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- Gold price gains ground around $1,980 on the weaker USD.
- The US October leading indicator dropped 0.8% MoM vs. 0.7% MoM fall prior.
- FOMC Meeting Minutes will be a closely watched event on Tuesday.
Gold price (XAU/USD) snaps the two-day losing streak during the early Asian trading hours on Tuesday. The lower US Treasury yields weigh on the Greenback and lift the USD-denominated gold. On a quiet day in terms of US economic data, traders await the Federal Open Market Committee (FOMC) Meeting Minutes on Tuesday, which might offer hints regarding future policy rate direction and inflation improvement. Gold price currently trades around $1,980, gaining 0.11% on the day.
Meanwhile, the US dollar Index (DXY), an index of the value of the USD measured against a basket of six world currencies, declines to 103.44, the lowest level since late August. The US Treasury bond yields consolidate their losses, with the 10-year yields standing around 4.42%.
The US October leading indicator dropped 0.8% MoM from September’s reading of 0.7% MoM fall, the Conference Board revealed Monday. The attention will turn to the FOMC Meeting Minutes on Tuesday. Investors believe that the US Federal Reserve (Fed) is done with its cycle of interest rate hikes, and anticipate that the central bank may begin to cut the rates around the middle of 2024. This, in turn, drags the Greenback lower and boosts the USD-denominated gold. According to CME's FedWatch Tool, markets have priced in a 50% chance of a cut of at least 25 basis points by May 2024.
Gold traders will focus on the FOMC Meeting minutes on Tuesday for fresh impetus. Also, the US Existing Home Sales and the Chicago Fed National Activity Index will be due on Tuesday. These events could give a clear direction to the gold price.
According to research from Nataxis, headline inflation for the Eurozone is set to rebound as main inflation measures converge with core inflation (less price volatility from food and energy prices), rather than remaining low moving forward.
Headline inflation to return to core inflation levels
Investors have noted the rapid fall in headline inflation in the EU, from 5.2% year-on-year in August 2023 to 2.9% year-on-year in October 2023. We need to compare headline inflation with inflation excluding energy and unprocessed food (core inflation). It is usual for energy and food prices to fall back after rising sharply, pushing headline inflation below core inflation.
We have seen in the past that when this base effect on energy and food prices disappears, it is headline inflation that rises to the level of core inflation, rather than core inflation falling to the level of headline inflation.
Eurozone inflation will rise from its low point in the autumn of 2023 and converge towards the level of core inflation. The eurozone's benchmark inflation is therefore inflation excluding energy and unprocessed foods, which was 4.9% in October 2023.
Nataxis research is out with a note detailing how long-running supply and demand imbalances in the Eurozone are going to keep rates higher for longer than most markets are currently expecting.
The state of supply and demand for goods and services in the eurozone
In the recent period (since the start of 2023), insufficient demand has been cited more as a factor limiting the eurozone's industrial production. But if we look at services, construction and the eurozone economy as a whole, it is still massively in a situation of excess deman for goods services, and labour, with insufficient supply.
Restrictive monetary policy has not yet caused the eurozone to return to a situation of excess supply of goods and services.
As long as the eurozone is in a state of excess demand for goods and services, inflation will be higher than financial markets expect.
The European Central Bank Governing Council member and Bank of France President, Francois Villeroy de Galhau said on Tuesday that interest rates have reached a plateau where they will remain for the next few quarters. He dismissed discussion of a rate cut as premature.
Key quotes
“Our reliance on forward guidance was excessive, we should be more modest with future guidance.”
“We should expect more bond volatility, renewed increases would be another reason not to hike rates.”
“We have to discontinue our PEPP reinvestments in due time, and possibly earlier then the end of 2024.”
“On our inflation target, I am not fixated on 2% to the nearest decimal place.”
“The latest developments in Israel and the oil market shouldn't significantly change downward inflation trend.”
“We should and can avoid recession, a soft landing path is more likely.”
“The question to quickly shifted from "When will we stop hiking?" to "When will we start cutting?"
“See rates plateauing for at least the next several meetings and the next few quarters.”
Market reaction
The comments above have little to no impact on the Euro. The EUR/USD pair is trading higher on the day at 1.0944, as of writing.
- EUR/JPY experienced a downturn, touching a five-day low of 161.77.
- Technical analysis reveals that EUR/JPY has slipped below the Tenkan-Sen at 162.82, indicating potential for further declines.
- The EUR/JPY upward bias remains in place, though buyers must reclaim the Tenkan-Sen at 162.83.
EUR/JPY remains trading in the red, stumbles to a new five-day low of 161.77, before recovering some ground, toward the end of Monday’s session, registering losses of 0.61%. Nonetheless, the pair is trading with a positive tone in the early Asian session, trading at 162.25, gaining 0.01%.
The lack of fundamental news triggered safe-haven flows toward the Japanese Yen (JPY), opening the door for a pullback. The EUR/JPY daily chart witnessed the cross-pair slipping below the Tenkan-Sen at 162.82, which could exacerbate further downside. The next demand zone would be the Senkou Span A at 161.76, followed by the 161.00 mark. The next floor level would be the Kijun-Sen at 160.69.
On the other hand, the path of least resistance suggests the EUR/JPY might resume its ongoing rally, though traders must reclaim the Tenkan-Sen at 162.83. Upside risks remain above that level, followed by the 163.00 figure. A breach of the latter could open the door to challenging the year-to-date (YTD) high at 164.31.
EUR/JPY Price Analysis – Daily Chart
EUR/JPY Technical Levels
New Zealand’s Trade Balance came in at $-14.81B YoY in October versus $-15.41B prior, according to the latest data released by Statistics New Zealand on Tuesday.
Further details suggest that Exports improved to $5.40B during the said month versus $4.77B prior whereas Imports dropped to $7.11B compared to $7.20B in previous readings.
- AUD/USD oscillates in a narrow range, nearing fresh monthly highs in early Tuesday.
- Market players have priced in a 100 basis point (bps) rate cut in the first half of 2024.
- More optimistic about additional Chinese stimulus measures and an end of the Fed's rate hike cycle lift the AUD.
- The RBA and FOMC Meeting Minutes will be in the spotlight on Tuesday.
The AUD/USD pair consolidates its recent gains to nearly fresh monthly highs during the early Asian session on Tuesday. The risk appetite and lower US Treasury yields exert some selling pressure on the US Dollar (USD), which lends support to the AUD/USD. Meanwhile, the US Dollar Index (DXY) dropped to 103.45, the lowest since late August. At the time of writing, AUD/USD is holding lower ground near 0.6557, losing 0.06% on the day.
US Treasury yields edge lower and US equities were marginally higher at the start of US Thanksgiving. With little economic data forthcoming, the attention will be on the minutes of the FOMC meeting, which are expected to be released late Tuesday. The report may include signals regarding future policy rate direction and inflation improvement. Market players raised their bets that the Federal Reserve (Fed) is done raising the interest rate and have priced in a 100 basis point (bps) rate cut in the first half of 2024.
On the other hand, commodity prices rose as investors became more optimistic about additional Chinese stimulus measures and the end of the Fed's rate hike cycle. This, in turn, boosts the China-proxy Australian Dollar (AUD). The Reserve Bank of Australia (RBA) Governor Michele Bullock will deliver a speech on Tuesday and RBA will also publish the minutes of its recent meetings later.
Markets anticipate a rate cut in 2024, but the RBA is still attempting to convince markets that rate hikes are still on the table and it is not talking about cutting rates. If the statement delivers a surprisingly hawkish tone, this could lift the AUD and act as a tailwind for the AUD/USD pair.
Looking ahead, market players will closely watch the RBA Meeting Minutes and RBA Governor Michele Bullock’s speech. The US Existing Home Sales and the Chicago Fed National Activity Index will be released on Tuesday ahead of the FOMC Meeting Minutes from its latest meeting. Traders will take cues from these figures and find trading opportunity around the AUD/USD pair.
- The Aussie is struggling to develop real momentum against the Kiwi after a flat Monday.
- The AUD/NZD is stalling after a failed bull run back towards 1.0900.
- RBA minutes due early on Tuesday.
The AUD/NZD went flat on Monday as the pair pauses a bullish rebound towards the 1.0900 handle.
A speech from Reserve Bank of Australia (RBA) Governor Michelle Bullock is due early in the Tuesday session, followed by the RBA's latest Meeting Minutes. RBA Governor Bullock will be speaking at the Australian Securities & Investments Commission's Annual Forum, branded "State of the Economy".
The RBA's latest Meeting Minutes will also be due early Tuesday.
New Zealand's Trade Balance figures missed the mark late Monday, with the NZD Trade Balance in October missing expectations to print at $-1.709B, far below the expected recovery to $-600M against September's $2.425B.
Australian Dollar price today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the Japanese Yen.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.30% | -0.39% | 0.04% | -0.68% | -1.09% | -0.70% | -0.14% | |
| EUR | 0.30% | -0.09% | 0.33% | -0.37% | -0.78% | -0.39% | 0.17% | |
| GBP | 0.39% | 0.10% | 0.44% | -0.28% | -0.68% | -0.29% | 0.26% | |
| CAD | -0.05% | -0.34% | -0.45% | -0.76% | -1.14% | -0.74% | -0.17% | |
| AUD | 0.67% | 0.38% | 0.31% | 0.72% | -0.41% | 0.00% | 0.53% | |
| JPY | 1.08% | 0.79% | 0.46% | 1.12% | 0.40% | 0.41% | 0.94% | |
| NZD | 0.68% | 0.39% | 0.30% | 0.73% | -0.02% | -0.40% | 0.56% | |
| CHF | 0.15% | -0.16% | -0.24% | 0.18% | -0.58% | -0.95% | -0.55% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
AUD/NZD Technical Outlook
The AUD/NZD is struggling to push out of a consolidation pattern just north of the 200-day Simple Moving Average (SMA), and the pair is stalled out below the 1.0900 handle.
With the pair grinding sideways through most of 2023, long-term technicals have been pushing into the middle, and the 50- and 200-day SMAs have been consolidating near 1.0800.
AUD/NZD Daily Chart
- AUD/JPY pair is experiencing a downward trend, struggling to regain momentum, staying below the crucial 97.50 level.
- Technical analysis indicates an overall upward bias for the pair, but recent movements have seen it drop below the Tenkan-Sen at 97.31, signaling the potential for further declines.
- On the flip side, a recovery above the recent high of 97.72 could pave the way for testing the 98.00 resistance level.
The AUD/JPY post of four straight days of losses stays below the 97.50 area on Monday, breaking below a key support level at the time of writing. The AUD/JPY is trading at 97.24, down y 0.01%, as Tuesday’s Asian session begins.
From a daily chart perspective, the pair is upward biased, but it fell below the Tenkan-Sen at 97.31, which could exacerbate a test of the 97.00 figure. The pair would witness further downside action below the latter, like the Senkou Span A at 96.86, before slumping toward the Kijun-Sen at 96.41. Once cleared, up next would be. the 96.00 mark.
On the other hand, if AUD/JPY climbs past the November 20 high at 97.72, that could exacerbate a test of the 98.00 figure. Once cleared, up next would be the year-to-date (YTD) high at 98.60, ahead of the 99.00 figure.
AUD/JPY Price Analysis – Daily Chart
AUD/JPY Technical Levels
- The Euro is slipping back against the Pound Sterling in thin Monday action.
- EUR/GBP testing back into 0.8750 as momentum drains out.
