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• EUR/USD edges higher to around 1.0855 in Thursday’s early Asian session. 
• Private sector employment increased by 233,000 jobs in October. 
• The Eurozone HICP and the US PCE inflation data will be in the spotlight on Thursday. 

The EUR/USD pair attracts some buyers to near 1.0855 during the early Asian session on Thursday. The weakening of the US Dollar (USD) and the better-than-expected Eurozone flash Gross Domestic Product (GDP) for the third quarter provides some support to the major pair.

The US economy grew at an annualised rate of 2.8% in the third quarter (Q3), slightly lower than the 3% estimated by economists. Meanwhile, private sector employment rose by 233,000 jobs in October, compared to September's reading of 159,000 (revised from 143,000), according to the October ADP National Employment Report. 

The US Dollar index (DXY), which measures the USD against six major rivals, retreats to weekly lows of 104.09 after reaching the highest since July 30 at 104.63 on Tuesday. Uto Shinohara, senior investment strategist at Mesirow Currency Management in Chicago, said the markets expect a 25 basis points (bps) cut in the November meeting, but another cut in December remains a coin flip.

The Eurozone economy expanded 0.4% QoQ in the third quarter of 2024, according to Eurostat's preliminary estimates, stronger than the 0.2% expected. On an annual basis, Eurozone GDP grew by 0.9% in Q3, above the market consensus of 0.8%. 

Investors will keep an eye on the Eurozone Harmonized Index of Consumer Prices (HICP) and the US Personal Consumption Expenditures (PCE) - Price Index data, which are due later on Thursday.

• The Bank of Japan is set to keep interest rates steady on Thursday.
• All eyes will be on the BoJ’s quarterly forecasts and Governor Kazuo Ueda’s press conference.
• The Japanese Yen could face intense volatility on the BoJ event risk.

The Bank of Japan (BoJ) is widely expected to maintain its short-term interest rate at around 0.25%, following the conclusion of its two-day monetary policy review on Thursday.

The BoJ decision will be accompanied by the bank’s quarterly outlook report, which will be released at around 3:00 GMT. Governor Kazuo Ueda’s post-policy meeting press conference will be held at 06:30 GMT.

What to expect from the BoJ interest rate decision?

The BoJ will likely keep interest rate unchanged for the second meeting in a row after announcing a surprise 15 basis points (bps) rate lift-off in July.

With a status quo outcome fully baked in, the central focus will be on the BoJ’s communication regarding further rate hikes, given Japan’s recent underlying inflationary trends, the rapid depreciation of the Japanese Yen (JPY) and ongoing political upheaval. Japan's ruling Liberal Democratic Party (LDP) headed by Prime Minister Shigeru Ishiba, lost its parliamentary majority in the snap election on October 27 – the first time in 15 years.

In that regard, the central bank’s updated projections for inflation and economic growth will play a pivotal role in the market’s pricing of the BoJ’s pace and timing of future rate increases.

Tokyo’s inflation data, a leading indicator of nationwide trends and a key factor the BoJ will scrutinize at its policy meeting showed on October 25 that the headline Consumer Price Index (CPI) rose 1.8% year-over-year (YoY) in October, down from September’s 2.1% growth.

Meanwhile, the BoJ’s closely watched broader price trend indicator, the “core-core" CPI –excluding both fresh food and energy costs– edged higher by 1.8 % YoY in the same period, accelerating from an increase of 1.6% in September.

This gauge suggests that the underlying price pressures remain on a gradual uptrend, compelling the BoJ to consider a rate hike at its December policy meeting.

The hawkish expectations could find additional support from the uncertainty around the Japanese political situation, which could exacerbate the pain in the beleaguered local currency. The further decline in the Japanese Yen could also drive up imported inflation and short-term inflation expectations.

Overall, the Japanese central bank is expected to remain in a wait-and-see mode, assessing domestic risks alongside the uncertainties linked to the United States (US) presidential election on November 5 and the economy.

Analysts at BBH preview the BoJ will keep its interest rate unchanged.“Recent comments from Ueda suggest there will be no policy change at this meeting, so the focus will be on the BoJ’s policy guidance. We expect the BoJ to signal again that it’s in no rush to remove policy accommodation, which would further weigh on JPY,” they said. 

As for the updated macro forecasts, BBH analysts said they see downside risks.” 

How could the Bank of Japan's interest rate decision affect USD/JPY?

The Japanese Yen recorded a fresh three-month low against the US Dollar (USD), sending the USD/JPY pair close to the 154.00 mark in the lead-up to the BoJ showdown. Further JPY weakness is expected following the BoJ’s likely no-rate change announcement.

The JPY, however, could stage a solid comeback if the BoJ signals another rate hike in December while acknowledging the risks emanating from the recent decline in the domestic currency. The USD/JPY sell-off may be short-lived due to potential downside risks to inflation and growth forecasts.

Conversely, if the BoJ sticks to its cautious rhetoric, supporting Governor Ueda’s latest remarks, the Japanese Yen could see another leg lower. Ueda said on October 23 that “underlying inflation has been rising slowly. It's still taking time for us to get to 2% inflation in a sustainable manner.”

“When there's huge uncertainty, you usually want to proceed cautiously and gradually,” Ueda added.

A downward revision to the growth and inflation forecasts could further motivate doves. In such a case, USD/JPY will make another run towards the 160.00 level.

From a technical perspective, Dhwani Mehta, Asian Session Lead Analyst at FXStreet, notes: “Amid oversold Relative Strength Index (RSI) conditions on the daily chart, USD/JPY buyers seem to have turned cautious ahead of the BoJ policy announcements. However, they remain hopeful, as the 21-day Simple Moving Average (SMA) is on the verge of crossing the 100-day SMA from below. If that occurs on a daily closing basis, a Bull Cross will be confirmed.”

“A dovish BoJ message could revive the USD/JPY uptrend, driving the pair toward the 155.00 supply zone, above which the July 24 high of 155.99 will be challenged. Further up, the door will open to test the 156.50 psychological barrier. On the flip side, a sustained break below the critical 200-day SMA at 151.50 could fuel a meaningful correction toward the 150.30 region, where the 21-day SMA and the 100-day SMA close in,” Dhwani adds.

• NZD/JPY faces mild gains, trading at 91.60.
• The short-term outlook remains neutral to bullish, with support at the 20-day SMA temporarily halting the decline.
• A breakout above 92.20 is needed to confirm the uptrend.

In Wednesday's session, the NZD/JPY pair exhibited a modest upward movement, reaching 91.60. The overall technical picture suggests a prevailing neutral to bullish bias for the short-term, due to  mixed signals from technical indicators. In addition a bearish crossover between the 20, 100 and 200-day Simple Moving Averages (SMA) might also change the outlook.

The Relative Strength Index (RSI) currently stands at 58, indicating a strengthening buying pressure. The Moving Average Convergence Divergence (MACD) displays flat green bars, suggesting a neutral stance between buyers and sellers. This confluence of indicators highlights a potential shift in the balance of power, but with some evidence of buying pressure gaining momentum.

Traders should eye the 91.50 area where the 20, 100 and 200-day SMA are about to confirm a bearish crossover which might trigger a sell-off. However, the 20-day SMA proved to be a strong barrier so sellers might have a hard time breaching it.

Supports: 91.60,91.30 and 91.15
Resistances: 91.80, 92.00,92.30

NZD/JPY daily chart

• Gold reaches a new ATH at $2,790, bolstered by election uncertainty and steady US economic growth.
• US Q3 GDP and ADP jobs data show economic resilience, caps Gold’s gains as Treasury yields slip.
• Year-to-date, Bullion prices had surged over 35%, analysts project further gains, potentially hitting $3,000 by 2025.

Gold price soared to a record high of $2,790 during the North American session, as investors remain uncertain about the outcome of the US Presidential Elections. Upbeat economic data in the US put a lid on the precious metal advance, as the economy grew steadily while the jobs market remained robust.

The XAU/USD trades at $2,785, gains over 0.40%, and is slightly below the all-time high (ATH) after the yellow metal bounced off daily lows of $2,771. US Treasury bond yields disappointed during the session as investors' confidence improved that the Fed would achieve its soft-landing scenario.

Data from the United States (US) showed the economy continued to grow steadily while the labor market remained robust. The Gross Domestic Product (GDP) for the third quarter of 2024 dipped below estimates. The ADP Employment Change report for October showed that private companies hired more personnel than foreseen.

At the same time, US Pending Home Sales soared due to buyers taking advantage of the combination of lower mortgage rates and more inventory choices, commented Lawrence Yun, Chief Economist of the National Association of Realtors (NAR).

The US election is reaching its boiling point as we approach November 5, Super Tuesday. The Democratic Vice-President Kamala Harris and former President Donald Trump clash in a tight race, as polls showed.

So far, Bullion’s price has surged over 35%, its most significant gain in twelve months, and is on its way to its best yearly performance since 1979. Sources cited by Reuters commented that Gold may reach $3,000 by 2025 due to “emerging market concerns, gold ETF inflows, and post-election market adjustments.”

Gold remains supported by safe-haven flows amid the ongoing conflict in the Middle East, even though Israeli officials commented that Hezbollah is ready to distance itself from Hamas in Gaza, and the IDF is close to finishing its ground operations.

Daily digest market movers: Gold price prolongs its positive streak

• The US Dollar Index (DXY), which tracks the Dollar's value against a basket of six currencies, drops 0.18% at 104.08.
• The ADP National Employment Change for October rose by 233K, surpassing estimates of 115K and the September figure of 159K.
• The US Bureau of Economic Analysis (BEA) reported that the US economy grew by 2.8% quarter-over-quarter (QoQ) in the third quarter of 2024, below the Q2 final reading and estimates of 3%.
• Pending Home Sales in September expanded by 7.4% month-over-month (MoM), exceeding estimates and August's figures. On an annual basis, sales grew by 2.6%, rebounding from August's -3% contraction.
• The Atlanta Fed GDP Now model suggests the economy grew by 2.8% in Q3 2024.
• Data from the Chicago Board of Trade, via the December fed funds rate futures contract, shows investors estimate 49 bps of Fed easing by the end of the year.

XAU/USD Technical Outlook: Gold price rallies to an all-time peak of $2,790

Gold price uptrend remains intact, with the yellow metal hitting a record high at $2,790. A breach of the latter will expose the $2,800 figure, followed by the psychological levels of $2,850 and $2,900.

On the other hand, if sellers move in and push prices below $2,750, the next support would be $2,700. Up next the September 26 swing high, which turned support at $2,685, followed by the 50-day Simple Moving Average (SMA) at $2,603.

Momentum suggests the non-yielding metal could consolidate as the Relative Strength Index (RSI) remains bullish, aiming higher, breaking the last peak. This means that buyers are gathering steam.

• AUD/USD rebounds from multi-week lows amid USD weakness.
• A break above the 200-day SMA at 0.6630 could signal a more positive outlook for the pair.
• The RBA's cautious tone and persistent inflation risks suggest that interest rates may stay steady for the foreseeable future.
• The upcoming US NFP report could weigh on the US Dollar and provide support for AUD/USD.

The AUD/USD rebounded from multi-week lows on Wednesday, driven by broad-based US Dollar weakness. The pair rose by 0.25% to 0.6575, snapping a three-day losing streak.

On the US data front, September’s ADP Employment Report exceeded market expectations in October, but a downward revision in third-quarter GDP growth made the USD tumble. On the other hand, Australia’s Q3 inflation figures cooled but still remain elevated.

Daily digest market movers: Australian Dollar rises on US economic data weakness, USD consolidation

• AUD/USD rose on Wednesday, boosted by mixed US economic data, which limited the USD gains.
• The pair climbed to 0.6600, targeting the 200-day SMA at 0.6627, a break above which would signal a shift to a more constructive outlook.
• Recent data from Australia showed inflation cooling to 2.8% in Q3 from 3.8% in Q2, falling just below the expected 2.9%.
• The core inflation gauge remains elevated at 3.5% YoY in Q3, giving the RBA no immediate impetus to lower interest rates.
• US ADP Employment showed a 233K increase on private-sector payrolls in October, beating expectations of a 115K increase.
• US Q3 Gross Domestic Product grew at a 2.8% pace, stronger than global peers but below market expectations.
• For next week’s Federal Open Market Committee (FOMC) meetings, markets have already priced in a 25 bps cut.

AUD/USD technical outlook: Pair in consolidation mode, but the outlook is bearish

The daily Relative Strength Index (RSI) is currently at 34, which is in the near oversold area. The RSI is suggesting that buying pressure is recovering since it is rising sharply as selling might have become over-extended. The Moving Average Convergence Divergence (MACD) is red and flat, which gives more evidence of a consolidation starting.

Technical analysis indicates a bearish outlook for AUD/USD, with the RSI below 30 and the MACD histogram in the red. Support levels are located at 0.6550, 0.6530 and 0.6500, while resistance lies at 0.6680, 0.6700 and 0.6750. However, oversold conditions may provide respite, while the pair is closely watched ahead of key US data releases that could impact the trajectory of both currencies.

• Mexican Peso weakens due to strong US data and political uncertainty tied to Mexico’s judiciary reform.
• Mexico’s Q3 GDP exceeds forecasts, but US ADP jobs data and resilient GDP growth lifts the USD.
• Traders eye upcoming data, including Mexico’s Business Confidence and US PCE Price Index and Nonfarm Payrolls.

The Mexican Peso extended its losses against the US Dollar for the fourth straight day on Wednesday and is down 0.62% even though Mexico’s economy grew above estimates. In the US, a stellar ADP jobs report and robust GDP growth in the third quarter boosted the Greenback. Therefore, the USD/MXN trades at 20.18 after bouncing off a daily low of 20.00.

The Instituto Nacional de Estadistica Geografia e Informatica (INEGI) revealed that Mexico’s Gross Domestic Product (GDP) figures for the third quarter of 2024 surprisingly beat estimates. Meanwhile, political turmoil linked to Mexico’s judiciary reform continued as eight of the eleven Supreme Court judges announced their resignation effective in August 2025.

Across the border, data hinted that the US Federal Reserve’s (Fed) soft-landing scenario continued to gain traction. The US ADP Employment Change for October exceeded the mark, brushing aside fears that the labor market is weakening. In the meantime, US GDP data for Q3 2024 dipped below estimates and Q2’s reading.

Ahead of the week, Mexico’s economic schedule will feature the release of Business Confidence and S&P Global Manufacturing PMI. Across the border, the US docket will feature the Fed’s favorite inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index and Nonfarm Payrolls (NFP).

Daily digest market movers: Mexican Peso tumbles after strong GDP data in Mexico and US

• Mexico’s GDP for Q3 2024 expanded 1% QoQ, exceeding the consensus of 0.8% and Q2’s 0.2% growth. On a yearly basis, GDP grew 1.5%, above forecasts of 1.2%, but dropped below the 2.1% reached in the previous quarter, indicating the ongoing economic slowdown.
• Therefore, the ongoing economic slowdown and disinflation could open the door for the Bank of Mexico (Banxico) to lower borrowing costs at the November meeting.
• Money market futures hint that Banxico is expected to cut between 175 to 200 basis points over the next 12 months.
• ADP National Employment Change in October rose by 233K, above estimates of 115K and September’s 159K.
• The US Bureau of Economic Analysis revealed the US economy grew 2.8% YoYin the third quarter of 2024, below Q2’s final reading and estimates of 3%.
• Other data showed that Pending Home Sales in September expanded by 7.4% MoM above estimates and August’s figures. Annually based, sales grew 2.6%, up from August’s -3% contraction.
• Data from the Chicago Board of Trade, via the December fed funds rate futures contract, shows investors estimate 49 bps of Fed easing by the end of the year.

