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The Federal Reserve (Fed) commented in its latest Beige Book survey released on Wednesday that US economic activity increased slightly in November after little change in preceding months, and US businesses grew more upbeat about demand prospects. 

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Market reaction

The US Dollar Index (DXY) is trading 0.01% higher on the day at 106.37, as of writing.

• USD/CAD drifts higher to around 1.4075 in Thursday’s early Asian session. 
• Fed Chair Powell was upbeat about the US economy; US ISM Services came in weaker than expected in November. 
• The BoC will likely cut a deeper-than-usual interest rate in its December meeting. 

The USD/CAD pair edges higher to near 1.4075 during the early Asian session on Thursday. The rising bets of the Bank of Canada (BoC) rate cut and a decline in crude oil prices continue to undermine the commodity-linked Canadian Dollar (CAD). The Canadian November Ivey PMI and US weekly Initial Jobless Claims are due later on Thursday. 

The Fed Chair Jerome Powell said on Wednesday that the US economy is in remarkably good shape, allowing Fed officials to potentially be more cautious in cutting interest rates further. Powell further stated that Unemployment is still very low and making progress on inflation. The cautious stance by the US central bank is likely to underpin the Greenback against the CAD in the near term. 

Data released by the Institute for Supply Management (ISM) on Wednesday showed that the US Services PMI fell to 52.1 in November from 56.0 in October. This reading came in weaker than the expectation of 55.5. The USD weakened in an immediate reaction to the downbeat US Services PMI data. 

On the other hand, the expectation that the Bank of Canada (BoC) would continue cutting rates more aggressively than the Fed might help limit the USD’s downside. Investors anticipate the Canadian central bank to continue its easing campaign at an interest rate decision next week, with the market pricing in nearly 50% odds of another large 50 basis points (bps) move.

Additionally, the lower crude oil prices could drag the commodity-linked Loonie lower. It's worth noting that Canada is the largest oil exporter to the United States (US), and lower crude oil prices tend to have a negative impact on the CAD value.

• EUR/AUD climbs over 0.86%, rebounding off a low of 1.6198 as bullish sentiment takes hold.
• The pair tested but failed to breach the confluence of the 100 and 200-day SMAs at around 1.6378.
• Potential upward targets set at 1.6400 and 1.6500, with October highs in view; support remains near weekly lows of 1.6159.

The EUR/AUD snaps four days of losses and climbs over 0.86% on Wednesday, late in the North American session. At the time of writing, the cross-currency pair trades at 1.6341 after bouncing off daily lows of 1.6198.

EUR/AUD Price Forecast: Technical outlook

The EUR/AUD remains sideways; yet It tested the confluence of the 100 and 200-day Simple Moving Averages (SMAs) at 1.6378-67 but failed to extend its gains past that level, retreating below 1.6370.

Momentum has shifted bullish, as depicted by the Relative Strength Index (RSI), an indication that the pair could aim towards 1.6400.

If EUR/AUD clears the 1.6400 figure, the next stop would be 1.6500, followed by the October 31 peak at 1.6600.

Conversely, if the pair reverses below 1.64300, it could test the current week’s low of 1.6159. A breach of the latter will expose the October 2 low of 1.6005 before testing the yearly low of 1.5966.

EUR/AUD Price Chart – Daily

• NZD/JPY stabilized at 88.10 on Wednesday after recent declines.
• Indicators flattened in negative territory, signaling a pause in bearish momentum.
• Bears remain in control, but oversold conditions could limit further immediate downside.

The NZD/JPY pair stabilized around 88.10 on Wednesday, following a decline earlier in the week that saw the pair drop towards the 88.00 level. While the bears remain in control, the recent pause suggests a potential breather as technical indicators show signs of flattening in negative territory.

The Relative Strength Index (RSI) remains near oversold levels, currently at 32, reflecting subdued buying interest but signaling that further immediate downside might be limited. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram continues to print in the red but shows signs of stabilization, indicating weakening bearish momentum. This technical setup could prompt a period of consolidation before the next directional move.

On the upside, a recovery toward the 89.00 level could challenge bearish control, with 90.00 serving as a key resistance level for bulls. Conversely, if the bearish momentum resumes, the pair could retest the 88.00 level and potentially extend losses toward the 85.00-86.00 range.

NZD/JPY Daily chart

• NZD/USD falls for a third consecutive session, settling near 0.5830.
• Bulls failed to reclaim the 20-day SMA, intensifying bearish momentum.
• Indicators show deepening negative signals, reinforcing the bearish outlook.

The NZD/USD pair extended its losses on Wednesday, marking a three-day losing streak as it continued to drift lower, closing near 0.5850.

The inability to regain the 20-day Simple Moving Average (SMA) highlights the pair’s struggle to find sustained bullish momentum. Technical indicators point to mounting downside risks, with the Relative Strength Index (RSI) slipping further into negative territory, currently at 34, nearing oversold levels and signaling sustained selling pressure. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram has deepened in the red, with a widening gap between the MACD line and the signal line, underscoring intensifying bearish momentum.

With the technical outlook firmly bearish, the pair faces immediate support at 0.5850, with further downside risks toward the 0.5820 level. On the upside, reclaiming the 20-day SMA remains critical for any bullish recovery, but current conditions suggest that such a move remains unlikely in the near term.

NZD/USD Daily Chart

• AUD/USD fell 0.76% to 0.6436 in Wednesday's session.
• Disappointing Australian data sent the AUD/USD to a fresh four-month low near 0.6400.
• Weak Q3 GDP data has boosted bets that the RBA will start cutting interest rates sooner rather than later.

The AUD/USD declined by 0.76% to 0.6435 in Wednesday's session, driven by disappointing data results from key fundamentals in Australia. This has sent AUD/USD to fresh four-month lows in the boundaries of the key contention zone at 0.6400.

In that sense, poor economic activity data led markets to believe that the Reserve Bank of Australia might consider cutting rates sooner instead of delaying it to May 2025.

Daily digest market movers: Australian Dollar sinks after weak GDP data from Australia

• Australia's GDP growth unexpectedly slows to 0.8% year-over-year, below estimates of 1%. 
• Quarterly GDP expands by 0.3% below 0.4%.
• This weak GDP data has increased expectations for RBA interest rate cuts to begin in April 2025. 
• On the US front, the Institute for Supply Management (ISM) Services PMI eased to 52.1 in November, below estimates and lower than October’s 56 reading.
• In addition, Jerome Powell was on the wires and emphasized the Federal Reserve's independence, which is supported by both political parties.
• Fed Chair Powell noted that the US economy is strong, with low unemployment and progress on inflation.
• He confirmed that the Fed is moving cautiously toward neutral rates to balance inflation control with economic stability.

AUD/USD technical outlook: Pair faces selling pressure and struggles to recover

The AUD/USD pair remains under severe selling pressure and struggles to make a stride amidst a combination of fundamental and technical headwinds. Indicators stand firmly in the red, signaling the continuation of the bearish momentum.

The Relative Strength Index (RSI) plunges deep in the negative area, near the oversold territory, indicating extreme selling conditions. Meanwhile, the Moving Average Convergence Divergence (MACD) line lies well below the signal line, confirming the bearish bias. Overall, the technical outlook remains overwhelmingly bearish, suggesting that the AUD/USD may continue to face headwinds in the near term.

• Gold rises as Powell underscores the need for cautious monetary policy.
• Mixed US economic data, including slightly disappointing ADP employment changes, support cautious investor sentiment.
• Fed’s Musalem keeps optionality for the December meeting.

Gold price advances during Wednesday’s North American session, sponsored by mixed US economic data. Nevertheless, the non-yielding metal remained slightly subdued as Federal Reserve (Fed) Chair Jerome Powell crossed the wires. The XAU/USD trades at $2,652, up 0.35%.

Powell said the US economy is in good shape, adding that September’s rate cut was a message to support the labor market. He said that despite showing progress, it’s premature to declare victory on inflation, and the US central bank could be cautious in setting monetary policy.

Recently, inflation has proved to be stickier than expected. The latest three readings indicate that the disinflation process has stalled. Despite ticking up a tenth, prices remain far from hitting the Fed’s 2% goal.

Other officials crossed the newswires.  St. Louis Fed President Alberto Musalem suggested that the time to slow or pause rate cuts might be approaching. He noted that the labor market aligns with full employment and expressed confidence that inflation could reach the 2% target within the next two years.

Meanwhile, Richmond Fed President Thomas Barkin stated that the risks to inflation and maximum employment appear balanced.

On the data front, US ADP National Employment Change figures came a whisker lower than foreseen in November, but October was downwardly revised. S&P Global and the Institute for Supply Management (ISM) revealed that Services PMIs cooled slightly, hinting the economy remains strong but is slowing down.

Ahead this week, the US docket will feature Fed speakers, Initial Jobless Claims and Nonfarm Payrolls (NFP) figures.

Daily digest market movers: Gold price capitalizes on weak US data

• Gold prices advanced as US real yields dropped four basis points to 1.904%.
• The US 10-year Treasury bond yield falls four basis points to 4.184%.
• The US Dollar Index (DXY), which tracks the buck's performance against six currencies, stumbles 0.01% to 106.32 on the day.
• The US ADP National Employment report for November showed private hiring increased by 145K, falling short of the 150K forecast and the downwardly revised October figure of 184K, previously 238K.
• November's ISM Services PMI dropped to 52.1 from 56, underperforming the expected 55.7, while the S&P Global Services PMI also fell, declining to 56.1 from 57 and missing projections.
• US Durable Goods Orders rose by 0.3% MoM in October, slightly improving from the 0.2% reported previously.
• ADP data and the latest Job Openings & Labor Turnover Survey (JOLTS) report on Tuesday confirm that the labor market remains solid. Fed policymakers, who shifted their dual-mandate priority towards maximum employment, leaving aside price stability, can be relieved that the economy remains solid.
• The CME FedWatch Tool indicates a 79% probability of a 25-basis-point rate cut at the Federal Reserve's December meeting, while Chicago Board of Trade data points to 19 bps of easing by the end of 2024.

Technical outlook: Gold price consolidates within $2,600 and the 50-day SMA

Gold remains upwardly biased yet remains subdued between $2,600 to $2,650 for the last seven days. It is capped on the upside by the 50-day Simple Moving Average (SMA) at $2,668; if it's broken, this would expose $2,700.

On further strength, bulls can test the year-to-date (YTD) high at $2,790. Conversely, bears stepping in could drag XAU/USD to $2,600, followed by the 100-day SMA at $2,578.

• The Dow Jones rattled on Tuesday and continued to battle the 45,000 handle.
• ADP jobs report says the number of new worker positions grew less than expected.
• Despite firm gains in key stocks and sectors, the Dow Jones looked downward.

The Dow Jones Industrial Average (DJIA) churned in a tight range on Tuesday as investors grapple with mixed data and an overall headwind in non-tech stocks. ADP jobs figures hinted at a weaker-than-expected hiring phase in November, albeit by a slight margin.

Federal Reserve (Fed) Chairman Jerome Powell made an appearance on Tuesday, but the Fed head stuck closely to familiar talking points. Markets saw a brief spike in volatility, but the lack of momentous announcements regarding the odds of a rate cut in December saw investor interest wane.

US ADP Employment Change figures came in slightly below expectations for November, printing at 146K compared to the median market forecast of 150K. The figure eased further back from October’s initial print of 233K, which was revised sharply lower to 184K. With ‘preview’ Nonfarm Payrolls (NFP) figures showing potential slack in the labor market, investors are losing their sure-footedness about how Friday’s NFP print may turn out.

The US ISM Services Purchasing Managers Index (PMI) for November also slipped back to a three-month low, easing to 52.1 MoM compared to the forecast decline to 55.5 from October’s 56.0. While the Services ISM PMI component is still holding above the contractionary 50.0 level, the number still lost ground and pairs poorly with the Manufacturing PMI component released earlier this week that showed aggregated business opinions expect a slowdown in business conditions in the months ahead.

Dow Jones news

Despite battling into the high side throughout the day, the Dow Jones struggled on Wednesday, with roughly half of the board dipping into the red. Salesforce (CRM) rallied by a stunning 9% to cross $362 per share, climbing to all time highs on the back of continued promises of integrating AI into the company’s data management operations, despite missing the bottom line on earnings per share in its latest earnings call.

Dow Jones price forecast

Bullish momentum in the Dow Jones chart may have chilled in recent days, but bidders aren’t leaving much room for sellers to move. The major equity index is pinned close to record highs set north of the 45,000 handle. While buyers have yet to break into a fresh set of record highs this week, odds favor the high side as short momentum remains more of a bear trap than an opportunity.

Traders interested in an exhaustion play should anticipate a potential decline to the 50-day Exponential Moving Average (EMA), which is currently rising through 43,000. However, due to a long-standing pattern of bouncing off this key moving average, it's advisable for traders to avoid trying to time the exit and instead follow the crowd as the market moves into a new upward leg.

Dow Jones daily chart

The Greenback traded on the defensive for the second day in a row on Wednesday amid lower yields and the absence of news in Powell’s remarks at an event hosted by the New York Times.

Here is what you need to know on Thursday, December 5:

The US Dollar Index (DXY) kept the trade in the low-106.00s against the backdrop of diminishing yields and further recovery in the risk complex. The October’s Balance of Trade figures are due, along with the usual weekly Initial Jobless Claims, and Challenger Job Cuts. Furthermore, the Fed’s Barkin is expected to speak.

EUR/USD added to recent gains and looked to consolidate the breakout of the key 1.0500 barrier. The HCOB Construction PMI in Germany and the euro area are expected, seconded by Factory Orders in Germany, and Retail Sales in the euro zone. In addition, the ECB’s Montagner is due to speak.