- EU, UK PMIs due later in the week.
The EUR/GBP is falling back to the 0.8750 level after last week's failed run at a fresh high. Markets dubbed the Euro (EUR) the weaker currency against the Pound Sterling (GBP), sending the EUR/GBP back down at the start of the trading week.
The economic calendar has a thin showing for both currencies in the early half of the week, leaving traders to sit and wait for Thursday's Purchasing Managers' Index (PMI) showings for both the EUR and the GBP.
European PMIs are expected to show a slight increase, while UK PMIs are forecast to stick tighter to previous readings.
The EU HCOB Composite PMI for November is expected to tick upwards from 46.5 to 46.9, with both the Services and Manufacturing components expected to show slight improvement.
The UK S&P Global/CIPS November Composite PMI is expected to hold flat at 48.7, with the Services component expected to hold at 49.5 and the Manufacturing component is forecast to show only a slight improvement from 44.8 to 45.0.
Euro price today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the Japanese Yen.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.32% | -0.42% | 0.06% | -0.70% | -1.04% | -0.70% | -0.12% | |
| EUR | 0.32% | -0.11% | 0.38% | -0.38% | -0.72% | -0.38% | 0.20% | |
| GBP | 0.42% | 0.11% | 0.49% | -0.27% | -0.60% | -0.27% | 0.31% | |
| CAD | -0.06% | -0.38% | -0.50% | -0.76% | -1.10% | -0.76% | -0.16% | |
| AUD | 0.69% | 0.38% | 0.28% | 0.76% | -0.34% | 0.00% | 0.58% | |
| JPY | 1.04% | 0.72% | 0.37% | 1.09% | 0.34% | 0.34% | 0.91% | |
| NZD | 0.70% | 0.38% | 0.27% | 0.76% | 0.00% | -0.34% | 0.58% | |
| CHF | 0.11% | -0.21% | -0.31% | 0.18% | -0.59% | -0.93% | -0.58% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
EUR/GBP Technical Outlook
Despite Monday's minor decline, the Euro remains well-bid against the Pound Sterling, and the pair is trading above the 200-day Simple Moving Average (SMA) that continues to grind lower into 0.8680. The Euro has risen over 3% against the Pound Sterling since August's swing low into the 0.8500 region.
The EUR/GBP pair set a fresh six-month high last week of 0.8766, and short-sellers will be looking to push the pair back below a rising trendline, while bidders will be trying to price in a technical floor from a bullish crossover of the 50- and 200-day SMAs.
EUR/GBP Daily Chart
During the Asian session, New Zealand will release trade data, and the Reserve Bank of Australia the minutes of its latest meeting. Later in the day, inflation data from Canada is due, and the Federal Reserve will release the FOMC minutes.
Here is what you need to know on Tuesday, November 21:
The US Dollar Index (DXY) dropped further and fell to 103.45, reaching its lowest level since late August. Risk appetite and lower Treasury yields weighed on the Greenback. In the short term, the US Dollar remains vulnerable even though the US economy is growing while the Eurozone and other economies are nearing recession.
Regarding economic data, Tuesday's data from the US includes Existing Home Sales and the Chicago Fed National Activity Index. The Federal Reserve (Fed) will release the minutes of its latest meeting.
EUR/USD extended its gains above 1.0900 to the 1.0950 area. The bias is to the upside, but technical indicators show overbought conditions that could point to consolidation before another leg higher.
GBP/USD rose above 1.2500, surpassing the 100-day Simple Moving Average (SMA). The pair maintains a bullish bias due to the weaker US Dollar. On Tuesday, Bank of England (BoE) Governor Bailey and members of the Monetary Policy Committee will face lawmakers to discuss the Monetary Policy Report.
USD/JPY also continued its downward trend for the third consecutive day, accumulating a decline of more than 300 pips. The pair fell towards 148.00 and remains under pressure.
AUD/USD jumped, breaking above 0.6550 to fresh monthly highs. The next significant resistance stands at 0.6600. Reserve Bank of Australia (RBA) Governor Michele Bullock will deliver a speech on Tuesday. The RBA will also release the minutes of its latest meetings.
USD/CAD posted modest gains, with the Canadian Dollar being among the worst performers, even despite crude oil's rally. The pair is facing resistance at 1.3770 and is supported by the 55-day SMA at 1.3660. Canadian data due on Tuesday will show if inflation continues to approach the 2% target or if fresh pressures emerge. The Federal Government will release the Fall Economic Statement.
Canada CPI Preview: Forecasts from six major banks, inflation to decelerate further
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- NZD/JPY sits at 89.50, noting minor losses as market sentiment skews somewhat bearish
- Subdued buying momentum is signalled by the RSI's negative gradient on the daily chart and the diminishing green bars of the MACD histogram.
- On the broader context, the pair's ascendancy above the 20, 100, 200-day SMA suggests bullish control.
On Monday's session, the NZD/JPY pair was seen trading at around 89.50, suffering slight losses. Indicators reflect that the buying momentum is diminishing after the pair rose to a multi-year high of around 2015 last week, as investors continue to take profits.
On the daily chart, the negative slope of the Relative Strength Index (RSI), though within the positive territory, along with the decreasing green bars of the Moving Average Convergence Divergence (MACD), hint towards a slowdown in buying momentum. However, the pair's position above its 20, 100, and 200-day Simple Moving Averages (SMAs) suggests that bulls have a firm grip on the broader outlook, indicative of possible resiliency in the buying pressure.
A glimpse at the shorter time frame based on the four-hour chart outlook adds a different perspective. The flat slope of the Relative Strength Index (RSI) below its middlepoint next to the decreasing green red of the four-hour Moving Average Convergence Divergence (MACD) hinders the selling momentum, indicating that in the near short-term, the buyers may step in.
Support Levels: 89.10, 88.84 (20-day SMA), 88.50.
Resistance Levels: 89.70, 90.00, 90.30.
NZD/JPY daily chart
-638361092400459902.png)
- EUR/USD pair continues its upward trajectory, capitalizing on the weakening US Dollar, with the pair trading around 1.0942.
- The decline in US Treasury bond yields acts as a significant factor undermining the US Dollar, aiding the Euro's strength.
- Potential for rate cuts of the Federal Reserve, underpins the EUR/USD.
- Key ECB Gouverning Council members, push back against rate cuts.
The shared currency continues to gain traction against the Greenback on Monday, which remains battered as US Treasury bond yields continue to edge lower, a headwind for the buck. Even though the economic outlook in the Eurozone (EU) is pessimistic, the EUR/USD’s rally continues, sponsored by a soft US Dollar. At the time of writing, the EUR/USD is trading at 1.0942, with buyers targeting the 1.1000 figure, late in the week.
Euro rises vs. US Dollar as market participants await crucial economic releases
The US Dollar (USD) remains weak for the second consecutive trading day. The US Dollar Index (DXY), a measure that tracks the buck’s value against six currencies, dropped 0.34%, is at 103.46, and remains the primary reason for the Euro’s (EUR) strength. According to the futures market, the latest inflation report in the United States (US) has increased the odds for rate cuts by the US Federal Reserve (Fed) next year.
The calendar would feature the release of the Federal Reserve’s Open Market Committee (FOMC) last meeting minutes on Tuesday. On Wednesday, unemployment claims will be released, followed by the Chicago Fed National Activity Index and Flash PMI figures on their preliminary readings for November.
Across the pond, the EU’s docket would release November PMIs, Germany’s IFO survey, and the latest European Central Bank (ECB) meeting minutes.
On the central bank front, ECB´s member Hernandez de Cos said the current level of rates should be enough, while Wunsch stressed that bet on rate cut reduction could trigger another hike by the EU’s central bank. The Bundesbank President and ECB’s Governing Council member Joachim Nagel pushed back against rate cuts, while Holtzmann said the ECB is ready for additional tightening, “if necessary.”
EUR/USD Technical Levels
- The Pound Sterling is in the red against the rallying Yen, but looking to arrest declines.
- The GBP/JPY is headed for its third straight down day.
- BoE policy hearings, Japanese holiday mar the midweek outlook.
The GBP/JPY is seeing declines in Monday trading as the Japanese Yen (JPY) sees a reprieve from long-running selling pressure. The pair initially tumbled to an intraday low of 184.63 to kick off the trading and is now looking to pare back losses, trading back into the 185.50 level.
The Pound Sterling (GBP) is a mixed bag in the new trading week, seeing lopsided performance against the other major currencies, but giving up the most ground to the rebounding Yen, down around 0.65% for Monday.
BoE's Bailey: we are on track to bring inflation down to target
Bank of England (BoE) Governor Andrew Bailey gave a speech late Monday discussing sticky food price inflation plaguing the UK's domestic economy, and Pound Sterling traders will be looking ahead to the BoE's latest Monetary Policy Report Hearings due on Wedneday.
Japanese markets will be shuttered on Wednesday in observance of Labor Thanksgiving Day on Wednesday, leaving Yen volumes thinner than usual.
Pound Sterling price today
The table below shows the percentage change of Pound Sterling (GBP) against listed major currencies today. Pound Sterling was the strongest against the Canadian Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.30% | -0.39% | 0.08% | -0.63% | -1.07% | -0.55% | -0.12% | |
| EUR | 0.30% | -0.10% | 0.38% | -0.32% | -0.76% | -0.24% | 0.19% | |
| GBP | 0.40% | 0.11% | 0.49% | -0.21% | -0.65% | -0.13% | 0.30% | |
| CAD | -0.08% | -0.38% | -0.49% | -0.71% | -1.14% | -0.63% | -0.20% | |
| AUD | 0.62% | 0.33% | 0.24% | 0.71% | -0.43% | 0.09% | 0.51% | |
| JPY | 1.06% | 0.74% | 0.41% | 1.12% | 0.41% | 0.51% | 0.93% | |
| NZD | 0.55% | 0.26% | 0.15% | 0.63% | -0.08% | -0.54% | 0.43% | |
| CHF | 0.12% | -0.18% | -0.27% | 0.21% | -0.50% | -0.95% | -0.42% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
GBP/JPY Technical Outlook
The GBP/JPY is trading back from eight-year highs near 188.00, declining from last week's peak for a third straight day. The pair is getting dragged back towards the 50-day Simple Moving Average (SMA) near 183.20.
The long-term trend for the GBP/JPY remains firmly bullish on the charts, with price action trading well above the 200-day SMA at the 176.00 handle.
A continued decline will see sellers challenging the last swing low into the 180.00 major handle, while bidders are going to have their work cut out for them trying to retake 188.00.
GBP/JPY Daily Chart
- The USD/CHF is currently hovering around the 0.8840 level, experiencing mild losses.
- Investors are taking a backseat after pushing the pair down by more than 1% last week.
- FOMC November's minutes will be the week's highlight.
During Monday's session, the USD/CHF pair experienced some softening, trading around 0.8840, reflecting mild losses. While there were no significant swings in the market, the pair traded in a limited range, and investors assess last week’s data from the US on a quiet Monday.
The latest report from the US Bureau of Labor Statistics revealed that the US Core Consumer Price Index (CPI) fell short of expectations in October. It registered a year-on-year (YoY) growth of 4%, slightly below the anticipated 4.1% and a slowdown from the previous figure of 4.1%. The headline figure, on the other hand, showed a YoY growth of 3.2%, which was lower than the consensus of 3.3% and down from the previous reading of 3.7%.