USD/MXN technical outlook: Mexican Peso plunges as USD/MXN clears 20.15

The USD/MXN prolonged its uptrend and tested the year-to-date (YTD) high of 20.22 as buyers seem reluctant to push the exchange rate past that area. If they clear that level, up next would be the psychological 20.50 level, the September 28, 2022 high at 20.57, and the August 2, 2022 peak at 20.82. Once surpassed, the next stop would be the March 8, 2022 swing high at 21.46.

On the other hand, if sellers drive the USD/MXN below 20.00, the first support would be the October 24 daily low of 19.74, followed by the 50-day Simple Moving Average (SMA) at 19.62.

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

The Greenback’s rally continued to give some signs of potential exhaustion on Wednesday, despite encouraging prints from the job creation in the US private sector and further evidence of a resilient US economy.

Here is what you need to know on Thursday, October 31:

The US Dollar Index (DXY) receded to three-day lows and pierced the 104.00 support amidst the generalised weakness in US yields across the spectrum. The PCE data will take centre stage, seconded by the weekly Initial Jobless Claims, Personal Income and Spending, the Chicago PMI, Challenger Job Cuts, and the Employment Cost Index.

EUR/USD gathered extra steam and challenged the critical 200-day SMA near 1.0870, up for the third straight day. Germany’s Retail Sales and Import Prices are due in the first turn, seconded by the preliminary Inflation Rate in the euro area as well as the Unemployment Rate.

GBP/USD came under pressure following two daily advances in a row and a climb to four-month tops in UK 10-year gilts. The speech by the BoE’s Breeden will be the only event on the UK docket.

USD/JPY saw another session of sidelined trading amidst steady prudence prior to the interest rate decision by the BoJ and vital US data releases. The BoJ’s interest rate decision will be the salient event followed by the BoJ Quarterly Outlook Report. In addition, advanced Industrial Production results are due along with weekly Foreign Bond Investment figures, Housing Starts, and Construction Orders.

AUD/USD regained the smile and reversed three daily retracements in arow, coming just short of the key 0.6600 hurdle. Retail Sales will be published in Oz, seconded by Housing Credit figures, Export and Import Prices, and Private Sector Credit data.

WTI prices rose to weekly highs on the back of a bullish weekly report from the EIA and speculation that the OPEC+ could delay its plans to boost the oil output in December.

Prices of Gold maintained their upside well in place, reaching an all-time peak near the key $2,800 mark per ounce troy. Silver prices, on the flip side, faded Tuesday’s robust uptick and deflated well below the $34.00 mark per ounce.

• US Dollar dips despite October ADP employment data showing private sector payrolls increased by 233K, surpassing expectations.
• Q3 US GDP growth of 2.8% falls short of market forecasts but remains strong amidst global economic slowdown.
• Focus shifts to Friday's NFP report, which could negatively impact the US Dollar.

The US Dollar Index (DXY), which measures the value of the USD against a basket of six currencies, lost ground on Wednesday following the release of mixed economic data. September’s ADP Employment Change report exceeded market expectations in October, but a downward revision in third-quarter GDP growth made the USD tumble.

However, investors remain cautious ahead of Friday's Nonfarm Payrolls (NFP) report, which may paint a different picture of the labor market.

Daily digest market movers: US Dollar steady on strong ADP employment figures

• US ADP Employment Change beat expectations with a 233K increase in October, which could limit the USD losses.
• September's ADP Employment Change reading was revised up to a 159K increase, further supporting the US Dollar.
• US Q3 Gross Domestic Product grew at a 2.8% pace, stronger than global peers but below market expectations.
• Futures markets now almost fully price in a quarter-point interest rate cut by the Fed next week.
• Friday's NFP report is expected to show a significant decline in payrolls, potentially hurting speculative demand for the US Dollar.

DXY technical outlook: DXY consolidates, may test 200-day SMA

The DXY index is consolidating and may be poised to revisit the 200-day SMA at 103.50. The Relative Strength Index (RSI) is declining but remains near overbought territory, while the Moving Average Convergence Divergence (MACD) is printing smaller green bars.

Key support levels are 104.50, 104.30 and 104.00, while resistance is found at 104.70, 104.90 and 105.00.

• Dow Jones climbs as US economy grows 2.8% in Q3, suggesting a soft landing despite slightly missing Q2’s 3% pace.
• ADP reports hefty job gains in October,  indicating robust labor demand.
• Visa leads DJIA gainers after beating earnings expectations, while Caterpillar struggles  after missing EPS estimates for Q3.

The Dow Jones Industrial Average (DJIA) advanced during the North American session, with bulls eyeing a break above 42,500 as US Treasury bond yields tumbled. The economy in the US grew below estimates but at a healthy pace. At the same time, jobs data revealed by Automatic Data Processing (ADP) showed the labor market is strengthening after announcing an outstanding jobs report.

The US Bureau of Economic Analysis revealed that the economy grew 2.8% QoQ in Q3 2024, according to its preliminary reading. Although it missed the mark and Q2’s 3%, the numbers suggest the economy is on its way to achieving a soft landing, as the Federal Reserve (Fed) lowers borrowing costs to stimulate the labor market.

Regarding this, the ADP National Employment Change report showed that private companies added 233K people to the workforce in October, crushing estimates of 115K. Nela Richardson, chief economist at ADP, said in a statement, “Even amid hurricane recovery, job growth was strong in October.” In the meantime, US bond yields retreated after hitting a three-month high of 4.337% and dropped 0.65% or three basis points (bps) to 4.248%.

After the data, the CME FedWatch Tool shows odds for a 25 bps rate cut by the Fed reaching 97%, down from 98% a day ago. This would leave rates in the 4.50%-4.75% range.

Dow Jones news

The earnings session continued as Visa (V) led the pack in the DJIA after the company announced fiscal Q4 2024 earnings. Visa revealed that earnings per share (EPS) was $2.71, up from estimates of $2.58, while revenue increased to $9.6 billion, exceeding forecasts of $9.48 billion. At the same time, the company cut 1,400 jobs.

Caterpillar (CAT) plunged before recovering as the company revealed lower-than-expected Q3 earnings. Adjusted earnings per share (EPS) came at $5.17, below estimates of $5.34, though revenue increased to $16.11 billion, exceeding estimates of $16.08 billion. The company projects sales and revenue to be slightly lower than expected at the end of the last quarter.

At the time of writing, Visa leads the DJIA, gaining 3.68% to $292.25. Boeing (BA) gained 2.07% to $156.14, and Amazon (AMZN) lifted 1.62% to $193.93. The laggards are International Business Machines (IBM) losing 1.95% to $206.33, followed by Nike (NKE) sinking 1.76% to $77.02, and Intel(INTC) diving 1.72% to $22.51.

Dow Jones price forecast

The Dow Jones consolidates at around 42,300 but cannot decisively crack the 42,400 mark, which would open the door to challenge 42,500.

At the beginning of the session, sellers pushed the DJIA toward a low of 42,122 near the October 25 low of 42,043, though buyers bought the dip before the index tested the 50-day Simple Moving Average (SMA) at 41,907. After that, the Dow Jones recovered some ground, clinging to minimal gains.

If buyers reclaim 42,500, look for a test of the October 23 peak at 42,830 ahead of testing 43,000 and the record high at 43,322.

Otherwise, if the Dow extends its losses below 42,000, the first support would be the 50-day SMA, ahead of 41,500.

Momentum remains bullish as depicted by the Relative Strength Index (RSI), which pierced above its neutral line. However, it has consolidated, suggesting that neither buyers nor sellers are in control.

Dow Jones daily chart

• Canadian Dollar rises slightly against US Dollar following mixed economic data.
• Soft US GDP growth and strong ADP Employment Change figure support the USD in Wednesday session.
• NFP expectations point to a decline in payrolls due to hurricanes and Boeing strike, potentially weakening USD.

The USD/CAD pair trades neutrally on Wednesday near 1.3915. The Canadian Dollar is gaining some ground against its US counterpart despite mixed economic data from the US. Softer Gross Domestic Product (GDP) growth than expected from Q3 and a strong ADP Employment Change report for October are moving the markets in Wednesday’s session.

However, Tuesday’s declining JOLTS Job Openings and expectations of a Federal Reserve (Fed) rate cut have weighed on the US Dollar. The release of the PCE Prices Index and Nonfarm Payrolls (NFP) report later this week is expected to provide further direction to the USD/CAD pair amidst ongoing market volatility.

Daily digest market movers: Canadian Dollar on neutral ground after US data

• Strong October ADP employment data (233K vs. 115K expected) strengthens the US Dollar against the Canadian Dollar.
• Q3 US GDP growth of 2.8% falls short of expectations but remains robust in the context of a global economic slowdown. The market had expected 3.0%.
• JOLTS report on Tuesday showed a decline in job openings in September, raising concerns about the labor market and pressuring the US Dollar.
• Futures markets now fully price in a 25 bps interest rate cut by the Fed next week with chances of a further cut in December easing.
• Personal Consumption Expenditures (PCE) Prices Index expected to show continued easing of price pressures on Thursday.
• NFP report on Friday expected to show a significant decline in new payrolls, potentially weighing on the US Dollar.
• Bloomberg consensus for October NFP is 110K vs. September's 254K and a whisper number of 127k.

USD/CAD technical outlook: Bullish momentum remains, strong resistance at 1.3920

The Loonie’s Relative Strength Index (RSI) is in the deep overbought area at a value of 75 with a mildly declining slope, suggesting that buying pressure is easing. Also, the Moving Average Convergence Divergence (MACD) is flat and green, suggesting that buying pressure is at least neutral.

Buyers will potentially take a breather in the next session and use the 1.3900 support to consolidate the Aussie trade in the next few sessions.

ECB board member Isabel Schnabel argued that the European Central Bank does not need to lower interest rates to a level that would stimulate the economy, as she believes inflation is unlikely to fall below the bank’s 2% target.

Key Quotes

After two significant declines, German inflation rate rose again in October, from 1.6% to 2.0%. This is partly due to a higher year-on-year rates in the very volatile energy and food prices, but the core inflation rate has also increased. At 2.9%, it remains well above the ECB's target of 2%, and in view of the continued strong rise in labor costs, it is likely to fall only slowly in the coming months, Commerzbank’s economist Dr. Ralph Solveen notes.

Headline inflation back at 2%, core rate still significantly higher

“The fall of the German inflation rate below the 2% mark has proofed to be only temporary. According to the preliminary estimate of the Federal Statistical Office, it rose again in October from 1.6% to 2.0%. One contributing factor was the rising yearon-year rates for energy and food prices. But even the core inflation rate, which excludes these two often highly volatile subcomponents, rose in October from 2.7% to 2.9% after having fallen slightly in the previous months.”

The high core inflation rate continues to primarily follow the ongoing strong rise in service prices. The year-on-year comparison here has been marginally below 4% since the spring; in October it increased slightly to 4.0%. The decisive factor for the sharp rise in service prices is likely to be the noticeable increase in wage costs. Since wages have risen significantly until recently, the only factor to slow prices is the weak economy, which will gradually push down the services inflation.”

“The goods inflation (excluding energy and food) appears to be at least stabilizing. In October, it rose from 1.2% to 1.5%, the second increase in a row. The price trend at the preliminary stages also argues against a renewed significant decline, especially since higher wage costs tend to indicate rising prices here as well. Thus, the core inflation rate is likely to fall only slowly in the coming months. The overall inflation rate is even likely to rise slightly in the coming months due to base effects in energy prices.”

• GBP/USD bounces off ascending channel support, clears 1.3000, and reaches a high of 1.3039 after the UK’s autumn budget release.
• Buyers must clear October 18 peak at 1.3070 to test 1.3100 and the 50-day SMA at 1.3138.
• Key support lies at the October 29 close of 1.3014 and the 100-day SMA at 1.2974, followed by the October low of 1.2936.

The Pound Sterling erased some of its earlier losses, climbing above its opening price against the US Dollar, after the UK Chancellor Rachel Reeves revealed its autumn budget. The GBP/USD trades above 1.3000, virtually unchanged.

According to the Financial Times, the Autumn budget was well received by the markets. Gilt yields are falling, and Cable aimed higher after the new labor Government announced its first budget in 14 years.

GBP/USD Price Forecast: Technical outlook

The GBP/USD bounced at the bottom of an ascending channel trendline, extending its gains after Chancellor Reeves, ended her speech. Initially, the pair cleared 1.2970, and pushed higher, clearing the 1.3000 figure hitting a high of 1.3039.

From a technical standpoint, the GPB/USD is not out of the woods, as sellers continued to cap the pair’s advance. Buyers must clear October 18 peak at 1.3070, so they could remain hopeful of testing 1.3100. Once those key resistance levels are taken out, the 50-day Simple Moving Average (SMA) would be up next at 1.3138.

Otherwise, if sellers push the exchange rate below the October 29 daily close of 1.3014, it would expose the 1.3000 psychological level as the next support. A breach of the latter will expose the 100-day SMA at 1.2974, before the GBP/USD tumbles towards October 300 low of 1.2936.

GBP/USD Price Chart – Daily

• GBP/JPY is bullish, but it might have start a consolidation period after a furious rally in October.
• The RSI in overbought territory while the MACD is green and rising.
• The pair might sideways trade between 197.00 and 199.00.

The GBP/JPY currency pair mildly declined on Wednesday as investors seem to be taking a breather. However, the outlook remains bullish and he buyers must cold the 199.00 line

The Relative Strength Index (RSI) indicator has recently crossed into overbought territory, suggesting that the uptrend in the pair may be overextended and that a pullback or correction is likely. However, the Moving Average Convergence Divergence (MACD) is green and rising, suggesting that buying pressure is rising. The overall outlook is bullish, with the pair expected to continue trading higher in the near term but a period of side-ways trade shouldn’t be taken off the table.

Traders may consider taking profit or adjusting their positions accordingly to navigate this potential market shift. That potential consolidation might take place between the 197.00 and 199.00 boundaries.

GBP/JPY daily chart

The US economy grew by 2.8% in the third quarter of 2024, roughly in line with expectations. Private consumption and investment in equipment in particular increased. This continues the strong expansion of recent quarters. We see this as confirming our assessment that the US economy will not slide into a recession despite high key interest rates because overall financing conditions are still quite favorable, Commerzbank’s economists Dr. Christoph Balz and Bernd Weidensteiner note.

The US economy continues to grow strongly

“This applies in particular to private domestic final purchases (PDFP), i.e. gross domestic product excluding inventory investment, government spending and foreign trade. Federal Reserve Chairman Powell has emphasized this figure on several occasions because it provides a clearer signal of the trend in demand. In the third quarter, PDFP increased 3.2%.”

“This is one of a series of six quarters with fairly stable and strong growth between 2.5% and 3.5%. Although key interest rates are quite high, financing conditions in the overall economy remain favorable in view of record high equity prices and low risk premiums.”

“Today's figures confirm our assessment that the US economy should avoid a recession. That said, it is unlikely to be able to maintain the high pace of growth seen in recent quarters as the extremely high level of immigration, which also supported demand, is not likely to be repeated. Furthermore, the labor market is cooling on trend, which is why private consumption should lose momentum. However, a more accurate outlook for 2025 will only be possible after the election.”

• EUR/GBP exhibits a volatile performance amid the announcement of UK Labour’s first budget announcement.
• The UK administration has announced significant spending plans for various sectors.
• The Euro performs strongly on upbeat Eurozone Q3 GDP growth and hot German inflation.

The EUR/GBP wobbles near an intraday high around 0.8350 in Wednesday’s New York session. The cross trades volatile amid the announcement of the United Kingdom (UK) Autumn Forecast Statement by Chancellor of the Exchequer Rachel Reeves.

In the first budget announcement under Labour’s administration, Reeves has announced tax hikes on inheritance wealth and private jet flights, and raise duties on various components such as air passengers, alcohol and tobacco.