GBP/USD managed to trespass the key 1.2700 hurdle amid the widespread rebound in the risk-associated assets and the weak tone in the Greenback. Next on tap is the S&P Global Construction PMI, followed by New Car Sales, and the BoE’s Decision Maker Panel. In addition, the BoE’s Greene will speak.

USD/JPY rebounded further and briefly rose to three-day highs north of the 151.00 barrier, although it loss some impulse towards the end of the NA session. The weekly Foreign Bond Investment figures will be published seconded by the speech by the BoJ’s Nakamura.

There was no respite for the selling pressure in AUD/USD, which this time challenged the key contention zone near 0.6400, weighed down by poor data in Oz. The Balance of Trade results take centre stage Down Under.

Prices of WTI plummeted below the $69.00 mark per barrel following the mixed report by the EIA despite geopolitical concerns remained well in place.

Prices of Gold added to Tuesday’s uptick and maintained their gradual uptrend alive, this time flirting with the $2,660 mark per troy ounce. Silver prices rose for the second consecutive day and confronted four-week highs near the $31.50 region per ounce.

• US Dollar Index declines toward 106.10 on Wednesday.
• Soft services data seems to be pushing the USD lower.
• Market attention will turn to Fed Chair Powell’s words late in the American session.

The US Dollar Index (DXY), which measures the value of the USD against a basket of currencies, declined toward 106.10 on Wednesday amidst slight profit-taking after steep rallies against many major G20 currencies this week.  

Profit taking and soft ISM PMIs seem to be the reasons for the USD weakness. However, the Buck might get bailed out by Federal Reserve (Fed) Chair Jerome Powell’s words later in the American session.

Daily digest market movers: US Dollar declines against major rivals after soft ISM Services figures

• The ISM Services PMI fell to 52.1 in November, a decline of 3.9 points compared to the previous month.
• The PMI reading missed market expectations of 55.5 and marked a significant drop from October's level of 56.
• The decline in the Services PMI suggests a slowdown in the growth of the US services sector.
• Later in the session, the Fed Beige Book report is expected to reflect a similar economic outlook to the previous report, which showed ‘moderate growth’ in the US economy.

DXY technical outlook: DXY tests the 20-day SMA,  break below could worsen short-term outlook

The US Dollar Index is facing a potential turning point as it approaches the 20-day Simple Moving Average (SMA). A break below this key level could worsen the short-term outlook for the index, as it has recently lost some momentum. 

Technical indicators are sending mixed signals, with the Relative Strength Index (RSI) remaining in bullish territory but the Moving Average Convergence Divergence (MACD) showing red bars. Resistance levels at 107.00 and 108.00 may pose challenges, while support is expected at 106.00-106.50. Overall, while the DXY is facing some headwinds, the bullish trend remains strong.

• Mexican Peso capitalizes on mixed economic data from the US.
• Mexico's economic indicators show a slowdown, with housing construction down 5.2% YoY in September.
• Fed's mixed messages on future rate cuts keep markets guessing, with further US data awaited this week.

The Mexican Peso registers decent gains versus the US Dollar after mixed US economic data augmented the chances that the Federal Reserve (Fed) could lower interest rates at the December meeting. The USD/MXN trades at 20.26, down 0.20%.

Mexico’s economic docket remained absent, yet September Gross Fixed Investment figures revealed on Tuesday hinted that the economy is slowing down. Figures showed that housing construction plunged 5.2% YoY in September, posting back-to-back months of losses, the most profound fall since March 2021.

Capex in machinery and equipment witnessed a mild advance of just 0.8%, the lowest level since the post-Covid-19 recovery in March 2021.

Across the border, the US jobs market revealed solid figures. Still, business activity witnessed a dip in the services sector, according to S&P Global and the Institute for Supply Management (ISM).

In the meantime, Fed speakers crossed the newswires. St. Louis Fed President Alberto Musalem said that time might be near to slow or pause rate cuts. Musalem added that the labor market is consistent with full employment and that inflation can converge toward 2% in the next two years.

At the same time, the Richmond Fed’s Thomas Barkin said that risks on inflation and maximum employment remain balanced.

Ahead this week, Mexico’s schedule will feature the release of automobile production data. In the US, the docket will feature Fed speakers, Initial Jobless Claims and Nonfarm Payrolls (NFP) figures.

Daily digest market movers: Mexican Peso boosted by falling US Dollar

• The latest Citi Mexico survey showed that most economists estimate Banxico will cut rates by 25 basis points at the December meeting. Analysts project the economy will grow 1.5% in 2024 and 1% in 2025.
• US ADP National Employment report for November revealed that private hiring jumped by 145K, below forecasts of 150K, and beneath the downwardly revised October figures from 238K to 184K.
• The ISM Services PMI in November retreated from 56 to 52.1, below estimates of 55.7. Earlier, S&P Global Services PMI dipped from 57 to 56.1, missing forecasts of 57.
• US Durable Goods Orders improved from 0.2% to 0.3% MoM in October, according to the US.
• The CME FedWatch Tool suggests that investors see a 79% chance of a 25-basis-point (bps) rate cut at the Fed’s December meeting.
• Data from the Chicago Board of Trade, via the December fed funds rate futures contract, shows investors estimate 19 bps of Fed easing by the end of 2024.
• Banxico’s November survey shows that analysts estimate inflation at 4.42% in 2024 and 3.84% in 2025. Underlying inflation figures will remain at 3.69% in 2024 and 2025. GDP is forecasted at 1.55% and 1.23% for 2024 and 2025, respectively, and the USD/MXN exchange rate at 20.22 for the rest of the year and 20.71 in 2025.

Mexican Peso technical outlook: USD/MXN drops below 20.30 on Peso’s strength

The USD/MXN uptrend remains intact, although the exotic pair fell below 20.50. Momentum shows that bears are in charge, as depicted by the Relative Strength Index (RSI) aiming toward its neutral line.

If USD/MXN drops below the November 19 low of 20.06, the next stop would be 20.00. On further weakness, the exotic pair will test the 50-day Simple Moving Average (SMA) at 19.97. A breach of the latter will expose the 100-day SMA at 19.61 before the psychological 19.00 figure.

On the other hand, if USD/MXN reclaims 20.50, the next resistance would be the year-to-date peak at 20.82. If surpassed, the next stop would be 21.00, ahead of the March 8, 2022 peak at 21.46, followed by the November 26, 2021 high at 22.15.

• Comments from Fed Chief Jerome Powell will be closely followed midweek to get clues about the interest rate outlook.
• The Fed is seen reducing its interest rates by a quarter point at this month’s meeting.
• The US labour market takes centre stage this week, with NFP due on Friday.

Federal Reserve Chair Jerome Powell is set to participate in a moderated discussion on the economic outlook on Wednesday at the New York Times DealBook Summit in New York. Investors will closely monitor his remarks, eager for any signals about future monetary policy.

The event comes at a time when markets largely expect the Fed to cut its policy rate by another 25 basis points during its December 17-18 meeting. However, this expectation lost some momentum following Powell's remarks at an event in Dallas on November 14.

During his Dallas speech, Powell indicated that the Fed could take its time before making further rate cuts. He pointed to steady economic growth, a strong labour market, and inflation remaining above the Fed's 2% target as reasons for a cautious approach. His comments aligned with the views of FOMC Governor Michelle Bowman, who has consistently advocated for a prudent stance on rate adjustments.

As of now, the probability of a 25-basis-point rate cut this month stands at approximately 75%, according to the CME Group’s FedWatch Tool. However, investors anticipate no more than 75 basis points of easing over the next 12 months.

The Fed and Trump: A collision course ahead?

The return of former President Donald Trump to the White House has raised concerns about renewed inflationary pressures. His proposed policies could significantly alter the economic landscape, featuring looser fiscal measures, the reintroduction of tariffs on exports from China, Europe, Mexico, Canada, and the BRICS nations, as well as stricter immigration policies.

In fact, a new chapter in the US-China trade war has already begun. China recently announced a ban on exporting gallium, germanium, and antimony to the US – minerals critical for military technologies. This move came just one day after Washington introduced new restrictions targeting China’s semiconductor industry.

While Powell has repeatedly declined to speculate on the economic impacts of potential policies under a renewed Trump administration, it's likely that any resurgence in inflationary pressures could lead the Fed to pause or even halt its current easing cycle.

Amid these developments, the US Dollar (USD) surged in October and November before entering a period of consolidation/correction. However, this pause should be temporary, leaving the bullish outlook for 2025 unchanged.

• Pair saw modest 0.20% gains and positioned itself at 1.0530.
• Buyers target continues to be the 20-day SMA.
• Until the short-term SMA isn’t recovered, the outlook will be bearish.

The EUR/USD pair found support around the psychological 1.0500 level after opening the week with a sharp decline of over 1% and tallies a two-day winning streak. On Wednesday, the pair saw a modest rebound, rising to 1.0530 as buyers stepped in, though the technical outlook remains bearish.

Despite this recovery, the pair remains below the 20-day Simple Moving Average (SMA), which continues to act as a strong resistance level. Indicators have gained some ground but remain in negative territory, reflecting lingering downside risks. The Relative Strength Index (RSI) has ticked higher to 42 but still signals bearish momentum, while the MACD histogram shows slightly improving momentum  but both indicators don’t give clear signals of sustained reversal has yet to materialize.

For now, traders will focus on whether the pair can build on this rebound and regain the 20-day SMA. If bullish momentum fades, the pair remains at risk of retesting support levels at 1.0500 and 1.0450, while resistance near 1.0550 could cap further upside in the near term.

EUR/USD daily chart

Precious metals have remained locked in a tight range, but recent flows have been interesting, TDS’ Senior Commodity Strategist Daniel Ghali notes.

Precious metals  remain locked in a tight range

“Firstly, our advanced positioning analytics suggest macro funds have re-accumulated a substantial portion of their extreme positions held in Gold prior to US election night. This is surprising given the notably different outlook for Fed policy, which no longer bears the same risk of an 'overly easy' policy on the horizon, which points to additional vulnerabilities.”

“CTAs have been whipsawed both ways, but price action has now unlocked scenarios that could see sizable liquidations over the coming week, which will feature Chair Powell's moderated discussion, the NFP report and will soon be followed by the Dec FOMC meeting.”

“There may well be another shoe to drop after all before the balance of risks shifts back towards the upside in Gold.”

According to the Institute for Supply Mangement (ISM), the Services PMI eased to 52.1 in November, coming in short of estimates at 55.5 and markedly lower than October’s 56 reading.

• GBP/USD sees limited movement, fluctuating between 1.2630 and 1.2700 despite breaching the upper boundary briefly.
• Market awaits US Nonfarm Payrolls report, keeping GBP/USD in a consolidation phase with a neutral RSI.
• Potential downside risk if the pair falls below 1.2650, with subsequent supports at 1.2600 and 1.2506.

The GBP/USD fluctuated between gains/loses, trapped at around the 1.2630-1.2700 range for the third consecutive day. Despite cracking 1.2700, buyers remain unable to drive prices higher amid dovish remarks by Bank of England (BoE) Governor Andrew Bailey.

GBP/USD Price Forecast: Technical outlook

The GBP/USD downtrend paused as the pair printed a leg-up towards 1.2749 before dropping below 1.2700. Momentum shows that neither buyers nor sellers are in charge, with the Relative Strength Index (RSI) turning flat at around neutral levels.

This and the GBP/USD consolidation suggest the pair will remain subdued ahead of the crucial US Nonfarm Payrolls report.

If GBP/USD falls below 1.2650, the next support would be 1.2600. Once surpassed, the next stop would be the November 26 low of 1.2506, followed by the November 22 low of 1.2486, ahead of the YTD low of 1.2299.

Conversely, if GBP/USD climbs above 1.2700, look for a test of the 200-day Simple Moving Average (SMA) at 1.2818.

GBP/USD Price Chart – Daily

• Silver price recovers strongly from $30.50 after US ADP Employment Change data misses estimates by a slight margin.
• Investors await Fed Powell’s speech for fresh guidance about the likely interest rate path.
• Traders expect the Fed to cut interest rates by 25 bps to 4.25%-4.50% on December 18.

Silver price (XAG/USD) recovers in a V-shape manner from the key support of $30.50 in Wednesday’s North American session and refreshes an intraday high near $31.20 after the release of the United States (US) ADP Employment Change data for November. The agency reported that the private sector hired fresh 146K workers, marginally missed estimates of 150K but was significantly lower from the former release of 184K, downwardly revised from 233K.

However, the private sector employment data has not weighed much on the US Dollar (USD). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, surrenders nominal gains but holds the key support of 106.50. 10-year US Treasury yields hold onto gains near 4.27%.

Historically, higher yields on interest-bearing assets increase the opportunity cost of holding an investment in non-yielding assets, such as Silver. But it doesn’t appear in this case, suggesting that geopolitical tensions continue to maintain safe-haven demand.

According to Reuters, the Hamas internal statement has reported that the group has information that Israel intends to carry out a hostage rescue operation similar to Israel's June nuseirat operation in Gaza, a move that could derail the ceasefire between Iran and Israel. The appeal of the Silver price strengthens in a heightened geopolitical environment.

Going forward, investors will focus on Federal Reserve (Fed) Chair Jerome Powell’s speech at the New York Times DealBook Summit for fresh guidance on interest rates. The probability for the Fed to cut interest rates by 25 basis points (bps) to 4.25%-4.50% is 74%, while the rest favors leaving them unchanged at their current levels, according to the CME FedWatch tool.

Silver technical analysis

Silver price strives to extend recovery above the 20-day Exponential Moving Average (EMA), which trades around $31.30.