In that sense, the US reporting soft inflation figures significantly impacted the USD as investors started to price in no more hikes by the Federal Reserve (Fed) and sooner rate cuts. For the rest of the week, no relevant reports will be released, and the market’s focus shifted to Tuesday’s Federal Open Market Committee (FOMC) November minutes to seek any clues on the next monetary policy decisions. In addition, investors await any fresh guidance regarding the bank’s stance on inflation and if a month of positive data is enough for the Fed to end the tightening.
USD/CHF levels to watch
Despite a flat Relative Strength Index (RSI) currently sitting in negative territory, the selling momentum is powerful. This assessment is derived from the observed positions of both the Moving Average Convergence Divergence (MACD) and the Simple Moving Averages (SMAs).
The MACD depicting red bars strongly signals the presence of selling pressure while the pair trading below the 20, 100, and 200-day Simple Moving Averages (SMAs) affirms prevalent bearish control in the broader scale. Additionally, indicators turning somewhat flat may indicate that bears are taking a breather, which could lead to a temporary slowdown in selling activity after a 1.8% losing week.
Support Levels: 0.8820, 0.8800, 0.8780.
Resistance Levels: 0.8860, 0.8890 (100-day SMA), 0.8900.
USD/CHF daily chart
-638361046056440759.png)
Bank of England (BoE) Governor Andrew Bailey, speaking at the Henry Plumb Memorial Lecture, noted that while inflation has run far over the BoE's main targets, signs are appearing that runaway prices, specifically in the food sector, are beginning to come to heel.
BoE Governor Bailey noted that overall inflation blew well past the UK central bank's main 2% target, reaching a peak of 11.1% in October of 2022. Despite UK inflation receding to 4.6% at the latest data reading, there's still plenty of ground to cover before reaching the 2% target once more, and Governor Bailey warns that it's certainly too soon to "declare victory" over inflation.
Inflation in food and beverages climbed to 19.1% in March of 2023, contributing 2 whole percentage points to overall inflation. Bailey noted that food inflation is still above 10% as of October, and the BoE is hoping that food price growth will slow to 3% by the end of the short-term forecast cycle in March of 2024.
Market Reaction
BoE Governor Bailey's speech did little to galvanize Pound Sterling (GBP) markets, and the GBP/USD pair continues to trade near the 1.2500 handle on Monday.
- Silver prices (XAG/USD) are struggling to maintain the upward momentum that started last Monday, currently facing consecutive days of losses.
- The formation of a ‘tweezers-top’ chart pattern in XAG/USD suggests a potential for further decline, with the current price at $23.48, down by 0.92%.
- If sellers maintain control and keep the price below $24.00, a pullback towards the 200-DMA is likely, with further potential decline towards the $23.00 mark.
Silver price struggles to extend its rally that began last Monday, posting back-to-back days of losses, due to a risk-on impulse, despite overall US Dollar (USD) weakness across the board. From a price action standpoint, the XAG/USD formed a ‘tweezers-top’ chart pattern, which warrants further downward action is expected; hence, XAG/USD is trading at $23.48, down 0.92%.
After forming the ‘tweezers top’, the XAG/USD resumed its downtrend but it was capped by the 200-day moving average (DMA) at $23.28 before resuming above the November 16 daily low of $23.28. A daily close above the latter could open the door to re-test the $24.00 figure.
On the other hand, if sellers stepped in, and kept prices below the $24.00 mark, the chances for a pullback to the 200-DMA increase, followed by the $23.00 mark. Further downside is expected beneath that level, exposing the latest cycle low seen at $21.88, the November 13 low.
Silver Price Analysis – Daily Chart
Silver Technical Levels
- A weaker US dollar supported the WTI rally and rumors that OPEC+ might consider further supply cuts in their upcoming meeting on November 26.
- Russia’s recent lifting of the gasoline export ban could potentially limit the rise in WTI prices.
- The latest US Baker Hughes rig count indicates a potential increase in oil supply, which might pressure oil prices downward.
West Texas Intermediate (WTI), the US crude oil benchmark, rallied more than 2% on Monday and is testing the 200-day moving average (DMA) at $78.13 in the mid-North American session. At the time of writing, WTI is trading at $78.32 after hitting a daily low of $75.49.
Oil prices bolstered by weak Dollar and geopolitical tensions
Oil´s price remains underpinned by the soft US Dollar (USD), alongside sources saying the Organization of Petroleum Exporting Countries and its allies (OPEC+) are considering additional supply cuts when the cartel meets on November 26.
Traders are eyeing Russian crude trade after Washington imposed sanctions on ships that sent Russian crude to India, above the price cap imposed by Washington and the G7 group.
On Friday, Moscow lifted a gasoline ban export, which could cap WTI prices. The latest US Baker Hughes rig count suggested that Oil prices might head lower due to a higher rig count indicating an increase in supply.
In the meantime, US refineries are in course to boost production by 559,000 barrels per day (bpd) this week as they come out of fall planned maintenance, leaving just 264,000 bpd of capacity offline.
Aside from this, geopolitical risks could boost Oil prices, though the Middle East conflict between Israel and Hamas remains contained within the Gaza Strip.
WTI Technical Levels
- The DXY Index stands at 103.45 on Monday, down by 0.35% on the session.
- The US won’t release high-tier economic reports this week, and the November FOMC Minutes will be the week’s highlight.
- US yields slightly recovered from September lows.
At the start of the week, the US Dollar, measured by the DXY index, declined toward 103.45 and saw a 0.35% loss. On Friday, the Greenback closed its worst week since July, tallying a 1.80% weekly loss, driven by the expectations of a less aggressive stance by the
Federal Reserve (Fed) following the release of lighter inflation figures last week.
In line with that, the Consumer Price Index (CPI) in the United States in October decelerated to 3.2% YoY, and the core CPI fell to 4% YoY. In that sense, markets cheered that the softening inflation may influence a less aggressive Fed, and investors are now taking off the table a hike at the December meeting and foreseeing sooner rate cuts in 2024.
Daily Digest Market Movers: US continues to weaken after soft inflation
- The US Dollar Index started the week on a weak note, falling by 0.35% to 104.35.
- Investors are still digesting last week’s inflation data from October in the US.
- The US Bureau of Labor Statistics reported that October's Core Consumer Price Index (CPI) missed the consensus. It came in at 4% YoY vs the expected 4.1% and decelerated from its previous figure of 4.1%.
- The headline figure came in at 3.2%YoY, below the consensus of 3.3% and in relation to its last reading of 3.7%.
- In addition, the Core Producer Price Index (PPI) from October fell short of expectations. It came in at 2.4% YoY vs the expected 2.7% and declined from its previous reading of 2.7%.
- On the other hand, Retail Sales from October came in better than expected, declining by 0.1% MoM vs the expected 0.3% decline.
- During the week ending November 11, the number of US Initial Jobless Claims increased to 231,000, surpassing the predicted 220,000.
- Industrial Production in the United States fell short of expectations, experiencing a 0.6% MoM decline, higher than the -0.3% expected. It also tallied a YoY decrease of 0.7%.
- The combination of softening inflation, decelerating job creation, and signs of weakening economic activity made markets confident that the Fed won’t risk hiking again.
- As a reaction, the 2, 5 and 10-year rates declined to their lowest levels since early November and mid-September, adding selling pressure to the US Dollar. On Monday, those rates increased to 4.91%, 4.46% and 4.45%, respectively, which could limit the Greenback’s downside.
- In the meantime, according to the CME FedWatch Tool, investors have already priced in a no hike in December and are betting on rate cuts sooner than expected in May 2024. A sizable minority is even betting on a rate cut in March.
- The week’s highlights include the Federal Open Market Committee (FOMC) November minutes, October’s Durable Goods Orders on Wednesday, and S&P PMIs from November on Friday.
Technical Analysis: US Dollar bears step in with RSI approaching oversold conditions
According to the daily chart, the DXY Index displays a bearish bias with increasing selling pressure, indicating a shift favouring the bears. The Relative Strength Index (RSI) is getting nearer to oversold conditions, signaling that an upward correction may be incoming, while the Moving Average Convergence (MACD) histogram exhibits larger red bars.
On the broader scale, the index is below the 20, 100 and 200-day Simple Moving Averages (SMAs), suggesting that the buyers are struggling to overcome the overall bearish trend and the bears are still in charge.
Support levels: 103.30, 103.15, 103.00.
Resistance levels: 103.60 (200-day SMA), 104.20 (100-day SMA),104.50.
US Dollar FAQs
What is the US Dollar?
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022.
Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
How do the decisions of the Federal Reserve impact the US Dollar?
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
What is Quantitative Easing and how does it influence the US Dollar?
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
What is Quantitative Tightening and how does it influence the US Dollar?
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- The Australian Dollar is seeing a mild recovery for Monday.
- AUD/USD testing territory north of 0.6550.
- RBA Gov Bullock speech, RBA Meeting Minutes due early Tuesday.
The AUD/USD has gained over 0.5% in Monday's trading, lifting above 0.6550 as the US Dollar (USD) eases back across the market, giving the Aussie (AUD) some breathing room. The Antipodean is extending recent bullish action, extending a climb into its highest bids since August.
Broader markets are tilting cautiously into risk-on sentiment, pushing the Greenback lower as investors celebrate what is widely perceived as the end of the Federal Reserve's (Fed) rate hike cycle.
A speech from Reserve Bank of Australia (RBA) Governor Michelle Bullock is due early in the Tuesday session, followed by the RBA's latest Meeting Minutes. RBA Governor Bullock will be speaking at the Australian Securities & Investments Commission's Annual Forum, branded "State of the Economy".
The mid-week will be bringing Australian Purchasing Manager Index (PMI) figures alongside US Jobless Claims data.
Australian Dollar price this week
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies this week. Australian Dollar was the strongest against the Canadian Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.28% | -0.37% | 0.09% | -0.57% | -1.09% | -0.47% | -0.12% | |
| EUR | 0.29% | -0.08% | 0.38% | -0.26% | -0.80% | -0.17% | 0.18% | |
| GBP | 0.37% | 0.08% | 0.47% | -0.18% | -0.71% | -0.09% | 0.26% | |
| CAD | -0.09% | -0.37% | -0.47% | -0.66% | -1.17% | -0.54% | -0.19% | |
| AUD | 0.56% | 0.28% | 0.19% | 0.64% | -0.54% | 0.09% | 0.44% | |
| JPY | 1.08% | 0.80% | 0.48% | 1.16% | 0.54% | 0.62% | 0.97% | |
| NZD | 0.45% | 0.20% | 0.09% | 0.54% | -0.11% | -0.63% | 0.33% | |
| CHF | 0.10% | -0.18% | -0.25% | 0.20% | -0.44% | -0.98% | -0.35% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
AUD/USD Technical Outlook
The AUD/USD's bullish extension sees the pair testing into the 0.6550 region, grinding higher towards the 200-day Simple Moving Average (SMA) near the 0.6600 handle.
The AUD/USD has rebounded almost 4.5% from October's lows near 0.6270, a year-long low bid for the pair.
Near-term swing lows continue to plague the pair, and the Aussie will have a tough time continuing to reclaim higher chart territory as bids approach the 0.6700 major handle.
AUD/USD Daily Chart
- GBP/USD reaches a nine-week peak at 1.2517, currently trading above the 1.2500 level, marking a gain of over 0.30% in the mid-North American session.
- Speculation suggests the BoE may have concluded its monetary policy tightening, with market odds indicating a less than 10% chance of a rate hike and a rate cut anticipated by June 2024.