The government has announced big-bang spending plans such as: 40% relief on business rates for retail and hospitality industries up to a cap retail, higher investment for affordable homes, set up of Electric Vehicles (EV) industry and 11 green hydrogen projects.

Meanwhile, the Office for Business Responsibility (OBR) has upwardly revised the Consumer Price Index (CPI) forecast to 2.5% in 2024, from 2.2% announced in March.

The cross performs strongly in North American trading hours due to upbeat Euro (EUR). The shared currency pair strengthened after the release of the Eurozone flash Gross Domestic Product (GDP) data, which showed that the economic growth was faster-than-expected in the third quarter of the year. The Eurozone economic output rose by 0.9% year-on-year, faster than estimates of 0.8% and 0.6% growth in the previous quarter.

Meanwhile, hotter-than-forecasted German inflation has also strengthened the Euro, a scenario that is unfavorable for European Central Bank (ECB) dovish bets. Annual German Harmonized Index of Consumer Prices (HICP) grew at a faster pace of 2.4% than estimates of 2.1% and the September reading of 1.8%.

UK Chancellor Rachel Reeves is delivering the Autumn Budget.

Key takeaways

"Will increase employers' national insurance contributions by 1.2 percentage points."

"Will reduce threshold for paying national insurance to 5,000 pounds by employers."

"Will increase employment allowance for small businesses."

"I have had to take very difficult tax decisions."

"Will freeze fuel duty next year."

"Inheritance tax measures together raise over 2 billion Sterling."

"We will increase soft drinks industry levy."

"Will raise 1 billion sterling through soft drink levy and tobacco, alcohol duty increases."

"Will introduce a flat rate duty on all vaping liquids from October 2026."

"Will extend inheritance tax threshold freeze to 2030."

"Will bring inherited pensions into inheritance tax from 2027."

"Will raise air passenger duty by no more than 2 pounds for economy short haul flights."

"Will raise tax on private jet flights by up to 50%."

"Will provide 40% relief on business rates for retail and hospitality industries up to a cap."

"Day-to-day spending from 2024-25 will grow by 1.5% in real terms."

"Increasing core schools budget by 2.3 billion sterling."

"Will increase defence spending by 2.9 billion sterling."

"Will provide 3 billion Sterling a year support to Ukraine for as long as it takes."

• Inflation in Germany rose at a stronger pace than expected in October.
• EUR/USD stays above 1.0800 following the German CPI data.

Inflation in Germany, as measured by the change in the Consumer Price Index (CPI), rose to 2% on a yearly basis in October from 1.6% in September, Destatis' flash estimate showed on Wednesday. This reading came in above the market expectation of 1.8%.

On a monthly basis, the CPI rose 0.4% after staying unchanged in September.

The Harmonized Index of Consumer Prices in Germany, the European Central Bank's preferred gauge of inflation, increased 2.4% on a yearly basis, up sharply from the 1.8% increase recorded in September.

Market reaction

EUR/USD recovered slightly from session lows after these data and was last seen trading flat on the day near 1.0820.

UK Chancellor Rachel Reeves said in the Autumn Forecast Statement that the Office for Budget Responsibility (OBR) expects the Consumer Price Index (CPI) to be at 2.5% in 2024, up from the 2.2% announced in March.

The OBR sees CPI of 2.6% in 2025, up from the March forecast of 1.5%.

Key takeaways

"OBR forecasts show 2024 GDP growth of 1.1% (March forecast 0.8%)."

"OBR forecasts show 2025 GDP growth of 2.0% (March forecast 1.9%)."

"OBR forecasts show 2029 GDP growth of 1.6%."

"Budget will boost long term growth."

Market reaction

GBP/USD stays under pressure and was last seen losing 0.55% on the day at 1.2945.

• Private sector employment rose at a stronger pace than expected in October.
• US Dollar Index clings to small daily gains slightly below 104.50.

Private sector employment in the US rose 233,000 in October and annual pay was up 4.6%, the Automatic Data Processing (ADP) reported on Wednesday. This reading followed the 159,000 increase (revised from 143,000) recorded in September and surpassed the market expectation of 115,000 by a wide margin.

Assessing the report's findings, "even amid hurricane recovery, job growth was strong in October,” said Nela Richardson, chief economist, ADP. "As we round out the year, hiring in the US is proving to be robust and broadly resilient."

Market reaction

The US Dollar Index edged higher with the immediate reaction and was last seen posting small daily gains near 104.40.

The Pound Sterling (GBP) is trading a little softer ahead of Chancellor Reeves’ first budget (8.30ET) for Labour. The broad outlines of the government’s fiscal plans have been flagged to the media and markets, Scotiabank’s Chief FX Strategist Shaun Osborne notes.  

GBP slips ahead of Labour government’s budget

“The anticipated mix of tax hikes and increased borrowing to invest in key policy priorities (health and infrastructure, for example) is getting scored as growth-positive by the Office of Fiscal Responsibility. The mix of growth enhancing fiscal policy plus tighter BoE monetary policy may be GBPsupportive in the medium term—assuming markets find Reeves’ plans credible.”

“GBP’s drop back from the intraday high in the low 1.30s leaves a negative look to the short-term chart via a bearish outside range session on the 6-hour chart. The drop interrupts the grinding improvement in Cable seen since last week’s rebound from the low 1.29 area and risks renewing downside momentum in the pound—if sustained over the session.”

“Support is 1.2940 and 1.2900/10. Resistance is 1.3025.”

GDP data reports for Q3 from France, Spain and Germany all beat expectations, lifting preliminary Eurozone growth to 0.4% in the quarter, double expectations, Scotiabank’s Chief FX Strategist Shaun Osborne notes.  

EUR firms on stronger than expected growth data

“The economy grew 0.9% over the year. Meanwhile, state-level inflation data in Germany was stronger than expected, suggesting the preliminary national data at 9ET risks coming in hotter than the 0.2% forecast. Strong data lifted European yields and prompted a further repricing of ECB easing expectations for December (31-32bps of easing priced in, from 35bps or so yesterday). That still looks too much.”

“Data reports and yields combined to lift the EUR to the mid-1.08s before it eased back. The EUR has shown signs of stabilizing just below 1.08 over the past few trading sessions. Support has been firm on dips to the 1.0760/70 area. This morning’s push higher in spot has not (yet, at least) developed much traction, however.”

“Gains push through 1.0840 which should have been a bull trigger for additional gains but the EUR rally has sputtered and key short-term resistance at 1.0875 remains untested. More range-trading around 1.08 may follow in the next few days.”

Near-term prospects for the Canadian Dollar (CAD) are little changed, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

CAD little changed

“Wide yield/swap spreads are the major drag on the CAD at the moment. The CAD has been pummeled by the prospect of more BoC easing ahead while the Fed drags its feet over lowering rates.”

“Swaps spreads have narrowed a fraction on the day so far, which may help the CAD steady, but the CAD is unlikely to pick up much ground ahead of the US presidential vote. The election outcome risks accentuating pressure on the CAD if a Trump win boosts inflation worries in the US. USDCAD’s estimated fair value this morning is little changed at 1.3931.”

“The bull trend in the USD remains very, very stretched in technical terms. Intraday price action suggests some stabilization in the USD so far, with spot’s trading range holding within yesterday’s. An inside range day (if confirmed through the close) would signal a pause at least in the USD’s rise ahead of major resistance at 1.3945/50. Support intraday is 1.3895 and 1.3860.”

The US Dollar (USD) is trading lower overall to start the day, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

USD may find support from GDP data

“There are some signs that the October bull run in the DXY is moderating. Short term charts reflect some (minor, so far) softness in price action and the pre-election demand for USD topside protection via risk reversals may be flattening out. This may may point to some stabilization in the broader USD trend—at least ahead of the election itself.”

“The sharp fall in US yields following yesterday’s well-received 7Y auction is extending this morning and is adding to USD headwinds in the short run while stronger than expected Eurozone data has given the EUR a lift. Sterling is a moderate underachiever ahead of the UK budget— but Gilts are outperforming amid generally firmer fixed income markets. Stocks are soft in Europe as markets have been forced to (further) reprice ECB easing expectations after this morning’s data round. US equity futures are firmer, however.”

“It’s another busy day of data releases is the US. ADP data at 8.15ET may shed some light on the impact of weather on hiring this month. Consensus expectations call for hiring to slow to 111k (from 143k in September). The advance Q3 GDP report is expected to show resilient growth (3%) and slowing core PCE inflation (2.1%); that’s Goldilocks-like and could be USD-supportive. Firm data may help keep the DXY from testing technical support at 103.93.”

The New Zealand dollar has capitalized on the moderate US Dollar weakness to regain some losses.
Weak job openings data in the US have raised concerns about the labour market and weighed on the US Dollar.
A break above 0.6000 would ease bearish pressure and bring 0.6060 into focus.

The New Zealand Dollar trimmed some losses on Wednesday, favoured by a somewhat lower US Dollar, with investors growing increasingly cautious ahead of US GDP and ADP employment figures.

Concerns about the US labour market are hurting the US Dollar

The weak US JOLTS job openings seen on Tuesday have scratched the image of a solid US labour market, keeping investors on their toes, ahead of Friday’s Nonfarm Payrolls report.

The US focus today is on the Q3 GDP, which is expected to confirm solid economic growth. The ADP employment report, however, might overshadow these figures, as further downbeat news on employment will  likely hurt confidence in the US Dollar  

The technical picture remains bearish, but the positive reaction from 0,5960 suggests the possibility of a deeper correction. Immediate resistance is at 0.6000 ahead of 0.6060. Supports are 0.5950 and 0.5910.

AUD/USD has experienced a deeper pullback after approaching projections and the upper limit of a multi-month ascending channel near 0.6950/0.6965, Société Generale’s FX analysts note.

Downtrend can extend towards April lows

“It has recently given up the 200-DMA (0.6630). Daily MACD is within negative territory denoting lack of upward momentum. The pair is gradually drifting towards next potential support of 0.6470 representing the trend line drawn since October 2023.”

“If the decline stalls near this level, an initial bounce is likely but reclaiming the MA at 0.6630 would be crucial for confirming a meaningful up move. Failure to hold 0.6470 could extend the downtrend towards April lows of 0.6360/0.6340.”

Eurozone economic growth came in stronger than expected in the third quarter, Rabobank’s economist Maartje Wijffelaars notes.

Consumer spending to drive growth in the coming quarters

“There’s a stark divergence between the manufacturing and services sector, however.”

“Industrial performance also varies widely between member states. This is not solely a recent phenomenon, but already predates the energy crisis. Industrial underperformance of Germany and France happened between 19Q4 and 22Q2, for example.”

“We expect that consumer spending will drive growth in the coming quarters.”

• The US Dollar’s bullish momentum loses strength after weak job opening figures.
• A downbeat ADP employment report might increase the bearish pressure on the US Dollar.
• Failure to break the 104.55 resistance has brought 103.95 support into focus. 

The US Dollar Index (DXY) is showing a moderately softer tone on Wednesday’s European session. Softer-than-expected JOLTS Job Openings sent US Treasury yields lower on Tuesday, increasing the negative pressure on the US Dollar (USD).

Job Openings came in at the lowest level in more than three years in September. These figures cast some doubt on the health of the labour market ahead of Friday’s Nonfarm Payrolls (NFP) report, with the Federal Reserve’s (Fed) monetary policy decision only one week away.

On Wednesday, the third quarter’s US Gross Domestic Product (GDP) is expected to show the world’s largest economy grew at a steady pace in the third quarter, in contrast with the rest of the world’s major economies.

The ADP Employment Report, however, might steal the show. The market consensus anticipates a significant decline in job creation that might increase concerns about the employment market, triggering a deeper US Dollar correction.

Daily digest market movers: The US Dollar shows signs of weakness ahead of key US releases

• US JOLTS Job Openings fell to 7.44 million in September, while August’s reading was revised to 7.86 million from the 8.04 million previously estimated.
   
• Futures markets are now fully pricing in a quarter-point interest-rate cut by the Fed at its meeting next week, according to data from the CME Group’s FedWatch tool. The chances of another 25 bps cut in December have increased to 76.6% from 72% at the start of the week.
   
• Later on Wednesday, the US Gross Domestic Product (GDP) is expected to show that the economy grew at a 3% annualized pace in the third quarter, the same pace as the previous quarter.
   
• The ADP Employment Report, however, is likely to add to the evidence of a loosening labor market, with a 115K increase in October, down from September’s 143K rise.
   
• On Thursday, the Personal Consumption Expenditures (PCE) Prices Index, The Fed’s inflation data of choice, is expected to show that price pressures continue to ease, with the core reading down to 2.6% yearly from 2.7% in September.
   
• The highlight of the week will be Friday’s NFP report, which is expected to show a significant decline in new payrolls. Such an outcome might hurt speculative demand on the US Dollar.

• DXY technical outlook: Showing signs of topping at 104.55

The DXY index keeps its bullish bias intact but the pair’s failure to break the resistance area above 104.55 might give fresh hopes for bears.

The 4-hour Relative Strength Index (RSI) shows a bearish divergence and has crossed below the 50 level, a negative sign. The index, however, should slide below Friday’s low, at 103.95 to confirm a deeper correction and shift its focus towards 103.40. Resistances are at the 104.55 - 104.75 area and 105.20.

 

The US Dollar (USD) is expected to trade in a range between 7.1300 and 7.1550. In the longer run, upward momentum is building, but USD must break and remain above 7.1600 before further sustained gains are likely, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

USD must break and remain above 7.1600 for further gains

24-HOUR VIEW: “We expected USD to rise yesterday, but we were of the view that ‘the 7.1600 level is likely out of reach.’ While USD rose more than expected to 7.1650, it pulled back quickly to close largely unchanged (7.1420, -0.06%). The brief rise did not result in any increase in momentum. Today, we expect USD to trade in range, likely between 7.1300 and 7.1550.”

1-3 WEEKS VIEW: “Two days ago (28 Oct, spot at 7.1460), we highlighted that ‘While upward momentum is building, USD must break and remain above 7.1600 before further sustained gains are likely.’ We added, ‘The likelihood of USD breaking clearly above 7.1600 will remain intact, provided that 7.1200 is not breached in the next few days.’ Yesterday, USD rose to 7.1650 before pulling back quickly. There is no increase in momentum, and we continue to hold the same view for now.”

The US Dollar (USD) is likely to trade in a range between 152.50 and 153.80. In the longer run, while conditions are severely overbought, there is a chance for the advance in USD to extend to 154.00 before pausing, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Chance for the advance in USD to extend to 154.00

24-HOUR VIEW: “After USD rose to 153.87 two days ago and then pulled back, we highlighted yesterday that ‘The pullback in overbought conditions suggests USD is unlikely to rise further.’ We also highlighted that USD ‘is more likely to trade in a range between 152.45 and 153.60.’ Although USD subsequently traded in a higher range of 152.74/153.86, it ended the day largely unchanged at 153.35 (+0.05%). There has been no clear increase in either downward or upward momentum. Today, we continue to expect USD to trade in a range, probably between 152.50/153.80.”

1-3 WEEKS VIEW: “Our update from yesterday (29 Oct, spot at 153.05) is still valid. As highlighted, ‘while conditions are severely overbought, there is a chance for the advance in USD to extend to 154.00 before pausing.’ Overall, only a breach of 151.90 (no change in ‘strong support’ level from yesterday) would indicate that the USD advance that started early this month has ended.”

• EUR/JPY sees more upside above 166.00 as upbeat Eurozone Q3 flash GDP has improved the Euro’s outlook.
• The German economy returns to growth, surprisingly rose by 0.2% in the third quarter of the year.
• Investors await the BoJ meeting to get cues about Yen’s outlook.

The EUR/JPY pair aims for a sustainable break above 166.00 in Wednesday’s European session. The cross strives to gain further as the Euro’s (EUR) outlook has improved after a slew of economic data from the Eurozone and its major regions.

