,000. Market forecasts for Friday's job report anticipate a deceleration in job growth to 118,000, down from the revised September figure of 336,000. Average Hourly Earnings are expected to slow slightly, with Unemployment predicted to remain steady at 3.8%.

On the Norges bank side, it held rates steady at 4.25%, as expected. The statement pointed out that the bank is considering another hike in December, but the tone was more confident, assuring that inflation is decelerating. As for now, the swaps markets are discounting a 40% chance of a 25 basis point hike in the December meeting, and as long those bets remain high, the NOK’s downside is limited.

USD/NOK Levels to watch 

 Observing the daily chart, signs of bullish exhaustion are apparent for USD/NOK. Having turned flat in positive territory, the Relative Strength Index (RSI) suggests a potential market equilibrium with balanced buying and selling pressure, while the Moving Average Convergence (MACD) displays stagnant green bars.

However, the pair remains above the 20,100,200-day Simple Moving Average (SMAs), implying that the bulls retain control on a broader scale.

 Support levels: 11.140, 11.083, 11.027 (20-day SMA), 

 Resistance levels: 11.200, 11.235, 11.276.

• GBP/USD continues the positive trend, erasing Wednesday's losses following the Federal Reserve's decision.
• Bank of England votes 6-3 to hold rates unchanged at 5.25%, supporting GBP/USD rally toward 1.2222.
• Traders await Friday's US Nonfarm Payrolls report, with a potential impact on GBP/USD's current rally.

The GBP/USD continues to trade in positive territory after erasing Wednesday’s losses due to the US Federal Reserve holding rates unchanged, but speculators are not expecting further tightening by Jerome Powell and Co. Alongside that, the Bank of England (BoE) followed suit, keeping rates at a 15-year high, maintaining the major exchanging hands at around 1.2200, gaining nearly 0.40%.

GBP/USD in positive territory as Federal Reserve holds rates unchanged and Bank of England maintains 15-year high rates

On Wednesday, the Federal Reserve kept the federal funds rate at the 5.25%-5.50% range for the second straight meeting after officials commented the US central bank could be patient. Fed policymakers acknowledged the labor market remains tight, with growth above trend and inflation high. Nevertheless, their decision was perceived as dovish; as speculations grow, the Fed is done raising rates.

On the UK front, the Bank of England voted 6-3 to hold rates unchanged at 5.25%, sponsoring a rally on the GBP/USD toward 1.2222, but has faded as the pair dipped 20 pips toward the 1.22 figure. In its monetary policy statement, the BoE mentioned that rates would remain restrictive for a long period. In his press conference, BoE Governor Andrew Bailey commented that inflation is too high, that further rate hikes could be needed, and disregarded rate cuts.

Aside from this, data-wise, Factory Orders in the United States (US) jumped surprisingly 2.8%, compared to August’s 1% and expectations for a 2.4% rise. On the labor market front, unemployment claims rose above estimates and the prior reading, suggesting that although it remains hot, the jobs market begins to cool down.

Given the backdrop, GBP/USD traders turn to Friday's US Nonfarm Payrolls October report. If figures show the jobs market remains hot, GBP buyers would be in a difficult position due to the extent of the major’s rally since Wednesday. The pair climbed more than 120 pips from Wednesday’s lows to current exchange rates.

GBP/USD Price Analysis: Technical outlook

The daily chart shows the downtrend remaining intact amid the formation of a descending triangle. For GBP/USD buyers to shift the bias to neutral, they must clear the top of the triangle at around 1.2225/1.2230, followed by ta break of key resistance levels. The next resistance would be the October 24 high at 1.2288 before testing the 50-day moving average (DMA) at 1.2308. Conversely, if sellers regain control, they must drag prices toward the bottom of the triangle at 1.2100. Once cleared, the next support emerges at 1.2037, the October 4 swing low.

• Silver gets left out of broad-market risk-on party.
• XAG/USD backslides from $23.10 to trade into familiar lows.
• Risk appetite returns as investors herald the perceived end of Fed rate hikes.

Silver is getting left out of the broader market's post-Federal Reserve (Fed) celebration after Fed Chairman Jerome Powell struck a more dovish tone than many expected, and investors are stepping back into risk assets in anticipation of the formal end of the Fed's rate hike cycle. 

Traders will now be looking ahead to eventual rate cuts from the Fed and jostling for position. Current markets are pricing in rate cuts to begin sometime in the latter half of 2024.

Despite the market's resurgence in risk appetite, Silver has been left out in the cold, with the XAG/USD getting left out in the cold.

Spot Silver bids have fallen back for the day even despite a bounce late in the US session, marking in the day's current low bid at $22.65.

XAG/USD Technical Outlook

Spot Silver bids feel from the day's early high of $23.12, getting knocked back below the $23.00 handle to trade in the sub-$22.80 region as XAG/USD returns to near-term swing low territory.

XAG/USD set an early week peak of $23.60 in Monday's rally that sent Spot Silver climbing almost 2.5%, but the week's cart action finds Silver testing back into familiar lows.

Despite April's double-top rally into the $26.00 handle, XAG/USD has spent most of 2023 cycling $23.00, and a notable lack of directional momentum in either direction leaves Silver hamstrung in the midrange, sticking close to the 200-day Simple Moving Average (SMA) that is currently grinding lower from $23.50.

XAG/USD Daily Chart

XAG/USD Technical Levels

• USD/CHF fell to 0.9050, seeing 0.30% losses.
• The USD is losing interest due to the Fed dovish tone on Wednesday’s decision.
• Ahead of October’s Nonfarm Payrolls, the US reported weak labor market data.
• Indicators flash signals of further downside.

In Thursday’s session, the USD/CHF saw red, mainly driven by a broad USD weakness following the Federal Reserve’s (Fed) and Jerome Powell’s remarks on Wednesday. In addition, soft labour market data is adding to the Greenback’s weakness.

On Wednesday, Jerome Powell hinted that the bank has covered significant ground. He stated that for the next decision, tighter financial conditions will be considered, as well as the cumulative effects for the next decisions. As a reaction, markets took those messages as a signal that interest rates reached its peak, which triggered a wave of risk-on flows which weakened the US Dollar.

Ahead of October’s Nonfarm Payroll on Friday, the U.S. Department of Labor revealed that the Initial Jobless Claims from the week ending in October 28 came in above the consensus. The people filling for unemployment benefits came in at 217,000, higher than the consensus 210,000 and increased concerning its last reading of 212,000.

For Friday’s job report, markets expect that the US economy added 118,000 jobs, decelerating from its revised September reading of 336,000. Wage inflation measured by the Average Hourly Earnings is forecasted to slightly decelerate while Unemployment is expected to remain steady at 3.8%. 

 USD/CHF Levels to watch 

 Upon evaluating the daily chart, a neutral to bearish outlook is seen, with the balance starting to lean in favour of the bears, although they still have hurdles to overcome. The Relative Strength Index (RSI) has a negative slope above its midline, indicating weakening buying pressure, while the Moving Average Convergence (MACD) histogram shows rising red bars.

In addition, it is worth noticing that the 20 and 200-day Simple Moving Averages (SMA) are converging towards 0.9000 en route to perform a bearish cross, which could fuel further downside movements.

 Support levels: 0.9030, 0.9015, 0.9000 (20 and 200-day SMA convergence)

 Resistance levels: 0.9060, 0.9080, 0.9100.

USD/CHF Daily chart

• WTI Crude Oil climbs more than 1.80%, rising above $82.00 per barrel, as US Dollar weakens.
• Investors react positively to Federal Reserve's decision to keep rates unchanged, despite possible hawkish pullback.
• Bank of England's decision to keep rates on hold and gloomy economic outlook cap WTI's rally.

West Texas Intermediate (WTI), the US Crude Oil benchmark, climbed more than 1.80% on Thursday, snapping three days of losses, rising above $82.70 per barrel, gaining 2.28%.

US Crude Oil benchmark rises, snapping three days of losses as investors react positively to Fed's decision

Investors seem convinced the US Federal Reserve (Fed) ended its tightening cycle, as Wall Street prints gains, US Treasury bond yields plunge for the second straight day, while the Greenback prolongs its agony, falling to new two-day lows, as shown by the US Dollar Index (DXY).

On Wednesday, the Fed kept rates unchanged at the 5.25%-5.50% range and reaffirmed its commitment to curb high inflation. Despite that, investors reacted positively to Powell and Co. decision, though they remain at risk of a possible hawkish pullback by the Fed.

This is because Powell said that higher rates at the long-term of the curve were helping to keep monetary conditions restrictive. Nevertheless, rates remained high on speculations for additional rate hikes. That, along with US Dollar weakness, augmented demand for Oil, as restrictive policies are seen as a threat to dent demand.

Besides that, the Bank of England (BoE) decided to keep rates on hold on Thursday, early in the North American session, on expectations the BoE reached peak rates amidst a gloomy economic outlook.

Nevertheless, the latest PMI reports are caping WTI’s rally. On Wednesday, the ISM Manufacturing PMI for October slumped below the contractionary/expansionary threshold, suggesting the economy is decelerating. That echoes some of China’s issues after the National Bureau of Statistics (NBS) and Caixin revealed that business activity on the manufacturing front remains at recessionary levels.

WTI Technical Levels

• The EUR/GBP is getting yanked back towards 0.8700 as Thursday's gains get rebuffed.
• The Euro clipped into a high of 0.8736 before getting knocked back down.
• BoE left rates unchanged, but hawkish lean sends the Pound Sterling back up.

The EUR/GBP is falling back towards the 0.8700 handle after scrambling up the charts in the runup to Thursday's Bank of England (BoE) rate call, which saw rates on hold, but hawkishly so. The Pound Sterling (GBP) saw a late break and recovery following the UK central bank, cutting away some of the day's gains for the Euro (EUR).

Bailey Speech: BoE Governor speaks on policy outlook after holding interest rate steady at 5.25%

BoE Governor Andrew Bailey gave some talking points while delivering the BoE's rate hold announcement, noting that the UK still has a long way to go on quashing inflation, and the need for balance in monetary policy restrictiveness.

The BoE's rate call showing wraps up impactful scheduled data from both the EU and the UK for the week.

EUR/GBP Technical Outlook

The EUR/GBP's late break lower has sent the pair back into the 200-hour Simple Moving Average (SMA) as prices return to the near-term median, slipping back from the day's high of 0.8736.

Despite the GBP's late rebound, the pair remains fairly well-bid for the day, up 0.3% from Thursday's opening bids near 0.8690.