- GBP/USD Technical Outlook: Could test 1.2700 if it prints a daily close above 1.2700; otherwise, expect a pullback toward 1.2400.
GBP/USD refreshes nine-week highs at 1.2517 and gains more than 0.30% in the mid-North American trading session after hitting a daily low of 1.2446. At the time of writing, the GBP/USD exchanges hands above the 1.2500 figure, keeping the bullish bias intact.
Pound Sterling gains as market participants wait for BoE’s Bailey speech
A scarce economic calendar in both sides of the Atlantic would leave GBP/USD traders adrift to the Bank of England’s (BoE) Governor Andrew Bailey's speech later, which isn’t expected to move the needle as speculations the BoE has finished tightening monetary policy. Odds for a rate hike are less than 10%, while the first-rate cut is priced in for June 2024.
On the fiscal front, the UK Primer Minister Rishi Sunak stated the government would cut taxes after witnessing a drop in inflation as he spoke ahead of the UK’s autumn budget release. The UK Chancellor of exchequer Jeremy Hunt is expected to announce how he would speed up a stagnant economy. Hunt added, “We plan a range of measures to boost business investment.”
On the US front, the Conference Board (CB) revealed the Leading Index dropped -0.8% from a -0.7%, more than expected. The report showed the economy is decelerating as deterioration in consumers and business conditions, along with a lower ISM Index for New orders, portrays a gloomy economic outlook.
Ahead of the week, the economic calendar will feature BoE Governor Andrew Bailey's speech. On Tuesday, the Chicago Fed National Activity Index, alongside Existing Home Sales, will shed some light regarding the status of the US economy.
GBP/USD Price Analysis: Technical outlook
The daily chart portrays the pair as upward biased, with GBP/USD buyers expected to test the September 11 high at 1.2548, ahead of the 1.2600 figure. Once cleared, the next stop would be the August 30 swing high at 1.2746. On the flip side, the pair would be subject to a pullback if GBP/USD fails to clear the 1.2500 mark. Hence, the pair could aim lower and test the 200-day moving average (DMA) at 1.2446 before diving to the 1.2400 mark. Once cleared, the next stop would be the November 17 low of 1.2374.
- The USD/JPY is slipping into a seven-week low as the Yen recovery extends.
- Japan Tokyo Inflation figures due later in the week, could put a kink in Yen rally.
- USD/JPY set for its third straight down day as markets sell Greenback, bid Yen.
The USD/JPY is seeing further declines on Monday, with the Japanese Yen (JPY) gaining over a full percent against the US Dollar (USD). The pair has backslid from the 150.00 handle and is currently aimed at the sub-148.00 chartspace.
USD/JPY: Targeting a drop to around 146.25 in the next 1-2 weeks – Scotiabank
Overall declines in the US Dollar's speculative position are exacerbating the Yen's recovery from multi-year lows, and the trick for Yen bulls will be to keep the JPY on track through Japanese inflation figures due later this week, slated for early Friday.
Friday's Japan National Consumer Price Index (CPI) inflation reading is expected to show a slight improvement in core CPI (CPI less volatile fresh food prices), with the annualized figure forecast to tick up from 2.8% to 3.0%.
The Bank of Japan (BoJ) has been trapped in an incredibly dovish stance as of late, which helped to fuel the Yen to some of its lowest bids in fifteen years against some of the other major currencies. An upbeat inflation number would be a saving grace for the BoJ which is hoping some of their extraordinary policy measures will help keep the Japanese economy from slipping back into long-term deflation.
Japanese Yen price today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Canadian Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.33% | -0.34% | 0.11% | -0.55% | -1.06% | -0.41% | -0.19% | |
| EUR | 0.33% | -0.03% | 0.44% | -0.22% | -0.73% | -0.08% | 0.13% | |
| GBP | 0.34% | 0.03% | 0.47% | -0.19% | -0.70% | -0.06% | 0.16% | |
| CAD | -0.12% | -0.44% | -0.46% | -0.66% | -1.18% | -0.53% | -0.31% | |
| AUD | 0.54% | 0.22% | 0.21% | 0.66% | -0.51% | 0.13% | 0.35% | |
| JPY | 1.06% | 0.72% | 0.48% | 1.18% | 0.51% | 0.65% | 0.87% | |
| NZD | 0.42% | 0.09% | 0.07% | 0.53% | -0.13% | -0.65% | 0.24% | |
| CHF | 0.20% | -0.13% | -0.14% | 0.31% | -0.35% | -0.87% | -0.21% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
USD/JPY Technical Outlook
The USD/JPY is set for its third straight loss day, accelerating declines as the pair falls below the 50-day Simple Moving Average (SMA) for the first time since late July, when the pair was trading near 141.00.
With Monday set for a close in the red, the USD/JPY will have closed down for four of the last five trading days, and the pair has declined over 2.5% from last week's early peak at 151.91.
Despite the near-term downside, the USD/JPY remains firmly well-bid, and is still trading well above the 200-day SMA, which is miles away from current price action, pushing up into 142.00.
USD/JPY Daily Chart
- The Canadian Dollar is trading steady as markets chew a quiet Monday.
- CPI inflation in Canada is slated for Tuesday, Retail Sales at the end of the week.
- Crude Oil is continuing to push higher, bolstering the CAD.
The Canadian Dollar (CAD) is leaning into the low side in quiet Monday trading as markets churn on US Dollar (USD) bets, but Loonie losses appear limited by rising Crude Oil bids.
Consumer Price Index (CPI) inflation figures from Canada are due on Tuesday, and Canadian Retail Sales are on the docket for Friday. Tuesday will also be seeing the Federal Reserve’s (Fed) latest Federal Open Market Committee (FOMC) Meeting Minutes.
Daily Digest Market Movers: Canadian Dollar softly higher on quiet but softly optimistic Monday
- Tuesday’s Canadian CPI figures to be the focus for Loonie traders.
- Markets are expecting a slight uptick in the MoM figure, 0.1% for October compared to September’s -0.1%.
- Annualized Canadian CPI inflation expected to cool slightly, print at 3.6% versus the previous 3.8%.
- With broader markets largely focused on the US Dollar, the Fed’s Meeting Minutes release on Tuesday could see added focus.
- Markets are betting that the Fed is now done with rate hikes, investors to focus on inflation figures in anticipation of future rate cuts.
- Crude Oil markets drift higher on Monday, but open interest is declining, which could see declining support for the Loonie.
- Canada CPI Preview: Forecasts from six major banks, inflation to decelerate further.
Technical Analysis: Canadian Dollar looking for a foothold in soft Monday trading
The Canadian Dollar (CAD) is getting pushed into the low end for Monday’s trading session, tipping into 1.3750 as the USD/CAD pair recovers into the 50-hour Simple Moving Average (SMA). The pair set an intraday low near 1.3690 in early chart action, but the USD/CAD is now paring back Friday’s declines from the 200-hour SMA at 1.3760.
On the daily candlesticks, the USD/CAD is continuing to see bids pushing into dynamic technical support at the rising trendline from July’s 1.3100 lows. Bids continue to see support from the 50-day SMA, and the long-term trend appears to support continued USD strength.
On the bearish side, the USD/CAD is struggling to establish meaningful gains, and downside risks are mounting as the pair trades into the year’s high side.
Canadian Dollar price today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the US Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.33% | -0.34% | 0.11% | -0.54% | -1.04% | -0.39% | -0.21% | |
| EUR | 0.33% | -0.02% | 0.44% | -0.20% | -0.70% | -0.05% | 0.14% | |
| GBP | 0.34% | 0.02% | 0.46% | -0.19% | -0.69% | -0.04% | 0.15% | |
| CAD | -0.12% | -0.44% | -0.47% | -0.66% | -1.16% | -0.50% | -0.32% | |
| AUD | 0.53% | 0.21% | 0.19% | 0.65% | -0.50% | 0.15% | 0.33% | |
| JPY | 1.03% | 0.71% | 0.45% | 1.14% | 0.50% | 0.65% | 0.82% | |
| NZD | 0.39% | 0.06% | 0.05% | 0.50% | -0.15% | -0.65% | 0.18% | |
| CHF | 0.20% | -0.12% | -0.14% | 0.32% | -0.34% | -0.84% | -0.19% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
USD/CAD Hourly Chart
USD/CAD Daily Chart
Canadian Dollar FAQs
What key factors drive the Canadian Dollar?
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
How do the decisions of the Bank of Canada impact the Canadian Dollar?
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
How does the price of Oil impact the Canadian Dollar?
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
How does inflation data impact the value of the Canadian Dollar?
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
How does economic data influence the value of the Canadian Dollar?
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
- The XAU/USD trades near the $1,970 level, recording a loss of 0.40%.
- US yields recovered and traders await potential new catalysts to model their expectations on the next Fed moves on a quiet week.
- The week’s highlights are the FOMC minutes on Wednesday.
In Monday's session, XAU/USD is seeing 0.40% losses, trading mainly in the vicinity of $1,970. Key factors driving these changes include a slight recovery in US yields and an uptick in market caution as traders await the reveal of fresh catalysts to continue placing their bets on the Federal Reserve (Fed). In addition, markets continue assessing last week’s inflation data from the US and seek to see any clues in the Federal Open Market Committee (FOMC) minutes from the last November meeting which will be released on Wednesday.
In the last week, the yellow metal’s price gained momentum due to the increasing downward pressure on U.S. yields and the US Dollar due to the soft Consumer Price Index (CPI) figures from the US from October. On Friday, the 10-year yield dropped to 4.38% from its peak in late October at 5.02% to the lowest level since late September. Similarly, the 2- and 5-year rates dropped to their lowest point since September, towards 4.80% and 4.35%, respectively.
On Monday, those rates recovered to 4.90%, 4.47%, and 4.46%, which seems to me to be applying pressure to the non-yielding metal. The question that arises now is if one month of positive inflation figures will be enough to end the Fed’s tightening cycle. Any new evidence of inflation picking up or the economy being overheated can fuel hawkish bets on the Fed, which could affect the price.
XAU/USD levels to watch
The technical indicators on the daily chart reflect uncertainty in the short-term momentum. Despite this, the Relative Strength Index (RSI) enjoys a pleasant sojourn in positive territory, indicating an intact buying momentum. The Moving Average Convergence Divergence (MACD) exhibits flat green bars, signifying a potential deceleration in the bullish charm but not necessarily hint at a complete trend reversal.
In addition, the price is trading just below its 20-day Simple Moving Average (SMA), but above 100-day and 200-day SMAs, suggesting a broader bullish bias. This seemingly contrasts with the bearish short-term sentiment inferred from a recent stall in bulls' action. However, this outlook may also mean that the bulls are taking a breather after a 2.2% winning week before continuing their upward march.
Support Levels: $1,940 (200-day SMA), $1,930 (100-day SMA), $1,900.
Resistance Levels: $1,970 (20-day SMA), $2,000, $2,020.
XAU/USD daily chart
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Statistics Canada will release October Consumer Price Index (CPI) data on Tuesday, November 21 at 13:30 and as we get closer to the release time, here are the forecasts by the economists and researchers of six major banks regarding the upcoming Canadian inflation data.
Headline is expected at 3.2% year-on-year vs. 3.8% in September. If so, it would be the lowest since June. Core trim is expected to fall a tick to 3.6% YoY while core median is expected to decline two ticks to 3.6% YoY.