The 14-day Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, suggesting a sideways trend.

Looking down, the upward-sloping trendline around $29.50, which is plotted from the February 29 low of $22.30 on a daily timeframe, would act as key support for the Silver price. On the upside, the horizontal support plotted from the May 21 high of $32.50 would be the resistance zone.

Silver daily chart

• Gold prices see slight increase, stabilizing at around $2,650 following subpar US ADP employment data.
• November's ADP report shows a hiring slowdown, with only 146,000 jobs added versus the 150,000 expected.
• Fed officials maintain cautious stance on rate cuts amid solid but slowing employment growth and sticky inflation.

Gold prices consolidate at around $2,650 for the seventh consecutive day, posts modest gains of over 0.20% after US jobs data revealed that private hiring dipped, missing economists forecasts. At the time of writing, XAU/USD trades at $2,648.

XAU/USD gains modestly after weaker-than-expected November job growth

Automatic Data Processing (ADP) revealed that companies in the US added 146,000 people to the workforce in November, below estimates of 150,000. Worth noting that the numbers were also below the revised numbers of the previous month, with October figures coming at 184,000, down from 238,000 reported a month ago.

Today’s data, coupled with the latest Job Openings and Labor Turnover Survey (JOLTS) data revealed on Tuesday, confirms that the labor market remains solid. Federal Reserve policymakers, who shifted their dual-mandate priority towards maximum employment, leaving aside price stability, can be relieved that the economy remains solid.

Recently, inflation has proved to be stickier than expected. In the last three months, the US disinflation process stalled, and despite ticking up a tenth, prices remain far from hitting the Fed’s 2% goal.

In the meantime, Fed speakers cross the wires. St. Louis Fed President Alberto Musalem said that time might be near to slow or pause rate cuts. Musalem added the labor market is consistent with full employment and that inflation can converge toward 2% in the next two years.

During the day, the US economic docket will feature Fed Chair Jerome Powell’s speech at around 18:45 GMT.

Gold Price Forecast: Technical outlook

Gold’s remain upward biased, yet remains subdued at around the $2,600-$2,650 for the last seven days. Capped on the upside by the 50-day Simple Moving Average (SMA) at $2,668, if its broken this would expose $2,700. On further strength, bulls can test the year-to-date (YTD) high at $2,790. Conversely, bears stepping in, could drag XAU/USD to $2,600, followed by the 100-day SMA at $2,578.

St. Louis Federal Reserve President Alberto Musalem said on Wednesday that it might be possible to pause rate cuts at the upcoming meetings, and added that they are keeping all options for the December meeting.

Key takeaways

"Will wait to see data before deciding on December Fed meeting."

"Restrictive monetary policy will continue to cool inflation."

"Chances of labor market trouble are low right now."

"The job isn't done to bring inflation back to target."

"Monetary policy is moderately restrictive."

"Uncertainty about monetary policy, election, had weighed on the economy."

Market reaction

The US Dollar Index edges higher following these comments and was last seen rising 0.32% on the day at 106.68.

While testifying before the European Parliament's Committee on Economic and Monetary Affairs on Wednesday, European Central Bank (ECB) President Christine Lagarde said that the economic growth in the Eurozone will be weaker in the near term, per Reuters.

Key takeaways

"Further ahead, the Euro area’s economic recovery should start to gather some steam."

"The medium-term economic outlook is uncertain."

"Inflation is expected to temporarily increase in the fourth quarter of this year."

"Inflation to decline to target in the course of next year."

"We are therefore not pre-committing to a particular rate path."

Market reaction

EUR/USD edges slightly lower following these comments and was last seen losing 0.18% on the day at 1.0490.

• EUR/GBP remains on tenterhooks below 0.8500 as traders brace for high volatility ahead of French no-confidence vote.
• Traders see ECB interest rates heading to 1.75% by the end of 2025.
• BoE Bailey said he sees four interest rate cuts next year.

The EUR/GBP pair ticks lower and sustains below the cruical resistance of 0.8300 in Wednesday’s North American session. The asset is expected to remain highly volatile with investors focusing on French no-confidence vote that is expected to result in a collapse of Prime Minister Michel Barnier’s government.

Marine Le Pen-led-Far Right allied with Left wing and proposed a non-confidence motion after claiming budget from Barnier’s government as “flawed and harmful” for French people. The budget in question proposed €60 billion in tax increases and spending cuts aimed at addressing France’s ballooning deficit, according to Firstpost.

Market participants worry that the impact of burgeoning defict will widen as a new election is not allowed until Summer.

Apart from French political crisis, growing expectations of more interest rate cuts from the European Central Bank (ECB) are also weighing on the Euro (EUR). The ECB is expected to cut push its Deposit Facility Rate lower to 1.75% by the end of 2025. For the policy meeting on December 12, ECB policymaker and Governor of Austrian Central Bank Robert Holzmann supported 25 basis points (bps) interest rate cut to 3%, indicated in an interview on Tuesday. “As the data currently stands, I think a reduction of 0.25 percentage points is conceivable, not more,” Holzmann said.

Meanwhile, the Pound Sterling (GBP) remains firm against a majority of its peers even though Bank of England (BoE) Governor Andrew Bailey predicted four interest rate cuts in 2025, said in an interview with the Financial Times (FT) in Wednesday’s European session. Bailey didn’t offer any cues about likley interest rate action in the meeting on December 19 but traders expect the BoE to leave policy rates unchanhed at 4.75%.

The Pound Sterling (GBP) is little changed on the session, but the GBP price action is leaning a little more positive, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

GBP nudges higher from intraday low

“UK Composite and Services PMIs were revised up modestly from the flash estimates (to 50.5, from 49.9 and 50.8, from 50.0 respectively). BoE Governor Bailey commented that four rate cuts in 2025 remained his base case.”

“GBP price action is leaning a little more positive, with strong gains off the early European low setting up a bullish impulse on the intraday chart. Key (bull trigger) resistance remains distant at 1.2760/65, however. A push above 1.2700 could signal a bit more intent on reaching towards those levels. Support is 1.2625/30.”

Final Eurozone November Composite and Services PMIs were revised up a little from the preliminary data (48.3, from 48.1 and 49.5, from 49.2 respectively). Firm intraday support below 1.05 is holding the EUR in a tight, sideways range, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

EUR steady around 1.05

“Positive French data revisions did all the heavy lifting. Attention remains on France ahead of today’s parliamentary no-confidence motion. A steady EUR and stable French assets suggests investors are less concerned by the risks around the vote this morning.”

“President Macron urged lawmakers not to topple the government and he said yesterday that he will not resign before his term ends in 2027.”

“Firm intraday support below 1.05 is holding the EUR in a tight, sideways range but the bid is not really strong enough to drive more gains at the moment. Absent a stronger move higher to test resistance in the 1.0590/95 area, the EUR may drift back to the mid-1.04s.”

The Canadian Dollar (CAD) is little changed. CAD is a marginal outperformer among the major currencies as a consequence, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

CAD little changed

“Beyond that, there’s little to remark on in terms of positives for the CAD’s near-term outlook. Q3 Productivity and the November S&P Global Composite and Services PMIs this morning are unlikely to change near-term CAD dynamics to any significant degree.”

“Market participants are rather waiting for Friday’s employment report before updating views on the BoC policy outlook, with swaps pricing for this month’s policy decision split between a 1/4 point and 1/2 point cut.”

“Spot is tracking a little lower on the session. After two rejections a little above 1.4080 over the past couple of sessions, the very shortterm chart does suggest some risk of USD losses extending on a break under 1.4055 (minor double top trigger) which may take spot back to the low 1.40s. Broader trends remain positive and dips to the 1.3950/1.40 area should remain well-supported.”

As a result of the UK’s Brexit referendum in June 2016, the trading range for EUR/GBP swiftly adjusted from trading mostly below the 0.80 level in H1 that year to an average of around 0.8590 in H2 2016, Rabobank’s FX analyst Jane Foley notes.

EUR/GBP seems to be eyeing the downside

“Since July 2016 the average trading level for EUR/GBP has been 0.8690. However, having started 2023 close to that average level, the currency pair has subsequently been on a slow grind lower. Last month EUR/GBP dipped close to the 0.8260 level and is currently trading only modestly above this low.”

“This raises the question as to whether GBP can achieve pre-Brexit referendum levels vs. the EUR in the foreseeable future. Our 12-month forecast for EUR/GBP is 0.8150. This falls short of a move back to pre-referendum levels. That said, it would take the currency pair below the 2022 low to levels last seen In June 2016, just after the referendum result was published.”

“In our view, downside risk to this forecast is more likely to come from a weaker than expected EUR rather than a more emboldened pound.”

The US Dollar (USD) is tracking a little higher overall this morning, lifting the DXY to the mid-106 area and potentially setting up trading today for a little more strength— despite usually negative seasonal trends for the dollar broadly in December. It’s a busy day for central bank speakers, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

USD edges marginally higher

“The KRW has, however rebounded strongly following yesterday’s fleeting “martial law” announcement by the president. The AUD and the JPY are the leading losers among the majors, falling 1.1% and 0.8% in the session respectively. Australian GDP was weaker than forecast, rising 0.3% in Q3 (versus 0.5% expected). Short rates rallied in response, but a full quarter point cut remains unlikely before March, according to swaps pricing.”

“The JPY’s losses were driven by an MNI report suggesting that local political concerns were prompting BoJ officials to err on the side of cautious policy normalization. December swaps pricing eased from reflecting 15bps of tightening to less than 8bps. After yesterday’s stronger-than-expected US JOLTS data, attention turns to the ADP jobs report this morning. Private sector jobs are expected to rise 150k in November.”

“It’s a busy day for central bank speakers as well. The Fed’s Musalem (non-voter), Barkin, Daly and Chair Powell are speaking over the course of the day. The Fed also releases what may be a cautious-sounding Beige Book at 14ET. Some ECB policymakers are also on the calendar, including President Lagarde. BoJ Board member Nakamura (generally viewed as a relative policy dove) is speaking this evening (20.30ET).”

• The US Dollar ticks up ahead of the release of ADP private employment and ISM Services PMI data. 
• French lawmakers will hold a vote of no confidence which, if successful,  will topple the government. 
• Fed Chairman Powell will speak during the American session, likely adding volatility to the US Dollar Dollar Index. 

The US Dollar (USD) edges up slightly on Wednesday as a no-confidence vote in France is set to take place. Chances that Prime Minister Michel Barnier will survive the vote are slim to nil, with President Emmanuel Macron forced to select a new prime minister to form a new government in the coming weeks. Meanwhile, in the US, traders are starting to keep their powder dry ahead of Friday's US Jobs Report. 

On the economic data front, the Institute for Supply Management (ISM) is up next with a data release gauging the health of the US services sector. The Services Purchasing Manager Index (PMI) for November will be the most market-moving element for this Wednesday. The ADP private payroll estimate will also be published, and late in the US trading session, Federal Reserve (Fed) Chairman Jerome Powell will speak at the New York Times DealBook Summit in New York.

Daily digest market movers: ADP, ISM to dictate US markets 

• The US Calendar kicks off this Wednesday at 13:15 GMT with the ADP Job Change numbers for November. Expectations are for an increase of 150,000, down from 233,000 in October. 
• At 14:45 GMT, S&P Global will release its final reading of its November numbers for the Purchasing Managers Index. The services index is expected to remain unchanged at 57 while the Composite should remain stable at 55.3.
• The Institute for Supply Management will release its November survey for the Services sector at 15:00 GMT. The headline PMI is expected to soften at touch to 55.5 from 56 previously.
• Three Federal Reserve members will speak this Wednesday:
  • at 13:45 GMT, Federal Reserve Bank of St. Louis President Alberto Musalem delivers a keynote speech on "Monetary Policymaking: Central Banking in a Changing World" at the College of Central Bankers Symposium in New York City, United States.
  • Around 18:45 GMT, Federal Reserve Chairman Jerome Powell participates in a discussion at the New York Times DealBook Summit in New York.
  • Closing off at 13:00 GMT, Federal Reserve Bank of San Francisco President Mary Daly is interviewed at PBS New Hour.
• Equities are looking for direction with some nervousness over South Korea and France limiting gains for this Wednesday. European equity indices and US futures are up less than 0.5% on average. 
• The CME FedWatch Tool is pricing in another 25 basis points (bps) rate cut by the Fed at the December 18 meeting by 73.8%. A 26.2% chance is for rates to remain unchanged. The Fed Minutes and recent comments from several Fed officials have helped the rate cut odds for December to move higher. 
• The US 10-year benchmark rate trades at 4.24%, ticking up from the 4.21% seen on Tuesday. 

US Dollar Index Technical Analysis: Sit on your hands

The US Dollar Index (DXY) is ticking up slightly ahead of the Nonfarm Payrolls print of Friday. After the turmoil at the start of the week on the back of the French political stage, it looks that traders want to keep their powder dry going into Friday’s Jobs Report. Although Fed Chairman Jerome Powell is set to speak, not manyuch market- moving comments are expected.  

On the upside, 106.52 (April 16 high) remains as the first resistance to look at after failing to close above it this week. Should the US Dollar bulls reclaim that level, 107.00 (round level) and 107.35 (October 3, 2023, high) are back on target for a retest. 

Looking down,Should the French government fall and a new, more stable, government formation is set to take place,  the pivotal level at 105.53 (April 11 high) comes into play before heading into the 104-region. Should the DXY fall all the way towards 104.00, the big figure and the 200-day Simple Moving Average at 104.03 should catch any falling knife formation. 

US Dollar Index: Daily Chart

• Oil prices tick up for a second day in a row ahead of the OPEC+ meeting on Thursday. 
• US President-elect Donald Trump threatens to drag the Middle-East region into a war if hostages are not released. 
• The US Dollar Index ticks up with traders looking ahead to Friday’s US Jobs Report. 