The Eurozone flash Gross Domestic Product (GDP) data shows that the economy expanded by 0.9% year-on-year in the third quarter of the year, faster than estimates of 0.8% and the 0.6% growth in the April-June period. Quarterly GDP growth was 0.4%, double the estimates and the former release of 0.2%.

Meanwhile, the return of the German economy to growth after a contraction in the second quarter has also strengthened the Euro. The German economy unexpectedly grew by 0.2% while economists estimated a steady decline of 0.1%. Also, flash Harmonized Index of Consumer Prices in six German states has come in hotter-than-expected, prompting traders to pare European Central Bank (ECB) dovish bets for the December meeting.

According to market expectations, the probability of the ECB reducing its Deposit Facility Rate by 50 basis points (bps) in December has eased to 22% from 45% after the GDP and inflation data release.

On the Tokyo front, investors await the Bank of Japan’s (BoJ) policy meeting on Thursday. The BoJ is expected to leave interest rates unchanged at 0.25%. Lately, the Japanese Yen (JPY) has remained under pressure due to market expectations of BoJ’s incapability to hike interest rates further as traders doubt economic sustainability after the Liberal Democratic Party (LDP) failed to gain a majority in national elections.

Signs of hawkish interest rate guidance would prompt a strong recovery in the Japanese Yen, while the downside would be limited if the BoJ remains dependent on incoming data.

The highlight of today’s session is the new Labour government’s first budget released at 1330CET. Does sterling rally on pro-growth fiscal loosening and a rise in real yields? Or is sterling flat on a carefully crafted series of tax hikes and spending increases which balance day-to-day spending? Or does Labour over-reach with some spending plans – reflected in higher-than-expected Gilt supply – which re-inserts some fiscal risk premium into the pound, ING’s FX analyst Francesco Pesole asks.

EUR/GBP is currently pressing 0.8300

“Discussing it with team members we think that a flat sterling outcome is a little more likely in that Chancellor Rachel Reeves will tread carefully. The negative risk will probably be judged against the key metric of the UK’s Gilt supply remit for FY24/25 and FY25/26.”

“Current numbers are around £276/277bn. The consensus seems to be that a modest increase to this supply – in the region of £10-20bn per year – would be digestible for the Gilt market. Any number above £300bn is therefore probably a Gilt and sterling negative.”

“EUR/GBP is currently pressing 0.8300, largely because of a dovish re-appraisal of upcoming ECB policy. As above, we do not see a strong reason for EUR/GBP to bounce today. And below, 0.8300, the next immediate target is 0.8250/80.”

• Gold hits fresh record highs on increasing demand for safe havens amid the US political uncertainty.
• US Treasury yields’ reversal from mid-term highs has increased bullish pressure on the precious metal.
• XAU/USD rally looks overextended, with the RSI showing a bearish divergence.

Gold price (XAU/USD) has stretched to fresh record highs on Wednesday, favored by a combination of higher demand for safe-haven assets amid the US political uncertainty and retreating US Treasury yields.

Investors are looking for safety with the US presidential election around the corner and recent polls showing a close race between the two candidates Vice President Kamala Harris and former President Donald Trump.

Beyond that, US Treasury yields pulled back after JOLTS Job Openings data declined by more than expected in September. The Federal Reserve (Fed) has set the labor market as the main focus of its monetary policy, and these figures have practically confirmed a 25 bps rate cut next week.

Daily digest market movers: Gold consolidates gains with investors pricing two more Fed rate cuts in 2024 

• US JOLTS Job openings declined to 7.44 million in September, and August’s reading was revised down to 7.86 million from the previously estimated 8.04 million. These figures have scratched the picture of a solid labour market ahead of Friday’s Nonfarm Payrolls (NFP) report.
• On the other hand, the Conference Board’s Consumer Confidence Index improved to 108.7 in October from 98.7 in September, beating expectations of a 99.5 reading.
• The CME Group’s Fed Watch tool shows a 99.6% chance of a quarter-point rate cut by the Fed next week, up from 92% on Tuesday. The chances of another 25 bps cut in December have increased to 76.6% from 72%.
• US 10-year Treasury yields retreated from three-month highs at 4.33% to 4.23% on Wednesday, which has provided an additional impulse to the precious metal.
• The main focus on Wednesday is the advanced US Gross Domestic Product (GDP) report, which is expected to show a healthy 3% annualized growth in Q3. The ADP Employment Change, however, is seen declining to 115K from 143K, which might increase doubts about Friday’s Nonfarm Payrolls (NFP) report.

Technical analysis: XAU/USD’s rally looks overstretched near $2,800

Gold is on a bullish trend amid a supportive fundamental backdrop, but the technical picture is showing signs of a potential correction. The RSI is at overbought levels in most time frames, with the 4-hour chart showing a bearish divergence, which often anticipates a corrective reaction.

Immediate resistance is the intra-day high at $2,780, ahead of the $2,800 level. Support levels are the previous top at $2,760 and $2,730.

The daily chart shows the pair likely to be at the end of a 5-wave (Elliot Wave) impulse, with the 261.8% retracement of the 4th wave, in the $2,800 area, as a potential pivot point.

XAU/USD Daily Chart

Chancellor Reeves said there would be new rules in her budget governing Treasury borrowing, allowing debt levels to increase by up to £50bn over 5 years – to facilitate investment in Britain’s infrastructure. GBP was last seen at 1.30 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

BoE can become a ‘bit more aggressive’

“There were concerns if her plans would be similar to former PM Liz Truss’s infamous mini-budget in 2022 although Reeves was quick to preempt in saying that she would stick firmly to a requirement for day-to-day spending to be matched by tax receipts. Increase in borrowings may keep rates elevated for longer.”

“This suggests that the BoE may not have much room to lower rates, which may run in contrast to Governor Bailey’s recent dovish shift in rhetoric, in which he said that BoE could become a ‘bit more aggressive’ and ‘a bit more activist’ in its approach to cutting rates if the news on inflation continued to be good (Telegraph interview).” “Bearish momentum on daily chart shows signs of fading while RSI shows rose from near oversold conditions. Resistance at 1.3040 (21 DMA), 1.3110 (38.2% fibo retracement from Sep high to Oct low). Support at 1.2975 (100 DMA), 1.2910 (recent low).”

The Eurozone economy grows by 0.4% in the three months to September of 2024, following a 0.2% expansion in the second quarter, the preliminary estimate released by Eurostat showed on Wednesday.

The data outpaced the market forecast for a 0.2% growth.

The bloc’s GDP  rose at an annual pace of 0.9% in Q3 versus 0.6% in Q2 and 0.8% expected.

EUR/USD reaction to the Eurozone GDP report

EUR/USD stays strongly bid near 1.0840 on the upbeat Eurozone growth data, up 0.20% on the day. 

The New Zealand Dollar (NZD) is expected to trade in a sideways range of 0.5955/0.5995. In the longer run, there is still no clear increase in downward momentum; the chance of a sustained break below 0.5950 is not high, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

NZD may test 0.5995 near term

24-HOUR VIEW: “Two days ago, NZD fell to a low of 0.5958. Yesterday, when NZD was at 0.5985, we held the view that ‘instead of continuing to decline, NZD is more likely to trade sideways between 0.5965 and 0.6005.’ Instead of trading in a range, NZD edged to a low of 0.5954. NZD rebounded from the low to close slightly lower at 0.5974 (-0.12%). The mild decline did not result in any increase in momentum, and we continue to expect NZD to trade sideways. Expected range for today: 0.5955/0.5995.”

1-3 WEEKS VIEW: “We highlighted on Monday (28 Oct, spot at 0.5985) that ‘the recent price action did not result in a significant increase in momentum, but the weakness in NZD has not stabilised.’ We added, ‘The next level to watch is 0.5950, and a breach of 0.6025 (‘strong resistance’ level) would mean that the weakness that started early this month has stabilised.’ While NZD dropped to a fresh 3-month low of 0.5954 yesterday, there is still no clear increase in downward momentum. The chance of a sustained break below 0.5950 is not high. On the upside, the ‘strong resistance’ level has moved lower to 0.6010 from 0.6025.”

Swiss National Bank (SNB) Chairman Martin Schlegel said on Wednesday that they are “ready to react to pressure on the Swiss Franc.”

Additional quotes

Market reaction

At the time of writing, USD/CHF is trading listlessly near 0.8670, unperturbed by these comments.

USD/SGD continued to trade near recent high with SGD weakness mirroring JPY and CHF softness. Last at 1.3231 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

SGD weakness mirrors JPY and CHF softness

“Daily momentum remains bullish while RSI is near overbought conditions. Potentially, a rising wedge pattern is coming into sight. This is typically associated with a bearish reversal. We monitor price pattern if a turn lower is near.”

“Resistance at 1.3290 (61.8% fibo retracement of Jun high to Oct low), 1.3350 levels (200 DMA). Support at 1.3190 (50% fibo), 1.31 (38.2% fibo). S$NEER was last at 1.44% above model-implied mid.”

• The Pound Sterling wobbles ahead of the UK budget announcement, in which the Labour administration is expected to raise taxes and boost spending.
• Investors expect the BoE to cut interest rates by 25 bps on November 7.
• Market participants await US private employment and Q3 GDP data.

The Pound Sterling (GBP) trades cautiously against its major peers on Wednesday ahead of the announcement of the United Kingdom’s (UK) Autumn Forecast Statement at 12:45 GMT. This will be Labour’s first budget presentation in over 15 years, in which Chancellor of the Exchequer Rachel Reeves is expected to announce a tax hike on various income-generating sources and provide higher spending plans to boost investment.

According to the UBS, the Budget will focus on three key aspects: First, changes in fiscal rules to increase headroom for future borrowing; second, a package of tax increases, probably on capital gains, inheritance, pensions, and – most importantly in terms of additional revenues – national insurance contributions for employers; third, additional spending on investment projects, Reuters reported.

Market participants will mainly focus on the quantum of tax raises and spending budgets to forecast their impact on inflationary pressures. Analysts at UBS expect that higher spending will likely lead to an upward revision in the fiscal deficit to 3.1% of Gross Domestic Product (GDP).

A higher deficit target would deepen fears of price pressures remaining persistent and force traders to pare Bank of England (BoE) dovish bets for the remainder of the year. According to the October 22-28 Reuters poll, the BoE is widely anticipated to cut interest rates by 25 basis points (bps) in its upcoming policy meeting on November 7. This would be the BoE’s second interest-rate cut this year, pushing key borrowing rates down to 4.75%.

Daily digest market movers: Pound Sterling edges higher against US Dollar

• The Pound Sterling edges higher to near 1.3020 against the US Dollar (USD) in Wednesday’s London session. The GBP/USD pair gains slightly as the US Dollar drops ahead of the United States (US) ADP Employment Change for October and the Q3 flash GDP data, which will be published around 12:30 GMT.
• The ADP Employment report is expected to show that the private sector hired 115K new workers in October, lower than 143K in September. A slower growth in the labor demand would renew fears of a deteriorating job market, which would prompt expectations of Federal Reserve (Fed) interest rate cuts. According to the CME FedWatch tool, the central bank is expected to cut interest rates further by 25 bps in both policy meetings in November and December.
• Tuesday’s JOLTS Job Openings data for September also refreshed fears of slower labor demand as new vacancies came in lower than expected. For more updates on the current labor market status, investors will pay close attention to the US Nonfarm Payrolls (NFP) data for October, which will be published on Friday.
• Meanwhile, the US economy is expected to have grown at a steady pace of 3.0% in the third quarter of the year.

Technical Analysis: Pound Sterling strives to hold above 1.3000

The Pound Sterling edges higher above 1.3000 against the US Dollar (USD) in European trading hours on Wednesday. The GBP/USD pair holds the lower boundary of a Rising Channel chart formation around 1.2900 on the daily time frame. 

The near-term trend of the Cable remains uncertain as it stays below the 50-day Exponential Moving Average (EMA), which trades around 1.3070.

The 14-day Relative Strength Index (RSI) stays above 40.00. A fresh bearish momentum would trigger if it fails to climb above it.

Looking down, the 200-day EMA near 1.2845 will be a major support zone for Pound Sterling bulls. On the upside, the Cable will face resistance near the 20-day EMA around 1.3060.

Government formation is key but this may take up to weeks or even months. Uncertainty on this front may complicate fiscal-monetary policy, and weigh on JPY in the interim. LDP coalition can either form a coalition with another smaller party such as DPP or JIP or attempt to govern with a minority government with ad-hoc cooperation on certain issues with the smaller parties. Pair was last at 153.18 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Near term retracement not ruled out

“But these parties have previously critic BoJ for raising interest rates. Alternatively, the opposition CDP leader, Noda (whom was a PM himself in 2011-12) can push to seek a coalition with other opposition parties. But it was last known that his party has had little success finding partners due to policy differences. Local news reported there may be a vote on 11 Nov on who will take premiership in a special parliamentary session. And there is now greater uncertainty if PM Ishiba will win enough votes to lead a new government as the new PM.”

“The focus is on BoJ MPC tomorrow. Consensus is for hold as policymakers may want to wait for greater clarity on government formation and economic policies before deciding on policy choice. That said, one may not want to rule out any surprises as policymakers may consider a hike tomorrow as an opportune time to tame JPY bears.”

“Bullish momentum on daily chart intact while RSI is from near overbought conditions. c. Support at 151.50 (200 DMA), 150.60/70 levels (50% fibo retracement of Jul high to Sep low, 100 DMA). Resistance at 155 and 156.50 (76.4% fibo). Slowing BoJ policy normalisation and Fed in no hurry to cut, alongside US election risks may imply that USDJPY may well stay supported in the interim.”

Silver prices (XAG/USD) fell on Wednesday, according to FXStreet data. Silver trades at $34.20 per troy ounce, down 0.75% from the $34.46 it cost on Tuesday.

Silver prices have increased by 43.72% since the beginning of the year.

The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 81.33 on Wednesday, up from 80.53 on Tuesday.

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Oversold conditions and slowing momentum suggest Australian Dollar (AUD) is likely to trade in a range of 0.6545/0.6585. In the longer run, the potential for further sustained decline may be limited; the next level to monitor is 0.6520, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

AUD can test the 0.6585 resistance

24-HOUR VIEW: “After AUD fell sharply on Monday, we highlighted yesterday (Tuesday) that ‘While oversold, the decline could extend to 0.6560 before stabilisation can be expected.’ Our view of AUD declining was not wrong, even though it fell more than expected to 0.6545. Conditions remain oversold, this, combined with tentative signs of slowing momentum, suggests that instead of continuing to weaken, AUD is more likely to trade in a 0.6545/0.6585 range.”

1-3 WEEKS VIEW: “Yesterday (29 Oct, spot at 0.6585) we indicated that ‘there is potential for AUD to continue to decline to 0.6560, possibly 0.6520.’ We did not quite expect AUD to reach 0.6560 as quickly, as it dropped to a low of 0.6545 during NY trading. Although the weakness has not stabilised, given that the current decline is entering its second month, the potential for further sustained weakness may be limited. The next level to monitor is 0.6520. On the upside, a breach of 0.6620 (‘strong resistance’ was at 0.6640 yesterday) would mean that the weakness has stabilised.”

• USD/CAD edges lower ahead of the release of US GDP data.
• The commodity-linked CAD receives support from improved Oil prices.
• The decline in the US Treasury yields weakens the US Dollar.

The USD/CAD pair pulls back from its three-month high of 1.3929, recorded in the previous session, trading around 1.3910 during Wednesday's European session. The Canadian Dollar (CAD), tied to commodities, benefits from stronger Oil prices, as Canada remains the largest crude supplier to the United States (US).