Daily candlesticks continue to clatter along the 0.8700 key handle, with the 200-day SMA near the level keeping prices strung along the midrange.

The pair is sticking close to the top side of six-year highs after lifting from the year's low bids near 0.8500 from back in August, and a bullish continuation will see the pair set for a long-term run towards 2023's early highs near 0.8860

EUR/GBP Daily Chart

EUR/GBP Technical Levels

• The Canadian Dollar is seeing a rebound alongside market sentiment.
• Canada Unemployment, Wages figures due on Friday alongside US NFP.
• Crude Oil prices are moderating on the low end, capping CAD gains.

The Canadian Dollar (CAD) is seeing a rebound as the broader market sentiment recovers on Thursday, pushing down the US Dollar (USD) and giving riskier currencies some much-needed breathing room.

Canada Unemployment and Average Hourly Wages data is slated for release on Friday, with the data points likely to be overshadowed by another US Nonfarm Payrolls (NFP) in the books.

Daily Digest Market Movers: Canadian Dollar finds foothold as markets send US Dollar lower

• Broad market risk appetite recovery sends equities and risk assets back up, US Dollar and Treasury yields back down.
• Fed’s rate hold and statement on Wednesday signals the end of the rate hike cycle to possibly overeager markets.
• Thursday’s rally gives way to US NFP Friday with Canada Unemployment and Wages data buried in the calendar.
• Canadian wage growth expected to ease, Net Change in Employment forecast to decline from 63.8K to 22.5K for October.
• Canada Unemployment Rate seen ticking upward from 5.5% to 5.6%.
• Canadian home sales broadly decline, key hotspots see sales activity fall to levels only seen in last two recessions.
• US NFP to dominate market data reactions, October jobs additions seen declining from 336K to 180K.
• WTI Crude Oil subdued below $82.00 per barrel, limiting topside gains for Oil-dependent Loonie.

Technical Analysis: Canadian Dollar follows rest of market higher against US Dollar, USD/CAD slips back below 1.3800

The USD/CAD pair fell back below the 1.3800 handle as the Canadian Dollar (CAD) follows market sentiment higher against the US Dollar (USD).

The CAD fell to a twelve-month low against the USD yesterday, sending the USD/CAD to 1.3899, and a relief pullback sent the pair into a low of 1.3841 on Thursday.

Despite broad-market relief, the USD/CAD is hung up toward the middle, down 0.45% for Thursday and trading just shy of 1.3800.

Near-term technical support sits at the 50-day Simple Moving Average (SMA) at 1.3625, while a longer-term move toward the downside sees a floor at the 200-day SMA currently rising into 1.3500.

A topside break of yesterday’s peak will see fresh year-long highs for the USD/CAD, with the way clear for a run at 2022’s high bids near 1.3980 set in October of last year.

USD/CAD Daily Chart

• NZD/USD advances steadily with improved risk appetite and speculations of Fed's rate hike pause.
• Market participants mostly ignore Fed Chair Jerome Powell's hawkish remarks, expect rate cut by June 2024.
• Upcoming US Nonfarm Payrolls and inflationary data could reignite discussions on further tightening needs.

NZD/USD advances steadily on Thursday due to risk appetite improvement sponsored by speculations the US Federal Reserve (Fed) is done raising interest rates. Therefore, a drop in US Treasury bond yields weakened the American Dollar (USD), a tailwind for the pair. At the time of writing, the NZD/USD exchanges hands at 0.5883, gaining more than 0.60%.

NZD/USD gains more than 0.60%, trading at 0.5883 amidst weakening US Dollar

Even though the Fed held rates unchanged at the 5.25%-5.50% range, its Chair Jerome Powell delivered some hawkish remarks that market participants mostly ignored. Regarding that, interest rate futures traders expect the Fed’s first rate cut by June 2024, with odds at 6780, according to the CME FedWatch Tool.

That could be seen as premature, as additional data is pending to be released with tomorrow’s US Nonfarm Payrolls report for October. Data is expected to show the US economy added 180K jobs to the workforce and the Unemployment Rate to remain at 3.8%. That, along with Consumer Sentiment on November 10, inflationary data from the consumer and producer side on the November 13 week, could come hotter as expected, and reignite discussions that further tightening is needed.

In the meantime, Thursday’s economic docker featured Initial Jobless Claims, which rose above estimates and the prior week from October 28 revealed today, with claims at 217,000, exceeding 210,000 foreseen and 212,000 from October 21. On the other hand, Factory Orders jumped above August’s and forecasts by analysts, as the US economy continues to show resilience and keeps growing above trend.

Meanwhile, the Kiwi enjoyed a rally, sponsored by risk appetite, falling US Treasury bond yields, and a softer US Dollar, following the Fed’s decision. The US 10-year bond yield, which has fallen close to 20 basis points since Wednesday, sits at 4.682%, while the US Dollar Index, loses 0.38%, and dives to 106.26.

NZD/USD Technical Levels

• DXY index declined to 106.20, down by 0.40%.
• US government bond yields are declining, while Wall St indexes are rising.
• Focus is set on Friday's Nonfarm Payrolls report for October.

The US Dollar (USD) tumbled on Thursday, and the DXY index declined to 106.20, driven by dovish bets on the Federal Reserve (Fed) and falling US bond yields following Wednesday’s decision and Chair Powell’s tone.  All eyes are now on the Nonfarm Payrolls (NFP) report from October on Friday, which could set the tone of the USD in the short term and extend its losses.

The Federal Reserve (Fed) and Chair Jerome Powell welcomed the latest data, which showed that the United States economy remains strong, and noted that the job creation pace and inflation are decelerating. In addition, Powell hinted that the bank has tightened significantly and that in the next decisions, he will consider the tighter financial conditions and the cumulative effects of monetary policy.

Daily Digest Market Movers: US Dollar declines on dovish bets on the Fed, labor market weakness

• The DXY index plunged below the 20-day SMA, toward 106.20, down by 0.40%.
• Ahead of October NFPs on Friday, the US reported soft labour market data. 
• The Unit Labour Costs from Q3 declined by 0.8% QoQ, while markets expected a 0.7% expansion.
• In addition, the US Department of Labor revealed that the Initial Jobless Claims from the week ending October 28 came in higher than expected. Folks filing for unemployment benefits came in at 217,000, higher than the consensus of 210,000 and an increase in relation to its last reading of 212,000.
• Elsewhere, US Treasury yields are sharply falling. The 2-year rate fell to 4.98%, while the longer-term 5 and 10-year rates retreated toward 4.63% and 4.67%, hindering the US Dollar from finding demand.
• According to the CME FedWatch Tool, the odds of a 25-basis-point hike in December are still low, around 20%, adding further pressure to the USD.

Technical Analysis: US Dollar Index bulls give up, losing the 20-day SMA 

The technical analysis of the daily chart suggests a neutral to bearish stance for the DXY Index as the bears work on staging a recovery and exerting their presence. The Relative Strength Index (RSI) points southward below its midline, while the Moving Average Convergence (MACD) histogram displays increasing red bars. Furthermore, the index is below the 20-day Simple Moving Average (SMA), which could pave the way for additional downward movements in the short term.

That being said, the DXY holds above the 100 and 200-day SMAs, pointing toward the prevailing strength of the bulls in the larger context.

Supports: 106.00, 105.70, 105.50
Resistances: 106.30 (20-day SMA), 106.50,106.90.

The US Bureau of Labor Statistics (BLS) will release the October jobs report on Friday, November 3 at 12:30 GMT and as we get closer to the release time, here are the forecasts by the economists and researchers of nine major banks regarding the upcoming employment data.

Nonfarm Payrolls are forecast to increase by 180K in October vs. the stronger-than-expected 336K increase recorded in September. The Unemployment Rate is seen steady at 3.8% and Average Hourly Earnings are expected to fall two ticks to 4.0% year-on-year. 

Commerzbank

Danske Bank

Deutsche Bank

ING

NBF

RBC Economics

SocGen

Citi

CIBC

Wells Fargo

At today’s monetary policy meeting, the Bank of England (BoE) left the key policy rate unchanged at 5.25%. EUR/GBP ended the meeting higher. Economists at Danske Bank analyze Sterling’s outlook.

BoE paves the way for more EUR/GBP topside 

• Mexican Peso extends rally against the US Dollar, with USD/MXN dropping below 200-day SMA.
• Federal Reserve holds rates steady, with Chair Jerome Powell's remarks perceived as hinting at the end of the rate hike cycle.
• Money market players estimates the Fed’s first rate cut by June 2024, a headwind for the USD/MXN

Mexican Peso (MXN) extends its rally against the US Dollar (USD), with the USD/MXN dropping below the important technical 200-day Simple Moving Average (SMA), as market participants speculate the US Federal Reserve (Fed) is done hiking rates after Wednesday’s decision. The fall in Treasury bond yields in the United States (US) dampens appetite for the American Dollar (USD). The USD/MXN pair trades below 17.60, registering losses of nearly 1% on the day.

On Wednesday, the Federal Reserve held the target range for federal funds rate steady at 5.25%-5.50% without changing the tone of the monetary policy statement. After that, Fed Chair Jerome Powell struck the markets with some hawkish remarks, although adding that “we have come very far with this rate-hike cycle and are close to end of the cycle.”.

Regarding the latter, money market players are indeed pricing in the Fed is done raising rates, with December odds of keeping rates on hold at 80%, as traders expect the first rate cut in June 2024. The odds for a 25 bps cut are at 67.80%.

Thursday's data revealed the Fed’s decision to pause was justified as unemployment claims for the last week rose above estimates and the prior week’s data, extending the uptrend to six straight weeks, while Unit Labor Costs unexpectedly declined in the third quarter. On the other hand, Factory Orders jumped above August’s and forecasts by analysts, as the US economy continues to show resilience and keeps growing above trend.

Nevertheless, market participants’ focus would shift towards the US Nonfarm Payrolls report for October, which is expected to show the economy added just 180K jobs with the Unemployment Rate foreseen at 3.8%. Due to the extension of the Greenback’s losses, a better-than-expected report could rock the boat sharply and catch traders off guard.

On the Mexican front, the economic docket featured the release of Foreign Exchange Reserves. The Bank of Mexico – also known as Banxico –reported that “reserves in Mexico decreased to 209,626 USD Million in September from 210,385 USD Million in August of 2023.”