Crude Oil ticks higher for a second day in a row on Wednesday, popping above the $70 round level, with traders getting nervous over geopolitical tensions and OPEC+ set to act. On the geopolitical side, President-elect Donald Trump vowed to drag the Middle East into a war if Israeli hostages are not released by Hamas by the time he takes office in January. Meanwhile, OPEC+ might be surprising friends and foes with a possible six-month delay of its production normalization output, Bloomberg reports.  

The US Dollar Index (DXY) – which measures the performance of the US Dollar (USD) against a basket of currencies – is ticking up within a tight range ahead of Friday’s Nonfarm Payroll numbers. Traders appear to be sitting on their hands, keeping their powder dry to trade the last Jobs Report for 2024. Later on Thursday, Federal Reserve Chairman Jerome Powell will make an appearance, though no market moving comments are expected. 

At the time of writing, Crude Oil (WTI) trades at $70.08 and Brent Crude at $73.98.

Oil news and market movers: OPEC+ might still pull that rabbit out of its hat

• Seasoned OPEC+ watcher Grant Smith warned in a recent post that OPEC+ may need to deliver a surprise plot twist at Thursday’s meeting to push Oil prices materially higher. Smith raised the possibility of a six-month pause, right out to the second half of 2025, Bloomberg reports. Market consensus is for a three-month delay.
• US President-elect Donald Trump vowed earlier this week that he would not refrain from dragging the Middle East into a war if Israeli hostages are not returned home by the time he takes office, Reuters reported.
• At 15:30 GMT, the Energy Information Administration (EIA) will release its weekly Crude stockpile change numbers. Expectations are for a drawdown of 2.06 million barrels against the draw of 1.844 million barrels last week.
• The overnight Crude stockpile change numbers from the American Petroleum Institute (API) overnight came in at a surprise build of 1.232 million barrels against the 2.06 million barrels drawdown expected and partially offsetting the big drawdown of 5.935 million barrels seen last week. 

Oil Technical Analysis: OPEC+ will need to deliver

Crude Oil prices might be ticking up a nudge on the back of the comments from President-elect Donald Trump and some analysts that are starting to see signs for a possible six-month delay for OPEC+ production normalization. With these elements being priced in, the risk is that the OPEC meeting could turn in a “buy the rumour, sell the fact” moment. These drivers could quickly dissolve and see Crude prices go the other way. 

On the upside, the pivotal level at $71.46 and the 100-day Simple Moving Average (SMA) at $71.79 are the two main resistances. The 200-day SMA at $76.10 is still far off, although it could be tested if tensions intensify further. In its rally towards that 200-day SMA, the pivotal level at $75.27 could still slow down any upticks. 

On the other side, traders need to look towards $67.12 – a level that held the price in May and June 2023 – to find the first support. In case that breaks, the 2024 year-to-date low emerges at $64.75, followed by $64.38, the low from 2023.

US WTI Crude Oil: Daily Chart

• AUD/USD plummets to near 0.6400 as the Australian Dollar weakens after slower-than-expected Australian Q3 GDP growth.
• Soft Aussie Q3 GDP data has boosted expectations for RBA interest rate cuts in April 2025.
• The US Dollar gains higher ahead of Fed Powell’s speech.

The AUD/USD pair dives more than 1% to near the round-level support of 0.6400 in Wednesday’s European session. The Aussie pair plummets as the Australian Dollar (AUD) has been hit hard by weaker-than-projected domestic output data for the third quarter of this year.

The Australian Bureau of Statistics reported that the Australian economy surprisingly expanded at a slower-than-expected pace of 0.8% compared to the same quarter of the previous year against the 1% growth seen in the previous quarter of this year. Economists estimated the annualized Q3 GDP growth of 1.1%. On a quarterly basis, the Australian economy expanded by 0.3%, slower than expectations of 0.4% but faster than the former reading of 0.2%.

Weak Q3 GDP data has boosted the Reserve Bank of Australia's (RBA) dovish bets. Growing concerns over Australian economic growth have prompted expectations that the RBA could start reducing interest rates from its policy meeting in April 2025.

Meanwhile, a slight upside move in the US Dollar (USD) has also weighed on the Aussie pair. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, rises to nearly 106.60 ahead of Federal Reserve (Fed) Chair Jerome Powell’s speech at 18:45 GMT. Fed Powell is expected to provide cues about whether the central bank will continue easing its monetary policy further in its meeting on December 18.

In today’s session, investors will also focus on the United States (US) ADP Employment Change and the ISM Services PMI data for November.

USD/SGD continued to trade near recent highs; last seen at 1.3464, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

USD is waiting for a catalyst to move

“Mild bearish momentum on daily chart intact for now while RSI is flat. Consolidation likely in the near term. Resistance at 1.3490, 1.3520 levels. Support at 1.3390 (21 DMA), 1.3340 (200 DMA).”

“US payrolls data on Fri may provide the directional catalyst for USD while we continue to watch CNY fixing. S$NEER was last at 0.93% above model-implied mid. This still shows that SGD remains firmer vs. peers in the trade basket but it is less firm today (vs. than for most of the year).”

Overbought advance could retest the 7.3145 level before a more sustained pullback can be expected. Momentum remains strong; the next significant resistance is at last year’s high of 7.3678, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.  

Next significant resistance is at last year’s high of 7.3678

24-HOUR VIEW: “While we held the view that USD ‘may rise further and break above 7.3000’ yesterday, we indicated that ‘the major resistance at 7.3115 is likely out of reach for now.’ We underestimated the upward momentum, as USD soared to a high of 7.3145, easing off to close at 7.2985, higher by 0.17% for the day. Despite being deeply overbought, the advance appears to have enough momentum to retest the 7.3145 level before a more sustained pullback can be expected. The next resistance at 7.3300 is not expected to come under threat. On the downside, support is at 7.2860, followed by 7.2750.”

1-3 WEEKS VIEW: “We turned positive in USD yesterday (03 Dec, spot at 7.2880), indicating the ‘rapid increase in momentum could lead to USD rising to 7.3115.’ We did not expect USD to exceed the technical target as quickly, as it surged to a high of 7.3145. Momentum remains strong, and now that USD has broken above 7.3145, the next significant resistance level is at 7.3678, last year’s high. To sustain the momentum, USD must not break below 7.2630 (‘strong support’ level was at 7.2550 yesterday).”

USD/CNH eased as policymakers continued to keep the daily fix under 7.20. In fact, the CNY fix was even set stronger at 7.1934 than the day before (at 7.1996). Pair was last at 7.2838, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

CNH may still trade under pressure

“Fixing pattern suggests that PBoC is doing whatever it takes to restraint the RMB from over-weakening after the initial round of knee-jerk depreciation post-US election outcome. That said, tariff headlines served as a constant reminder that wider tariffs could soon hit when Trump comes on board officially in Jan2025. PBoC may continue to restraint the RMB from excessive weakening via daily fix, but likely they may have to deploy offshore funding squeeze (if need arises) to ensure more effective transmission.”

“CNH may still trade under pressure expectations for further rate cuts at home while economic recovery remains uneven. Caixin services PMI was weaker than expected while manufacturing PMI was stronger than expected. Housing market has also showed very mixed signs of stabilisation. While there may be other stimulus support measures to support the domestic economy, these are at best mitigating factors only.”

“Meantime the bias for RMB may be skewed towards further weakening (notwithstanding some short-term technical correction). Daily momentum is mild bullish while RSI shows signs of turning from near-overbought conditions. Corrective pullback not ruled out. Support at 7.2745 and 7.2440 (21 DMA). Resistance at 7.32, 7.3450 levels.”

To continue to decline, the US Dollar (USD) must break and close below 148.65, which is acting as a significant support level now, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.  

The next significant support level below 148.65 is at 146.95

24-HOUR VIEW: “USD plummeted to 149.06 on Monday before rebounding. Yesterday, we pointed out that ‘despite the sharp decline, downward momentum has not increased much.’ We expected USD to ‘trade in a range between 149.00 and 150.50.’ Our view was incorrect, as USD plummeted briefly to 148.63, rebounding sharply to close unchanged at 149.59. The brief drop did not result in any increase in momentum, and we continue to expect USD to trade in a range, probably between 148.80 and 150.30.”

1-3 WEEKS VIEW: “We shifted our outlook to negative late last week. Tracking the subsequent decline, we indicated yesterday (03 Dec, spot at 149.85) that USD ‘may continue to decline, but given that downward momentum has not increased much further, it is unclear if there is enough momentum for it to reach 148.65.’ USD subsequently dropped briefly to 148.63, rebounding to close unchanged at 149.59. There is still no clear increase in momentum, and for USD to continue to decline, it must break and close below 148.65, which is acting as a significant support level now. On the upside, should USD break above 150.80 (‘strong resistance’ level previously at 151.30), it would indicate that the weakness in USD has stabilised. Looking ahead, the next significant support level below 148.65 is at 146.95.”

• USD/CAD climbs to near 1.4075 ahead of key US data and Fed Powell’s speech.
• Investors should brace for volatility in the CAD as the employmnet data for November is set to release on Friday.
• USD/CAD holds the Ascending Trinagle breakout, suggesting more upside ahead.

The USD/CAD pair extends its winning streak for the third trading day on Wednesday. The Loonie pair moves higher to near 1.4075 as the US Dollar (USD) gains ahead of United States (US) economic data for November, including ADP Employment Change and ISM Services PMI, and Federal Reserve (Fed) Chair Jerome Powell’s speech in the North American session.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, climbs around 106.60.

Investors will pay close attention to the Jerome Powell’s speech at at the New York Times DealBook Summit to get fresh cues about whether the central bank will cut interest rates again in its policy meeting on December 18. According to the CME FedWatch tool, there is a 74% chance that the Fed will reduce its key borrowing rates by 25 basis points (bps) to 4.25%-4.50%, while the rest favors leaving them unchanged at their current levels.

This week, the Canadian Dollar (CAD) will be influenced by the labor market data for November, which will be released on Friday, along with US Nonfarm Payrolls (NFP).

USD/CAD holds the breakout of the Ascending Triangle chart pattern formed on a weekly timeframe. The outlook of the Loonie pair remains firm as the 20-day Exponential Moving Average (EMA) near 1.3820 is sloping higher.

The 14-week Relative Strength Index (RSI) oscillates above 60.00, suggesting a strong bullish momentum.

A fresh upside would appear if the asset breaks above November’s high of 1.4178. The scenario will pave the way for the April 2020 high of 1.4265 and the round-level resistance of 1.4300.

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

USD/CAD weekly chart

USD/JPY traded a low of 148.65 overnight on safe-haven demand, and was last seen at 150.73 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Rebound risks not ruled out near term

“Bearish momentum on daily chart intact while RSI shows signs of turning higher from near oversold conditions. Rebound risks not ruled out in the near term. Resistance at 151.20, 152 (200 DMA), 153.30/70 levels (61.8% fibo retracement of 2024 high to low, 21DMA). Support at 149.50, 148.90 levels (100 DMA). Broader bias remains to lean against strength.”

“Price-related data (Tokyo CPI, PPI, etc.), labour market development (jobless rate easing, job-to-applicant ratio increasing, etc.), wage growth expectations (PM Ishiba and trade unions calling for another 5-6% wage increase at shunto wage negotiations for 2025) and Ueda's recent comments on Nikkei over the weekend continue to reinforce the view that Bo J is likely to proceed with another hike, sooner rather than later.”

“But near term, pair may consolidate for now in light of US data risks this Fri.”

Momentum indicators are mostly flat; the New Zealand Dollar (NZD) is expected to trade in a 0.5860/0.5900 range. In the longer run, for the time being, NZD is likely to trade in a range between 0.5840 and 0.5950, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.  

NZD to trade in a range between 0.5840 and 0.5950

24-HOUR VIEW: “We stated yesterday that NZD ‘is under mild downward pressure.’ While we expected it to edge lower, we were of the view that ‘any decline is unlikely to reach the major support at 0.5840.’ However, instead of edging lower, NZD traded quietly between 0.5865 and 0.5905. NZD closed modestly lower by 0.10% at 0.5882. Momentum indicators are mostly flat, and we expect NZD to trade in a 0.5860/0.5900 range today.”

1-3 WEEKS VIEW: “Our most recent narrative was from last Thursday (28 Nov, spot at 0.5895), wherein ‘the current price movements are likely part of a range trading phase.’ We expected NZD to “trade between 0.5840 and 0.5950.” There is no change in our view.”

In the Czech Republic, the government yesterday approved the state budget for next year, as expected, which we estimate should lead to a public deficit of 1.9% from this year's 2.4% of GDP, ING’s Frantisek Taborsky notes.

Current levels in the 25.150-200 range seem

“Third quarter wage data will be released today, which we estimate rose by 4.0% YoY in real terms, similar to the previous quarter. The central bank forecast 3.6% in November. Speaking of the Czech National Bank, the governor is also scheduled to speak at a local conference today, which could give us a hint on the December decision, which remains unclear. However, we usually get a hawkish message from the governor, which could again support the CZK.”

“EUR/CZK quickly broke below 25.200, a level we have mentioned here in previous days, and current levels in the 25.150-200 range seem fair to us. If the governor makes it clear today that a pause in December is the more likely scenario, EUR/CZK could test 25.100. Similar to PLN, we see tactical gains here but more weakness later due to geopolitical reasons.”

• The Pound Sterling experiences a whipsaw move after BoE Governor Bailey predicted four interest-rate cuts in 2025 as he expects the disinflation process is embedded.
• Traders expect the BoE to keep interest rates steady at 4.75% at this month's meeting.
• Investors await a slew of US economic data and Fed Powell’s speech.