West Texas Intermediate (WTI) Oil price rebounds after two days of losses, trading around $67.70 at the time of writing. Crude Oil prices are bolstered by an unexpected decline in US crude inventories. API US weekly crude Oil stockpiles fell by 0.573 million barrels in the week ending October 25, contrary to expectations of a 2.3 million-barrel increase. Investors now await the EIA crude Oil stockpiles report, due Wednesday.

On Monday, Bank of Canada Governor Tiff Macklem provided more insight into last week’s substantial interest rate cut, describing it as justified following years of sharp rate increases aimed at curbing inflation. Macklem is expected to appear before the House of Commons Finance Committee on Wednesday to discuss the bank’s monetary policy.

The decline of the USD/CAD pair could also be attributed to a weaker US Dollar (USD), driven by lower Treasury yields. The US Dollar Index (DXY), which measures the value of the US Dollar against six other major currencies, trades around 104.10 with 2-year and 10-year yields on US Treasury bonds standing at 4.07% and 4.22%, respectively, at the time of writing.

Traders will likely watch the upcoming release of preliminary US Q3 Gross Domestic Product (GDP) figures and October’s ADP Employment Change, as these could offer important insights into the timing and pace of the Federal Reserve’s (Fed) expected rate cuts. Additionally, US PCE inflation and Nonfarm Payrolls (NFP) will be closely monitored on Thursday and Friday, respectively.

The US Dollar (USD) traded 2-way overnight with gains on the back of strong consumer confidence but turned lower after JOLTS job openings slumped to lowest level since early 2021. DXY was last at 104.10, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Room for USD to retrace lower

“Moves reinforced our view for more 2-way trades in the USD this week amidst a slew of tier-1 data releases. Tonight, we have ADP employment, 3Q GDP before core PCE tomorrow and payrolls on Friday.”

“Daily momentum remains bullish but there are signs of it fading while RSI eased lower from overbought conditions. We see room for USD to retrace lower. That said, pullback may also be shallow ahead of US elections next week.”

“Support at 103.80 levels (200 DMA, 50% fibo), 102.90/103.20 levels (21, 100 DMAs, 38.2% fibo fibo retracement of 2023 high to 2024 low) and 101.90 (50 DMA). Resistance at 104.60 (61.8% fibo), 105.20 levels.”

The latest US macro news has dampened the dollar rally. Consumer confidence rose more than expected from 99.5 to 108.7 yesterday, the strongest monthly gain since March 2021. Interestingly, for the first time since July 2023, the survey shows some improved optimism about future job availability, ING’s FX analyst Francesco Pesole notes.

US GDP report to prevent USD narrative turn negative

“The indications from the JOLTS job openings instead pointed to some cool-off in the jobs market. There was a revision in the August figure down to 7.8m, and the September print was 7.4m – well below the consensus of 8.0m. The JOLTS report also includes the quits rate, which has decreased sharply to 1.9% from the 3% early-2022 peak, when a high number of workers were leaving their jobs for higher-paid roles elsewhere.”

“The falling quits rate can indicate that there is indeed a greater scarcity of jobs but also that workers are more worried about the outlook and value job security. This is a net-negative indicator for the jobs market, but payrolls data needs to follow through with a soft read on Friday to convince markets to price back in Fed easing. The Fed funds futures curve is embedding 45bp of cuts over November and December.”

“Today, the US will release the advanced third-quarter GDP report, which includes the quarterly core PCE figures. These are expected at 2.1% QoQ, a decline from 2.8% in the second quarter. The ADP payrolls for October are also released today and are expected to have declined from 143k to 111k. Those have limited predictive power for actual payrolls, but can still move the market. We suspect a strong growth print can prevent the macro story from turning dollar-negative before payrolls on Friday, and allow Trump hedges and rising implied volatility to feed into a stronger dollar.”

• AUD/USD rebounds around 50 pips from a nearly two-month low touched this Wednesday.
• The technical setup warrants caution before confirming a near-term bottom for the major.
• Traders now look forward to important US macro releases to grab short-term opportunities.

The AUD/USD pair stages a goodish intraday recovery from its lowest level since August 8, around the 0.6535 region touched earlier this Wednesday and for now, seems to have snapped a three-day losing streak. Spot prices climb to a fresh daily high, around the 0.6685 area during the first half of the European session a modest US Dollar (USD) slide, though any meaningful appreciating move still seems elusive. 

The USD Index (DXY), which tracks the Greenback against a basket of currencies, extends the overnight pullback from a three-month peak amid a further decline in the US Treasury bond yields. Meanwhile, the latest Australian consumer inflation figures released today dashed hopes for an interest rate cut by the Reserve Bank of Australia (RBA) before the year-end. This, in turn, underpins the Australian Dollar (AUD) and contributes to the AUD/USD pair's intraday bounce.

That said, firming expectations for a less aggressive policy easing by the Federal Reserve (Fed), along with a generally weaker tone around the equity markets, should act as a tailwind for the safe-haven buck and cap the risk-sensitive Aussie. Traders might also refrain from placing aggressive directional bets ahead of important US macro releases. This makes it prudent to wait for strong follow-through buying before confirming that the AUD/USD pair has formed a near-term bottom.

From a technical perspective, the recent breakdown below the very important 200-day Simple Moving Average (SMA) was seen as a fresh trigger for bearish traders. Moreover, oscillators on the daily chart are holding deep in negative territory and are still away from being in the oversold zone. This, in turn, suggests that any subsequent recovery beyond the 0.6600 mark might still be seen as a selling opportunity and remain capped near the 0.6630 area, or the 200-day SMA breakpoint. 

The latter should act as a key pivotal point, which if cleared decisively could trigger a fresh bout of a short-covering rally and lift the AUD/USD pair to the 0.6675 intermediate hurdle en route to the 0.6700 round figure.

On the flip side, the daily swing low, around the 0.6535 area could offer some support ahead of the 0.6500 psychological mark. Some follow-through selling should pave the way for a further depreciating move towards the 0.6440-0.6435 support zone. The AUD/USD pair could eventually drop to the 0.6400 round figure and the next relevant support near the 0.6370 region.

AUD/USD daily chart

• German GDP rises 0.2% QoQ in Q3 vs. -0.1% estimated.
• Annual German GDP contracts 0.2% in Q3 vs. -0.3% forecast.
• EUR/USD rises further on the upbeat German Q3 GDP report.

The German economy expanded by 0.2% over the quarter in the third quarter of 2024 after shrinking by 0.1% in the second quarter, according to the preliminary data published by Destatis on Wednesday. The market consensus was for a 0.1% decline.

Meanwhile, the annual GDP rate fell by 0.2% in Q3, following no growth reported in Q2 and against the -0.3% forecast.

EUR/USD reaction to the German GDP data

EUR/USD catches a fresh bid on the German GDP expansion, adding 0.32% on the day to trade near 1.0850, at the time of writing. The pair awaits the Eurozone Preliminary GDP and Germany’s inflation data for further incentives.

The Pound Sterling (GBP) is facing mild upward pressure; it could edge higher to 1.3035. The major resistance at 1.3070 is not expected to come into view. In the longer run, GBP is expected to trade in a 1.2950/1.3070 range; slightly firm underlying tone suggests it will likely test the top of the range first, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Upward momentum appears to be building

24-HOUR VIEW: “We highlighted yesterday that ‘The price action still appears to be part of a sideways trading phase.’ We expected GBP to ‘trade in a 1.2940/1.2995 range.’ We did not expect GBP to rise to a high of 1.3018. There has been a slight increase in momentum. Today, there is a chance for GBP to edge higher to 1.3030 before levelling off. The major resistance at 1.3070 is unlikely to come into view. Support is at 1.2990; a breach of 1.2970 would indicate that the current mild upward pressure has eased.”

1-3 WEEKS VIEW: “Our latest narrative was from two days ago (28 Oct, spot at 1.2960), wherein ‘downward momentum is slowing, and should GBP break above 1.3000 (‘strong resistance’ level), it would indicate that GBP is not declining further.’ Yesterday, GBP rose and broke above 1.3000, reaching a high of 1.3018. Downward momentum has faded. Upward momentum appears to be building, albeit tentatively. While GBP is expected to trade in a 1.2950/1.3070 range for now, the slightly firm underlying tone suggests it will likely test the top of the range first. At this time, a sustained break above this level appears unlikely.”

Australia's consumer price inflation rate fell to its lowest since early 2021 in the third quarter on government’s electricity rebates and a drop in gasoline prices, UOB Group’s Economist Lee Sue Ann note.

First rate cut can arrive only at the February meeting in 2025

The annual pace of inflation came in at 2.8% y/y in 3Q24, significantly lower from 3.8% in 2Q24. CPI rose 0.2% q/q in 3Q24, a tad below expectations of 0.3% q/q.”

“However, core inflation, remains elevated. The trimmed mean measure increased by 0.8% q/q, just above forecasts of a 0.7% gain. The annual pace slowed to 3.5% from 4.0%, with service-sector inflation still elevated.”

“While 4Q24 is still a possibility, we are now pushing back our first rate cut forecast from Nov to Dec. There is even the possibility that the first rate cut will not arrive until its Feb meeting in 2025, if the RBA chooses to wait for the 4Q24 CPI print, due for release on 29 Jan 2025.”

Gold surge pushes on as markets continue to factor in US election risk premium as we inch closer to election day. In the de-centralised betting markets (poly market as a reference), Trump-over-Harris spread continued to widen sharply in favour of Trump. And that brings back worries of tariffs, inflation and fiscal concerns. XAU was last at 2783 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Moving towards the $2800 resistance

“Trump’s proposed tax cut would add $7.5tn more to US debt (according to estimates from nonpartisan nonprofit committee for responsible federal budget). The potential ballooning in US debt also stirred up the narrative of dedollarisation, adding to demand for gold. Defensive positioning/ trump hedges (i.e. long USD, long gold, short CNH) may still gather traction in the near term given the fluidity of election developments and geopolitical uncertainties.”

“US election results should be known on the night of the election (6 Nov SGT). Outcome is a big unknown, judging from polls which is too close to call. There will be implications on prices of asset classes including gold, FX, etc as shifts in fiscal, foreign and trade policies may occur, depending on whether Trump or Harris is elected as the next President.”

A Trump outcome may see a play-up of USChina trade tensions and should inject some uncertainty to markets and continue to fuel demand for gold. While a Kamala Harris outcome should see some of these volatility and uncertainty ease. On this outcome, we may possibly see gold prices find a breather after a near 35% rally this year. Momentum is bullish while RSI is near overbought conditions. Next resistance at $2800. Support at $2720, $2690 (21 DMA).”

The Euro (EUR) held up above 1.08-handle overnight albeit still near 2-month lows. EUR was last seen at 1.0841, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

RSI is rising from near oversold conditions

“Quite a bit of negativity is in the price of EUR following recent dovish rhetoric out of ECB, softer growth/ economic momentum, USD strength and the fear of Trump win and the threat of that 10-20% tariff. But with much negativity in the price, we do caution for the risk of rebound if EU data this week surprise to the upside. 3Q GDP will be one to watch later today and CPI estimate will be key on Thu.”

“Momentum remains bearish though there are signs of it fading while RSI is rising from near oversold conditions. Resistance at 1.0830 (61.8% fibo retracement of 2024 low to high), 1.0870 (200 DMA), 1.0910/30 levels (21, 100 DMAs). Support at 1.0780, 1.0740 (76.4% fibo).

Growth and inflation data across the eurozone begin to flow in today. This morning, French third-quarter GDP figures came in one-tenth above consensus at 0.4% QoQ, and we’ll see German and Italian growth numbers before the advanced eurozone print is released at 11.00 CET. Consensus is expecting a second consecutive 0.1% QoQ contraction in Germany, and unchanged 0.2% QoQ eurozone-wide growth, ING’s FX analyst Francesco Pesole.

Eurozone is on the verge of a data overflow

“The greater emphasis by the ECB on growth’s downside risks means these GDP numbers can have a higher market impact than usual. Incidentally, the Governing Council’s sanguine stance on inflation and their explicit tolerance for some bumps in the numbers across the next few months mean that CPI figures can have a somewhat reduced impact on the euro.”

“October numbers for Spain and Germany are published today, and the eurozone flash estimate tomorrow. Core Spanish inflation is seen inching lower to 2.3%, while German headline numbers are widely expected to rebound from September’s 1.6%.”

“EUR/USD briefly explored levels below 1.080 yesterday but then got a lift from soft US job openings. Barring a material surprise on growth/inflation today and tomorrow, markets will likely remain reluctant to price out ECB easing given the latest dovish communication, and a still wide USD:EUR short-term swap rate gap will stay consistent with EUR/USD around 1.07.”

• Silver struggles to capitalize on the precious day’s positive move and drifts lower on Wednesday.
• The technical setup favors bulls and supports prospects for the emergence of some dip-buying.
• A sustained break below the $33.10-$33.00 area is needed to negate the near-term positive bias.

Silver (XAG/USD) meets with a fresh supply on Wednesday and drops back closer to the $34.00 mark during the first half of the European session, reversing a part of the previous day's move up. 

From a technical perspective, the XAG/USD is holding comfortably above important daily moving averages – 50-day, 100-day and 200-day SMAs. Moreover, oscillators on the daily chart maintain their positive bias and are still away from being in the overbought territory, suggesting that the path of least resistance for the white metal remains to the upside. 

Hence, any subsequent slide is more likely to find decent support near the $33.70 horizontal zone. This is followed by last week's swing low, around the $33.10 area, which if broken decisively might shift the bias in favor of bearish traders. The XAG/USD might then accelerate the slide towards the $32.20-$32.15 intermediate support en route to the $32.00 round figure.

Some follow-through selling below the $31.70-$31.65 region could drag the XAG/USD towards the $31.00 mark. The downward trajectory could extend further towards the $30.50 area and the monthly swing low, close to the $30.00 psychological mark tested on October 8.

On the flip side, bulls might now wait for a sustained strength beyond the $34.50-$34.55 area before making a fresh attempt to conquer the $35.00 psychological mark. The subsequent move up has the potential to lift the XAG/USD further towards the October 2012 swing high, around the $35.35-$35.40 region.

Silver daily chart

The Euro (EUR) is expected to trade in a range between 1.0790 and 1.0840. In the longer run, month-long decline has come to an end; EUR is expected to trade in a 1.0760/1.0885 range for the time being, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Rangebound between 1.0790 and 1.0840

24-HOUR VIEW: “Yesterday, we expected EUR to ‘trade in a range, probably between 1.0790 and 1.0830.’ Our view was incorrect, as EUR fell sharply but briefly to 1.0768, rebounding to close largely unchanged at 1.0818 (+0.06%). The brief drop did not result in an increase in momentum. Today, we continue to expect EUR to trade in a range, likely between 1.0790 and 1.0840.”

1-3 WEEKS VIEW: “We turned negative in EUR early this month (see annotations in the chart below). As we tracked the decline, in our most recent narrative from last Friday (25 Oct, spot at 1.0825), we highlighted that ‘should EUR break above 1.0840, it would signal the end of the decline that started early this month.’ Yesterday, EUR dipped to 1.0768, then rebounded to a high of 1.0826. Although our ‘strong resistance’ level at 1.0840 has not been breached yet, downward momentum has largely faded. In other words, the month-long decline has come to an end. The current price movements are likely part of a range trading phase, and EUR is expected to trade between 1.0760 and 1.0885 for the time being.”

• EUR/GBP appreciates as the British Pound faces challenges ahead of the UK’s Autumn Forecast Statement.
• UK Chancellor of the Exchequer, Rachel Reeves, plans to implement approximately £40 billion in fiscal measures, primarily through tax increases.
• Traders await the release of preliminary Gross Domestic Product (GDP) data from Germany and the Eurozone on Wednesday.