Daily digest movers: Mexican Peso climbs sharply on Fed’s dovish hold

• US Initial Jobless Claims for the week ending October 28 rose by 217K, exceeding estimates and the previous week's figures at 210K and 212K, respectively.
• Factory Orders in September grew surprisingly, coming at 2.8% MoM, above forecasts of 2.3% and August 1%.
• US ADP Employment Change in October climbed to 113K, better than the previous month, but missed forecasts of 150K.
• The ISM Manufacturing PMI dropped to contractory territory at 46.7 in October, below forecasts and September’s 49 reading.
• September’s JOLTs job report showed openings rose by 9.553 million, above forecasts of 9.25 million, and August’s 9.497 million.
• Mexico S&P Global October Manufacturing PMI at 52.1, above September’s 49.8.
• Mexico’s Gross Domestic Product grew by 0.9% QoQ in the third quarter on its preliminary reading, above the previous quarter and estimates of 0.8%.
• On a yearly basis, Mexico’s GDP for Q3 expanded by 3.3%, above forecasts of 3.2% but trailing the previous 3.6%.
• According to Enki Research, a firm specializing in natural disasters, the first estimates of Hurricane Otis's damages in Mexico are around $10 to 15 billion.
• On October 24, Mexico's National Statistics Agency, INEGI, reported annual headline inflation hit 4.27%, down from 4.45% at the end of September, below forecasts of 4.38%.
• Mexico’s core inflation rate YoY was 5.54%, beneath forecasts of 5.60%.
• The Bank of Mexico (Banxico) held rates at 11.25% in September and revised its inflation projections from 3.50% to 3.87% for 2024, above the central bank’s 3.00% target (plus or minus 1%). The next decision will be announced on November 9.

Technical Analysis: Mexican Peso buyers conquered the 200-day Simple Moving Average, USD/MXN eyes 17.50

The USD/MXN finally plunged below the 200-day Simple Moving Average (SMA) at 17.70, extending its losses toward the 50-day SMA at 17.61. A daily close below those two crucial support levels, and the pair could prolong its slide towards the September 29 daily low at 17.34.

On the other hand, if USD/MXN buyers stepped in and reclaimed the 200-day SMA, that could open the door to recovering the psychological 18.00 figure. A breach of the latter could expose a rally to the 20-day SMA at 18.06 before targeting the October 26 high at 18.42 before challenging last week’s high at 18.46, ahead of the 18.50 figure.

The Fed's tone around financial conditions has dinged the USD. Economists at TD Securities analyze Greenback’s outlook.

If the data starts to soften, then the USD should follow it lower

The Yen weakened in October versus the US Dollar to levels above 150.00. Economists at MUFG Bank analyze Yen’s outlook.

Yen weakness to persist but peak rates globally should halt slide

The Canadian Dollar weakened in October and was the third worst performing G10 currency across G10. Economists at MUFG Bank analyze Loonie’s outlook.

USD/CAD is now overshooting fair value

USD/CAD – Q4 2023 1.39 Q1 2024 1.35 Q2 2024 1.33 Q3 2024 1.32

The Bank of England kept the Bank Rate on hold today at 5.25%. The BoE came in a tad hawkish and supported the GBP. Economists at TD Securities analyze Sterling’s outlook.

The MPC voted 6-3 to maintain Bank Rate at 5.25%

Factory Orders (MoM) in the United States climbed 2.8% in September, exceeding the 2.3% rise expected by markets. In August, United States Factory Orders (MoM) had risen by a revised 1% compared with the 1.2% rise previously estimated.

What is the United States Factory Orders (MoM)?

The Factory orders released by the United States Census Bureau is a measure of the total orders of durable and non durable goods such as shipments (sales), inventories and orders at the manufacturing level which can offer insight into inflation and growth in the manufacturing sector. Normally, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or bearish).

When is the next United States Factory Orders (MoM) report released?

The next United States Factory Orders (MoM) data will be published on December 4 at 15:00 GMT. For more information, check the United States Factory Orders (MoM) entry in FXStreet Calendar.

An automation tool was used in creating this post.

• AUD/USD climbs close to 0.6440 as market sentiment improves.
• The demand for the US Dollar dampens as investors hope that the Fed is done with hiking interest rates.
• RBA monetary policy and the US NFP data will be keenly watched.

The AUD/USD pair jumps sharply towards 0.6440 as the US Dollar faces an intense sell-off. The US Dollar fell vertically to near 105.80 on disappointment from the US data and a steady interest rate policy from the Federal Reserve (Fed).

The S&P500 has opened on a bullish note amid optimism that the Fed is done with hiking interest rates. Fed Chair Jerome Powell kept expectations of one more interest rate increase alive as a resilient US economy could keep price pressures persistent.

Market mood has improved significantly while the US Dollar Index (DXY) has dropped significantly. 10-year US Treasury yields have plunged more than 3% to 4.67%, at the press time. While discussing rate cuts, in his monetary policy statement, Jerome Powell said that the central bank is not looking to lower interest rates but added that "It’s fair to say the question we’re asking is should we hike more” as officials weigh how they can guide inflation back to the 2% target.

Going forward, investors will focus on the Nonfarm Payrolls (NFP) data for September, which will be published on Friday. As per the consensus, employers hired 180K job seekers in October against the former release of 336K. The Unemployment Rate is seen unchanged at 3.8%.

On the Australian Dollar front, investors shift focus to the interest rate decision by the Reserve Bank of Australia (RBA), which will be announced on Tuesday. Investors hope that the RBA could raise interest rates by 25 basis points (bps) to 4.35% as inflation turns out persistent in the third quarter of 2023.

After falling by 14% between September 2022 and early July this year, the US Dollar Index recouped half of that fall in Q3. Kit Juckes, Chief Global FX Strategist at Société Générale, analyzes USD outlook.

USD/JPY has room to fall back into a 145-150 range

• The US Dollar extends slide following the release of US data.
• Stocks on Wall Street open higher, putting additional pressure on the Greenback.
• EUR/USD tests a short-term downtrend line and remains firmly above 1.0600.

The EUR/USD accelerated to the upside and climbed to 1.0667, reaching a fresh daily high. This upward movement gained momentum after the release of US data and the positive opening on Wall Street.

Dollar remains under pressure

The US Dollar continues to be weighed down by an improvement in risk sentiment and a decline in Treasury yields. Additionally, economic data from the US has also affected the Greenback.

US economic figures came in below expectations, with Initial Jobless Claims rising to 217,000, the highest level in seven weeks, and Continuing Claims reaching the highest level since May. Another report showed a 0.8% drop in Unit Labor Costs during the third quarter, against expectations of a 0.7% increase. 

The US Dollar Index fell to 105.80, the lowest level since October 24. The 10-year Treasury yield currently stands at 4.64%, the lowest in two weeks.

Bullish but facing resistance 

The EUR/USD is currently testing a downtrend line near 1.0670, and if it breaks above this level, it could trigger further gains with potential exposure to 1.0700.

The bullish tone in the market is likely to persist as long as the pair remains above the 1.0580 level. On the 4-hour chart, the price is holding firm above key Simple Moving Averages, and technical indicators point to the upside.

4-hour chart 

Technical levels 

The Mexican Peso showed another month of sizeable weakening in October. Economists at MUFG analyze MXN outlook.

Mexican Peso to weaken next year

• GBP/JPY finds support near 183.00 on neutral BoE policy.
• BoE Bailey said that interest rates will remain elevated for a longer period.
• The BoJ focuses on exiting easy policy sometime next year.

The GBP/JPY pair discovers an intermediate support near 183.00 after correcting from two-day high. The cross finds a cushion as the Bank of England (BoE) has kept interest rates unchanged at 5.25% for the second time in a row.

Investors were hoping that the BoE would keep interest rates steady as the United Kingdom economy is going through a vulnerable phase. Weak consumer spending, labor demand, and business activities must have leaned BoE policymakers toward supporting a stable interest rate policy. The steady monetary policy was taken after 6-3 vote split in which Jonathan Haskel, Megan Greene and Katherine Mann voted for a 25 basis points (bps) rate hike.

BoE Governor Andrew Bailey, in his monetary policy statement, said that interest rates will remain elevated for a longer period and further interest rate hikes would be appropriate if needed. He further added that the central bank is making good progress in bringing down inflation to 2%.

The inflation forecast report from the BoE shows that inflation will come down to 4.6% by the end of 2023. This indicates that the promise of halving inflation to 5.4% made by UK Prime Minister Rishi Suank in January at time when inflation was at 10.7% would be fulfilled.

On the Japanese Yen front, the Bank of Japan (BoJ) is expected to continue to maintain an expansionary monetary policy but will focus on exiting from a decade-long easy policy sometime next year, as reported by Reuters. The BoJ is committed to keep inflation comfortably above 2% and it should be supported by wage growth.

USD losses may extend as markets detect signs of Fed relenting on rates, economists at Scotiabank report.

Investors may be looking for an excuse to cover massive Treasury shorts

Andrew Bailey, Governor of the Bank of England, presents the Monetary Policy Report and responds to questions from the press following the Bank of England's (BoE) decision to leave the policy rate unchanged at 5.25%.

Key quotes

"There is a considerable way to go on quashing inflation."

"Events in the Middle East do create uncertainty, risk of higher energy prices."

"We are making good progress in bringing inflation down."

"Will not use "price worth paying" language on bringing inflation down."

About Andrew Bailey (via bankofengland.co.uk)

"Andrew Bailey previously held the role of Deputy Governor, Prudential Regulation and CEO of the PRA from 1 April 2013. While retaining his role as Executive Director of the Bank, Andrew joined the Financial Services Authority in April 2011 as Deputy Head of the Prudential Business Unit and Director of UK Banks and Building Societies. In July 2012, Andrew became Managing Director of the Prudential Business Unit, with responsibility for the prudential supervision of banks, investment banks and insurance companies. Andrew was appointed as a voting member of the interim Financial Policy Committee at its June 2012 meeting."
 

The New Zealand Dollar weakened in October. Economists at MUFG Bank analyze Kiwi’s outlook.

NZD downside risks persist for now

Andrew Bailey, Governor of the Bank of England, presents the Monetary Policy Report and responds to questions from the press following the Bank of England's (BoE) decision to leave the policy rate unchanged at 5.25%.

Key quotes

"There is no room for complacency."

"Inflation is still too high."

"Ofgem price cap means we can be confident about energy bills lowering inflation."

"Important that services inflation falls steadily over next year."

"If we maintain restrictive stance long enough, we will squeeze inflation out of the system."

"This means being on watch for more signs of inflation persistence that may require rates to rise again."

"We should not keep monetary policy restrictive for excessively long."

"We have to be mindful of balance of risks between doing too little and too much."