The Pound Sterling (GBP) faces selling pressure against all its major peers on Wednesday after Bank of England (BoE) Governor Andrew Bailey forecasted four interest-rate cuts in 2025 in an interview with Financial Times (FT).

Andrew Bailey reiterated that interest rates should be lowered gradually and emphasized the need to do more to bring inflation down even though the “disinflation process is well embedded”. When asked about the impact of tariffs by US President-elect Donald Trump on the United Kingdom (UK) inflation, Bailey said that these effects "are not straightforward to predict.”

Bailey didn’t guide about the likely interest rate action in the monetary policy meeting on December 19, but traders expect the BoE to leave interest rates unchanged at 4.75%.

Market expectations for the BoE to keep interest rates steady have been prompted by fears of United Kingdom (UK) inflation remaining persistent. UK’s inflation report for October showed that the annual core Consumer Price Index (CPI) – which excludes volatile items – accelerated to 3.3% and the service inflation rose to 5%. Inflation in the services sector is closely tracked by BoE officials for decision-making on the interest rate policy.

Daily digest market movers: Pound Sterling turns upside down against US Dollar

• The Pound Sterling broadly consolidates against the US Dollar (USD) after facing selling pressure near 1.2700 in London trading hours on Wednesday. The GBP/USD pair is experiencing some whipsaw moves as the US Dollar (USD) rises.
• Investors will pay close attention to the US Nonfarm Payrolls (NFP) data on Friday as the Federal Reserve (Fed) started the policy-easing cycle in September amid worries over deteriorating labor demand, with high confidence over inflation remaining on a sustainable path to the bank’s target of 2%.
• In Wednesday’s session, investors will focus on Fed Chair Jerome Powell’s speech at the New York Times DealBook Summit for fresh guidance on interest rates. The probability for the Fed to cut interest rates by 25 basis points (bps) to 4.25%-4.50% is at 74%, while the rest favors leaving them unchanged at their current levels, according to the CME FedWatch tool.
• On the economic front, investors will look at the US ADP Employment Change and the ISM Services Purchasing Managers’ Index (PMI) data for November on Wednesday. Economists expect the US private sector to have added fresh 150K jobs in November, significantly lower than 233K in October. In the same period, the Services PMI is estimated to have grown at a slower pace to 55.5 from the prior release of 56.0. A figure above 50.0 signals an expansion in economic activity.

Technical Analysis: Pound Sterling drops from 20-day EMA

The Pound Sterling faces sellers against the US Dollar after a mean-reversion move to near the 20-day Exponential Moving Average (EMA) around 1.2710. The GBP/USD pair could fall further as its outlook remains bearish, with all short-to-long-term Exponential Moving Averages (EMAs) sloping downwards.

The 14-day Relative Strength Index (RSI) rebounds after turning oversold. However, the downside bias is still intact.

Looking down, the pair is expected to find a cushion near the upward-sloping trendline around 1.2500, which is plotted from March 2023 low near 1.1800. On the upside, the 200-day Exponential Moving Average (EMA) around 1.2830 will act as key resistance.

The Euro (EUR) traded a subdued range, waffling around 1.05 levels. Pair was last at 1.0492, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Political uncertainties may continue to drag on EUR

“French’s minority government faces a real risk of falling apart after far-right and left-wing parties submitted no-confidence motions. Debate is expected to start 4pm local time (11pm SGT) and the voting will commence shortly thereafter. No-confidence motion requires more than half of the lower house votes (i.e. 288 votes) to succeed. No single party or bloc has sufficient votes to pass a no-confidence motion on its own. In the event of a successful no-confidence vote, PM Barnier and cabinet will likely have to resign and the government goes into caretaker mode (to be appointed by President Macron). No legislative elections can be held until 1 year after the last elections that was held in July. In the interim, Macron will need to appoint a new Prime minister.”

“Political uncertainties did not stop at France, In Germany, Chancellor Scholz is expected to call for a vote of confidence on 11 Dec and the Bundestag will vote on 16 Dec. To survive the vote, Scholz would need to receive the support of an absolute majority of 367 votes. But in the event, he fails, then Germany is likely to make way for elections on 23 Feb 2025. Far right AfD is calling for Germany to leave the European Union, the EUR and Paris climate deal as the party prepares for early elections.”

“Political uncertainties may continue to drag on EUR. But given the bout of uncertainties so far, the EUR has also refused to test much lower. Price action suggests that short EUR trades may be at stretched levels. A flush out of stale EUR shorts cannot be ruled out and that can come of any upside data surprise out of Europe or downside surprise in US data. Daily momentum is mild bullish while RSI is flat. Sideways trade likely. Support at 1.0450 levels before 1.0330. Resistance at 1.0570 (21 DMA), 1.0610 and 1.0670 (38.2% fibo retracement of Oct high to Nov low).”

• The Mexican Peso is trading little changed on Wednesday after making gains on the previous day. 
• The Peso has been aided by stronger-than-expected Mexican jobs data and idiosyncratic factors impacting its peers. 
• Technically, USD/MXN is finding support at a major trendline as it consolidates within a broader uptrend.

The Mexican Peso (MXN) mostly trades flat in its key pairs on Wednesday after strengthening on the previous day, buoyed by lower-than-expected unemployment data from Mexico. 

Idiosyncratic factors impacted each of the Peso’s major pairs, with the key themes being increasing political instability and weaker economic data in Europe and continued expectations that the Federal Reserve (Fed) will move to cut interest rates in the US.  

Mexican Peso gains after release of Jobless data

The Mexican Peso strengthened on Tuesday after data from Mexico’s National Statistics Agency (INEGI) showed the Jobless Rate fell to 2.5% in October from 2.9% in September, well below expectations of remaining at a stable 2.9%. On a seasonally adjusted basis, unemployment fell to 2.5% from 2.7% previously. 

The Mexican Peso rose a third of a percentage point against the US Dollar (USD) to close at 20.33 on Tuesday. It was aided by a Greenback that weakened due to continued expectations that the Federal Reserve (Fed) will cut interest rates in December. A series of Fed speakers repeated broadly the same message: that they thought the US economy was in a good position and interest rates should therefore continue to fall. Lower interest rates are negative for the US Dollar (USD) as they reduce foreign capital inflows.

The Peso rose a quarter of a percentage point to close at 21.37 to the Euro (EUR) on Tuesday as the single currency faced downside pressure from heightened political risk in France, where the minority centrist government of Prime Minister Michel Barnier faces a vote of no confidence after opposition parties rejected his proposed Budget. If successful, the vote would bring down the French government and lead to political turmoil in one of the Eurozone’s key member states.

Against the Pound Sterling (GBP) the Peso closed Tuesday up two-tenths of the percent at 25.77 as a run of weak data for the UK – most recently in the form of lower-than-expected Retail Sales in October and activity data in November – led markets to price in a higher probability of the Bank of England (BoE) cutting interest rates before the end of the year. 

Technical Analysis: USD/MXN finds support from long-term trendline

USD/MXN consolidates in a range with an up-sloping trendline as a base. More broadly, the pair is rising in a channel and is in an uptrend on a medium and long-term basis. 

USD/MXN 4-hour Chart 

The pair is currently trading along support from the trendline but it will probably rise up to the top of the range at around 20.70 (red dashed line) as it continues its oscillations. 

A decisive break above the top of the range at 20.80 would be required to signal the start of a more bullish short-term trend in line with longer-term up cycles. Such a move would be likely to rally up to a target at about 21.00, where resistance will likely kick in because of its round-number and psychological significance. 

The Organization for Economic Co-operation and Development (OECD) warned of increasing growth risks from rising trade tensions and protectionism even after raising the global growth outlook for the next year.

Key takeaways

Silver prices (XAG/USD) fell on Wednesday, according to FXStreet data. Silver trades at $30.82 per troy ounce, down 0.65% from the $31.03 it cost on Tuesday.

Silver prices have increased by 29.54% 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 85.66 on Wednesday, up from 85.16 on Tuesday.

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

Yesterday's news of the brief imposition of martial law in South Korea came as a shock. Korean currency and asset markets play a significant role in the investment universe, where the Korean won is the 12th most traded currency in the world (BIS 2022) and its government bonds make up 9-10% of emerging market local currency bond indices. Indeed, Korea recently celebrated its inclusion into the FTSE Russell's World Government Bond Index. Global investors will therefore be closely monitoring developments in Korea over the coming days, ING’s FX analysts Chirs Turner notes.

DXY to find good buying interest under 106.00

“USD strength is not entirely being led by the second coming of Donald Trump. A lame duck government in Germany and potentially France too today if a no-confidence vote is successful, plus this Korean news, will only add to confidence that the relatively high rates (USD one-week deposit rates at 4.6%) and liquidity make the dollar the most compelling currency in which to park cash balances right now. Yes, there is the risk that US macro data softens a little and can drag the dollar a little softer, but taking defensive positions in something like the Japanese yen (deposit rate at 0.11%) or Swiss franc (0.86%) can be expensive.”  

“In focus for the US today is ADP employment data (1415CET) and ISM Services (16CET). The ADP number has been discredited this year, but the ISM services number occasionally moves markets. There seems no reason to see a sharp fall here and actually the JOLTS job opening data we discussed yesterday came in better than expected.” 

“Perhaps more interesting today will be Fed communication. Fed Chair Jerome Powell speaks in a moderated New York Times discussion at 1940CET. And the Fed's Beige Book is released at 2000CET. Both can provide a little colour ahead of the FOMC meeting on 18 December, where the Fed looks minded to ease policy. A 25bp cut is not fully priced and softer short-dated US rates could drag the dollar a little softer. Yet there are plenty of reasons to suspect the Dollar Index will find good buying interest under 106.00.”

Having fallen nearly 8% between late September and mid-November, it is no surprise to see EUR/USD undergoing some consolidation. Be it European political risk, weak activity, the threat of trade wars or energy prices creeping higher (EU gas inventories are starting to come under pressure) there are many reasons to be underweight in the euro, ING’s FX analysts Chris Turner notes.

EUR/USD to be capped around the 1.0550 area

“We do have ECB President Christine Lagarde speaking at the EU parliament at 1430CET. We doubt she will shed much light on whether the ECB will cut rates by 25bp or 50bp on 12 December, although 25bp looks much more likely at the moment.” 

“Our bias would be for EUR/USD to be capped around the 1.0550 area and it would be no surprise if EUR/USD dropped back towards 1.0400 over the coming days – unless Friday's US NFP data dramatically disappoints consensus of +200/220k.” 

“Elsewhere, we have Bank of England Governor Andrew Bailey speaking at a Financial Times event at 1000CET today. He occasionally errs into dovish territory but probably does not have the ammunition to do that today. Still, there are downside risks to GBP/USD from the speech – perhaps taking the pair to 1.2590/2620 on the day.”

Bank of England (BoE) Governor Andrew Bailey spoke in a pre-recorded interview at the Global Boardroom Digital Conference hosted by the Financial Times (FT) on Wednesday.

Key quotes

Market reaction

At the time of writing, GBP/USD is losing 0.21% on the day to trade near 1.2640, having come under renewed selling pressure following these dovish comments.

The US Dollar (USD) traded little changed as markets mulled political risks in France and Korea. DXY was last at 106.51, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Consolidation likely intra-day

“US data remains the key focus this week – ISM services (Wed); initial jobless claims (Thu); payrolls (Fri). There is a good chance Nov NFP rebound sharply after hurricanes and major strikes may have distorted Oct NFP. Consensus is looking for +218k print while 6m average is at 131k. We caution that a lower print could see USD bears return.”

“Daily momentum is mild bearish though RSI is flat. Consolidation likely intra-day. Key support at 106.20 (21 DMA) if broken may see bearish momentum gather traction. Next support at 105.40 levels (38.2% fibo), 104.00/40 (50, 200 DMAs). Resistance at 106.50, 107.20.”

• USD/JPY gains strong positive traction on Wednesday, though the upside potential seems limited.
• Less dovish Fed expectations push the US bond yields higher and undermine the lower-yielding JPY.
• December BoJ rate hike bets and subdued USD demand might cap the pair ahead of Fed’s Powell.

The USD/JPY pair builds on the overnight bounce from the 148.65 area, or its lowest level since October 11 and gains strong follow-through traction on Wednesday. The intraday ascent extends through the first half of the European session and lifts spot prices to a fresh daily high, around the 150.55 region in the last hour.

Investors now seem convinced that the Federal Reserve (Fed) will adopt a more cautious approach to cutting rates amid hopes that US President-elect Donald Trump's policies will boost inflation. This, in turn, pushes the US Treasury bond yields higher and is seen as a key factor driving flows away from the lower-yielding Japanese Yen (JPY). Meanwhile, expectations for a less dovish Fed act as a tailwind for the US Dollar (USD) and provide an additional boost to the USD/JPY pair. 

The USD bulls, however, seem reluctant to place aggressive bets and opt to wait for Fed Chair Jerome Powell's speech for more cues about the future rate-cut path. Moreover, the Tokyo November Consumer Price Index (CPI) print released last week indicated that the underlying inflation is gaining momentum and fueled speculations that the Bank of Japan (BoJ) will hike interest rates again in December. This might contribute to keeping a lid on any further gains for the USD/JPY pair. 

Traders now look forward to the release of the US ADP report on private-sector employment for some impetus ahead of the US ISM Services PMI. The focus, however, will remain on the official monthly employment details or the Nonfarm Payrolls (NFP) report on Friday, which should guide Fed policymakers on their next decision. This, in turn, will drive the USD demand and determine the near-term trajectory for the USD/JPY pair ahead of the FOMC/BoJ event risks in two weeks.