TDS
We look for CPI to fall 0.7pp to 3.1% YoY on a sharp swing in the contribution from energy products as prices hold unchanged MoM. Gasoline prices will exert a sharp drag on the month but a tepid rebound in core goods and ongoing strength in shelter should help offset this. We should also see more progress across core measures with CPI-trim/median edging lower to 3.6% YoY.
RBC Economics
YoY CPI growth is expected to slow significantly to 3.1% in October (just above the top end of the BoC’s 1% to 3% inflation target range) from 3.8% in September. A drop in gasoline prices pushed energy costs lower and the lagged impact of easing supply chains and lower food commodity prices continue to slow grocery store price growth. There is not much that the BoC can do to impact global commodity prices, and price growth excluding food and energy products is expected to be ‘stickier’, edging up to 3.3% YoY from 3.2% in September.
NBF
The drop in gasoline prices may have limited the increase of the headline index to 0.2% during the month before seasonal adjustment. If we’re right, the 12-month rate of inflation should come down from 3.7% to 3.2%. Similarly to the headline print, the core measures preferred by the Bank of Canada should have eased, with CPI-med likely moving from 3.8% to 3.6% and CPI-trim from 3.7% to 3.6%.
CIBC
Lower gasoline prices, on both a MoM and YoY basis, will be the main driver of weaker consumer prices in October. The 0.1% decline in unadjusted prices in October (-0.2% seasonally adjusted) would see the annual rate of inflation slow to 3.0%, which would be the lowest reading since June. Food price inflation should also continue to ease, even though prices are still expected to be up modestly on the month. In contrast, ex food/energy prices could look a little firmer than in the prior month, with a 0.3% seasonally adjusted increase expected. That said, this increase is still anticipated to be more narrowly based than the inflation we were seeing in the first half of the year, with mortgage interest costs and rental prices the main contributors. The Bank of Canada’s preferred trim and median measures of inflation are expected to decelerate further on both a year-over-year and a 3-month annualized basis.
Citi
Canada’s headline CPI should ease further in October, remaining flat on the month and dropping to 3.1% YoY. Weaker energy prices should be a large factor leading to softer CPI in October. Many components of shelter inflation should remain on the strong side, however, including another solid increase in rents. But a further decline in new home prices in September and weaker existing home prices in October suggest the shelter components more closely related to house prices could be somewhat softer this month. The most important element of any CPI report, as it has been for many months, will be the path of core inflation with anecdotal data suggesting an easing in annual core inflation should be more evident sometime in H1 next year. The more conservative CFIB decline could suggest the 3-month pace of core inflation falling below 3.5% sometime in the next few months.
Wells Fargo
A favorable outcome for October CPI would support the case for a continued policy rate pause and a probable policy rate peak. A combination of lower energy prices during October as well as favorable base effects should see headline inflation slow sharply to 3.2% YoY in October from 3.8% in September. Equally important, central bank policymakers and market participants will be looking for the pace of core inflation to slow as well. The average of the central bank's core inflation measures slowed to a three-month annualized pace of 3.67% in September. Should that metric shift down to a 3.0%-3.5% range for the October reading, we believe that would strengthen the case that the policy rate peak has already been reached. A moderate deceleration of inflation along those lines would also, we think, keep the BoC on course to begin lowering its policy interest rates from around the middle of next year.
- Mexican Peso (MXN) extends gains against the US Dollar (USD), buoyed by a risk-on market mood.
- Mexico’s calendar will feature mid-November inflation data, expected to show a slight increase in headline CPI and a minor decrease in core CPI.
- The Bank of Mexico (Banxico) is set to release the minutes of its latest meeting, where it decided to maintain interest rates unchanged, altering its language from previous statements.
Mexican Peso (MXN) extends its gains despite being on holiday in observance of the Mexican Revolution, climbing more than 0.30% against the US Dollar (USD) amid a risk-on impulse. Broad US Dollar weakness persists, even though US Treasury bond yields advance slightly. The USD/MXN pair is trading at 17.13 after reaching a daily high of 17.25.
Mexico’s current week's economic docket will feature the release of mid-November inflation, which is expected to show a slight jump in the headline Consumer Price Index (CPI) and a minuscule reduction in core CPI. Besides that, the Bank of Mexico (Banxico) will release its latest meeting minutes after deciding to hold rates “for some time” at current levels, changing the language of the prior five meetings from “for an extended period.” Regarding rate cuts, the swap market prices in 50 bps of cuts for the first half of 2024.
Daily digest movers: Mexican Peso rally extends to seven straight days, USD/MXN hits two-month low at 17.11
- The USD/MXN is trading well below the 20, 50, 100, and 200-day Simple Moving Averages (SMAs), portraying a bearish bias.
- The US Dollar Index (DXY), which measures the Greenback’s value against a basket of peers, posts losses of more than 0.20%, trading at 103.57, even though US Treasury bond yields climb.
- The US 10-year Treasury bond yield is up two basis points (bps) to 4.46%.
- Mexico’s Gross Domestic Product (GDP) figures will be revealed on Friday, alongside the third quarter current account.
- Thursday’s economic data in the US suggests the economy is decelerating as expected by the Federal Reserve, after Industrial Production plunged in October and unemployment claims have risen the most since August.
- Data published last week showed prices paid by consumers and producers in the US dipped, increasing investors' speculations that the Fed’s tightening cycle has ended.
- The swap market suggests traders expect 100 basis points of rate cuts by the Fed in 2024.
- The latest inflation report in Mexico, published on November 9, showed prices grew by 4.26% YoY in October, below forecasts of 4.28% and prior rate of 4.45%. On a monthly basis, inflation came at 0.39%, slightly above the 0.38% consensus and September’s 0.44%.
- Banxico revised its inflation projections from 3.50% to 3.87% for 2024, which remains above the central bank’s 3.00% target (plus or minus 1%).
Technical Analysis: Mexican Peso maintains the upper hand, with USD/MXN eyeing 17.00
The USD/MXN bearish bias remains intact, with sellers eyeing a test of the 17.00 figure, which would open the door for further losses below the figure. The next stop will be the August 28 low of 16.69 before the year-to-date (YTD) low of 16.62.
On the other hand, if the USD/MXN breaks above the 100-day Simple Moving Average (SMA) at 17.34, it could pave the way to 17.50. However, the loss of 17.28, the November 3 low, has exposed the following demand area at the 17.00 figure.
Mexican Peso FAQs
What key factors drive the Mexican Peso?
The Mexican Peso (MXN) is the most traded currency among its Latin American peers. Its value is broadly determined by the performance of the Mexican economy, the country’s central bank’s policy, the amount of foreign investment in the country and even the levels of remittances sent by Mexicans who live abroad, particularly in the United States. Geopolitical trends can also move MXN: for example, the process of nearshoring – or the decision by some firms to relocate manufacturing capacity and supply chains closer to their home countries – is also seen as a catalyst for the Mexican currency as the country is considered a key manufacturing hub in the American continent. Another catalyst for MXN is Oil prices as Mexico is a key exporter of the commodity.
How do decisions of the Banxico impact the Mexican Peso?
The main objective of Mexico’s central bank, also known as Banxico, is to maintain inflation at low and stable levels (at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%). To this end, the bank sets an appropriate level of interest rates. When inflation is too high, Banxico will attempt to tame it by raising interest rates, making it more expensive for households and businesses to borrow money, thus cooling demand and the overall economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.
How does economic data influence the value of the Mexican Peso?
Macroeconomic data releases are key to assess the state of the economy and can have an impact on the Mexican Peso (MXN) valuation. A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only does it attract more foreign investment but it may encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this strength comes together with elevated inflation. However, if economic data is weak, MXN is likely to depreciate.
How does broader risk sentiment impact the Mexican Peso?
As an emerging-market currency, the Mexican Peso (MXN) tends to strive during risk-on periods, or when investors perceive that broader market risks are low and thus are eager to engage with investments that carry a higher risk. Conversely, MXN tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
Economists at HSBC do not expect the USD to be materially affected by expected Fed rate cuts in 2024.
Modest USD strength ahead
Our view of modest USD strength in 2024 is not based on an anticipated calamity, either for the US economy or elsewhere. As such, the impact of Fed easing on the USD falls into the realm of uncertainty, rather than ‘safe-haven’ USD bullishness.
Rate cuts delivered in tandem with slower US inflation would also mean that US real interest rates would probably remain positive, supporting the USD.
Shallow cuts could eventually lead to the US economy regaining momentum, and for the USD to remain supported.
Seasonal bias adds to short-term upside risks for EUR/USD, economists at MUFG Bank report.
EUR/USD on average gains 1.8% in the final five weeks of the year
Covering the entire period of EUR trading since 1999, EUR/USD on average gains 1.8% in the final five weeks of the year. There is no clear consensus on why this bias exists with differing reasonings provided by market participants.
Certainly, some form of position squaring into the end of the years seems quite likely. Looking at the history of Leveraged Funds’ positioning in EUR for example does show a far greater proportion of the time positioning is short EUR. Roughly two-thirds of the time since the IMM Leveraged Funds data began in 2006, positioning has been short.
Two caveats are therefore worth mentioning in regard to this year. Firstly, the sharp rebound in EUR/USD in November could take away some of the scope for EUR upside in December and positioning right now shows modest long EUR.
- The New Zealand Dollar rises on increased optimism regarding its largest trading partner, China.
- The Kiwi gains traction after the PBOC decides to keep rates unchanged and pumps more liquidity into the economy.
- NZD/USD continues to rebound, resuming the short-term uptrend from last week.
The New Zealand Dollar (NZD) is trading higher against the US Dollar (USD) at the start of the new week, as optimism surrounding the outlook for China, New Zealand’s chief trading partner, supports the NZD – and the USD suffers more losses.
Daily digest market movers: New Zealand Dollar buoyed by improved sentiment around China
- The New Zealand Dollar rises, benefiting from increased optimism over the outlook for China, its biggest trading partner.
- On Monday, Chinese officials reiterated their vow to roll out more policy support for the country’s beleaguered real estate sector.
- During the Asian session, The People’s Bank of China (PBOC) held its policy meeting and decided to leave its benchmark Loan Prime Rate (LPR) near record lows of 3.45%. It also injected about 80 billion Yuan of liquidity into the economy.
- The PBOC also set a stronger-than-expected daily midpoint for the USD/CNY fix.
- The US Dollar, on the other hand, was weighed down by the expectation that the Federal Reserve (Fed) has concluded raising interest rates.
- Since higher interest rates tend to increase demand for a currency because they attract foreign capital inflows, this has weighed on USD.
- In fact, markets are now pricing in the possibility of nearly 100 bps of Fed rate cuts by December 2024, which has led to a sharp decline in US Treasury bond yields, which are closely correlated with the USD. The yield on the benchmark 10-year US government bond fell to a two-month low on Friday and continues to undermine the US Dollar.
- The next major release for the New Zealand Dollar is the New Zealand Trade Balance for October, out at 21:45 GMT.
New Zealand Dollar technical analysis: NZD/USD may be forming potential bottoming formation
NZD/USD – the number of US Dollars one New Zealand Dollar can buy – continues its rebound on Monday, peaking close to the key October highs at (0.6050 – 0.6055).
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New Zealand Dollar vs US Dollar: Daily Chart
The pair remains in a short-term bullish trend, biasing longs; this holds true as long as the November 14 lows at 0.5863 stay intact.
The zone around the October highs has been touched multiple times this year, making it an important support and resistance level. As a result of its heightened significance, it is likely to yield a volatile push higher when it is eventually broken.