EUR/GBP recovers its recent losses from the previous session, trading near 0.8320 in the European session on Wednesday. This downward trend in the EUR/GBP cross could be attributed to a weaker Pound Sterling (GBP) ahead of the UK’s upcoming Autumn Forecast Statement. This will mark the first budget announcement by a Labor government in over 15 years.

Reuters cited government sources, UK Chancellor of the Exchequer, Rachel Reeves plans to implement approximately £40 billion ($52 billion) in fiscal measures, primarily through tax increases, to fulfill her commitment to fund day-to-day government expenses.

The Euro may face headwinds as the European Central Bank (ECB) is widely expected to lower its Deposit Facility Rate again. Current money market data suggests nearly a 50% probability of a 50 basis point rate cut in the December meeting.

Investors will pay close attention to preliminary Gross Domestic Product (GDP) data from Germany and the Eurozone, as well as Germany’s preliminary Harmonized Index of Consumer Prices (HICP) figures, all set for release on Wednesday.

In recent days, ECB policymakers have expressed mixed views on monetary policy. Pierre Wunsch, Governor of the National Bank of Belgium, indicated that there is no urgency to accelerate rate cuts and even suggested that a modest rate could be sustained. In contrast, Mario Centeno, Governor of the Bank of Portugal, supported the idea of a potential 50 basis point rate cut in December.

• EUR/USD stays sideways around 1.0800 ahead of key economic data releases from both the Eurozone and the US.
• The French economy rose by 0.4%, as expected, in the third quarter of the year.
• Trump’s victory in the US presidential election could have an adverse impact on the Eurozone growth.

EUR/USD trades close to Tuesday’s high slightly above 1.0800 in Wednesday’s European session. The major currency pair remains sideways for a third consecutive day as investors await key macroeconomic data from both the Eurozone and the United States (US) that is likely to inject volatility into the pair. 

In Europe, the October preliminary Harmonized Index of Consumer Prices (HICP) data from Germany and six of its states, and from Spain will indicate whether inflationary pressures continue to remain within the European Central Bank’s (ECB) target of 2%.

Economists estimate the German HICP to have grown at a faster pace of 2.1% from 1.8% in September, while inflation in Spain is expected to have remained below 2%.

Unless there is a big upside surprise, the impact of the inflation data is expected to be less significant on the ECB’s interest rate action in its upcoming policy meeting in December as officials see price pressures softening faster than what the central bank had anticipated.

Recent commentaries from ECB policymakers have indicated that they are worried about inflation remaining persistently lower due to weakening economic growth. Market participants are worried about the outlook of the Eurozone economy. 

Meanwhile, uncertainty ahead of the US presidential election persists. While national polls have indicated tight competition between former US President Donald Trump and current Vice President Kamala Harris, traders seem to be pricing in a Trump victory, which would have deep repercussions also for the Eurozone. 

Trump has promised a universal 10% tariff on all imports, except those from China, which would face even bigger tariffs. The threat of tariffs could impact the Eurozone’s powerful export sector significantly. Investment banking firm Goldman Sachs projects a 1% drop in the Eurozone’s Gross Domestic Product (GDP) if a universal 10% tariff is imposed.

In Wednesday’s session, investors will also focus on the flash Q3 GDP data of the Eurozone and its major regions. Market participants will pay close attention to German growth numbers as the region’s largest economy is forecasted to contract for the second quarter in a row.

Meanwhile, the preliminary French Q3 GDP grew at an expected pace of 0.4%, faster than 0.2% in the second quarter of this year.

Daily digest market movers: EUR/USD stays on sidelines as US Dollar rally stalls

• EUR/USD remains sideways as the rally in the US Dollar (USD) appears to have stalled. The USD faces pressure after weak United States (US) JOLTS Job Openings data for September has renewed fears of pain in the labor market. The US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, drops to near 104.20.
• Tuesday’s Job Openings data showed fresh vacancies stood at 7.443 million, lower than estimates of 7.99 million and the prior release of 7.861 million. Weak job openings pointed to a slower labor demand, which kept Federal Reserve (Fed) dovish bets for the remaining year afloat. According to an October 23-29 Reuters poll, the Fed will cut interest rates by 25 basis points (bps) in policy meetings in November and December.
• For more interest rate cues, investors will focus on the ADP Employment Change and the flash US Q3 GDP data, which will be published in the North American session. Economists expect the private sector to have added 115K new workers in October, lower than 143K in September. Meanwhile, the US economy is expected to have grown at a steady pace of 3.0% on an annualized basis.
• Later this week, investors will keep an eye on the Nonfarm Payrolls and the ISM Manufacturing PMI data for October, and the Personal Consumption Expenditure Price Index (PCE) data for September.

Technical Analysis: EUR/USD stays within tight range around 1.0800

EUR/USD consolidates around 1.0800 in European trading hours on Wednesday. The shared currency pair continues to hold above the upward-sloping trendline near 1.0750, which is plotted from the October 3, 2023, low at around 1.0450 on the daily time frame. However, the broader outlook of the major currency pair remains bearish as it stays below the 200-day Exponential Moving Average (EMA), which trades around 1.0900.

The downside move in the shared currency pair started after a breakdown of a Double Top formation on the daily time frame near the September 11 low at around 1.1000, which resulted in a bearish reversal.

The 14-day Relative Strength Index (RSI) remains in the 20.00-40.00 range, pointing to more downside ahead.

On the downside, the major pair could see more weakness towards the round-level support of 1.0700 if it slips below 1.0750. Meanwhile, the 200-day EMA near 1.0900, and the psychological figure of 1.1000 emerge as key resistances.

• NZD/USD moves downwards within a descending channel pattern, reinforcing a bearish bias.
• The nine-day EMA continues to stay below the 14-day EMA, adding to the prevailing bearish sentiment.
• The pair could target the lower boundary of the descending channel around the 0.5930 level.

The NZD/USD pair remains tepid for the fourth consecutive session, trading around 0.5970 during Wednesday's European session. Analysis of the daily chart shows a downward movement within a descending channel, indicating a bearish bias.

Adding to this outlook, the nine-day Exponential Moving Average (EMA) remains below the 14-day EMA, further supporting the bearish sentiment for the NZD/USD pair. Short-term momentum appears weak, suggesting continued downward pressure.

The 14-day Relative Strength Index (RSI), a key momentum indicator, currently hovers just above the 30 mark. A drop below this level would signal an oversold condition, potentially pointing to an upcoming upward correction for the NZD/USD pair.

On the downside, the NZD/USD pair could target the lower boundary of the descending channel around the 0.5930 level. A decisive break below this support might lead the pair toward the "pullback support" near 0.5850.

For resistance, the initial obstacle is the upper boundary of the descending channel, close to the nine-day Exponential Moving Average around 0.6006, followed by the 14-day EMA at 0.6033. A sustained move above these EMAs could shift the NZD/USD pair to a short-term bullish stance, potentially aiming for the psychological level of 0.6100.

NZD/USD: Daily Chart

• AUD/JPY loses ground after the release of lower-than-expected Australia's third-quarter inflation data.
• The monthly Australian CPI rose by 2.1% YoY in September, against the expected 2.3% and previous 2.7% readings.
• The Japanese Yen may struggle due to increased uncertainty surrounding the BoJ rate-hike intentions, following LDP coalition loss.

AUD/JPY extends its losses for the second successive session, trading around 100.50 during the early European hours on Wednesday. This downside of the AUD/JPY cross is attributed to the weaker Australian Dollar (AUD) following lower-than-expected Australia's third-quarter Consumer Price Index (CPI) data.

The Australian Bureau of Statistics reported that the Consumer Price Index (CPI) rose just 0.2% quarter-over-quarter in the third quarter, down from 1.0% in the previous quarter and slightly below the anticipated 0.3%. The monthly CPI rose by 2.1% year-over-year in September, coming in below market expectations of 2.3% and down from August's reading of 2.7%.

However, the downside of the AUD could be restrained due to the hawkish sentiment surrounding the Reserve Bank of Australia's (RBA) regarding its policy outlook. The Reserve Bank of Australia signaled that the current cash rate of 4.35% is sufficiently restrictive to guide inflation back to the target range of 2%-3% while continuing to support employment. As a result, a rate cut in November appears unlikely.

The Japanese Yen (JPY) may encounter pressure due to ongoing uncertainty surrounding the Bank of Japan’s (BoJ) rate-hike intentions, especially after the ruling Liberal Democratic Party (LDP) coalition lost its parliamentary majority in Sunday’s election.

Japan’s Economy Minister Ryosei Akazawa remarked on Tuesday that a weaker Yen could drive up prices via higher import costs, potentially reducing real household income and dampening private consumption if wage growth does not keep pace.

The Bank of Japan’s interest rate decision, scheduled for Thursday, remains a focal point, with nearly 86% of economists surveyed by Reuters anticipating that the central bank will hold rates steady at its October meeting.

• The United States Gross Domestic Product is expected to grow at an annualised rate of 3.0% in Q3.
• The US economy continues to outperform its G10 peers. 
• Investors anticipate the Federal Reserve will reduce interest rates by 25 bps in November.

The US Bureau of Economic Analysis (BEA) is scheduled to release the preliminary estimate of the US Gross Domestic Product (GDP) for the July-September quarter on Wednesday. Analysts anticipate that the report will indicate an annualised economic growth rate of 3.0%, matching the expansion recorded in the previous quarter.

Unveiling US economic growth: GDP forecast insights

This Wednesday, the US Bureau of Economic Analysis (BEA) is set to release the first estimate of the Gross Domestic Product (GDP) for the third quarter (July-September) at 12:30 GMT. Initial projections point to an annualised economic growth rate of 3.0%, in line with the expansion seen in the previous period and indicating a robust pace for the domestic economy, which continues to outpace its G10 counterparts.

The updated Summary of Economic Projections at the Federal Reserve’s (Fed) September meeting revealed several changes from June. The Fed’s median forecast for real GDP growth remained mostly steady at 2.0% for 2024, 2025 and 2026, and 1.8% for the long term.

The Fed also announced that it had raised the median unemployment rate projections to 4.4% for both 2024 and 2025, 4.3% for 2026 and 4.2% in the long run, up from the previous estimates of 4.0%, 4.2%, 4.1% and 4.2%, respectively.

Regarding inflation, the Fed reported that the median estimate for the core Personal Consumption Expenditures (PCE) price index was revised down to 2.6% for 2024, 2.2% for 2025 and 2.0% for 2026,from earlier projections of 2.8%, 2.3% and 2.0%.

The latest GDPNow forecast from the Federal Reserve Bank of Atlanta, released on Friday, projects that the US economy expanded at an annual rate of 3.3% in the third quarter.

Market observers will be paying close attention to the GDP Price Index, which tracks changes in the prices of goods and services produced domestically, including exports but excluding imports. This index provides a clear view of how inflation is affecting GDP. For the third quarter, the GDP Price Index is expected to increase by 2.7%, up from the 2.5% rise seen in the second quarter.

Along withthe GDP Price Index, the upcoming GDP report will include the quarterly Personal Consumption Expenditures (PCE) Price Index and the core PCE Price Index. These metrics are crucial for assessing inflation, with the core PCE Price Index being the Federal Reserve’s preferred measure.

Ahead of the GDP release, analysts at TD Securities shared their insights: “US Q3 GDP strength is likely to persist with a 3% gain, driven by strong domestic demand and a resilient consumer base.”

When will the GDP print be released, and how can it affect the USD?

The US GDP report will be published at 12:30 GMT on Wednesday. In addition to the headline real GDP figure,changes in private domestic purchases, the GDP Price Index and the Q3 PCE Price Index figures could impact the US Dollar’s (USD) valuation.

Sticky inflation readings in September, combined with the still robust US labour market, have recently fuelled expectations for a smaller Fed rate cut in November.

According to the CME FedWatch Tool, a 25 basis points (bps) rate reduction in November is almost fully priced in.

Looking at the USD, a firm GDP could provide the Fed with additional justification to go for the small option at next month’s meeting. On the other hand, a disappointing GDP print—albeit unlikely—could motivate the Greenback to take a momentary breather, if any at all.

Pablo Piovano, Senior Analyst at FXStreet, gives his view on the technical outlook for the US Dollar Index (DXY): “Amidst the ongoing rally in the US Dollar Index (DXY), the next key target is the October 29 high of 104.63 (October 29). Once this region is cleared, the index could embark on a potential test of the weekly top of 104.79 (July 30).”

“On the downside, strong support remains at the year-to-date low of 100.15 (September 27). Should selling pressure reappear and the DXY breach this level, it may retest the psychological 100.00 milestone, potentially leading to a drop to the 2023 low of 99.57 (July 14)”, added Pablo.

• GBP/USD weakens to near 1.3005 in Wednesday’s early European session. 
• The bearish outlook of the pair remains intact below the 100-period EMA. 
• The first downside target to watch is 1.2943; the immediate resistance level emerges at 1.3016. 

The GBP/USD pair trades in negative territory around 1.3005 on Wednesday during the early European trading hours. Investors will closely monitor the UK Autumn Budget 2024. The UK government is set to deliver Labour’s first budget in almost 15 years on Wednesday. Commerzbank analysts said that if the budget combines austerity with the hope of tackling long-term investment, “this should be positive for the pound as it would strengthen the U.K.’s long-term growth potential.”

GBP/USD keeps the bearish vibe on the 4-hour chart as the major pair is below the key 100-period Exponential Moving Average (EMA). Nonetheless, the Relative Strength Index (RSI) stands above the 50-midline near 57.60, indicating that further upside cannot be ruled out in the near term. 

The lower limit of the Bollinger Band at 1.2943 acts as an initial support level for GBP/USD. A breach of this level could expose the 1.2910-1.2900 region, portraying the low of October 24 and the psychological figure. The next contention level to watch is 1.2813, the low of August 14.

On the bright side, the upper boundary of the Bollinger Band at 1.3016 acts as the first upside barrier for the major pair. Extended gains could pave the way to the 100-period EMA at 1.3032. The next hurdle is located at 1.3071, the high of October 18.

GBP/USD 4-hour chart

Here is what you need to know on Wednesday, October 30:

The action in foreign exchange markets remain subdued early Wednesday as investors gear up for key macroeconomic data releases. The European economic docket will feature inflation and Gross Domestic Product (GDP) data for Spain, Italy and Germany, as well as GDP figures for the Eurozone. Later in the day, ADP Employment Change data from the US will be watched closely and the US Bureau of Economic Analysis will publish the first estimate of the annualized GDP growth for the third quarter. 

After edging higher during the European trading hours on Tuesday, the US Dollar (USD) Index lost its traction on disappointing JOLTS Job Openings data for September and closed the day virtually unchanged. Early Wednesday, the index continues to move sideways above 104.00. Meanwhile, US stock index futures trade marginally higher following the mixed action seen in Wall Street on Tuesday. The US GDP report will also include quarterly Personal Consumption Expenditures (PCE) Price Index readings.

EUR/USD fell below 1.0800 on Tuesday but staged a rebound in the American session to end the day flat. The pair holds steady at around 1.0820 to begin the European session. In addition to above-mentioned data, the European Commission will publish business and consumer sentiment figures for October.

GBP/USD registered small gains and closed above 1.3000 on Tuesday. The pair stays in a consolidation phase early Wednesday. The UK government will release the Autumn Forecast Statement and unveil the Autumn Budget later in the day.

During the Asian trading hours, the data from Australia showed that the Consumer Price Index (CPI) rose 0.2% on a quarterly basis in the third quarter. This reading followed the 1% increase recorded in the second quarter and came in slightly below the market expectation of 0.3%. On a yearly basis, the CPI rose 2.8%, compared to analysts' estimate of 2.9%. AUD/USD stays under modest bearish pressure and trades near 0.6550 in the European morning on Wednesday.

USD/JPY failed to gather directional momentum and ended the day flat on Tuesday. The pair stays relatively quiet early Wednesday and fluctuates in a narrow band above 153.00.