"How long restrictive stance will be needed depends on incoming data."

About Andrew Bailey (via bankofengland.co.uk)

"Andrew Bailey previously held the role of Deputy Governor, Prudential Regulation and CEO of the PRA from 1 April 2013. While retaining his role as Executive Director of the Bank, Andrew joined the Financial Services Authority in April 2011 as Deputy Head of the Prudential Business Unit and Director of UK Banks and Building Societies. In July 2012, Andrew became Managing Director of the Prudential Business Unit, with responsibility for the prudential supervision of banks, investment banks and insurance companies. Andrew was appointed as a voting member of the interim Financial Policy Committee at its June 2012 meeting."
 

• Initial Jobless Claims in the US increased by 5,000 in the week ending October 27 to the highest level in seven weeks.
• Continuing Claims increased by 35,000 in the week ending October 21. 
• US Dollar Index dropped to fresh daily lows after Jobless Claims and Q3 Unit Labor Costs.  

There were 217,000 initial jobless claims in the week ending October 27, the weekly data published by the US Department of Labor (DOL) showed on Thursday. It is the highest level in seven weeks. This reading follows last week’s print of 212,000 (revised from 210,000) and came in worse than the market expectation of 210,000. The 4-week moving average was 210,000, an increase of 2,000 from the previous week's revised average. 

Continuing claims rose by 35,000 in the week ending October 21 to 1.81 million, above market expectations of 1.8 million. It is the highest reading since May.

Market reaction

The US Dollar Index dropped further and hit a fresh daily low under 106.00 following Jobless Claims and also the Q3 Unit Labor Costs report.
 

• The Bank of England kept rates unchanged as expected.
• The Pound rose modestly across the board, reaching fresh daily highs against the US Dollar and trimmed losses against the Euro.
• EUR/GBP encounters resistance at 0.8730, while key support levels are located at 0.8700 and 0.8680.

Following the Bank of England meeting, the Pound gained momentum. The EUR/GBP pair trimmed its daily losses and moved lower towards the 0.8700 level.

Pound rises after BoE

As expected, the Bank of England (BoE) decided to keep its bank rate unchanged at 5.25%. However, three members of the Monetary Policy Committee (Greene, Haskel, and Mann) voted in favor of a 25 basis points rate hike. The BoE's forecast indicates an expected inflation rate of 3.1% in one year, up from the previous forecast of 2.8%. The growth projection for the current year remains at 0.5%, while the forecast for the following year was revised downward from 0.5% to 0%.

Governor Andrew Bailey stated that it is too early to consider rate cuts and that the BoE is closely monitoring the situation to assess whether further rate hikes are necessary. The BoE Monetary Policy Report Press Conference is scheduled to begin at 12:30 GMT.

Following the decision, the Pound strengthened across the board. The EUR/GBP pair trimmed its gains and declined from 0.8725 to 0.8707. However, the cross still remains in positive territory for the day and above the 0.8700 level.

Levels to watch 

The EUR/GBP has an immediate support area around 0.8700, and if this level is broken, it would expose the next support zone at 0.8680. This level is crucial as it has acted as a significant barrier to further downside movement over the past two weeks. A sustained move below 0.8680 would strengthen the outlook for the Pound.

On the upside, if the pair manages to stay above the daily high at 0.8725, the next resistance area to watch for is at 0.8740. Beyond that, the October high at 0.8754 becomes the next significant level.
 

USD/CAD is trading in the low 1.38s. Economists at Scotiabank analyze the pair’s outlook.

Short-term price patterns suggest a minor top

• Japanese Yen recovers some of the lost ground after dramatic post-BoJ sell-off.
• JPY makes back roughly 50% of the losses that incurred in the “Tokyo Chainsaw Massacre” that followed Tuesday’s BoJ meeting.
• USD/JPY returns and settles on prior highs prompted by investors’ dovish take of Fed Powell’s post-meeting presser. 

The Japanese Yen (JPY) is making back lost ground after the dramatic sell-off registered following the BoJ’s Halloween day meeting, in which it bled over 1% lower versus the US Dollar (USD). The runaway market backtracked on Wednesday and Thursday to fill the inefficiency gap created after Tuesday’s sheer drop – the largest recorded this year. 

The Yen was helped by a weaker US Dollar, which fell after the market’s dovish take of Federal Reserve (Fed) Chairman Jerome Powell’s comments at the press conference following the Fed’s own meeting the day after. With progress being made on inflation and less chance of another interest-rate hike, the Fed chair assessed the “risks” as now “more two sided” and “balanced” than previously. The market took the hint, stocks rallied and the Greenback gave way.

Daily digest market movers: Yen recovers to fill inefficiency gap

• The Yen climbs halfway out of its grave after taking a beating on October 31 following the Bank of Japan (BoJ) policy meeting.  
• JPY came under pressure after the Bank of Japan governor Kazuo Ueda played down inflationary risks at the post-meeting presser, saying most inflation was caused by rising input costs due to higher commodity prices, especially of Oil, rather than being “demand driven”. 
• This suggests the BoJ will need to continue to maintain easy monetary policy and low interest rates going forward – a negative for JPY, since global investors tend to prefer parking their money in currencies which can deliver them higher returns.
• The Japanese Yen recouped losses against most majors midweek, however, and particularly versus the USD following the Fed meeting on Wednesday. 
• Fed Chair Jerome Powell said another rate hike was now less likely, saying that whilst it was not out of the question the Fed was no longer committed to the idea. 
• Powell added progress had been made on dealing with inflation and that risks were broadly balanced either way. 
• The lower probability that the Fed will raise interest rates pressured the USD lower, due to currency interest-rate sensitivity. 

Japanese Yen technical analysis: USD/JPY recovers midway

USD/JPY – the amount of Yen that one Dollar buys – retreated roughly 50% of the gains made following Tuesday’s BoJ meeting when the pair soared to the 151.70s. 

The pullback is likely only a temporary ‘backing and filling’ story, however, with the overall bias still remaining to the upside. A re-break of the 151.92 highs of 2022 is required to reaffirm the uptrend but now seems likely. 

US Dollar vs Japanese Yen: 4-hour Chart

The pair has pulled back to a confluence of support levels, including the 50% Fibonacci of Tuesday’s dramatic rise, the lower boundary of its ascending channel, and the key October 3 highs. This seems as good a place as any for the bulls to plant their flag and rally for a counter attack.   

US Dollar vs Japanese Yen: Daily Chart

The Moving Average Convergence Divergence (MACD) indicator on the daily chart is showing bearish divergence with price as it failed to make a higher high along with the price on Tuesday. Nevertheless, this is not sufficient on its own to suggest the uptrend has run out of gas.

The “trend is your friend..” and the short, medium and long-term trends remain bullish, suggesting the odds favor higher highs and a continuation onwards and upwards. After the 151.93 high is breached, next targets lie at round numbers – 153.00, 154.00 etc.

Economists at MUFG Bank analyze GBP outlook ahead of the BoE’s policy update.

GBP  to see a temporary bounce if the BoE does not signal as strongly as expected that they are unlikely to hike rates further

GBP is firmer against the generally weaker USD. Economists at Scotiabank analyze Cable’s outlook.

Firm demand for the Pound on weakness to or a little below 1.21

EUR/USD makes headway above 1.06. Economists at Scotiabank analyze the pair’s outlook.

Positive spin on the short-term chart

Economists at Scotiabank analyze GBP outlook ahead of the BoE policy decision.

Initial GBP reaction may reflect how deep – or not – the dissent runs on the MPC

The Bank of England (BoE) holds its regular monetary policy meeting today. Economists at Commerzbank analyze GBP outlook ahead of the Interest Rate Decision.

Market likely to remain sceptical about whether the BoE is taking things seriously enough

The Australian Dollar depreciated for the third consecutive month in October. Economists at MUFG Bank analyze Aussie’s outlook.

AUD downside risks diminishing from here

The Fed's decision to leave rates unchanged has seen interest rate volatility drop and high-yielding currencies start to perform well again, economists at ING report.

Fed pause renews interest in the carry trade

• USD/CAD falls sharply to near 1.3800 as the US Dollar tumbles amid steady Fed policy.
• The USD Index drops to near 106.16 as investors see the Fed done with hiking interest rates.
• Investors await the US and Canadian Employment data for further guidance.

The USD/CAD pair falls vertically after a short-lived pullback to near 1.3850 in the European session. The Loonie asset faces an intense sell-off as the US Dollar extends downside on expectations that the Federal Reserve (Fed) is done with hiking interest rates for now.

S&P500 futures generated significant gains in the London session, portraying a decent improvement in the risk appetite of the market participants. US equities were heavily bought on Wednesday as the Fed kept interest rates unchanged in the range of 5.25-5.50%. Fed Chair Jerome Powell kept expectations of further policy-tightening alive as the US economy is resilient due to robust consumer spending and tight labor market conditions.

The US Dollar Index (DXY) has extended its downside to near 106.16 after a gap-down opening, weighed down by steady Fed policy and surprisingly lower ISM Manufacturing PMI for October. The US ISM reported that factory activities fell to 46.7 against expectations and the former release of 49.0. Contrary, the S&P Global survey of private factories showed that the Manufacturing PMI met the 50.0 threshold in October.

Meanwhile, investors await the US Nonfarm Payrolls (NFP) data, which will be published on Friday. As per expectations, US employers hired 180K job seekers in October.

On the Canadian Dollar front, the Employment data for October will be keenly watched, which will be released on Friday. The Unemployment Rate is seen rising to 5.6% while 22.5K new labor joining are expected.

The Fed left interest rates unchanged for the second meeting in a row. Now everything depends on the data, economists at Commerzbank report.

The market will keep a close eye on whether the fall in inflation is sustainable

• Gold price clings to gains prompted by steady monetary policy from the Fed.
• Weak US private payrolls and factory data have diminished the appeal for the US Dollar.
• The release of the US NFP would guide further action on the Gold price.

Gold price (XAU/USD) holds onto recovery prompted by a steady interest rate decision from the Federal Reserve (Fed). The precious metal aims to generate more gains in hopes that the Fed has concluded its rate-tightening campaign. Federal Reserve chairman Jerome Powell said progress was being made with inflation and whilst another rate hike was not out of the question he sounded less committed to the idea. As a consequence the US Dollar (USD) weakened and XAU/USD got a shot in the arm.

The downside in the yellow metal also remains cushioned due to Middle East conflicts and mixed US data. US private payrolls and Manufacturing PMI for October failed to meet expectations. Going forward, the Gold price and the US Dollar would be impacted by the Nonfarm Payrolls (NFP) for October. Investors would keenly watch for wage growth as it will exhibit a consumer spending outlook.