A decisive break above 0.6055 would change the outlook to bullish in the medium term, indicating the possibility of the birth of a new uptrend. Such a move would then initially target the 200-day Simple Moving Average (SMA) at around 0.6100.
A possible bullish inverse head and shoulders pattern may have formed at the lows. The pattern is identified by the labels applied to the chart above. L and R stand for the left and right shoulders, whilst H stands for the head. If the neckline at the October highs is decisively breached, it will indicate a substantial move to the upside, to a target at 0.6215.
A decisive break would be one accompanied by a long green candle or three green candles in a row.
As things stand, the medium and long-term trends are both still bearish, however, suggesting the potential for more downside remains strong.
New Zealand Dollar FAQs
What key factors drive the New Zealand Dollar?
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
How do decisions of the RBNZ impact the New Zealand Dollar?
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
How does economic data influence the value of the New Zealand Dollar?
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
How does broader risk sentiment impact the New Zealand Dollar?
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
The USD retains a soft undertone after closing out Friday on the low after a poor week. Economists at Scotiabank analyze Greenback’s outlook.
Slower US growth and lower US yields will undercut the appeal of the USD
Sentiment on the USD is clearly changing as market conviction that the Fed tightening cycle is ended grows and investors start to focus on when the Fed will start to relax its policy settings.
Slower US growth and lower US yields will undercut the appeal of the USD in the coming months.
Economists at Danske Bank maintain a bullish view on USD/CAD on a 3-12M horizon.
BoC to keep policy rates unchanged until Q1 2024
We maintain a bullish view on USD/CAD on a 3-12M horizon. That said, in the near-term risks are for a further setback to the broad USD given weakness in US figures and as markets price in the first rate cut for March. This is likely to benefit CAD albeit not by as much as other cyclically sensitive currencies.
We expect the Bank of Canada to keep policy rates unchanged until Q1 2024 when we pencil in the first rate cut.
A persistent move lower in the cross would likely require a stronger global growth backdrop than what we pencil in or a very ‘hard landing’ requiring a sharp easing of global monetary conditions, including a weaker USD.
Forecast: 1.34 (1M), 1.37 (3M), 1.41 (6M), 1.44 (12M)
The continuation of the downward bias could drag USD/IDR to the strong support around 15,320 in the near term, according to Markets Strategist Quek Ser Leang at UOB Group.
Key Quotes
We did not anticipate the sharp drop in USD/IDR last week (we were expecting it to rebound further). USD/IDR continues to drop today, and the risk for this week is still on the downside. That said, it remains to be seen if USD/IDR can break clearly below the major support at 15,320.
Looking ahead, if USD/IDR breaks clearly below this level, the focus will shift to 15,220. The downside risk is intact as long as USD/IDR stays below 15,590 (minor resistance is at 15,510).
- EUR/USD adds to the monthly rally and revisits 1.0940.
- Next on the upside comes the 1.1000 threshold.
EUR/USD adds to the ongoing optimism and reaches a new three-month peak around 1.0940 at the beginning of the week.
The continuation of the upward bias could see the weekly high of 1.0945 (August 30) revisited sooner rather than later. Once cleared, spot could challenge the psychological threshold of 1.1000.
So far, while above the significant 200-day SMA, today at 1.0805, the pair’s outlook should remain constructive.
EUR/USD daily chart
The US Dollar weakened by 1.8% (DXY basis) last week. Economists at MUFG Bank analyze Greenback’s outlook.
Looking set for further declines
We now believe the window for renewed US Dollar strength that we have been referring to may now have closed.
US data and global growth conditions will remain key for the scope for further Dollar weakness ahead.
The US Dollar remains vulnerable to further selling, certainly in the earlier part of this week both from a fundamental and technical perspective.
See: The Dollar can edge a little lower near-term – ING
Markets Strategist Quek Ser Leang at UOB Group suggests USD/MYR risks further losses in the short-term horizon.
Key Quotes
We expected USD/MYR to consolidate in a range of 4.6540/7.7550 last week. USD/MYR then traded between 4.6540 and 4.7210 before ending the week at 4.6780 (-0.59%). USD/MYR edged lower in Asian trade today, and downward momentum appears to be building again, albeit tentatively.
This week, USD/MYR is likely to trade with a downward bias, but any decline is unlikely to reach the early November low, near 4.6280 (there is another support at 4.6400). Resistance is at 4.7150, followed by 4.7350.
- DXY comes under extra pressure and challenges the 200-day SMA.
- The index risks sustained losses if 103.60 is breached in a convincing fashion.
DXY adds to Friday’s decline and drops to levels last seen in early September around 103.50 on Monday.
In case bears push harder, the breakdown of the November low of the 200-day SMA at 103.61 should leave the door open to further retracements in the short-term horizon. That said, the next support emerges at the weekly low of 102.93 (August 30) prior to the psychological 100.00 threshold.
In the meantime, while below the key 200-day SMA, the outlook for the index is expected to shift to bearish.
DXY daily chart
Gold price hangs near daily low. Economists at TD Securities analyze the yellow metal’s outlook.
Is it time to come to the dark side?
The door for some downside in Gold prices may be finally opening up, as our advanced positioning analytics suggest that upside flows have now peaked.
We now estimate that without a decisive break north of $2,000, trend follower buying activity will likely grind to a halt.
A meaningful deterioration in US data may increasingly create headwinds for the bears, but the scope for tactical downside is growing nonetheless.
The JPY is the top performer on the day. Economists at Scotiabank analyze Yen’s outlook.
A minor reversal has formed on the daily chart
Japanese stocks hit a fresh 33-year high briefly earlier before retreating but JPY gains are more reflective of the lower US yield outlook as well as positioning.
Friday’s CFTC data showed a large rise in net speculative JPY shorts through last Tuesday’s week (amid generally better net buying of the USD); net short JPY positions held by speculative, hedge fund and real money traders rose to the largest in close to a year – just as the JPY was starting to show some signs of steadying near recent lows.
Daily chart patterns suggest a minor reversal (double top pattern) has formed on the daily chart, targeting a drop to around 146.25 in the next 1-2 weeks. That could squeeze some of the weaker JPY shorts further.
Speaking in an interview with CNBC News on Monday, US Treasury Secretary Janet Yellen said that the “US and China recognize they have the opportunity to work together.”
Additional comments
President Biden made clear to China's XI that Taiwan policy has not changed.
Discussed issues concerning China's investment in the US.
Americans still seeing increases in some important prices including food.
We do have concerns about issues with privacy and social media.
This matter has not been resolved.
I think we are making considerable progress and bringing inflation down.
Americans still seeing increases in some important prices including food.
Biden administration making investments that will improve conditions in many parts of the country.
We cannot allow Ukraine to lose battle on the homefront.
Ukraine is utterly dependent on US aid.
Israel urgently needs aid as well.
Aid is important for US national security.
We need to be a fiscally responsible and sustainable path for spending and taxation.
The higher interest rate environment does pose additional challenges for debt reduction.
Related reads
- US Dollar subdued as more downturn looms on the horizon
- The Dollar can edge a little lower near-term – ING
USD/CAD is little changed on the day. Economists at Scotiabank analyze the pair’s outlook.
Intraday resistance should be firm around 1.3750/1.3775
The CAD’s technical position remains very fluid from a short-term point of view. But a lot of chop in spot over the past month does not diminish the importance of the big, bearish reversal signal on the weekly chart that formed at the start of the month.
USD bull momentum is weakening and spot is pressuring, if only gently, important support in the upper 1.36s (40-DMA at 1.3699 and trend support at 1.3660).
Intraday resistance should be firm around 1.3750/1.3775.
Further decline in USD/THB is expected to meet the next contention zone around 34.80, notes Markets Strategist Quek Ser Leang at UOB Group.
Key Quotes
Our view for USD/THB to “rebound further” last week was incorrect. Instead of rebounding further, USD/THB plummeted to a fresh 21/2-month low of 35.00 before ending the week on a weak note at 35.14 (-2.52%). The outsized decline is severely oversold, but with no signs of stabilisation yet, USD/THB could weaken to 34.80 before stabilisation is likely.
The next support at 34.60 is unlikely to come under threat. Resistance is at 35.30; is USD/THB breaks above 35.60, it would mean the weakness has stabilised.
- EUR/JPY drops to multi-day lows in the sub-162.00 area.
- Further south comes the 55-day SMA near 158.90.
EUR/JPY extends the decline below the 162.00 support at the beginning of the week.
Further downside appears well on the cards for the cross in the short-term horizon. That said, losses could then accelerate to the provisional 55-day SMA at 158.87 ahead of the interim 100-day SMA at 158.02.
So far, the longer term positive outlook for the cross appears favoured while above the 200-day SMA, today at 152.79.
EUR/JPY daily chart
GBP/USD pushed higher to edge a little above 1.25 before easing back. Economists at Scotiabank analyze the pair’s outlook.
Cable should see firm support on dips
Sterling retains a firm undertone, backed by positive trend momentum on the short, medium and long-term DMIs. Intraday gains have stalled above 1.25 again, however, where the market peaked late last week and right on the 100-DMA.
Intraday dips should remain well supported but loss of support at 1.2370 would imply potential for the Pound to slide back to the mid-1.22 area.
A quick push on through 1.2510 removes that risk and targets gains to 1.26.
USD/CNH is expected to accelerate its losses once it clears the 7.2000 level, comment UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.
Key Quotes
24-hour view: Last Friday, we indicated USD “could break the major support at 7.2380, but it remains to be seen if it can maintain a foothold below this level.” We also indicated that “the next support at 7.2250 is unlikely to come into view.” However, USD weakened more than expected as it broke below both 7.2380 and 7.2250 and plunged to a low of 7.2099. While the sharp and swift drop appears to be overdone, USD could retest the 7.2100 level before a more sustained recovery is likely. The major support at 7.2000 is unlikely to come under threat. Resistance is at 7.2350, followed by 7.2430.
Next 1-3 weeks: Our most recent narrative was from Wednesday (15 Nov, spot at 7.2600). As highlighted, “downward momentum has increased, and USD is likely to weaken further to 7.2380.” We added, “If USD breaks clearly below 7.2380, the focus will shift to 7.2000.” Last Friday, USD plummeted to a low of 7.2099. Downward momentum has increased further, albeit not much. From here, USD must break clearly below 7.0000 before a sustained decline to 7.1800 is likely. Overall, only a breach of 7.2600 (‘strong resistance’ level previously at 7.2900) would indicate that the downside risk has eased.
FX option expiries for Nov 20 NY cut at 10:00 Eastern Time, via DTCC, can be found below.
- EUR/USD: EUR amounts
- 1.0850 824m
- 1.0900 612m
- 1.0930 643m
- USD/JPY: USD amounts
- 149.25 770m
- 150.00 1.2b
- USD/CHF: USD amounts
- 0.8900 701m
- AUD/USD: AUD amounts
- 0.6500 871m
- 0.6550 508m
- USD/CAD: USD amounts
- 1.3550 1b
- 1.3825 1b
NZD/USD: NZD amounts
- 0.5925 682m
- 0.6050 564m
EUR/USD extends gains through 1.09. Economists at Scotiabank analyze the pair’s outlook.
Undertone remains bullish
Minor new cycle highs for the EURU/USD pair, testing the late August highs for spot – are keeping the EUR trend and tone bullish.