Gold gathered bullish momentum and gained more than 1% on Tuesday. XAU/USD continues to stretch higher toward $2,800 and trades at a new record-high on Wednesday.

FX option expiries for Oct 30 NY cut at 10:00 Eastern Time, via DTCC, can be found below.

EUR/USD: EUR amounts

• 1.0750 991m
• 1.0775 1.1b
• 1.0800 918m
• 1.0850 1.7b
• 1.0925 1.2b

USD/JPY: USD amounts                     

• 151.00 686m
• 152.00 844m
• 152.50 898m
• 154.00 783m

USD/CHF: USD amounts     

• 0.8575 455m
• 0.8635 480m

AUD/USD: AUD amounts

• 0.6555 927m
• 0.6600 1b
• 0.6675 747m

USD/CAD: USD amounts       

• 1.3800 2b
• 1.3810 2.5b
• 1.3820 1.3b
• 1.3950 795m

• EUR/JPY drifts lower to around 165.75 in Wednesday’s early European session. 
• The constructive outlook of the cross remains intact, with the bullish RSI indicator. 
• The immediate resistance level emerges at the 166.00-166.10 region; the first support level is seen at 165.16.

The EUR/JPY cross weakens to near 165.75 during the early European trading session on Wednesday. The anticipation that the European Central Bank (ECB) would cut its Deposit Facility Rate again this year exerts some selling pressure on the Euro (EUR). 

According to the 4-hour chart, the positive outlook of EUR/JPY prevails as the cross holds above the key 100-period Exponential Moving Average (EMA). Additionally, the upward momentum is supported by the Relative Strength Index (RSI), which stands above the midline near 62.20, supporting the buyers in the near term. 

The first upside barrier for the cross emerges at the 166.00-166.10 zone, representing the high of October 29 and the psychological level. A decisive break above this level could see a rally to 166.55, the upper boundary of the Bollinger Band. The next resistance level is located at 167.95, the high of July 30. 

On the downside, the initial support level for EUR/JPY is seen at 165.16, the low of October 29. Any follow-through selling below the mentioned level could see a drop to 164.32, the low of October 26. The additional downside filter to watch is 164.06, the lower limit of the Bollinger Band. 

EUR/JPY 4-hour chart

• USD/CHF may appreciate further as US Treasury yields advance.
• The US Dollar receives support amid prevailing uncertainty surrounding the US presidential election.
• The safe-haven CHF may face challenges due to easing concerns over a potential all-out war in the Middle East.

USD/CHF steadies with a bias of extending gains for the second consecutive day amid higher US Dollar (USD) and improved Treasury yields. The pair trades around 0.8670 during the Asian hours on Wednesday. The US Q3 Gross Domestic Product (GDP) figures and October's ADP Employment Change are set to be released later in the North American session.

The US Dollar Index (DXY), which measures the value of the US Dollar against six other major currencies, trades around 104.30 with 2-year and 10-year yields on US Treasury bonds standing at 4.09% and 4.24%, respectively, at the time of writing.

Regarding the US presidential election, a three-day poll conducted by Reuters/Ipsos, which concluded on Sunday and was released on Tuesday, indicated that the race is essentially tied as the November 5 election approaches. Vice President Kamala Harris, the Democratic candidate, has seen her lead over Republican nominee Donald Trump narrow to just one percentage point, with 44% support compared to Trump's 43%.

The demand for the safe-haven Swiss Franc (CHF) may decline due to easing concerns over a potential all-out war in the Middle East. An Axios reporter posted on X that Israeli Prime Minister Benjamin Netanyahu would soon meet with several ministers and military and intelligence leaders to discuss a diplomatic resolution to the war in Lebanon, per Reuters.

Traders are expected to monitor the Swiss Consumer Price Index (CPI) for October and the Real Retail Sales for September, both set to be released on Friday. These data points could provide insights into the economic conditions in Switzerland.

• GBP/JPY pulls back from a multi-month peak, though the downside potential seems limited.
• The BoJ rate-hike uncertainty could undermine the JPY and lend some support to the cross. 
• Traders look to the UK Autumn Budget for short-term impetus ahead of the BoJ on Thursday.

The GBP/JPY cross edges lower during the Asian session on Wednesday and erodes a part of the previous day's gains to over a three-month peak, around the 199.70 region. Spot prices, however, lack follow-through selling and manage to hold above the 199.00 mark as trades look to the UK Autumn Budget for some meaningful impetus.

This will be the first budget announcement under the recently elected Labour government where Rachel Reeves, UK Chancellor of the Exchequer, is expected to raise taxes and increase public spending as suggested by Prime Minister Keir Starmer. Traders will keenly focus on the overall spending plans as it will influence the Bank of England’s (BoE) interest rate path, which, in turn, should influence the British Pound (GBP) and provide some meaningful impetus to the GBP/JPY cross. 

In the meantime, the possibility of more BoE rate cuts in November and December, bolstered by a fall in the UK Consumer Price Index to the lowest level since April 2021 and below the central bank's 2% target, is seen acting as a headwind for the GBP. The Japanese Yen (JPY), on the other hand, draws some support from fears that authorities will intervene in the market to prop up the domestic currency. This turns out to be another factor exerting some pressure on the GBP/JPY cross. 

Meanwhile, the loss of a parliamentary majority by Japan's ruling coalition raised doubts over the Bank of Japan's (BoJ) ability to tighten its monetary policy further. This, along with the prevalent risk-on environment, might keep a lid on any meaningful appreciating move for the JPY and help limit the downside for the GBP/JPY cross. Hence, any subsequent slide might still be seen as a buying opportunity, warranting some caution before confirming that spot prices have topped out.

• EUR/USD inches lower ahead of key economic data from the Eurozone and Germany.
• The risk-sensitive EUR may further depreciate due to prevailing uncertainty surrounding the US presidential election.
• Traders will shift their focus to US Gross Domestic Product (GDP) and ADP Employment Change data later in the day.

EUR/USD loses ground after two days of gains, trading around 1.0810 during the Asian hours on Wednesday. The Euro receives downward pressure as the European Central Bank (ECB) is widely anticipated to reduce its Deposit Facility Rate once again. Money markets are currently pricing in nearly a 50% chance of a 50 basis point rate cut during the December meeting.

Investors will closely watch preliminary Gross Domestic Product (GDP) data from Germany and the Eurozone, as well as Germany’s preliminary Harmonized Index of Consumer Prices (HICP) data, which are scheduled for release on Wednesday. The focus will shift to the preliminary US Q3 Gross Domestic Product (GDP) figures and October's ADP Employment Change release on Wednesday.

Recently, ECB policymakers have expressed varying views on monetary policy. Pierre Wunsch, the Governor of the National Bank of Belgium, noted that there is no pressing need for the central bank to speed up interest rate cuts, suggesting it could even accommodate a modest rate. In contrast, Mario Centeno, Governor of the Bank of Portugal, advocated for considering a 50 basis point rate cut as a viable option for December.

The downside of the EUR/USD pair could also be attributed to the higher US Dollar (USD) amid improved Treasury yields. The US Dollar Index (DXY), which measures the value of the US Dollar against six other major currencies, trades around 104.30 with 2-year and 10-year yields on US Treasury bonds standing at 4.09% and 4.24%, respectively, at the time of writing.

The risk-sensitive EUR/USD pair may further depreciate amid ongoing uncertainty surrounding the US presidential election. A three-day poll conducted by Reuters/Ipsos, which concluded on Sunday and was released on Tuesday, indicated that the race is essentially tied as the November 5 election approaches.

Vice President Kamala Harris, the Democratic candidate, has seen her lead over Republican nominee Donald Trump narrow to just one percentage point, with 44% support compared to Trump's 43%.

Gold prices rose in India on Wednesday, according to data compiled by FXStreet.

The price for Gold stood at 7,514.59 Indian Rupees (INR) per gram, up compared with the INR 7,500.72 it cost on Tuesday.

The price for Gold increased to INR 87,648.67 per tola from INR 87,486.93 per tola a day earlier.

FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.

(An automation tool was used in creating this post.)

• USD/CAD continues to attract buyers and draw support from a combination of factors. 
• Bets for a larger BoC rate cut, along with bearish Crude Oil prices, undermine the Loonie.
• Expectations for a less aggressive Fed easing lend support to the Greenback and the pair.

The USD/CAD pair trades near its highest level since August 5, around the 1.3920-1.3925 region during the Asian session on Wednesday and seems poised to prolong its recent upward trajectory witnessed over the past month or so. A combination of factors might continue to weigh on the Canadian Dollar (CAD), which, along with the emergence of some US Dollar (USD) dip-buying, validate the near-term positive outlook for the currency pair. 

The Bank of Canada (BoC) Governor Tiff Macklem sounded dovish last Friday and said that the headline GDP will be lower if population growth slows faster than assumed. Furthermore, Macklem, speaking to the House of Commons finance committee on Tuesday, reiterated that the central bank would be able to cut rates further if the economy evolved broadly in line with forecasts. Adding to this, the recent slump in Crude Oil prices, triggered by concerns about flagging global demand growth, is seen undermining the commodity-linked Loonie and acting as a tailwind for the USD/CAD pair. 

The US Dollar (USD), on the other hand, attracts some dip-buying and stalls the previous day's modest pullback from its highest level since July 30 amid growing acceptance that the Federal Reserve (Fed) will proceed with smaller rate cuts. Adding to this concerns that the spending plans of Vice President Kamala Harris and the Republican nominee Donald Trump will further increase the deficit remain supportive of elevated US Treasury bond yields. This, in turn, supports prospects for a further USD appreciation and suggests that the path of least resistance for the USD/CAD pair is to the upside. 

Traders, however, might refrain from placing aggressive bets and opt to move to the sidelines ahead of key US macro releases, featuring the ADP report on private-sector employment and the Advance Q3 GDP print. The market attention will then shift to the US Personal Consumption Expenditure (PCE) Price Index on Thursday and the closely watched US Nonfarm Payrolls (NFP) report on Friday. The data should provide fresh cues about the Fed's interest rate outlook, which, in turn, will influence the USD price dynamics and help determine the next leg of a directional move for the USD/CAD pair.

• Gold price continues scaling new all-time peaks amid US election jitters, Middle East woes.
• The momentum seems unaffected by elevated US Treasury bond yields and a bullish USD.
• Traders now look forward to important US macro data before positioning for further gains.

Gold prices (XAU/USD) climbs to a fresh record high during the Asian session on Wednesday as uncertainties surrounding the US presidential election, and the Middle East conflict continue to boost demand for traditional safe-haven assets. Apart from this, a modest pullback in the US Treasury bond yields and subdued US Dollar (USD) price action benefit the precious metal. The supporting factors, to a larger extent, overshadow the upbeat market mood, which tends to undermine the commodity. 

Even expectations for smaller interest rate cuts by the Federal Reserve (Fed) and elevated US Treasury bond yields do little to hider the underlying bullish sentiment surrounding the non-yielding Gold price. It, however, remains to be seen if bulls can build on the momentum amid slightly overbought conditions on the daily chart and ahead of key US macro releases. The data might provide cues about the Fed's rate outlook and determine the next leg of a directional move for the XAU/USD. 

Daily Digest Market Movers: Gold price benefits from US political uncertainty and Middle East tensions

• Republican former US President Donald Trump and Democratic Vice President Kamala Harris are caught in a tight race for the White House, fueling political uncertainty and pushing the Gold price to a fresh record high on Wednesday.
• An Israeli strike on a residential building in northern Gaza killed nearly 100 people on Tuesday. This comes days after the Israeli military confirmed on Sunday that the air force had conducted a precise strike targeting Hamas fighters.
• The development raises the risk of a further escalation of tensions in the Middle East and contributes to the bid tone surrounding the safe-haven XAU/USD, offsetting the recent surge in the US Treasury bond yields and the US Dollar. 
• The incoming US macro data suggested that the US economy remains on a strong footing, reaffirming market expectations for a less aggressive policy easing by the Federal Reserve and the prospects for smaller interest rate cuts.
• The Conference Board reported on Tuesday the US Consumer Confidence Index registered its largest single-month gain since March 2021 and rose to a nine-month high of 108.7 in October, from September's upwardly revised 99.2.
• This reflected optimism in business conditions and the job market, overshadowing the disappointing Job Openings and Labor Turnover Survey, or JOLTS report, which showed that vacancies fell to more than a 3-1/2-year low in September.
• Apart from this, deficit-spending concerns after the November 5 US presidential election keep the US bond yields elevated near a multi-month top, which, however, do little to hinder the precious metal's follow-through positive move. 
• Traders now look to Wednesday's US economic docket, featuring the release of the ADP report on private-sector employment and the Advance GDP print, which is expected to show that the economy grew by a 3% annualized pace in Q3.
• The market attention will then shift to the US Personal Consumption Expenditure (PCE) Price Index – the Fed's preferred inflation gauge – on Thursday and the closely-watched US Nonfarm Payrolls (NFP) report on Friday.

Technical Outlook: Gold price flirts with multi-month ascending trend-line hurdle amid overbought RSI

From a technical perspective, the overnight breakout above a one-week-old trading range was seen as a fresh trigger for bulls. The subsequent move up lifts the Gold price to an ascending trend-line resistance extending from early July, currently pegged near the $2,780-2,785 region, which could now act as a strong barrier amid a slightly overbought Relative Strength Index (RSI) on the daily chart. A sustained strength beyond the said barrier, however, could lift the XAU/USD further towards the $2,800 mark.

On the flip side, any meaningful corrective slide now seems to find decent support near the trading range hurdle breakpoint, around the $2,750 region. Some follow-through selling could make the Gold price vulnerable to extend the fall further towards the $2,732-2,730 intermediate support en route to the $2,715 area. This is followed by the $2,700 mark, which if broken should pave the way for a decline towards the next relevant support near the $2,675 zone en route to the $2,657-2,655 region.

• The Indian Rupee remains steady in Wednesday’s Asian session. 
• Rising US Treasury yields and significant foreign outflows could weigh on the INR; RBI’s intervention might cap its downside. 
• Investors await the advanced US Q3 GDP data for fresh impetus. 

The Indian Rupee (INR) trades flat on Wednesday amid the consolidation of the US Dollar (USD). Rising US Treasury bond yields and sustained foreign outflows from domestic stocks might exert some selling pressure on the INR. Nonetheless, a further decline in crude oil prices might support the Indian Rupee as India is the world's third-largest oil consumer. Additionally, the downside for the INR might be limited as the RBI has been intervening regularly to prevent the local currency from depreciating. 

Looking ahead, traders will keep an eye on the US October ADP Employment Change, the advanced US Q3 Gross Domestic Product (GDP), and September Pending Home Sales, which are due later on Wednesday. The Indian market will be closed on Friday for the occasion of Diwali. 

Daily Digest Market Movers: Indian Rupee flat lines ahead of the key US economic data

• Foreign investors have withdrawn $10 billion from India's equity and debt markets in October, the heaviest month of selling this year.
• The RBI has projected the Indian economy to grow at 7.2% in FY25, with Q2 at 7.0%, Q3 at 7.4%, and Q4 at 7.4%.
• Nomura noted that the Indian economy has entered a phase of "cyclical growth slowdown" and the RBI's estimate of 7.2% GDP expansion is "overly optimistic." 
• Job openings arrived at 7.44 million, compared to the 7.86 million (revised from 8.4 million) seen in August, according to the US Bureau of Labor Statistics (BLS) in the Job Openings and Labor Turnover Survey (JOLTS) on Tuesday. This figure came in below the market expectation of 7.99 million. 
• The US Conference Board’s Consumer Confidence Index rose to 108.7 in October from an upwardly revised 99.2 in September, beating the estimation of 99.5.
• Traders have priced in nearly 98.4% odds of a 25 bps rate cut by the Fed in the November meeting, according to the CME FedWatch tool. 