There has been no increase in either downward or upward momentum; the Pound Sterling (GBP) is likely to trade in a 1.2630/1.2705 range. In the longer run, outlook for GBP has turned neutral; it is likely to trade between 1.2580 and 1.2750, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.   

Likely to trade between 1.2580 and 1.2750

24-HOUR VIEW: “Two days ago, GBP fell sharply to 1.2619 before rebounding. Yesterday, we highlighted that ‘the sharp drop seems overdone.’ We also highlighted that ‘instead of weakening, GBP is more likely to trade in a 1.2620/1.2710 range.’ GBP then traded in a narrower range than expected, between 1.2638 and 1.2700, closing at 1.2673, slightly higher by 0.12%. There has been no increase in either downward or upward momentum. Today, we continue to expect range trading, probably between 1.2630 and 1.2705.”

1-3 WEEKS VIEW: “Yesterday (03 Dec), when GBP was at 1.2660, we revised our outlook from positive to neutral. We indicated that GBP ‘is likely to trade in a range, probably between 1.2580 and 1.2750.’ We continue to hold the same view.”

USD/KRW saw a sharp run up towards 1444 after President Yoon surprisingly declared martial law. USD/KRW was last at 1413.65 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Pair may retrace in the interim

“The pair subsequently fell after martial law was rescinded (all in the same night). Domestic political uncertainty is the main issue as opposition leaders are now calling for President Yoon to resign or face impeachment. Political uncertainty at home may temporarily weigh on KRW and should fade once we get more clarity.”

“That said, Korea economy is facing a double whammy of sluggish domestic activity and slowing exports. KRW is typically a highly sensitive currency to market developments. The threat of US tariffs, fears of Fed slowing rate cut cycle, RMB trading weaker, alongside domestic political uncertainties may continue to weigh on KRW.”

“Daily momentum is mild bullish while RSI turned lower from overbought conditions. Pair may retrace in the interim. Support at 1410, 1400 (21DMA) and 1385 levels. Resistance at 1425, 1445 levels.”

The Euro (EUR) is expected to continue to trade in a range, most likely between 1.0480 and 1.0535. In the longer run, instead of a rebound, EUR is expected to trade in a range for now, most likely between 1.0430 and 1.0580, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.  

EUR is expected to trade between 1.0430 and 1.0580

24-HOUR VIEW: “Following EUR sharp drop to 1.0459 on Monday, we highlighted yesterday (Tuesday) that ‘deeply oversold conditions and slowing momentum indicate that EUR is unlikely to weaken further.’ We expected EUR to ‘trade in a 1.0470/1.0540 range.’ Although our view of range trading was correct, EUR traded in a narrower range than expected (1.0479/1.0535), closing slightly higher at 1.0509 (+0.11%). The relatively quiet price action provides no fresh clues, and we continue to expect EUR to trade in a range, most likely between 1.0480 and 1.0535.”

1-3 WEEKS VIEW: “We highlighted yesterday (03 Dec, spot at 1.0500) that “instead of a rebound, EUR is expected to trade in a range for now, most likely between 1.0430 and 1.0580.” EUR then traded in a relatively quiet manner, and our view remains unchanged.”

• The ADP Employment Change report is seen showing a deceleration of job creation in the US private sector in November.
• The ADP report could anticipate the more relevant Nonfarm Payrolls report on Friday.
• The US Dollar looks to extend its positive start to the week. 

The ADP Research Institute is set to publish its monthly update on private-sector job growth for November on Wednesday. Known as the ADP Employment Change report, it’s expected to show that US employers added 150K jobs last month, down from 233K in October.

Typically released two days before the official Nonfarm Payrolls (NFP) report, the ADP data is often viewed as an early preview of the Bureau of Labor Statistics (BLS) jobs report. However, the connection between the two has proven to be somewhat inconsistent over time. For example, while ADP showed a 233K gain in October, the official number reported by the BLS was a meager 12K. 

Employment growth and its role in shaping Fed policy

US employment data has taken centre stage in determining monetary policy decisions since the Federal Reserve’s (Fed) Chief Jerome Powell and other rate setters suggested that inflation has been convincingly trending towards the central bank’s 2.0% target.

The Fed has been walking a tightrope in the post-pandemic economy, striving to balance its dual mandate: maximum employment and price stability. Faced with soaring inflation in 2022, the Fed responded by hiking interest rates to historic highs in a bid to cool the economy and bring prices under control.

The labour market played a crucial role in this equation. Tight job conditions risked adding more fuel to the inflation fire, but recent months have seen signs of a healthier economic balance. This shift allowed the Fed to adjust its strategy. At its September meeting, it surprised markets with a 50 basis-point (bps) rate cut and hinted that more reductions could be on the horizon.

True to this guidance, the Fed implemented an additional 25 bps rate cut at its November 7 meeting. Following this move, Chair Powell emphasised that the Fed is in no rush to continue cutting rates, signalling a potential pause in December. This hawkish shift led to a significant reduction in market expectations for further cuts at the December 18 gathering.

Fed officials, including Powell, have repeatedly described the US economy as being “in a good place.”

The CME Group’s FedWatch Tool currently shows a more than 75% chance of a quarter-point rate cut later this month.

However, upcoming employment data could influence these odds. A stronger-than-expected ADP Employment Change report might support the case for holding rates steady, bolstering the US Dollar (USD) by maintaining the Fed’s restrictive stance. Conversely, a weaker report could revive speculation about another rate cut, potentially challenging the Greenback’s recent strength.

Even so, any reaction to the ADP report may be fleeting. Investors are likely to wait for Friday’s Nonfarm Payrolls (NFP) report, which traditionally provides a more comprehensive view of the labour market, before making significant moves.

When will the ADP Report be released, and how could it affect the USD Index?

The ADP Employment Change report for November will be released on Wednesday at 13:15 GMT. It’s expected to show that the US private sector added 150K new jobs during the month.

As markets await the report, the US Dollar Index (DXY) is looking to consolidate a very auspicious start to the week, bouncing off last week’s lows near 105.60 and briefly reclaiming the 106.70 region so far.

From a technical perspective, Pablo Piovano, Senior Analyst at FXStreet, says: “The US Dollar Index (DXY) continues its steady climb, with the next major target being the recent cycle high just above the 108.00 level on November 22. Beyond that, it aims for the November 2022 top of 113.14 (November 3)”.

“On the downside, any pullback would first encounter support at the weekly low of 105.61 (November 29), seconded by the critical 200-day SMA, currently at 104.04, and the November low of 103.37 (November 5). Further declines could test the 55-day and 100-day SMAs at 103.95 and 103.29, respectively. A deeper retreat might even bring the index closer to its 2024 bottom of 100.15, recorded on September 27”, Pablo adds.

Finally, Pablo concludes: “The Relative Strength Index (RSI) on the weekly chart hovers around the 58 region and points upwards. At the same time, the Average Directional Index (ADX) has lost some momentum, receding below 44 but still indicative of a solid uptrend”.

South Korean President Yoon Suk Yeol sent shockwaves across markets after he declared an emergency martial law at around 11 pm local time on Tue night (3 Dec), only to lift it six hours later following a parliamentary vote where 190 of 300 lawmakers demanded the lifting of the martial law. Under South Korean law, the government must lift martial law if a majority in parliament demands it in a vote, UOB Group’s FX analysts Ho Woei Chen and Peter Chia note.

Political miscalculation likely to bring early end to President Yoon’s term

“South Korean President Yoon Suk Yeol sent shockwaves across markets after he declared an emergency martial law at around 11 pm local time on Tue night (3 Dec), only to lift it six hours later. South Korea financial authorities’ pledge to ‘inject unlimited liquidity’ is expected to stabilize markets.”

“Next to watch will be the political consequences on President Yoon. Impeachment proceedings could follow soon after, bringing an early end to his term originally set to end in May 2027. A general election will likely be held in early 2025 following the impeachment.”

“Given the political uncertainties, the BOK could deliver the next 25 bps cut as soon as its Jan meeting (16 Jan). While the currency has since pared most of the losses, USD/KRW is likely to stay above 1,400 in the near term, reflecting the political uncertainties. At the same time, BOK’s pledge may help reduce KRW’s downside. Overall, we reiterate the view that USD/KRW will trade higher across most part of 2025.”

“I see policy easing continuing in the coming months,” European Central Bank (ECB) policymaker Olli Rehn said on Wednesday.

Additional quotes

• EUR/USD gains slightly with investors focusing on political jitters in France as the no-confidence vote against the prime minister looms. 
• ECB Holzmann supports a 25 bps interest rate cut in a policy meeting on December 12.
• Investors will also focus on US private employment and Services PMI data for November.

EUR/USD edges higher and holds the key support of 1.0500 in European trading hours on Wednesday. The major currency pair is broadly sideways as investors await the no-confidence motion by French far-right and left-wing parties against Prime Minister Michel Barnier. The vote has bolstered political uncertainty in the Eurozone’s second-largest nation due to the increasing chances that the French government will collapse, hurting the Euro (EUR).

Looking at the economic calendar, investors will also focus on the United States (US) ADP Employment Change and the ISM Services Purchasing Managers’ Index (PMI) data for November, which will be published in the North American session.

Economists expect the US private sector to have added fresh 150K jobs in November, significantly lower than 233K in October. In the same period, the Services PMI – which gauges activity in the services sector – is estimated to decline to 55.5 from the prior release of 56.0, suggesting a slowdown in growth.

The economic data will influence market expectations for the Federal Reserve’s (Fed) likely interest rate action in its monetary policy meeting on December 18. There is a 74% chance that the Fed will reduce its key borrowing rates by 25 basis points (bps) to 4.25%-4.50% and a 26% probability of rates being unchanged at the current levels, according to the CME FedWatch tool.

In Wednesday’s session, investors will also focus on the Fed’s Beige Book and Chair Jerome Powell’s speech for fresh interest rate guidance.

Meanwhile, a string of Fed officials have recently said that they see more interest rate cuts as appropriate as inflation continues to cool down. “I expect it will be appropriate to continue to move to a more neutral policy setting over time,”  New York Fed President John Williams said on Monday. However, Williams didn’t provide any target for the Federal Funds Rate and said that the path would be data-dependent.

Ahead of the private sector employment and the service sector activity data, the US Dollar (USD) exhibits a muted trend. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, wobbles around 106.30.

The outlook of the US Dollar remains broadly positive as US President-elect Donald Trump threatened to impose 100% tariffs on BRICS. “The idea that the BRICS countries are trying to move away from the dollar while we stand by and watch is OVER,” Trump wrote in a social media post over the weekend. 

Daily digest market movers: EUR/USD could remain edgy ahead of French no-confidence vote

• The French no-confidence debate is set to start at 15:00 GMT, and voting should happen around three hours later. Since Marine Le Pen announced on Monday that her party would vote to bring down the government, it would now require someone in the left-wing parties to shift position in order for Prime Minister Barnier to win the vote and avoid the fallout of the government.
• EUR/USD gains slightly as the US Dollar ticks down. Meanwhile, the outlook of the Euro (EUR) remains weak as European Central Bank (ECB) officials support more interest rate cuts. Traders expect the ECB to cut its key borrowing rates again in its monetary policy meeting on December 12 but are mixed about the likely interest-rate cut size.
• ECB policymaker and Governor of Austrian Central Bank Robert Holzmann said in an interview with Oberoesterreichische Nachrichten newspaper on Tuesday: “As the data currently stands, I think a reduction of 0.25 percentage points is conceivable, not more.”
• When asked about his views on the Eurozone’s inflation outlook, Holzmann said he sees risks to inflation skewed on the upside due to Trump’s tariffs policies. However, the extent of the effect will be based on how he will implement polcies.
• On the contrary, ECB board member Piero Cipollone said on Tuesday that US tariffs would weaken the economy, which translates into lower consumption and thus reduced pressure on prices.

Technical Analysis: EUR/USD consolidates around 1.0500

EUR/USD trades in a tight range near 1.0500 in Wednesday’s European session. The outlook of the major currency pair remains bearish as all short-to-long-term day EMAs are declining, pointing to a downside trend.

The 14-day Relative Strength Index (RSI) remains close to 40.00, suggesting that the bearish momentum has faded. However, the bearish trend has not been extinguished.

Looking down, the November 22 low of 1.0330 will be a key support for Euro bulls. On the flip side, the 50-day EMA near 1.0750 will be the key barrier for the Euro bulls.

• USD/CHF holds steady near 0.8860 in Wednesday’s early European session. 
• The constructive outlook of the pair remains in play above the 100-day EMA with the bullish RSI indicator. 
• The first upside barrier emerges at 0.8938; the initial support level is located at the 0.8800-0.8795 region. 

The USD/CHF pair flat lines around 0.8860 on Wednesday during the early European trading hours. Traders prefer to wait on the sidelines ahead of the key US events this week. The US Federal Reserve Chair Jerome Powell is set to speak later on Wednesday. On Friday, the attention will shift to the US November employment data, including Nonfarm Payrolls (NFP), Unemployment Rate, and Average Hourly Earnings data.

According to the daily chart, USD/CHF keeps a bullish vibe at present as the price is well-supported above the key 100-day Exponential Moving Average (EMA). Furthermore, the upward momentum is supported by the 14-day Relative Strength Index (RSI), which is located above the midline near 58.00, suggesting that the path of least resistance is to the upside. 

The upper boundary of the Bollinger Band at 0.8938 acts as an immediate resistance level for USD/CHF. Any follow-through buying above this level could expose 0.8957, the high of November 22. The 0.9000 psychological level appears to be a tough nut to crack for USD bulls. 