Trend strength signals are aligning bullishly for the Euro, keeping the pair on track for a push to 1.0961 (61.8% retracement of the EUR’s H2 drop).
Minor dips (to the mid/upper 1.08s) are likely to remain well-supported amid solid bull trend momentum.
See – EUR/USD: Good resistance at 1.0950/1.0960 this week – ING
The Swedish Krona has shown signs of recovery vs. the Euro since the start of this month as on a one-month view, the SEK is the best performing G10 currency. Economists at Rabobank analyze Krona’s outlook.
Three-month EUR/SEK forecast revised from 11.40 to 11.20
On the assumption that the Riksbank does hike rates again this week, we see scope for a continued recovery in the SEK.
Having essentially hit our target, we have revised our three-month EUR/SEK forecast from 11.40 to 11.20.
See – EUR/SEK: Further Krona strength in the near-term – Danske Bank
- The Greenback opens the week in the red at a fresh two-month low.
- Traders are further betting on rate cuts from the biggest central banks.
- The US Dollar Index holds above 103.00, though a sell-off could result into the DXY near 101.00
The US Dollar (USD) is kicking off this festive week in the red as US traders look for the best Black Friday deals ahead of the turkey dinner on Thursday. The US Dollar Index (DXY) has snapped some substantial technical indicators that hold big relevance as support or resistance. With a very light economic calendar this week, not many elements can be pushed forward for a turnaround in the current downturn for the Greenback.
The calendar for this Monday is very light, with just a few bond auctions from the US Treasury. On Tuesday traders will brace for the FOMC Fed Meeting Minutes from their latest rate decision. Before Thursday’s national holiday, the University of Michigan will print its final November data and the week will be closed with the flash S&P Global Purchase Managers Index (PMI) numbers.
Daily digest: US bleeds quietly
- Geopolitical tensions are flaring up as over the weekend there were rumours over an agreement of a five-day ceasefire, though the US refrained from confirming. Meanwhile, this Monday morning a tanker in the Strait of Hormuz got seized by Iran-backed rebels, Tokyo-based Nippon Yusen KK reported, who chartered the ship.
- The US Treasury will be going to the markets to relocate a few bonds:
- A 3-month bill will be issued at 16:30 GMT.
- A 6-month bill will be issued at 16:30 GMT.
- A 20-year bond auction will take place at 18:00 GMT.
- Overnight, the People’s Bank of China (PBoC) issued a much stronger fixing for its Yuan, pushing the Chinese currency substantially stronger against the Greenback by 0.70%.
- Additionally, the Greenback is losing over 1% against the Japanese Yen.
- Equities are looking for direction as the question stands whether a recession will take place before or after central bank interest-rate cuts. The only notable outlier this Monday is the Hang Seng Index, which is up near 2% at the Chinese closing bell.
- The CME Group’s FedWatch Tool shows that markets are pricing in a 99.8% chance that the Federal Reserve will keep interest rates unchanged at its meeting in December. A small 0.2% believes a cut is due to unfold.
- The benchmark 10-year US Treasury Note yield trades at 4.45%.
US Dollar Index technical analysis: A doom scenario
The US Dollar is signalling distress to the markets, accumulating several red lights flashing when gauged by the US Dollar Index (DXY). Both on the daily and the weekly chart, the DXY is snapping several important support areas, which could mean a bigger and broader downtrend for weeks and months to come from a pure technical perspective. Especially the break of the 200-day SImple Moving Average (SMA) on the daily chart, combined with the weekly break below both the 55-day and 100-day SMA, is a worrying sign that the DXY could depreciate even more.
The DXY was unable to bounce off the 100-day SMA and is treading water at the 200-day SMA. Look for the recovery bounce towards the 100-day SMA near 104.20. Should the DXY be able to close and open above it, look for a return to the 55-day SMA near 105.71 with 105.12 ahead of it as resistance.
Traders were warned that when the US Dollar Index would slide below that 55-day SMA, a big air pocket was opening up that could see the DXY fall substantially. The 200-day SMA is trying to keep everything together, though should there be a further decline, the psychological 100-level comes into play. With a very slim economic calendar and several US market participants off the desk for the holidays, there is room for a potential big downturn this week.
US Dollar FAQs
What is the US Dollar?
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022.
Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
How do the decisions of the Federal Reserve impact the US Dollar?
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
What is Quantitative Easing and how does it influence the US Dollar?
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
What is Quantitative Tightening and how does it influence the US Dollar?
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
USD/JPY is no longer trading above the level of 150. Economists at Commerzbank analyze the pair’s outlook.
The difference between JPY projections and JPY buy recommendations
The sword of Damocles that is hanging over the Japanese currency has to be taken into consideration: the possibility that a restrictive policy aimed at fighting inflation may not be possible in Japan following years of ultra-expansionary monetary policy and in view of a treasury that is running frightening deficits.
Only those who are reasonably certain that this concern is unjustified can deduct trade recommendations from relatively moderate or positive JPY projections. I certainly am not. Our JPY projections are explicitly not to be understood as a trade recommendation!
Further losses in USD/JPY appears on the cards once 148.90 is breached, according to UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.
Key Quotes
24-hour view: We indicated last Friday that “as long as USD stays below 151.30, it could weaken but is unlikely to break clearly below 150.10.” The anticipated USD weakness exceeded our expectations as USD broke below 150.10 and plummeted to a low of 149.12. USD rebounded from the low, and this combined with oversold conditions suggests USD is unlikely to weaken further. Today, USD is more likely to trade in a range, probably between 149.40 and 150.60.
Next 1-3 weeks: After USD pulled back early last week, we highlighted last Wednesday (15 Nov, spot at 150.55) that “the recent buildup in upward pressure has faded”, and we expected USD to trade in a range of 149.50/151.65. On Friday, USD broke below 149.50 before rebounding quickly from a low of 149.18. The increase in downward momentum is not enough to suggest that USD is ready to head lower in a sustained manner. USD must break clearly below the major support near 148.90 before a sustained decline is likely. As long as USD does not break above 151.10 in the next few days, the likelihood of a clear break below 148.90 will remain in place.
Considering advanced prints from CME Group for natural gas futures markets, open interest increased for the second session in a row on Friday, now by around 23.6K contracts. On the other hand, volume resumed the downside and went down by nearly 26K contracts, partially reversing the previous daily build.
Natural Gas: A test of the 200-day SMA is not ruled out
Prices of natural gas extended the corrective decline on Friday. The downtick was amidst rising open interest and opens the door to further losses in the very near term. Against that, the next contention zone emerges at the key 200-day SMA, today at $2.607 per MMBtu.
Economists at ING have a mildly bullish outlook for EUR/GBP into 2024.
Low volatility
We have a mildly bullish outlook for EUR/GBP into 2024, but our call for 0.90 in the second half of 2024 is not particularly far above the outright forward.
Historical volatility is very low here and that is reflected in one year implied EUR/GBP volatility – now just 5.7%. This had traded as low as 4% in 2006/07 and we do not have any high conviction in saying that volatility cannot fall further. In other words, we are not looking for major swings in EUR/GBP.
Sentiment and prices shifted palpably against the Dollar in the first two weeks of November. Kit Juckes, Chief Global FX Strategist at Société Générale, analyzes FX market outlook for the week ahead.
SEK and NOK come back into favour
We have a quiet week ahead for economic data and with Thanksgiving potentially a distraction for some, there isn’t a lot to challenge the market’s view that a US soft landing is coming.
European PMI data on Friday could be a reminder that growth on this side of the Atlantic isn’t anything to write home about, but US PMIs will be ignored in favour of waiting for ISM a week later (and then NFP a week after that, followed by CPI and the FOMC).
Maybe it all adds up to the EUR/USD and GBP/USD bounces running out of steam at some point, while JPY, AUD and NZD carry on for longer and SEK and NOK come back into favour. Both of those two can drift higher against CHF in this ‘soft landing’ world.
In its monthly economic report published on Monday, Germany’s central bank, the Bundesbank, said that the German economy is likely to shrink again this quarter while facing a touch recovery in the first quarter of 2024.
Key quotes
"Economic output is likely to once again decline slightly in the fourth quarter of 2023.”
"The German economy is set to recover only arduously from the period of weakness that has persisted since the outbreak of war against Ukraine."
"Tentative signs of a slight improvement after the turn of the year are beginning to emerge.”
"The underlying trend in new orders suggests that foreign demand may have bottomed out."
“There is no evidence of a sustained improvement in global industrial activity.”
Market reaction
EUR/USD is unperturbed by the findings of the Bundesbank report, currently trading at 1.0930, up 0.19% on the day.
- Natural Gas prices are down 1% on Monday during early trading in the US.
- The US Dollar sells off and snaps several important support levels, which should support commodity prices.
- Natural Gas prices could decline further once $3.10 is firmly in the rear view mirror.
Natural Gas (XNG/USD) is showing a very mixed picture this Monday morning. European futures are soaring substantially by 4%, while US futures are sinking by 2%. The reason for the dispersion appears to be headlines from a seized vessel in the Red Sea that could stir up war fears.
Meanwhile, the US Dollar (USD) is being clobbered again as the Greenback snaps a crucial technical support level. The 200-day Simple Moving Average (SMA), visible on a daily price chart at 103.62 of the US Dollar Index (DXY), is that support level. The big risk from a pure technical perspective is that if the DXY should close below this level this evening, and open below it again on Tuesday, a long term sell-off could get underway.
Natural Gas is trading at $3.08 per MMBtu at the time of writing.
Natural Gas market movers: split drivers
- European Natural Gas prices are soaring substantially, near 4% intraday, after Galaxy Leader, a vessel carrying Liquefied Natural Gas (LNG), got seized by Iran-backed Houthi rebels in the Red Sea, near the Strait of Hormuz.
- More dark clouds for Europe in the meanwhile as cold weather is coming in quickly and is already having a grip on the more northern, Scandinavian capitals.
- US futures meanwhile are declining and putting pressure on the floor near $3.08, as recent data revealed that the Biden administration very quietly had ramped up its energy production in both Oil and Natural Gas.
- With the Thanksgiving holiday on Thursday, markets and trading dates will be a bit distorted this week.
Natural Gas Technical Analysis: support holds for now
Natural Gas is testing the floor at $3.07 which acts as the last line of defence in a pure technical trading environment ahead of $3.00. Although the price action in US futures looks bearish, some support could be underway as the recent seizing of a tanker in the Strait of Hormuz could respark the pricing of a risk premium in the energy complex. A possible sease-fire between Israel and Palestine could counterbalance those tensions a bit.
Should a proxy war in the Middle East develop, $3.64, will be the level to watch for as prices soar. A risk premium will be priced in if Iran, Saudi Arabia and other countries in the region start mobilising forces. In such a case, even a quick sprint to $4.33, the high of 2023, could be expected.
The current pivotal level, the orange line near $3.07, is trying to provide ample support for now. That level should be able to act as the last line of defence before Gas prices retreat below $3.00. If it snaps, the 100-day SMA could try and salvage the situation for Gas prices. Further weakness could see the commodity sink to $2.72 near the 200-day SMA.
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XNG/USD (Daily Chart)
Natural Gas FAQs
What fundamental factors drive the price of Natural Gas?
Supply and demand dynamics are a key factor influencing Natural Gas prices, and are themselves influenced by global economic growth, industrial activity, population growth, production levels, and inventories. The weather impacts Natural Gas prices because more Gas is used during cold winters and hot summers for heating and cooling. Competition from other energy sources impacts prices as consumers may switch to cheaper sources. Geopolitical events are factors as exemplified by the war in Ukraine. Government policies relating to extraction, transportation, and environmental issues also impact prices.