Daily Digest Market Movers: Gold price turns sideways ahead of NFP data

• Gold price trades inside Wednesday’s range after a recovery move from $1,972 inspired by a steady interest rate decision from the Federal Reserve.
• The Fed kept interest rates unchanged in the range of 5.25-5.50% for the second time in a row.
• The Fed kept expectations of further policy-tightening alive as the progress in consumer inflation taming toward 2% has slowed due to the high purchasing power of households.
• Fed Chair Jerome Powell acknowledged that the US economy is performing well but warned that businesses and households are facing tighter financial conditions.
• The US economy is performing strong on metrics of consumer spending and employment along with easing price pressures.
• The Q3 growth rate, released last week, was the strongest in 20 years due to robust retail demand and upbeat wage growth.
• While discussing rate cuts, Jerome Powell said that the central bank is not looking to lower interest rates but added that "It’s fair to say the question we’re asking is should we hike more” as officials weigh how they can guide inflation back to the 2% target. 
• The US Dollar Index (DXY) fell sharply from the 107.00 resistance as Jerome Powell’s commentary expressed that the central bank is less committed to the idea of hiking interest rates. In addition to a steady monetary policy decision, ADP Employment and Manufacturing PMI remained below estimates and weighed heavily on the US Dollar.
• The US ADP reported that private employers hired 113K job seekers in October, which were lower than expectations of 150K but significantly higher than September’s reading of 89K. 
• The ISM reported that the Manufacturing PMI slumped to 46.7 from its highest reading of 49.0 in September while economists forecasted a steady performance. The factory data remains below the 50.0 threshold for the 12th time in a row. 
• New factory orders dropped significantly to 45.5 against a 49.2 reading from September.
• Meanwhile, investors await the US Nonfarm Payrolls (NFP) data, which will be published on Friday. As per the consensus, the labor force is expected to have expanded by 180K in October against the former release of 336K. The Unemployment Rate is seen unchanged at 3.8%.
• Apart from the employment numbers, investors will focus on the labor cost data. Monthly Average Hourly Earnings is seen expanding by 0.3% vs. 0.2% growth in September. The annual earnings data rose by 4.0% against 4.2%.
• Middle East tensions keep broader appeal for bullion strong as Israeli airstrikes come close to hitting the Al Quds hospital in Gaza in which several displaced civilians are sheltering.
• A full-scale ground invasion by the Israeli Defence Forces (IDF) would increase the odds of Iran’s intervention, which would widen Middle East conflicts.

Technical Analysis: Gold price turns sideways near $1,990 after a recovery move

Gold price turns sideways around $1,990 after discovering buying support near $1,970 as investors seek fresh development on Israel-Palestine tensions. The precious metal continues to trade inside the $1,970-2,010 range ahead of the crucial labor market data. The yellow metal aims to recapture the psychological resistance of $2,000 as the broader outlook is bullish due to the upward-sloping 50 and 200-day Exponential Moving Averages (EMAs).

Economists at TD Securities discuss the Bank of England Interest Rate Decision and its implications for the GBP/USD pair.

Neutral hold (35%): Unchanged language

Dovish hold (60%): Softer hiking guidance

Very dovish hold (5%): Balanced policy outlook

Norges Bank still warns of a hike in December but has become more uncertain. Economists at Nordea do not think a hike in December will come.

A December hike is not given

The Chinese Yuan extended losses against the US Dollar last month. Economists at MUFG Bank analyze USD/CNY outlook.

More upside for CNY than downside 

The US Dollar has been a little weaker over the last 24 hours. Economists at ING analyze Greenback’s outlook.

DXY to drift towards 106.00

• GBP/JPY drifts lower for the second straight day, though the downside remains limited.
• Intervention fears boost the JPY and turn out to be a key factor weighing on the cross.
• The BoJ’s dovish stance and a positive risk tone cap any meaningful gains for the JPY.
• Traders also seem reluctant to place aggressive bets ahead of the crucial BoE decision.

The GBP/JPY cross remains under some selling pressure for the second successive day on Thursday and drops to the 182.70 support,  representing the 100-day Simple Moving Averages (SMA), during the early part of the European session. Spot prices, however, manage to recover a few pips in the last hour and currently trade around the 183.00 round figure, down less than 0.20% for the day, as traders keenly await the outcome of the Bank of England (BoE) policy meeting.

The broader market consensus is that the UK central bank will maintain the status quo for the second successive time amid signs of an economic slowdown and easing inflationary pressures. Hence, the focus will remain on the accompanying policy statement and the Monetary Policy Committee (MPC) vote split, which will influence expectations about future rate decisions and play a key role in influencing the British Pound (GBP).  In the meantime, speculations that Japanese authorities will intervene in the FX market to combat a sustained depreciation in the domestic currency might continue to weigh on the GBP/JPY cross.

Any meaningful upside for the Japanese Yen (JPY), however, still seems elusive in the wake of more dovish signals from the Bank of Japan (BoJ) earlier this week. The Japanese central bank reiterated its pledge to keep monetary policy ultra-loose until sustained achievement of the 2% price target comes into sight. Moreover, a minor change in its yield curve control (YCC) policy pointed to a slow move towards exiting the decade-long accommodative regime. Apart from this, the risk-on mood – as depicted by a positive tone around the equity markets – could undermine the JPY and lend support to the GBP/JPY cross.

Hence, it will be prudent to wait for a sustained break and acceptance below the aforementioned confluence support before confirming that this week's goodish bounce from sub-181.00 levels, or the lowest level since October 5 has run out of steam. On the flip side, bullish traders need to wait for some follow-through buying beyond the 183.55 area, or the daily swing high, before placing fresh bets and positioning for any further gains.

Technical levels to watch

Economists at ING analyze GBP outlook ahead of today's Bank of England (BoE) policy statement.

Sterling to stay relatively well supported if the BoE does not soften its tone

Economists at Commerzbank analyze how the Norges Bank Interest Rate Decision could impact the Krone (NOK).

NOK to benefit if  Norges Bank maintains its restrictive wording

EUR/USD is enjoying something of a reprieve. Economists at ING analyze the pair’s outlook.

EUR/USD could drift up to the 1.0650/1.0675 area

• Silver gains some positive traction, albeit struggles to capitalize on the move beyond $23.00.
• The mixed technical setup warrants caution for bulls and before positioning for further gains.
• A sustained break below the $22.50-45 area will be seen as a fresh trigger for bearish traders.

Silver (XAG/USD) builds on the previous day's goodish rebound from the vicinity of mid-$22.00s, or a multi-day low and gains some follow-through traction on Thursday. The white metal maintains its bid tone through the early part of the European session and currently trades around the $23.00 round-figure mark, up over 0.20% for the day.

The post-FOMC US Dollar (USD) selling bias remains unabated, which, in turn, is seen as a key factor driving flows towards the USD-denominated commodities, including the XAG/USD. This, along with positive technical indicators on the daily chart, supports prospects for a further appreciating move. That said, the recent repeated failures near the $23.60-$23.70 supply zone, which constitute the formation of a bearish multiple tops pattern, warrants caution for bullish traders.

In the meantime, any subsequent move up is more likely to confront stiff resistance near the very important 200-day Simple Moving Average (SMA), currently pegged around the $23.30 region. Bulls, meanwhile, need to wait for a convincing breakout through the $23.60-$23.70 barrier, before placing fresh bets. The XAG/USD might then aim to surpass the $24.00 mark and test the $24.20 hurdle before making a fresh attempt towards conquering the $25.00 psychological mark.

On the flip side, the $22.50-$22.45 region now seems to have emerged as an immediate strong support. Some follow-through selling, however, will be seen as a fresh trigger for bearish traders and drag the XAG/USD to the $22.00 mark. The downward trajectory could get extended further towards the $21.70 horizontal support en route to the $21.35-$21.30 region and the $21.00 mark. Silver could eventually drop to the $20.70-$20.65 area, or a seven-month low touched in October.

Silver daily chart

Technical levels to watch

• Pound Sterling remains on the frontfoot amid a risk-on mood ahead of BoE policy.
• The BoE is expected to keep interest rates unchanged but is likely to keep the odds of more rate hikes alive.
• UK business optimism dipped to a ten-month low as firms cut heavily on personnel and inventory in October.

The Pound Sterling (GBP) clings to gains on Thursday ahead of the interest rate decision by the Bank of England (BoE),  which is expected to keep rates unchanged at 5.25%. The GBP/USD pair recovered sharply on Wednesday as market sentiment improved after the Federal Reserve (Fed) kept interest rates steady in the range of 5.25%-5.50%. 

The UK economy is struggling for a firm footing due to weak retail demand, poor business data, a vulnerable housing sector and a deteriorating labor market. These factors could lean BoE policymakers towards keeping interest rates unchanged as more rate hikes could further dampen the economic outlook and push the economy into a recession. 

A steady monetary policy decision from the BoE could avoid damaging further UK economic prospects, but it would also increase upside risks to consumer inflation. Inflation in the country is still above 6% despite a historically tight rate-hiking campaign. Meanwhile, deepening Middle East tensions pose more threats to the progress in taming inflation toward 2% as the possibility of tightened Oil supply could propel energy prices again. 