Technical Analysis: USD/INR keeps the bullish vibe in the longer term

The Indian Rupee trades on a flat note on the day. The constructive outlook of the USD/INR pair remains unchanged, with the price holding above the key 100-day Exponential Moving Average (EMA) on the daily timeframe. The path of least resistance level is to the upside, as the 14-day Relative Strength Index (RSI) stands above the midline near 59.20. 

The immediate resistance level for the pair emerges at the upper boundary of the ascending trend channel of 84.22. Extended gains could pave the way to 84.50, followed by the 85.00 psychological level. 

On the other hand, sustained trading below the lower limit of the trend channel near 84.05 could expose USD/INR to a possible move down to 83.76, the 100-day EMA. 

• Silver price may regain its ground due to market caution ahead of the US presidential election.
• Silver prices faced challenges as the Israeli PM Netanyahu may discuss a diplomatic resolution to the war in Lebanon.
• The dollar-denominated Silver received support from a lower US dollar and Treasury yields ahead of US data releases this week.

Silver prices (XAG/USD) dips slightly to around $34.30 during the Asian trading hours on Wednesday. However, Silver gained over 2% on Tuesday amid ongoing uncertainty surrounding the US presidential election.

A three-day poll conducted by Reuters/Ipsos, which concluded on Sunday and was released on Tuesday, indicated that the race is essentially tied as the November 5 election approaches. Vice President Kamala Harris, the Democratic candidate, has seen her lead over Republican nominee Donald Trump narrow to just one percentage point, with 44% support compared to Trump's 43%.

Silver prices might have encountered difficulties due to safe-haven flows, following an Axios reporter post on X that Israeli Prime Minister Benjamin Netanyahu is set to meet with various ministers and military and intelligence leaders to discuss a diplomatic resolution to the war in Lebanon, according to Reuters.

The dollar-denominated commodity, like Silver, typically benefits from a weaker US dollar and lower Treasury yields as traders exercise caution ahead of significant US economic data releases this week. A declining US dollar makes Silver more affordable for foreign buyers, which can boost demand for the precious metal.

The preliminary US Q3 Gross Domestic Product (GDP) figures and October's ADP Employment Change are set to be released on Wednesday. Additionally, US PCE inflation and Nonfarm Payrolls will be closely monitored on Thursday and Friday, respectively.

Investors are also anticipating the upcoming meeting of China's parliament, scheduled for November 4-8, as reported by state media on Friday. There is considerable interest in the gathering of the standing committee of the National People’s Congress, which is expected to provide updates on potential fiscal stimulus measures.

• WTI price receives some support from a drop in US crude oil inventories.
• API Weekly Crude Oil Stock fell by 0.573 million barrels in the previous week, against an expected 2.3 million-barrel increase.
• An Axios reporter stated that Israeli Prime Minister Benjamin Netanyahu would discuss a diplomatic resolution to the war in Lebanon.

West Texas Intermediate (WTI) Oil price steadies around $67.40 during Wednesday’s Asian session, following two days of declines. Crude Oil prices found support from a surprise drop in US crude oil inventories.

Data from the American Petroleum Institute (API) on Tuesday showed that US weekly crude Oil stockpiles fell by 0.573 million barrels in the week ending October 25, contrary to expectations of a 2.3 million-barrel increase. The previous week's stock level was 1.643 million barrels. Investors now await the EIA crude oil stockpiles report, due Wednesday.

On Tuesday, Oil prices faced downward pressure after an Axios reporter stated on X that Israeli Prime Minister Benjamin Netanyahu would soon meet with several ministers and military and intelligence leaders to discuss a diplomatic resolution to the war in Lebanon, per Reuters.

However, the US plan to purchase Oil for its Strategic Petroleum Reserve (SPR) provided some support for WTI prices. On Monday, the US announced intentions to acquire up to 3 million barrels for delivery by May next year. This purchase could deplete the remaining funds available for SPR replenishment until further funding is approved by Congress.

Crude Oil prices may encounter challenges as the OPEC+ alliance, which includes the Organization of the Petroleum Exporting Countries and partners like Russia, plans to begin easing its production cuts in December, aiming for an increase of 180,000 barrels per day (bpd).

• NZD/USD softens to around 0.5970 in Wednesday’s Asian session.
• The dovish stance of the RBNZ weighs on the Kiwi, but the additional China stimulus plans might cap its downside. 
• Investors will monitor the advanced US Q3 GDP, which will be published on Wednesday. 

The NZD/USD pair remains on the defensive near 0.5970 during the Asian trading hours on Wednesday. The dovish stance of the Reserve Bank of New Zealand (RBNZ) continues to weigh on the pair. Investors will take more cues from the advanced US Gross Domestic Product (GDP) for the third quarter and the US ADP Employment Change for October on Wednesday. 

Goldman Sachs analysts expect a possible more aggressive rate cut from the RBNZ. Goldman forecasts 50 bps rate cuts in both November and February, with an elevated risk of a 75 bps cut in November. The dovish outlook of the New Zealand central bank is likely to undermine the New Zealand Dollar (NZD) in the near term. 

China is considering issuing around 10 trillion yuan ($1.4 trillion) in extra debt in the next years to revive its sluggish economy, per Reuters. The positive development surrounding China’s fresh stimulus measures might support the China-proxy Kiwi as China is a major trading partner to New Zealand.

The expectation of less aggressive rate cuts from the US Federal Reserve (Fed) this year lifts the Greenback. Traders have priced in a nearly 98.4% chance of a 25 bps rate cut by the Fed in the November meeting. 

The US Department of Labor showed on Tuesday that the JOLTS Job Openings and Labor Turnover Survey for September fell to its lowest level in three and a half years, missing expectations.

Meanwhile, the Conference Board (CB) Consumer Confidence for October registered the highest in nine months as perceptions of the labor market improved. Investors will shift their attention to the US Q3 GDP data on Wednesday ahead of the highly-anticipated Nonfarm Payrolls (NFP) data. 

• The Japanese Yen trades with a mild positive bias on Wednesday, albeit it lacks bullish conviction.
• The BoJ rate-hike uncertainty, along with the upbeat market mood, caps the upside for the JPY.
• Traders also seem reluctant ahead of the BoJ decision and important US macro data this week.

The Japanese Yen (JPY) edges higher against its American counterpart during the Asian session on Wednesday amid fears that authorities will intervene in the market to prop up the domestic currency. The uptick, however, lacks bullish conviction amid expectations that the loss of the parliamentary majority by Japan's ruling coalition could make it difficult for the Bank of Japan (BoJ) to tighten its monetary policy further. Furthermore, the upbeat market mood is seen as another factor that is acting as a headwind for the safe-haven JPY.

Traders also seem reluctant to place aggressive directional bets and might opt to wait on the sidelines ahead of the crucial BoJ decision on Thursday. Apart from this, investors this week will confront important US macro data – the Advance Q3 GDP print later today, the Personal Consumption Expenditure (PCE) Price Index on Thursday and the Nonfarm Payrolls (NFP) report on Friday. This will play a key role in influencing the near-term US Dollar (USD) price dynamics and provide some meaningful impetus to the USD/JPY pair. 

Daily Digest Market Movers: Japanese Yen bulls remain on the sidelines amid diminishing odds for further BoJ policy tightening

• Japan's Economy Minister Ryosei Akazawa said on Tuesday that a weak yen can push up prices through higher import costs and if wages are not rising as much, this would push down real household income and depress private consumption.
• Earlier Japan's Finance Minister Katsunobu Kato reiterated that the authorities will closely monitor FX moves, including those driven by speculators, with a higher sense of vigilance, fueling speculations about a potential government intervention.
• The political turmoil in Japan adds to a layer of uncertainty about the Bank of Japan's rate-hike plans, which, in turn, should keep a lid on any meaningful appreciating move for the Japanese Yen on the back of the prevalent risk-on environment. 
• The US Dollar remains on the defensive below its highest level since July 30 set on Tuesday and drags the USD/JPY pair away from a three-month top, though the downside seems limited ahead of this week's key central bank event/data risks. 
• The BoJ is scheduled to announce its policy decision at the end of a two-day meeting on Thursday. Investors this week will also confront important US macro releases, which might provide fresh cues about the Federal Reserve's rate outlook. 
• Investors are pencilling in a slower pace of interest rate cuts by the Fed as a series of upbeat economic data released recently pointed to the underlying strength of the US economy, which has been pushing the US Treasury bond yields higher. 
• The Conference Board reported on Tuesday the US Consumer Confidence Index registered its largest single-month gain since March 2021 and rose to 108.7 in October – a nine-month high – from an upwardly revised 99.2 in the prior month.
• This reflected optimism in business conditions, the job market and incomes, offsetting a rather disappointing Job Openings and Labor Turnover Survey, or JOLTS report, which showed that vacancies fell to more than a 3-1/2-year low in September.
• Adding to his, concerns that the spending plans of Vice President Kamala Harris and the Republican nominee Donald Trump will further increase the budget deficit, which further contributed to the recent upsurge in the US bond yields. 
• Traders now look to Wednesday's US economic docket, featuring the release of the ADP report on private-sector employment and the Advance GDP report, which is expected to show that the economy expanded by a 3% annualized pace in Q3.

Technical Outlook: USD/JPY continues with its struggle to find acceptance above the 61.8% Fibo. level and remains below 154.00

From a technical perspective, last week's breakout through the 150.65 confluence – comprising the 100-day Simple Moving Average (SMA) and the 50% Fibonacci retracement level of the July-September downfall – was seen as a fresh trigger for bulls. That said, this week's repeated failures to find acceptance or build on the momentum beyond the 61.8% Fibo. level warrants some caution. Moreover, the Relative Strength Index (RSI) on the daily chart remains close to the overbought zone, making it prudent to wait for some near-term consolidation or a modest pullback before positioning for further gains. 

Any subsequent slide below the 153.00 mark, however, is likely to find some support near the overnight swing low, around the 152.75 region, ahead of the 152.40 area, or the weekly through. Some follow-through selling could drag the USD/JPY pair to the 152.00 mark en route to the 151.45 support and the 151.00 mark. The downward trajectory could extend further towards challenging the 150.65 confluence resistance breakpoint, which should now act as a key pivotal point and a strong base for spot prices.

On the flip side, the 153.85-153.90 region now seems to have emerged as an immediate strong barrier. A sustained strength beyond, leading to a breakout through the 154.00 mark, could lift the USD/JPY pair beyond the 154.35-154.40 supply zone, towards reclaiming the 155.00 psychological mark. Spot prices could eventually climb to test the late-July swing high, around the 155.20 region.

• The Australian Dollar remains elevated after a release of lower-than-expected CPI data on Wednesday.
• The monthly Australian CPI rose by 2.1% YoY in September, coming in below the expected 2.3% and previous 2.7% readings.
• The US Dollar may appreciate due to market caution persisting amid uncertainty surrounding the US presidential election and US data.

The Australian Dollar (AUD) edges higher against the US Dollar (USD) despite lower-than-expected Australia's third-quarter Consumer Price Index (CPI) data released on Wednesday. The upside of the AUD could be attributed to the hawkish sentiment surrounding the Reserve Bank of Australia's (RBA) regarding its policy outlook.

The Australian Bureau of Statistics reported that the Consumer Price Index (CPI) rose just 0.2% quarter-over-quarter in the third quarter, down from 1.0% in the previous quarter and slightly below the anticipated 0.3%. The monthly CPI rose by 2.1% year-over-year in September, coming in below market expectations of 2.3% and down from August's reading of 2.7%.

The US Dollar saw a slight downward correction as US Treasury yields edged lower. However, the USD’s downside may be limited, with market caution persisting due to uncertainty surrounding the upcoming US presidential election and anticipation of key US economic data releases.

Traders will likely watch the upcoming release of preliminary US Q3 Gross Domestic Product (GDP) figures and October’s Nonfarm Payrolls (NFP) report, as these could offer important insights into the timing and pace of the Federal Reserve’s (Fed) expected rate cuts.

Daily Digest Market Movers: Australian Dollar inches higher due to hawkish RBA

• The positive US economic data from last week indicates continued resilience in the economy. This supports the sentiment of nominal interest rate cuts by the Federal Reserve (Fed) in November. According to the CME FedWatch Tool, there is a 98.4% probability of a 25-basis-point rate cut by the Fed in November, with no expectation of a more substantial 50-basis-point cut.
• Australia’s CPI fell to 2.8% year-over-year from the prior 3.8%, marking the lowest level since Q1 2021 and coming in below market forecasts of 2.9%.
• The US Bureau of Labor Statistics (BLS) reported on Tuesday that JOLTS Job Openings reached 7.443 million in September, down from 7.861 million in August and falling short of the market expectation of 7.99 million.
• The Reserve Bank of Australia signaled that the current cash rate of 4.35% is sufficiently restrictive to guide inflation back to the target range of 2%-3% while continuing to support employment. As a result, a rate cut in November appears unlikely.
• ANZ-Roy Morgan Australia Consumer Confidence dropped to 86.4 this week, down from 87.5 the previous week.
• Last week, Federal Reserve Bank of San Francisco President Mary Daly stated in a post on the social media platform X that the economy is clearly in a better position, with inflation having fallen significantly and the labor market returning to a more sustainable path.
• RBA Deputy Governor Andrew Hauser highlighted the country's strong labor participation rate last week and stressed that although the RBA relies on data, it is not overly fixated on it.

Technical Analysis: Australian Dollar remains above 0.6550 within the descending channel

AUD/USD trades near 0.6560 on Wednesday, with daily chart analysis indicating a short-term bearish bias as the pair remains within a descending channel. However, the 14-day Relative Strength Index (RSI) sits at 30, signaling an oversold condition that may lead to an upward correction.

On the support side, the AUD/USD pair could test the descending channel's lower boundary around 0.6520, followed by the psychological level of 0.6500.

For resistance, the first hurdle lies at the upper boundary of the descending channel near 0.6590, with a psychological level of 0.6600 above that. A breakout above the latter could pave the way for the AUD/USD pair to reach the nine-day Exponential Moving Average (EMA) at 0.6619.

AUD/USD: Daily Chart

On Wednesday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.1390, as compared to the previous day's fix of 7.1283 and 7.1398 Reuters estimates.

• GBP/USD edges lower to near 1.3010 in Wednesday’s early Asian session.
• Job openings fell more than expected in September. 
• Traders brace for the UK’s Autumn Budget, advanced US Q3 GDP data, which will be released on Wednesday.

The GBP/USD pair weakens around 1.3010 despite the consolidation of the US Dollar (USD) during the early Asian session on Wednesday. Investors await the release of the UK’s Autumn Budget, the US October ADP Employment Change for October and the advanced US Q3 Gross Domestic Product (GDP), which are due later on Wednesday.

The US Bureau of Labor Statistics (BLS) reported in the Job Openings and Labor Turnover Survey (JOLTS) on Tuesday that Job openings came in at 7.443 million, followed the 7.861 million (revised from 8.04 million) seen in August, and came in below the market expectation of 7.99 million. This report might prompt the Federal Reserve (Fed) dovish bets and weigh the Greenback against the Pound Sterling (GBP). 

The Fed is likely to cut its key interest rate by 25 basis points (bps) on November 7, according to all 111 economists in a Reuters poll, with over a 90% majority expecting another quarter-percentage-point move in the December meeting.

On the UK’s front, the government is set to deliver Labour’s first Budget in almost 15 years on Wednesday. Rachel Reeves, the UK Chancellor of the Exchequer, might be preparing to unveil £40 billion in tax hikes and spending cuts overall. Employer National Insurance contributions, capital gains tax, and inheritance tax allowances are all possible targets.

Commerzbank analysts noted that if the budget combines austerity with hope of tackling long-term investment, “This should be positive for the pound as it would strengthen the U.K.’s long-term growth potential.”