On the other hand, the first downside target of the pair emerges in the 0.8800-0.8795 zone, representing the round mark and the low of November 29. Extended losses below the mentioned level could pave the way to the 0.8745-0.8735 regions, portraying the lower limit of the Bollinger Band and the 100-day EMA.  

USD/CHF daily chart

Here is what you need to know on Wednesday, December 4:

The action in foreign exchange markets remain choppy early Wednesday as investors refrain from taking large positions ahead of key events. Bank of England (BoE) Governor Andrew Bailey, European Central Bank (ECB) President Christine Lagarde and Federal Reserve (Fed) Chairman Jerome Powell will be delivering speeches later in the day. The US economic calendar will feature ADP Employment Change and ISM Services PMI data for November.

Following Monday's rebound, the US Dollar (USD) Index lost its momentum and registered small losses on Tuesday. The index fluctuates in a tight range below 106.50 early Wednesday, while US stock index futures trade in positive territory. Powell will participate in a moderated discussion at the New York Times DealBook Summit, starting at 18:45 GMT.

Following news of South Korean President Yoon Suk Yeo declaring martial law, USD/KRW surged to its highest level in two years above 1,440 during the American trading hours on Tuesday. In the Asian session on Wednesday, the Bank of Korea said that it will deploy various measures to stabilize the Korean Won exchange rate. Additionally, South Korea’s Parliament stepped in hours after President Yoon Suk Yeol’s announcement to soundly reject the martial law call and opposition parties submitted an impeachment bill against the president. Following these developments, USD/KRW staged a deep correction and was last seen losing 0.6% on the day at around 1,409.

EUR/USD struggled to gather bullish momentum and posted small gains on Tuesday. The pair holds its ground in the European morning on Wednesday and trades above 1.0500. ECB President Lagarde will testify before the Committee on Economic and Monetary Affairs of the European Parliament in Brussels, Belgium, starting at 13:30 GMT.

GBP/USD closed with small gains on Tuesday and continued to edge higher toward 1.2700 early Wednesday. BoE Governor Bailey's pre-recorded keynote interview at the Financial Times Live Global Boardroom will be released at 09:00 GMT.

The data from Australia showed on Wednesday that the Gross Domestic Product (GDP) grew at an annual rate of 0.8% in the third quarter. This reading followed the 1% growth recorded in the second quarter and missed the market expectation of 1.1%. AUD/USD turned south following the disappointing data and dropped to its weakest level since early August near 0.6400. The pair stages a correction in the European morning and trades near 0.6450.

After closing the second consecutive day virtually unchanged on Tuesday, USD/JPY gains traction and trades in positive territory above 150.00 early Wednesday.

Gold failed to make a decisive move in either direction and closed virtually unchanged on Tuesday. XAU/USD extends its sideways grind below $2,650 in the European morning on Wednesday.

• GBP/USD recovers to near 1.2690 in Wednesday’s early European session. 
• The negative view of the pair prevails below the 100-day EMA with a bearish RSI indicator. 
• The potential support level is located at 1.2600; the first resistance level is seen at 1.2750.

The GBP/USD pair trades in positive territory for the second consecutive day around 1.2690 during the early European session on Wednesday. However, the potential upside for GBP/USD seems limited as the expectation of less aggressive interest rate cut by the US Federal Reserve (Fed) and the concerns about US President-elect Donald Trump's tariffs policies could provide some support to the Greenback. Investors await Federal Reserve Chair Jerome Powell's speech for cues about the interest rate outlook. 

The bearish outlook of GBP/USD remains in play as the major pair holds below the key 100-day Exponential Moving Average (EMA) on the daily timeframe. Furthermore, the 14-day Relative Strength Index (RSI) remains capped below the midline around 45.35, suggesting that the further downside cannot be ruled out. 

The 1.2600 psychological level acts as an initial support level for the major pair. Further south, the next downside target to watch is 1.2467, the lower limit of the Bollinger Band. A breach of this level could push prices lower toward 1.2331, the low of April 23. 

In the bullish case, the first resistance level is seen at 1.2750, the high of November 29. Sustained bullish momentum could see a rally to 1.2875, the 100-day EMA. The additional upside filter emerges at 1.2920, the upper boundary of the Bollinger Band.  

GBP/USD daily chart

Reuters is carrying a story on Wednesday, citing that South Korean opposition parties submitted an impeachment bill against President Yoon Suk Yeol.

The vote on the impeachment bill could take place either on December 6 or 7.

Market reaction

USD/KRW erases earlier gains to trade 0.25% lower on the day near 1,410 at press time. The pair jumped to fresh two-year highs near 1,445 on Tuesday amid the South Korean political instability.

• AUD/JPY attracts heavy selling following the release of softer domestic GDP growth figures.
• A slightly oversold RSI on the daily chart prompts intraday short covering around the cross.
• Bets for an early RBA rate cut and December BoJ rate-hike expectations should cap the upside.

The AUD/JPY cross dropped to its lowest level since September 18 during the Asian session on Wednesday as softer Australian GDP print lifted bets for an early interest rate cut by the Reserve Bank of Australia (RBA). Moreover, expectations that the Bank of Japan (BoJ) will hike interest rates again in December contribute to the Japanese Yen's (JPY) relative outperformance and exert additional pressure on the currency pair. 

Spot prices, however, managed to rebound over 70 pips from sub-96.00 levels and currently trade around 96.70, down 0.20% for the day. The Relative Strength Index (RSI) on the daily chart is flashing slightly oversold conditions and turns out to be a key factor that prompts some short-covering around the AUD/JPY cross. That said, the technical setup warrants caution before positioning for any further gains.

Last week's breakdown below the 98.00 round figure was seen as a key trigger for bearish traders. Furthermore, oscillators on the daily chart are holding deep in negative territory. This, in turn, suggests that any subsequent move up could be seen as a selling opportunity ahead of the 97.00 mark and cap the AUD/JPY cross near the 97.50 horizontal barrier. The latter might now act as a key pivotal point for short-term traders. 

On the flip side, the 96.00 round figure might continue to offer some support. A convincing break and acceptance below the said handle will reaffirm the negative outlook and pave the way for deeper losses. The AUD/JPY cross might then slide to the next relevant support near the 95.30 region en route to the 95.00 psychological mark. The downfall could eventually drag spot prices to the 94.45-94.40 horizontal support and the 94.00 mark.

AUD/JPY daily chart

FX option expiries for Dec 4 NY cut at 10:00 Eastern Time via DTCC can be found below.

EUR/USD: EUR amounts

• 1.0400 1.8b
• 1.0450 830m
• 1.0525 1.9b
• 1.0700 1b

GBP/USD: GBP amounts     

• 1.2500 550m
• 1.2600 424m

USD/JPY: USD amounts                     

• 150.00 452m
• 151.25 533m
• 151.51 402m

USD/CHF: USD amounts     

• 0.8800 595m
• 0.8900 509m

AUD/USD: AUD amounts

• 0.6450 1.3b
• 0.6500 1.3b
• 0.6550 650m

USD/CAD: USD amounts       

• 1.3900 767m

NZD/USD: NZD amounts

• 0.5710 658m

EUR/GBP: EUR amounts        

• 0.8320 446m
• 0.8410 428m

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

The price for Gold stood at 7,206.19 Indian Rupees (INR) per gram, up compared with the INR 7,193.10 it cost on Tuesday.

The price for Gold increased to INR 84,050.36 per tola from INR 83,898.89 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.)

• NZD/USD drops to a one-week low following the release of softer Services PMI from China.
• US-China trade war fears and a modest USD uptick further contribute to the intraday fall.
• Traders look forward to Fed Chair Jerome Powell’s speech for some meaningful impetus.

The NZD/USD pair attracts fresh sellers following the previous day's good two-way price move and drops to a one-week low during the Asian session on Wednesday. Spot prices, however, manage to rebound a few pips in the last hour and currently trade around mid-0.5800s, down over 0.50% for the day.

A private survey released earlier today showed that China’s services sector grew less than expected in November, which adds to worries about the fragile recovery in the world's second-largest economy. In fact, China's Caixin Services PMI unexpectedly fell to 51.5 in November from 52.0 in the prior month. This comes on top of new US export curbs on China and concerns about US President-elect Donald Trump's impending tariffs, which, in turn, weigh heavily on antipodean currencies, including the Kiwi. 

The US Dollar (USD), on the other hand, continues to draw support from the upbeat US data released on Tuesday, which eased fears of a significant slowdown in the labor market. Adding to this, expectations that Trump's expansionary policies will boost inflation might force the Federal Reserve (Fed) to take a cautious stance on cutting rates. This, along with persistent geopolitical uncertainty continues to underpin the safe-haven Greenback and exerts additional downward pressure on the NZD/USD pair.

The USD bulls, however, seem reluctant to place aggressive bets and opt to move to the sidelines ahead of Fed Chair Jerome Powell's speech later this Wednesday. Apart from this, the release of the closely-watched US Nonfarm Payrolls (NFP) report on Friday should offer fresh cues about the Fed's rate-cut path. This, in turn, will play a key role in influencing the near-term USD price dynamics. Nevertheless, the fundamental backdrop suggests that the path of least resistance for the NZD/USD pair is to the downside.

European Central Bank (ECB) policymaker Robert Holzmann said on Wednesday that a “25 basis points (bps) rate cut is conceivable in December, not more.”

Additional quotes

Market reaction

EUR/USD was last seen trading 0.07% lower on the day at 1.0500, unperturbed by these comments.

• Gold price continues its struggle to gain any meaningful traction on Wednesday.
• Bets for a less dovish Fed and an uptick in the US bond yields cap the precious metal.
• Geopolitical risks and trade war fears lend some support amid subdued USD demand.

Gold price (XAU/USD) extends its consolidative price move on Wednesday and oscillates in a narrow range below the $2,650 level during the Asian session. Traders now seem reluctant and opt to wait for more cues about the Federal Reserve's (Fed) rate-cut path before placing directional bets. Hence, the market focus will remain glued to Fed Chair Jerome Powell's speech later today. Apart from this, the closely watched US Nonfarm Payrolls (NFP) report should guide Fed policymakers on their next monetary policy decision and provide some meaningful impetus to the non-yielding yellow metal.

In the meantime, the upbeat US data released on Tuesday eased fears of a significant slowdown in the labor market. This, along with expectations that US President-elect Donald Trump's expansionary policies will boost inflation, might force the Fed to take a cautious stance on cutting rates. This, in turn, remains supportive of a modest uptick in the US Treasury bond yields, which acts as a tailwind for the US Dollar (USD) and caps the upside for the Gold price. That said, persistent geopolitical uncertainty and concerns about Trump's tariff plans continue to offer some support to the safe-haven XAU/USD. 

Gold price traders await more cues about the Fed’s rate-cut path before placing directional bets

• Traders now seem reluctant to place aggressive directional bets around the Gold price and await Federal Reserve Chair Jerome Powell's speech for cues about the interest rate outlook. 
• A survey (JOLTS) published by the US Bureau of Labor Statistics (BLS) on Tuesday showed that the number of job openings increased solidly from 7.37 million to 7.74 million in October. 
• The strong US labor market report comes on top of stalling progress in lowering inflation to the 2% target and suggests that the US central bank could pause its rate-cutting cycle next year. 
• The prospects for a less dovish Fed remain supportive of a modest uptick in the US Treasury bond yields, though does little to impress the US Dollar bulls or provide any meaningful impetus.
• According to the CME Group's FedWatch Tool, the markets are still pricing over a 70% chance that the Fed will cut rates by 25 basis points at its upcoming meeting in December. 
• San Francisco Fed President Mary Daly said that the US economy is in a good place the balanced labor market is not a source of inflation and that the December rate cut is not off the table.
• Fed Governor Adrianna Kugler noted that the progress on inflation is still underway and the central bank will make decisions meeting by meeting and that the policy is not on a preset course.
• Chicago Fed President Austan Goolsbee said that rates remain restrictive and need to come down a fair amount from where they are now over the next year if inflation gets close to the target.
• US President-elect Donald Trump pledged to impose big tariffs against America’s three biggest trading partners – Mexico, Canada and China – and also threatened a 100% tariff on 'BRICS' nations. 
• Israel carried out its biggest wave of air strikes since the truce agreement with Lebanon in retaliation to the firing of two rockets at Israeli-occupied territory by the Iran-backed group Hezbollah. 

Gold price technicals suggest that the path of least resistance remains to the downside

From a technical perspective, the recent range-bound price action might still be categorized as a bearish consolidation phase against the backdrop of last week's decline. Adding to this, this week's breakdown below a four-day-old ascending channel favors bearish traders. That said, neutral oscillators on the daily chart suggest that any further slide below the overnight swing low, around the $2,622-2,621 area, might continue to find some support near the $2,600 mark. Some follow-through selling, meanwhile, might expose the 100-day Simple Moving Average (SMA), currently around the $2,579-2,78 zone, below which the Gold price could retest the November monthly trough, around the $2,537-2,536 region.

On the flip side, the $2,655 area, followed by the $2,666 region might act as immediate strong barriers. The next relevant hurdle is pegged near the $2,677-2,678 zone, above which the Gold price could aim to reclaim the $2,700 round figure. Any further move up is likely to confront stiff resistance near the $2,721-2,722 supply zone. A sustained strength beyond the latter might shift the bias in favor of bullish traders and pave the way for some meaningful appreciating move in the near term.

• The Indian Rupee steadies in Wednesday’s Asian session.
• India's disappointing GDP data, foreign fund outflows and strengthening of the USD weigh on the INR. 
• The HSBC India Services PMI is due later on Wednesday, ahead of Fed Chair Powell’s speech. 