Daily Digest Market Movers: Pound Sterling capitalizes on risk-on mood

• Pound Sterling holds onto gains inspired by an improved market mood on expectations that the Federal Reserve is done hiking interest rates.
• The GBP/USD pair is preparing for a volatile action as the Bank of England (BoE) will announce its monetary policy decision at 12:00 GMT.
• The BoE is widely expected to keep interest rates unchanged at 5.25% as potential slowdown fears in the UK economy mount.
• This would be the second straight time that the BoE kept rates unchanged despite upside risks to consumer inflation.
• Barclays predicts a 1-6-2 split vote in the BoE’s Monetary Policy Committee, with policymaker Swati Dhingra voting for a rate cut while Jonathan Haskel and Katherine Mann voting for a 25 basis points (bps) rate hike.
• New Deputy Governor Sarah Breeden, who has replaced Jon Cunliffe, is expected to vote for keeping interest rates at the current levels. 
• Plenty of factors such as employment retrenchment, contracting business activity, falling consumer spending, declining consumer confidence, and a weak housing market support an unchanged interest rate decision from the BoE.
• BoE Governor Andrew Bailey is expected to keep expectations of more interest rate hikes alive as inflation is more than three times the desired rate of 2%. 
• The headline and core inflation in the UK economy are at 6.7% and 6.1%, respectively, partly fueled by strong wage growth.
• The upside risks to consumer inflation have escalated due to deepening Middle East tensions, which could propel energy prices.
• The BoE is also expected to release new inflation forecasts. Investors will check if the bank’s inflation outlook aligns with Prime Minister Rishi Sunak’s promise of halving inflation to 5.4% by year-end. 
• Investors will keep focus on inflation forecasts for 2024 and growth prospects as the British economy is struggling with higher interest rates.
• There is increasing speculation that the central bank could raise the inflation target to 3%.
• Andrew Bailey, in his remarks, remained confident that price pressures will remarkably decline in October and denied any plans of raising the inflation target.
• On the economic data front, S&P Global reported on Wednesday that Manufacturing PMI dropped to 44.8 in October against expectations and the preliminary reading of 45.2.
• S&P Global reported that "Risks to the outlook remain skewed to the downside. Business optimism dipped to a ten-month low and manufacturers' increased belt-tightening drove cuts to employment, purchasing, and inventories.”
• Meanwhile, the US Dollar falls sharply on increasing odds that the Fed is done hiking interest rates. In addition to a stable Fed policy, weak ADP private payrolls and downbeat ISM Manufacturing PMI data have also weighed heavily on the US Dollar.
• The US ADP reported that employers hired 113K job seekers, lower than expectations of 150K but significantly higher than the former reading of 89K. The ISM reported the Manufacturing PMI at 46.7, lower than expectations and the former reading of 49.0.
• Going forward, the US Dollar will dance to the tunes of the Nonfarm Payrolls (NFP) data, which will be published on Friday.

Technical Analysis: Pound Sterling faces 1.2200 resistance

Pound Sterling faces some selling pressure after a sharp recovery to near 1.2200. The GBP/USD pair attempts to break above the 20-day Exponential Moving Average (EMA), which trades around 1.2185. The Cable, which strengthened sharply after Wednesday’s Fed decision, falls slightly in the European morning but remains above 1.2100 ahead of the BoE monetary policy decision. The pair’s broader outlook remains vulnerable amid downward-sloping 50-day and 200-day Exponential Moving Averages (EMAs).

The Bank of England (BoE) will announce its Interest Rate Decision on Thursday, November 2 at 12:00 GMT and as we get closer to the release time, here are the expectations forecast by the economists and researchers of eight major banks.

The BoE is likely to keep the benchmark rate unchanged for a second consecutive meeting at 5.25%. This meeting will include the Monetary Policy Report alongside it, which offers the economic analysis and inflation projections that the MPC uses to make its interest rate decisions, and a press conference by Governor Andrew Bailey following the release of the statement. 

Nomura

TDS

Nordea

Deutsche Bank

Danske Bank

ING

SocGen

Citi

FX option expiries for Nov 2 NY cut at 10:00 Eastern Time, via DTCC, can be found below.

- EUR/USD: EUR amounts

• 1.0450 1.2b
• 1.0475 949m
• 1.0525 621m
• 1.0540 1.9b
• 1.0545 870m
• 1.0600 1b
• 1.0650 1.5b
• 1.0690 989m
• 1.0695 746m

- GBP/USD: GBP amounts     

• 1.2130 552m
• 1.2150 539m

- USD/JPY: USD amounts                     

• 150.50 451m
• 151.00 1.5b
• 152.00 2.4b
• 152.50 692m

- USD/CHF: USD amounts        

• 0.8930 930m
• 0.9050 957m

- AUD/USD: AUD amounts

• 0.6250 712m
• 0.6310 429m
• 0.6315 1.1b
• 0.6330 1b
• 0.6400 1.3b
• 0.6420 389m

- USD/CAD: USD amounts       

• 1.3750 516m
• 1.3875 715m

- NZD/USD: NZD amounts

• 0.5850 397m
• 0.5900 473m

- EUR/GBP: EUR amounts        

• 0.8680 356m

The BoE's Sterling trade-weighted index has stayed on the soft side of narrow ranges during October. Economists at ING analyze GBP outlook ahead of the Bank of England meeting.

EUR/GBP could trade up to 0.90 next summer

Here is what you need to know on Thursday, November 2:

The US Dollar stays on the back foot as markets assess the Federal Reserve's (Fed) policy decisions and Chairman Jerome Powell's remarks at the post-meeting press conference. The Bank of England (BoE) will announce the interest rate decision and Governor Andrew Bailey will deliver the Monetary Policy Report at a press conference on Super Thursday. Later in the day, weekly Initial Jobless Claims, September Factory Orders and Unit Labor Costs data for the third quarter will be featured in the US economic docket. 

The Fed left its policy rate unchanged at 5.25%-5.5% as expected. Although Chairman Powell refrained from shutting the door to a rate hike in December, he adopted a cautious tone regarding the need for additional tightening. Powell acknowledged that financial conditions have tightened amid rising yields and reiterated the data-dependent approach, noting that they will have two more inflation and employment data before the December meeting. According to the CME Group FedWatch Tool, the probability of the Fed holding the interest rate steady in December rose to 80% from 69% before the meeting. Meanwhile, the US Dollar Index was last seen losing 0.3% on the day below 106.50 and the benchmark 10-year US Treasury bond yield was moving sideways below 4.75% after falling nearly 4% on Wednesday.

The BoE is forecast to stand pat on policy, leaving the key rate at 5.25% for the second consecutive meeting. After testing 1.2100 on Wednesday, GBP/USD gathered bullish momentum and climbed to the 1.2200 area early Thursday. 

UK Interest Rate Decision Preview: BoE set to stand pat for second consecutive time despite high inflation.

EUR/USD reversed its direction following a decline toward 1.0500 mid-week and was last seen trading in positive territory at around 1.0600.

Gold fluctuated in a wide range on Wednesday but closed the day virtually unchanged slightly above $1,980. XAU/USD holds its ground in the European morning and trades with modest gains near $1,985.

USD/JPY closed in negative territory as US yields turned south on Wednesday. The pair extended its slide during the Asian trading hours on Thursday and was last seen trading below 105.50.

(This story was corrected on November 2 at 07:17 GMT to say that the US Dollar was the weakest against the Swiss Franc).

• The Bank of England will announce its decision on monetary policy on Thursday. 
• The BoE is likely to keep the benchmark rate unchanged for a second consecutive meeting at 5.25%.
• The United States Federal Reserve left rates unchanged at 5.5%, offering relief to markets.
• Pound Sterling trades in a well-limited range against the US Dollar. 

The Bank of England's (BoE) Monetary Policy Committee (MPC) is meeting this week to decide the future of monetary policy and will announce its decision on Thursday, November 2. The central bank will publish the Monetary Policy Report alongside it, which offers the economic analysis and inflation projections that the MPC uses to make its interest rate decisions.

The BoE is expected to stand pat again after September’s meeting, when policymakers decided to keep the base rate on hold at 5.25% in a tight 5-4 vote. This is the highest level since 2008, and financial markets are still pricing a terminal rate of 5.5% by the start of 2024. Ahead of the event, the Pound Sterling trades near a multi-month low of 1.2037 against the US Dollar after a massive drop from July’s peak at 1.3141.

Bank of England interest rate decision: What to know in markets on Thursday

• GBP/USD is sitting at weekly highs as market players assess the Federal Reserve (Fed) monetary policy announcement.
• The BoE is watching three specific data figures on which it bases its policy decisions: private-sector wage growth, services inflation and the vacancy-to-unemployment ratio.
• Like most major central banks, the BoE also adopted the “higher for longer” stance based on keeping benchmark rates elevated for an extended period to tame inflationary pressures.
• Ahead of the announcement, the United Kingdom (UK) shop price inflation eased to 5.2% in October, its lowest rate in more than a year, helped by falling prices of homegrown food, according to the British Retail Consortium.
• The Consumer Prices Index (CPI) rose by 6.7% in the 12 months to September, the same rate as in August. On a monthly basis, CPI rose by 0.5% in September 2023, the same rate as in September 2022.
• Meanwhile, the world faces a new uncertainty factor from the Middle East. On October 7, the Palestinian group, Hamas, attacked Israel, leading the latter to declare war. The ground invasion of the Gaza Strip began over the weekend, with market participants keeping an eye on the situation.
• As widely anticipated, the Fed maintained rates at 5.5%. The announcement had a limited impact on financial markets, as the central bank offered a mixed message. Powell offered some hawkish lines, saying they are not considering rate cuts but questioning whether additional hikes are needed. He also noted policymakers are committed to achieving a sufficiently restrictive stance, but they can’t say at the moment if they have reached that point.  
• Early on Wednesday, the US Treasury announced upcoming auction sizes of $112 billion, slightly below the $114 billion anticipated by financial markets. The Treasury also announced plans to increase auction sizes one more time. The predictability of the announcement brought relief to the markets, while the Fed’s announcement fell short of spurring fresh concerns.

When will the BoE release its monetary policy decision and how could it affect GBP/USD?

The BoE is expected to keep the main rate on hold at 5.25% on Thursday, November 2. The decision will be announced at 12:00 GMT, alongside the release of the Minutes of the meeting and the Monetary Policy Report. Governor Andrew Bailey will then hold a press conference in which he will explain the background of policymakers’ decisions.

BoE Governor Andrew Bailey and his colleagues have little room to manoeuvre. The British economy is giving more and more signs of weakening, and the traces of recession returned even after the MPC expressed easing concerns on the matter. 

Nevertheless, taming inflation is the central bank’s main goal at the time being, while wage growth remains high. Average earnings in the three months through August surged 7.8% from a year earlier, according to the Office for National Statistics, moderating slightly, but still rising too quickly to be compatible with the central bank’s 2% inflation target.

Despite the disappointing August inflation figures, it seems unlikely that the MPC will hike rates this time. Data in between meetings has not brought significant change factors  to the table, so policymakers will likely remain on hold. However, the odds of one more rate hike in the upcoming months are quite high. Market participants still believe the central bank will maintain a mostly hawkish stance, as a 6.7% annual CPI does not align with a neutral stance.

Governor Bailey will likely note that the effects of previous rate hikes are yet to take effect on the economy to justify the on-hold decision. 

With the BoE foreseen adding little changes to the monetary policy, the chances of a sharp directional move are limited. Still, a hawkish surprise seems more likely than a dovish one. With the Greenback on the back foot, the pair can turn north with the first-tier event.

GBP/USD is challenging the weekly high near 1.2200, moving further away from the October monthly low of 1.2037. According to Valeria Bednarik, FXStreet.com’s Chief Analyst, “GBP/USD  has a long way to go before turning bullish. Despite the lack of US Dollar momentum, the pair would need to run past the October 24 peak at 1.2288 to convince buyers.” 

Bednarik adds: “Technically, the risk skews to the downside according to the daily chart. A flat 20 Simple Moving Average (SMA) at around 1.2180 has been scaled, while the longer moving averages are directionless, although over 300 pips above the current level. The same chart shows that the Momentum indicator advances within negative levels, while the Relative Strength Index (RSI) indicator stands pat at around 44. The pair has been steadily meeting buyers on slides below the 1.2100 mark, a near-term support level. Once below 1.2069, however, sellers may seize control of GBP/USD.”

• EUR/USD attracts some buyers near 1.0600 post-Fed meeting.
• The Federal Open Market Committee (FOMC) held the rate steady at the 5.25%–5.50% range, as widely expected.
• ECB’s Joachim Nagel said the ECB must keep the rate higher for longer.
• Market players will monitor the Eurozone HCOB Manufacturing PMI and the US weekly Initial Jobless Claims.

The EUR/USD pair gains traction during the early European session on Thursday. The rebound of the major pair is bolstered by the correction of the US Dollar (USD) after the Federal Open Market Committee (FOMC) policy meeting decided to maintain the interest rate unchanged on Wednesday. At the press time, the EUR/USD pair is up 0.24% on the day to trade at 1.0596.

The FOMC's policy decision in November matched market expectations at its November meeting, with rates keeping unchanged in the 5.25%–5.50% range. This is the first time in this tightening cycle that the FOMC has paused rates for two consecutive policy meetings. However, the US Treasury bond yields and the Greenback edge lower as investors discount the odds of further rate hikes.

Meanwhile, Federal Reserve (Fed) Chair Jerome Powell attempted to reassure market participants that the Committee would take action to bring inflation back to the 2% target, but the policy choices will remain highly data-dependent.

On the Euro front, European Central Bank (ECB) vice president Luis de Guindos said on Tuesday that the recent CPI data suggested a fall in Eurozone inflation and it was good news for the ECB. Additionally, ECB policymaker Joachim Nagel said on Tuesday that the ECB must keep the rate higher for longer since inflation in the eurozone has not been conquered despite a large drop in the last year.

Later on Thursday, traders will focus on the HCOB Manufacturing PMI from Spain, Italy, France, Germany, and the Eurozone. Also, the ECB’s Philip Richard Lane speech could offer some hints about monetary policy guidance. In the American session, the US weekly Initial Jobless Claims for the week ending October 27 will be due.

• GBP/USD gains momentum below the 1.2200 barrier post-Fed meeting.
• The pair holds above the 50- and 100-hour EMAs, RSI indicator stands in the bullish zone.
• The key resistance level to watch is the 1.2200–1.2210 region; 1.2147 acts as an initial support level.

The GBP/USD pair edges higher during the Asian trading hours on Thursday. The uptick of the pair is supported by the weakening of the US Dollar (USD) after the Federal Reserve (Fed) maintained the interest rate steady, while odds that it may not hike rates again rose after the press conference. The major pair currently trades around 1.2184, gaining 0.28% on the day.

From the technical perspective, GBP/USD holds above the 50- and 100-hour Exponential Moving Averages (EMAs) on the one-hour chart, which means further upside looks favorable. Additionally, the Relative Strength Index (RSI) holds above 50 in bullish territory, indicating buyers retain control for the time being.

The critical resistance level will emerge at the 1.2200–1.2210 region, portraying the confluence of a psychological round mark, the upper boundary of the Bollinger Band, and a low of October 31. A break above the latter will see a rally to a high of October 16 at 1.2218. The additional upside filter to watch is 1.2288 (high of October 24), followed by 1.2300 (round figure).

On the flip side, the initial contention level is located near the 100-hour EMA at 1.2147. Further south, the next downside stop is seen near a low of October 31 at 1.2119. The key support level will emerge at the 1.2095–1.2100 area, representing a round mark, the lower limit of the Bollinger Band, and a low of October 20. A breach of the level will see a drop to a low of October 26 at 1.2066.

GBP/USD one-hour chart

• A combination of factors drags USD/CAD away from the YTD peak touched on Wednesday.
• A modest uptick in Oil prices underpins the Loonie and exerts pressure amid a weaker USD.
• A positive risk tone is seen as another factor denting demand for the safe-haven Greenback.

The USD/CAD pair remains under some selling pressure for the second successive day on Thursday and extends the overnight rejection slide from the 1.3900 mark, or its highest level since October 2022. The downtick drags spot prices to the 1.3825 area during the Asian session and is sponsored by a combination of factors.

Crude Oil prices gain some positive traction and for now, seem to have snapped a three-day losing streak to over a two-month low touched on Wednesday, which is seen underpinning the commodity-linked Loonie. The US Dollar (USD), on the other hand, continues to be weighed down by expectations that the Federal Reserve (Fed) is nearing the end of its rate-hiking cycle and contributes to the offered tone surrounding the USD/CAD pair.

Fed Chair Jerome Powell, addressing the press at the end of a two-day policy meeting, noted that the recent market-driven surge in borrowing costs could have its impact on economic activity and that financial conditions may be tight enough already to control inflation. The markets were quick to price in the possibility that the Fed will start cutting rates in June 2024, which is reinforced by the ongoing slide in the US Treasury bond yields.

The yield on the rate-sensitive two-year US government bond falls to its lowest level since September 8 and the benchmark 10-year Treasury yield moves away from the 5% threshold. This, along with a generally positive tone around the equity markets, turns out to be another factor denting the Greenback's relative safe-haven status. The Fed, meanwhile, acknowledged the US economic resilience and left the door open for additional rate hikes.

In contrast, the Bank of Canada (BoC) Governor Tiff Macklem indicated last week that interest rates may have peaked. This might hold back traders from placing aggressive bearish bets around the USD/CAD pair and warrants some caution before confirming that spot prices have topped out in the near term. Market participants now look to the US macro data – Weekly Initial Jobless Claims and Factory Orders – for short-term trading impetus.

Technical levels to watch

• WTI prices hold positive ground above the $81.00 mark post Federal Open Market Committee (FOMC) meeting.
• The FOMC maintained the interest rate unchanged at the 5.25–5.50% range on Wednesday.
• The rising Middle East tensions could lead to supply disruptions.

Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around $81.00 so far on Thursday. WTI prices snaps the three-day losing streak after the Federal Open Market Committee (FOMC) meeting decided to pause the rate on Wednesday. However, the weaker Chinese data might dampen the oil demand outlook.

As widely expected, the FOMC maintained the interest rate unchanged on Wednesday. During the press conference, Fed Chair Jerome Powell emphasized the committee's dependence on data and vowed to move cautiously. FOMC opens the door for another rate hike, but the market believes that the hiking cycle is already over, which drags the US Dollar (USD) lower across the board.

Furthermore, the escalating tension in the Middle East might exacerbate the already-existing energy market disruptions caused by Russia's war in Ukraine.

On the other hand, the Chinese manufacturing PMI fell below 50 in October due to slower production and weaker demand. That being said, the downbeat Chinese data adds doubt to recent optimism for a recovery in the world's second-largest economy. It’s worth noting that China is the major oil consumer in the world, and a negative economic outlook could exert pressure on oil prices.

Looking ahead, oil traders will monitor the US weekly Initial Jobless Claims on Thursday. On Friday, the attention will shift to the US Nonfarm Payrolls, which is expected to add 180K jobs in October from 336K in September. These events could significantly impact the USD-denominated WTI price. Oil traders will take cues from the data and find trading opportunities around WTI prices.

• Indian Rupee holds mild gains on a decline in US yields, US Dollar. 
• The Federal Open Market Committee (FOMC) decided to hold the rate steady at its November meeting. 
• The US Nonfarm Payrolls (NFP) will be closely watched later this week. 

Indian Rupee posts modest gains on Thursday on lower US Treasury bond yields and the correction of the US Dollar (USD). The Federal Open Market Committee (FOMC) kept the federal funds rate unchanged at the 5.25-5.50% range at its November meeting on Wednesday, as widely expected. The Greenback edges lower as the markets anticipate that the US rate hike cycle is already over, despite Fed Chair Jerome Powell opening the door for another rate hike.

Nonetheless, the Indian Rupee remains sensitive to risk sentiment and global factors. The escalating tension in the Middle East and higher crude oil prices might contribute to the risk-off environment and cap the upside of the Indian Rupee. Investors will monitor the US weekly Initial Jobless Claims for the week ending October 27 on Thursday. The US Nonfarm Payrolls (NFP) will be in the spotlight on Friday.

Daily Digest Market Movers: Indian Rupee trades firmly amid the geopolitical risks

• The Reserve Bank of India (RBI) has appointed Mr Manoranjan Mishra as Executive Director.
• RBI announced the debut of the 'Inflation Expectations Survey of Households' and the 'Consumer Confidence Survey,' which would offer key inputs for the bi-monthly monetary policy.
• RBI Governor Shaktikanta Das said GDP growth for the second quarter of FY24 would surpass estimations.
• Geopolitical risks are the biggest challenge for India, but RBI Governor Das said India is better placed compared to other countries to deal with any potentially risky situation.
• Foreign investors sold $2.74 billion in Indian equities in October, marking the largest monthly sell-off since January 2023.
• The Federal Open Market Committee (FOMC) decided to hold the interest rate unchanged at its November meeting on Wednesday, as widely expected.
• The US Private Sector Payroll rose by 113K from 89K in September, below the 150k rise expected.
• US JOLTS Jobs Opening climbed to 9.553M, better than the estimation of 9.25M. 
• The US ISM Manufacturing PMI dropped to 46.7 in October from the previous reading of 49.0, the lowest reading since July 2023.

Technical Analysis: Indian Rupee rebounds, upside potential seems limited

The Indian Rupee stages a modest recovery on the day. The USD/INR pair has traded within a familiar range of 83.00–83.35 since September. In the meantime, USD/INR keeps a bullish stance as the pair holds above the key 100- and 200-day Exponential Moving Averages (EMA) on the daily chart. 

That being said, the key support level will emerge at the confluence of a low from October 24 and a round level marked at 83.00. A breach below 83.00 will see a drop to a low of September 12 at 82.82. Further south, the next contention level to watch is a low of August 4 at 82.65.

On the upside, the upper boundary of the trading range at 83.35 acts as an immediate upside barrier for the pair. Any decisive follow-through buying above the latter will pave the way to the year-to-date (YTD) highs of 83.45. The additional upside filter is located near a psychological round figure at 84.00.