The Indian Rupee (INR) trades on a flat note on Wednesday after reaching its all-time low in the previous session. The weakness in the local currency is expected to persist due to India's sluggish Gross Domestic Product (GDP) growth, persistent outflows in Indian markets, and significant US Dollar (USD) demand. Nonetheless, the downside for the INR might be limited amid the foreign exchange intervention by the Reserve Bank of India (RBI) via USD sales. 

Investors await the release of the HSBC India Services Purchasing Managers Index (PMI) for fresh impetus, which is estimated to improve to 59.2 in November from 58.5 in October. If the reading shows a stronger-than-expected outcome, this could provide some support to the Indian Rupee. On the US docket, the ADP Employment Change report, final S&P Global Services PMI, ISM Services PMI and the Fed’s Beige Book will be published. Additionally, the Federal Reserve’s (Fed) Chair Jerome Powell speech will be closely watched later in the day. 

Indian Rupee remains vulnerable amid geopolitical uncertainties

• “The RBI may also intervene in the dollar market to provide the rupee with some temporary strength, although broader economic factors will likely keep the rupee under pressure,” said Vishnu Kant Upadhyay, AVP - Research and Advisory at Master Capital Services Ltd. 
• The US JOLTs Job Openings increased from 7.372 million in October to 7.744 million openings in November, the US Bureau of Labor Statistics (BLS) reported on Tuesday. This reading was above the market consensus of 7.48 million.
• San Francisco Fed President Mary Daly said on Tuesday that she sees inflation progress and a solid job market, adding that the central bank has to continue to recalibrate policy. 
• Chicago Fed President Austan Goolsbee noted, "Over the next year it feels to me like rates come down a fair amount from where they are now, but we meet every six weeks because the conditions change.”
• Fed Governor Adriana Kugler stated that the US economy is in a good position after making significant progress in recent years toward our dual-mandate goals of maximum employment and stable prices.  

USD/INR’s uptrend prevails in the longer term

The Indian Rupee trades flat on the day. The constructive outlook of the USD/INR pair remains unchanged as the pair is well supported above the key 100-day Exponential Moving Average (EMA). The path of least resistance level is to the upside as the 14-day Relative Strength Index (RSI) stands above the midline near 67.00, supporting the buyers in the near term. 

The all-time high of 84.77 acts as the first upside barrier for USD/INR. A decisive break above the mentioned level could pave the way to the 85.00 psychological mark, en route to 85.50.

On the downside, a breach of the resistance-turned-support at 84.55 could drag the pair lower to 84.22, the low of November 25. The key contention level is located at 84.00, the 100-day EMA and round figure. 

• USD/CAD lacks any firm intraday direction and is influenced by a combination of diverging forces. 
• The overnight rally in Oil prices and reduced bets for a larger BoC rate cut underpins the Loonie.
• The USD bulls remain on the sidelines ahead of Fed Chair Jerome Powell’s speech later today. 

The USD/CAD pair struggles to capitalize on its gains registered over the past two days and oscillates in a range, around the 1.4070 area during the Asian session on Wednesday. Spot prices remain close to the weekly high, though the mixed fundamental backdrop warrants some caution before placing fresh bullish bets. 

Crude Oil prices consolidate the previous day's strong gains amid expectations that OPEC+ will announce an extension of supply cuts on Thursday. Adding to this, Israel's threat to attack the Lebanese state if its truce with Hezbollah collapses lends some support to the black liquid. This, along with reduced bets for a bigger rate cut by the Bank of Canada (BoC) in December, could underpin the commodity-linked Loonie and act as a headwind for the USD/CAD pair. 

Meanwhile, the US Dollar (USD) continues with its struggle to gain any meaningful positive traction as traders seem reluctant to place aggressive bets ahead of Federal Reserve (Fed) Chair Jerome Powell's speech. This might further contribute to capping gains for the USD/CAD pair. However, expectations that the Fed will take a cautious stance on cutting rates amid concerns that Trump's expansionary policies will boost inflation should act as a tailwind for the buck. 

Traders might also await the release of the US Nonfarm Payrolls (NFP) report on Friday, which should provide more cues about the Fed's rate-cut path and influence the near-term USD price dynamics. This, in turn, suggests that any meaningful USD/CAD slide could be seen as a buying opportunity and remain limited.

Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr said early Wednesday that “changes to capital rules will not increase competition among banks.”

He did not comment on monetary policy or economic outlook.

Market reaction

As of writing, NZD/USD is testing intraday lows at 0.5860, down 0.34% on the day.

Bank of Korea (BoK), the South Korean central bank, said on Wednesday that it will “deploy various measures to stabilize the FX market as needed.

Additional takeaways

Will increase short-term liquidity measures starting Wednesday.

Will loosen collateral policies in repo operation to ease any bond market jitters.

Make any special loans available to inject funds into market if needed.

The central bank stands ready to intervene in the forex market after the South Korean Won (USD/KRW) witnessed intense volatility on Tuesday when President Yoon Suk Yeol declared "emergency martial law", accusing the opposition Democratic Party of sympathising with communist North Korea.

USD/KRW jumped to its highest level since October 2022 at 1,444.05 in reaction to the political jitters before stabilizing to nea 1,415 early Wednesday. The KRW markets breathed a sigh of relief after the parliament voted to reject his martial law declaration, and President Yoon Suk Yeol said that he would soon lift the military rule he had imposed overnight.

According to the latest update, South Korea's opposition party said it would initiate impeachment proceedings against President Yoon Suk Yeol unless he immediately resigned.

• The Australian Dollar attracts some sellers following the release of weaker domestic GDP print.
• China’s economic woes and US-China trade war fears also undermine the China-proxy Aussie.
• The USD bulls remain on the sidelines ahead of Powell’s speech, lending support to AUD/USD.

The Australian Dollar (AUD) moves lower in reaction to weaker domestic Gross Domestic Product (GDP) growth figures. Given that the headline inflation in Australia has fallen to the central bank's 2%-3% target range, slower growth could put pressure on the Reserve Bank of Australia (RBA) to respond with lower interest rates. Furthermore, new US export curbs on China, concerns about China's fragile economic recovery and US President-elect Donald Trump's impending tariffs turn out to be another factor weighing on the China-proxy Aussie. 

The US Dollar (USD), on the other hand, continues to be underpinned by expectations for a less dovish Federal Reserve (Fed), though bulls opt to wait for more cues about the future rate-cut path. This, in turn, assists the AUD/USD pair to hold above the weekly low and a multi-month trough touched last Tuesday. Traders might also opt to move to wait for Fed Chair Jerome Powell's speech later today. Apart from this, the US Nonfarm Payrolls (NFP) report should influence the interest rate outlook in the US and provide a fresh directional impetus. 

Australian Dollar drifts lower as weak GDP print lifts chances for an early RBA rate cut

• The Australian Bureau of Statistics (ABS) reported this Wednesday that the economy expanded by 0.3% in the third quarter and by 0.8% on a yearly basis, missing estimates for a reading of 0.4% and 1.1%, respectively. 
• Commenting on the critical economic report, Australia's Treasurer Jim Chalmers said that the national accounts show positive but weak GDP growth and that it is encouraging to see growth in real disposable incomes.
• According to the latest data published by Caixin on Wednesday, China's Services Purchasing Managers' Index (PMI) declined to 51.5  in November from 52.0 in October.
• The US announced a new set of export controls to curb China's technological advancements and restricted the sale of crucial semiconductor-manufacturing equipment and high-bandwidth computer memory to the country.
• This comes after US President-elect Donald Trump threatened a 100% tariff on BRICS nations – Brazil, Russia, India, China, and South Africa – if they undermine the US Dollar by creating or backing alternative currencies. 
• The US Job Openings and Labor Turnover Survey (JOLTS) data published on Tuesday showed that the number of job openings on the last business day of October stood at 7.74 million, up from 7.37 million in the prior month.
• The data eases fears of a significant slowdown in the US labor market and might force the Federal Reserve to take a cautious stance on cutting rates amid expectations that Trump's expansionary policies will boost inflation. 
• The US Treasury bond yields shot up in reaction to the upbeat data, though failed to impress the US Dollar bulls as the markets are still pricing in a greater chance that the Fed will lower borrowing costs again in December. 
• San Francisco Fed President Mary Daly said that the US economy is in a really good place, while the labor market is in balance and is not a source of inflation. Daly added that the December rate cut is not off the table.
• Board of Governors member Adrianna Kugler reiterated that the progress on inflation is still underway, while the policy is not on a preset course and that the central bank will make decisions meeting by meeting.
• Adding to this, Chicago Fed President Austan Goolsbee said that rates remain in restrictive policy and need to come down a fair amount from where they are now over the next year if inflation gets close to the target.
• The market attention now shifts to Fed Chair Jerome Powell's speech, which, along with the US Nonfarm Payrolls (NFP) report on Friday, should guide policymakers on their next monetary policy decision. 

AUD/USD bears await a breakdown below short-term trading range support near 0.6440-0.6435

From a technical perspective, the range-bound price action over the past two weeks or so might still be categorized as a bearish consolidation phase against the backdrop of the fall from the September monthly swing high. Moreover, oscillators on the daily chart are holding in negative territory and are still away from being in the oversold zone. This, in turn, suggests that the path of least resistance for the AUD/USD pair is to the downside and supports prospects for a further depreciating move. That said, it will still be prudent to wait for some follow-through selling below the 0.6440-0.6435 region, or the multi-month low, before placing fresh bets. Spot prices might then turn vulnerable to weaken further below the 0.6400 mark and retest the year-to-date low, around the 0.6350-0.6345 region touched in August. 

On the flip side, any meaningful recovery back above the 0.6500 psychological mark is likely to confront stiff resistance and remain capped near the 0.6535-0.6540 supply zone. A sustained strength beyond, however, could trigger a short-covering rally and allow the AUD/USD pair to reclaim the 0.6600 round figure en route to the 0.6625-0.6630 confluence hurdle. The latter comprises the 200- and the 50-day Simple Moving Averages (SMAs), which if cleared decisively might shift the near-term bias in favor of bullish traders and pave the way for additional gains.

China's Services Purchasing Managers' Index (PMI) declined to 51.5  in November from 52.0 in October, according to the latest data published by Caixin on Wednesday.

The data came in below the market expectations of 52.5 in the reported period.

Australia Treasurer Jim Chalmers said on Wednesday that the national accounts show positive but weak Gross Domestic Product (GDP) growth. 

Key quotes

Market reaction

AUD/USD is trading 0.38% lower on the day at 0.6458, as of writing.

Chicago Federal Reserve President Austan Goolsbee said on Tuesday said he sees interest rates needing to come down a "fair amount" over the next year as rates remain in restrictive policy, per Reuters.  

Key quotes

Market reaction

The US Dollar Index (DXY) is trading 0.03% higher on the day at 106.37, as of writing.

The People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead on Wednesday at 7.1934, as compared to the previous day's fix of 7.1996.

• The Japanese Yen loses ground amid the stronger USD in Wednesday’s early Asian session. 
• Growing expectations of the BoJ rate hike in December and safe-haven flows might help limit the JPY’s losses. 
• Investors brace for Japan’s Jibun Bank Services PMI, US economic data and Fed’s Powell speech on Wednesday. 

The Japanese Yen (JPY) trades in negative territory on Wednesday. The upbeat US Manufacturing PMI data and job openings data this week indicated that the US economy remains robust, lifting the Greenback. However, traders are increasingly confident that the Bank of Japan (BOJ) may hike interest rates this month. This, in turn, might support the JPY in the near term. 

Furthermore, the ongoing political uncertainty in France, the political tension in South Korea and escalating geopolitical risks in the Middle East could boost the safe-haven flows, benefitting the JPY against the USD. Investors will keep an eye on the final reading of Japan’s Jibun Bank Services PMI, which is due later on Wednesday. On the US docket, the ADP Employment Change report, final S&P Global Services PMI, ISM Services PMI and the Fed’s Beige Book will be released. The Federal Reserve’s (Fed) Chair Jerome Powell is scheduled to speak later in the same day. 

Japanese Yen edges lower amid the firmer US Dollar broadly 

• The BoJ Governor Kazuo Ueda said on Saturday that the central bank will adjust the degree of monetary easing at the appropriate time if it becomes confident that the underlying inflation rises toward 2%.
• The US JOLTS Job Openings rose to 7.74 million in October, compared to 7.37 million openings in September, according to the US Bureau of Labor Statistics (BLS) on Tuesday. This reading came in higher than the market expectation of 7.48 million.
• Fed Governor Adriana Kugler said the labor market remains solid, and inflation appears to be on a sustainable path to the Fed's 2% target. However, Kugler underscored that the central bank’s policy decisions are not on a preset course. 
• San Francisco Fed President Mary Daly stated that an interest rate cut in the December meeting isn’t certain but remains on the table for policymakers.
• Chicago Fed President Austan Goolsbee noted he expects interest rates will “come down a fair amount from where they are now” over the next year, per Bloomberg.  

USD/JPY turns bearish in the longer term

The USD/JPY pair keeps the bearish vibe on the daily chart as the pair remains capped below the key 100-day Exponential Moving Average (EMA). The 14-day Relative Strength Index (RSI) stands below the midline near 38, indicating the further downside for the pair looks favorable. 

A break below the lower Bollinger Band of 149.33 could set off an even steeper slide for the pair to 147.18, the high of September 2. Further south, the next support level is seen at 143.62, the low of August 6. 

On the brighter side, the crucial resistance level emerges at the 150.00 psychological mark. Sustained upside momentum could even take it all the way to the next hurdle at 154.70, the high of November 6. A decisive break above the mentioned level could attract enough bullish energy to lift USD/JPY back up to 155.89, the high of November 20.