• USD/JPY remains under some selling pressure for the second successive day amid a weaker USD.
• Expectations that the Fed is don raising rates and sliding US bond yields weigh on the Greenback.
• The Fed-BoJ policy divergence should limit gains for the JPY and limit the downside for the major.

The USD/JPY pair extends the overnight retracement slide from the 151.70 area, or its highest level since October 2022 and drifts lower for the second successive day on Thursday. Spot prices currently trade just above the 150.psychological mark, down over 0.50% for the day, though any meaningful corrective decline still seems elusive.

Expectations that the Federal Reserve (Fed) is nearing the end of its policy-tightening campaign drag the US Dollar (USD) away from a near one-month peak touched on Wednesday, which, in turn, is seen exerting pressure on the USD/JPY pair. The US central bank left the key overnight interest rates unchanged for the second time in a row, though left the door open for additional rate hikes in the wake of the unexpected US economic resilience. However, Fed Chair Jerome Powell, in the post-meeting press conference, noted that the recent market-driven surge in borrowing costs could have its impact on economic activity.

Powell added that financial conditions may be tight enough already to control inflation, fueling speculations that the Fed was done raising rates and could start cutting rates by June next year. The repricing of the Fed's future rate-hike path leads to a further steep decline in the US Treasury bond yields and continues to weigh on the Greenback. Apart from this, 
speculations that Japanese authorities will intervene in the FX market to combat a sustained depreciation in the domestic currency also contribute to the offered tone surrounding the USD/JPY pair, though the Bank of Japan's (BoJ) dovish stance could help limit losses.

The BoJ's minor change to its yield curve control (YCC) policy pointed to a slow move towards ending years of massive stimulus. The Japanese central bank also indicated that a shift away from the ultra-dovish stance will take longer than initially expected. This marks a big divergence in comparison to a relatively hawkish Fed, which, along with the unattractiveness of Japanese government bonds, could undermine the Japanese Yen (JPY). Furthermore, a generally positive risk tone could dent the JPY's safe-haven demand and lend some support to the USD/JPY pair, warranting some caution for aggressive bearish traders.

Market participants now look to the US economic docket – featuring the release of the usual Weekly Initial Jobless Claims and Factory Orders data later during the early North American session. Apart from this, the US bond yields will influence the USD price dynamics and provide some impetus to the USD/JPY pair. Traders will further take cues from the broader risk sentiment to grab short-term opportunities ahead of the closely-watched US monthly employment details – popularly known as the NFP report on Friday.

Technical levels to watch

• AUD/USD gains traction for the second straight day and climbs to over a three-week top.
• The post-FOMC USD selling bias turns out to be a key factor behind the ongoing move up.
• A move beyond the 50-day SMA and the 23.6% Fibo. supports prospects for further gains.

The AUD/USD pair builds on the previous day's strong move up and gains some follow-through positive traction for the second successive day on Thursday. The momentum is fueled by the post-FOMC US Dollar (USD) weakness and lifts spot prices to the 0.6435 area or a three-week top during the Asian session.

Despite the fact that the Federal Reserve (Fed) left the door open for additional rate hikes in the wake of the unexpected US economic resilience, investors seem convinced that the US central bank is nearing the end of its rate-hiking cycle. This is reinforced by the ongoing decline in the US Treasury bond yields, which, in turn, is seen weighing on the US Dollar (USD) and lending support to the AUD/USD pair.

Apart from this, a generally positive tone around the equity markets turns out to be another factor undermining the safe-haven Greenback and benefitting the risk-sensitive Australian Dollar (AUD). Bullish traders, meanwhile, seem unaffected by rather unimpressive Australian macro data, which showed that the trade surplus narrowed sharply from A$9.64 billion to A$6.786 billion in September and missed expectations.

From a technical perspective, the AUD/USD pair has now found acceptance above the 50-day Simple Moving Average (SMA) for the first time since July. This, along with a move beyond the 23.6% Fibonacci retracement level of the July-October decline, could be seen as a fresh trigger for bullish traders. Moreover, oscillators on the daily chart have just started moving into positive territory and validate the constructive setup.

This, in turn, suggests that the path of least resistance for the AUD/USD pair is to the upside and supports prospects for a further appreciating move. Some follow-through buying beyond the October monthly swing high, around the 0.6445 region, will reaffirm the positive bias and allow spot prices to climb further towards the 0.6500-0.6510 confluence, comprising the 100-day SMA and the 38.2% Fibo. level.

On the flip side, the 50-day SMA resistance breakpoint – levels just below the 0.6400 mark – now seems to protect the immediate downside. A convincing break below will expose the 0.6335-0.6325 horizontal support, below which the AUD/USD pair could slide further towards the 0.6300 round-figure mark. Bears might then aim to challenge the YTD trough, around the 0.6270 region, touched on October 26.

AUD/USD daily chart

Technical levels to watch

On Thursday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.1797 as compared to the previous day's fix of 7.1778 and 7.3055 Reuters estimate.

• EUR/USD gains momentum near the 1.0600 psychological mark on the weaker USD.
• The FOMC decided to keep the federal funds rate unchanged at 5.25–5.50%, as widely expected.
• The downbeat Eurozone economic data raises the fear of recession in the area.

The EUR/USD pair surges above 1.0580 during the early Asian session on Thursday. The weaker US Dollar (USD) after the Federal Open Market Committee (FOMC) policy meeting lends some support to the major pair. EUR/USD currently trades around 1.0597, up 0.26% on the day.

The FOMC decided to keep the federal funds rate unchanged at 5.25–5.50% on Wednesday, as widely expected. During the press conference, Fed Chair Jerome Powell said that the rise in long-end yields needs to be persistent and driven by higher-term premiums to influence monetary policy. Powell further stated that the current monetary policy is already restrictive. FOMC opens the door for another rate hike, but it does not seem very eager. The Greenback dropped after the meeting as markets believe that the rate hike cycle is already over.

On Wednesday, the US Private sector payroll growth increased modestly in October but missed expectations. The figure rose by 113,000 from 89,000 in September, below the market consensus of a 150k rise. Meanwhile, the JOLTS jobs opening data unexpectedly rose to 9.553M, better than the expectation of 9.25M. The ISM Manufacturing PMI registered the lowest reading since July, dropping to 46.7 in October.

On the other hand, the European Central Bank (ECB) decided to hold interest rates unchanged last week and the ECB is expected to start cutting interest rates in Q2 next year. The disinflationary pressures reflected sluggish GDP growth, while the PMI data also pointed to heightened risks of recession.

Earlier this week, the preliminary Eurozone Harmonized Index of Consumer Prices (HICP) for October came in at 2.9% YoY versus 4.3% prior, below the market consensus. The Core HICP eased to 4.2% from the previous reading of 4.5%. Additionally, the Eurozone Gross Domestic Product (GDP) for the third quarter (Q3) arrived at -0.1% QoQ from 0.1% expansion in the previous reading. On an annual basis, the growth numbers grew by 0.1% versus 0.5% prior. However, both growth figures were below market expectations.

Market participants will monitor the German Unemployment rate, Spain, and Italy’s HCOB Manufacturing PMI on Thursday. Traders will also take more cues from ECB's Lane speech for fresh impetus. On the US docket, the US weekly Initial Jobless Claims will be due. The focus will shift to the US Nonfarm Payrolls on Friday, which is estimated to add 180K jobs in October. These events could give a clear direction to the EUR/USD pair.

• GBP/USD scales higher during the Asian session on Thursday and draws support from a weaker USD.
• Expectations that the Fed is done raising rates and declining US bond yields weigh heavily on the buck.
• A positive risk tone further undermines the safe-haven USD as the focus now shifts to the BoE meeting.

The GBP/USD pair is seen building on the previous day's bounce from sub-1.2100s and gaining some follow-through positive traction during the Asian session on Thursday. The momentum lifts spot prices to the top end of the weekly range, closer to the 1.2200 round figure, and is sponsored by a modest US Dollar (USD) weakness.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, retreats further from a near one-month high touched on Wednesday in the wake of expectations that the Federal Reserve (Fed) may be done raising interest rates. The US central bank, as was widely anticipated, decided to keep the key overnight interest rates unchanged in the 5.25%-5.50% range, or a 22-year high for the second time in a row. In the accompanying monetary policy statement, the Fed acknowledged the need for another rate hike on the back of the US economy's unexpected resilience. However, Fed Chair Jerome Powell's comments at the post-meeting press conference raised doubts if the US will hike rates again.

Powell said that the Fed has a long way to go to bring inflation back to the 2% target, though noted that financial conditions have clearly tightened and cited plenty of risks. Investors, meanwhile, seem convinced that the Fed will start cutting rates next year, which is evident from a further steep decline in the US  Treasury bond yields and is seen weighing on the buck. Apart from this, a generally positive tone around the equity markets turns out to be another factor undermining the safe-haven Greenback and lending support to the GBP/USD pair. It, however, remains to be seen if bulls are able to capitalize on the move up or opt to wait on the sidelines as the focus shifts to the Bank of England (BoE) policy meeting later today.

The UK central bank is all but certain to maintain the status quo amid signs of slowing economic activity and decreasing inflationary pressures. Investors, meanwhile, will keep a close eye on the Monetary Policy Committee (MPC) vote split, which will influence market expectations about future rate decisions and play a key role in influencing the British Pound (GBP). Apart from this, the US economic docket, featuring the usual Weekly Initial Jobless Claims and Factory Orders data, will be looked upon to grab short-term opportunities around the GBP/USD pair. The market attention, however, will remain glued to the release of the closely-watched US monthly employment details, popularly known as the NFP report on Friday.

Technical levels to watch

Australia’s trade surplus shrinks to 6,786M MoM in September versus 9,400M expected and 9,640M in the previous reading, according to the latest Aussie foreign trade data published by the Australian Bureau of Statistics on Thursday.

Further details reveal that Australia's September Goods/Services Exports reprint -1.4% figures on a monthly basis versus 4.0% prior. The nation’s Goods/Services Imports rose by 7.5% in September MoM versus 0% prior.

Market reaction

At the press time, the AUD/USD pair is up 0.48% on the day to trade at 0.6424.

About Australia Trade Balance

The trade balance released by the Australian Bureau of Statistics is the difference in the value of its imports and exports of Australian goods. Export data can give an important reflection of Australian growth, while imports provide an indication of domestic demand. Trade Balance gives an early indication of the net export performance. If a steady demand in exchange for Australian exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the AUD.