What are the main macroeconomic releases that impact on Natural Gas Prices?
The main economic release influencing Natural Gas prices is the weekly inventory bulletin from the Energy Information Administration (EIA), a US government agency that produces US gas market data. The EIA Gas bulletin usually comes out on Thursday at 14:30 GMT, a day after the EIA publishes its weekly Oil bulletin. Economic data from large consumers of Natural Gas can impact supply and demand, the largest of which include China, Germany and Japan. Natural Gas is primarily priced and traded in US Dollars, thus economic releases impacting the US Dollar are also factors.
How does the US Dollar influence Natural Gas prices?
The US Dollar is the world’s reserve currency and most commodities, including Natural Gas are priced and traded on international markets in US Dollars. As such, the value of the US Dollar is a factor in the price of Natural Gas, because if the Dollar strengthens it means less Dollars are required to buy the same volume of Gas (the price falls), and vice versa if USD strengthens.
Both the USD Index and EUR/USD are trading at levels last seen at the end of August. Economists at Commerzbank analyze expect rising EUR/USD levels.
First USD-weakness then EUR-strength?
The idea of an exceptionally hawkish Fed is incorrect. The Fed might act more aggressively than other central banks. In case of globally rising inflation and a more restrictive monetary policy being required everywhere that means: it hikes interest rates more quickly and further than others. However, conversely, that also means: once inflation pressure eases the Fed often is one of the first central banks to lower interest rates again. That is unlikely to be USD-positive.
Even without further US-idiosyncratic USD strength, EUR/USD would have further upside potential simply because in our view the market increasingly assesses the ECB incorrectly. Until the end of next year, ECB interest rates would have to fall by roughly 100 bps for the market’s bet to work out. According to our economists that is far too much.
Call it ECB inertia or simply a lack of scope due to a disappointingly slow fall in core inflation: anyone who believes (like we do) that the ECB will lower key rates much later and much more slowly than the market expects will expect rising EUR/USD levels simply because in addition to the USD-weakness we have been seeing over the past weeks there should then also be EUR-strength.
“With inflation halved we can now look forward to the future economy we want to build,” United Kingdom (UK) Prime Minister Rishi Sunak said on Monday.
Additional quotes
We believe in cutting taxes carefully and sustainably.
Our approach starts with controlling inflation.
We have met our commitment to halve inflation.
To develop the economy we will take five long term decisions.
Market reaction
GBP/USD is failing to find any impetus from the above comments, trading at around 1.2475, still up 0.10% on the day.
Economists at Citigroup expect the Swiss Franc (CHF) to weaken as the Swiss National Bank (SNB) may have ended its tightening cycle.
CHF biased toward an extended period of underperformance
The SNB’s pause at its September meeting at a 1.75% terminal rate likely signals an end to its tightening cycle which leaves CHF biased towards an extended period of underperformance given the significantly lower yield on CHF compared to almost all its G10 peers (ex JPY).
However, in ending its rate hike cycle, the SNB has indicated its willingness to strengthen CHF should Swiss inflation once again rise above its 2% target. But with Switzerland having an export-to-GDP ratio of 75% and much more geared towards export performance than its peers, the SNB is likely to be more careful this time about supporting a stronger CHF especially as its growth outlook weakens significantly.
CHF is expected to weaken against most of its G10 peers in the medium-term as investors use the currency as a low-cost funding vehicle to buy risk assets and FX.
USD/CNH erases 7.18. Economists at Société Générale analyze the pair’s outlook.
7.24 expected to be a short-term hurdle
USD/CNH uptrend faltered near October 2022 peak of 7.37 and it evolved within a brief consolidation. It has breached below the lower limit of this three-month range denoting potential downside.
The pair is expected to head lower gradually towards July trough of 7.11/7.10 which is also the 38.2% retracement from January.
Lower limit of previous consolidation near 7.24 is expected to be a short-term hurdle.
USD/JPY slips below 149. Economists at Société Générale analyze the pair’s outlook.
Only a cross above 152 would signal a larger uptrend
USD/JPY has once again struggled to reclaim the high of 2022 near 152 forming double top pattern.
Daily MACD has been posting negative divergence and has dipped below its trigger line denoting lack of steady upward momentum.
The pair is now attempting a break below 50-DMA first time since August and is challenging recent pivot low. A short-term pullback can’t be ruled out towards the lower limit of the multi-month channel near 146.30/146 and 145.10.
Only a cross above 152 would signal a larger uptrend.
- The Euro gathers extra upside traction vs. the US Dollar.
- European stocks open mostly on the defensive on Monday.
- The FOMC Minutes will be the salient event this week.
The Euro (EUR) extends the upside bias against the US Dollar (USD), encouraging EUR/USD to advance to new highs near 1.0950 for the first time since late August.
Meanwhile, the Greenback’s performance, as reflected in the USD Index (DXY), remains negative and puts the key 200-day SMA in the 103.60 region to the test during the European morning.
The persistent downtrend in the Dollar comes amidst marginal moves in US yields across the curve, against the backdrop of increasing speculation regarding a potential interest rate reduction by the Federal Reserve (Fed) in spring 2024. This speculation has been fueled by weaker-than-anticipated inflation indicators (CPI and PPI) released during last week.
In the domestic docket, Producer Prices in Germany contracted 0.1% MoM in October and 11.0% over the last twelve months.
In the US, the only release of note will be the Leading Index tracked by the Conference Board.
Daily digest market movers: Euro retargets the 1.1000 threshold
- The EUR looks well bid vs. the USD early on Monday.
- US and German yields appear slightly bid.
- Markets see that the Fed will lower interest rates in the first quarter of 2024.
- For the time being, investors prefer the ECB to postpone the rate hike.
- Speculation of FX intervention is prevalent in the USD/JPY market.
Technical Analysis: Euro could extend gains above 1.0945
EUR/USD keeps the optimism well and sound well north of 1.0900 the figure at the beginning of the week.
Immediately to the upside for EUR/USD now comes the weekly high of 1.0945 (August 30) ahead of the psychological level of 1.1000. Further north, the pair might come into contact with the August top of 1.1064 (August 10) and another weekly peak of 1.1149 (July 27), all preceding the 2023 high of 1.1275 (July 18).
Occasional bearish moves, on the other side, should meet initial support at the critical 200-day SMA at 1.0805 seconded by the temporary 55-day SMA at 1.0644. South from here emerges the weekly low of 1.0495 (October 13) prior to the 2023 low of 1.0448 (October 3).
Looking at the big picture, the pair's prospects should remain positive as long as it remains above the 200-day SMA.
Euro FAQs
What is the Euro?
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day.
EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
What is the ECB and how does it impact the Euro?
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy.
The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa.
The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
How does inflation data impact the value of the Euro?
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control.
Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
How does economic data influence the value of the Euro?
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency.
A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall.
Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
How does the Trade Balance impact the Euro?
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period.
If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
European Central Bank (ECB) policymaker, Pierre Wunsch, made some comments on the central bank’s interest rate outlook on Monday.
Key quotes
Markets are optimistic to rule out further rate hikes.
Bets on rate cuts risk prompting rate hikes instead.
But rates should stay unchanged in December and January.
Market reaction
At the time of writing, EUR/USD is keeping its upbeat momentum intact near 1.0935, up 0.23% on the day.
The Dollar has fallen nearly 2% since last Tuesday's US CPI release. Economists at ING analyze USD outlook.
Bearish unwind into Thanksgiving
Given the major US Thanksgiving public holiday on Thursday, we suspect this period of position-unwind can continue a little further.
Inputs into FX markets this week will include second-tier US data and the release of minutes to the 1 November FOMC meeting. The market seems in the mood to look out for some dovish headlines here, and this can prove a negative dollar event risk tomorrow evening.
DXY has decent support at 103.50, marking the 50% retracement of its rally from July. This could mark the lower boundary of this week's trading range, while the top could be the 104.40/104.50 area.
Gold prices rose in India on Monday, according to data from India's Multi Commodity Exchange (MCX).
Gold price stood at 60,784 Indian Rupees (INR) per 10 grams, up INR 755 compared with the INR 60,029 it costed on Sunday.
As for futures contracts, Gold prices decreased to INR 60,655 per 10 gms from INR 60,722 per 10 gms.
Prices for Silver futures contracts decreased to INR 72,794 per kg from INR 73,360 per kg.
| Major Indian city | Gold Price |
|---|---|
| Ahmedabad | 62,895 |
| Mumbai | 62,760 |
| New Delhi | 62,885 |
| Chennai | 62,890 |
| Kolkata | 62,880 |
Global Market Movers: Comex Gold price struggles amid optimism over China stimulus
- Comex Gold price struggles, despite firming expectations that the Federal Reserve (Fed) will not hike interest rates amid signs that the high-prices nightmare has ended.
- The US CPI report last week indicated that consumer inflation was cooling faster than anticipated, while the US Jobless Claims last Thursday pointed to a cooling labor market.
- The markets seem convinced that the Fed will leave rates unchanged at its December 2023 policy meeting and are pricing in nearly 100 bps of rate cuts by the end of 2024.
- A turnaround in expectations for the Fed's future policy action dragged the benchmark 10-year US Treasury yield to a two-month low on Friday and benefit the non-yielding metal.
- The US Dollar languishes near its lowest level since September and is seen as another factor lending support to the XAU/USD ahead of the FOMC minutes on Tuesday.
- The escalation of violence between Israel and Hamas has sparked concerns about its potential impact on the world economy and, in a worst-case scenario, could push it into recession.
- Israel and the US rejected reports of a potential breakthrough in negotiations with Hamas to free some of the 240 hostages in Gaza in exchange for a five-day pause in the war.
- The People’s Bank of China kept its Loan Prime Rate (LPR) near record lows, as widely expected, and also injected about 80 billion Yuan of liquidity into markets.
- Chinese regulators vowed to provide more policy support to the beleaguered real estate sector, boosting investors' confidence and capping the safe-haven XAU/USD.
Gold FAQs
Why do people invest in Gold?
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Who buys the most Gold?
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
How is Gold correlated with other assets?
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
What does the price of Gold depend on?
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
- EUR/GBP pulls back from the six-month highs.
- Euro receives downward pressure after the German PPI data.
- BoE may consider rate cuts following weaker UK Retail Sales.
EUR/GBP retreats from the six-month highs, trading lower around 0.8750 during the European session on Monday. The Euro seems to lose ground after the German economic data released on Monday. The Producer Price Index (MoM) reported a decline of 0.1% in October as expected. The annual rate declined by 11.0% lower than the previous contraction of 14.7%.
However, the Euro could maintain its support from hawkish comments made by European Central Bank (ECB) officials on Friday, resisting expectations for early rate cut speculations. Joachim Nagel, the President of Bundesbank, cautioned against initiating interest rate cuts too early. Additionally, ECB policymaker Robert Holzmann argued that the second quarter would be premature for a rate cut.
Market expectations point towards the Bank of England (BoE) considering a reduction in interest rates from their 15-year peak due to looming recession risks. These expectations gained strength following weaker United Kingdom (UK) Retail Sales figures, aligning with a pessimistic outlook for the British economy. This scenario could lend support to the Pound Sterling (GBP).
On Friday, UK Retail Sales (MoM) reduced by 0.3% against the market expectation of a 0.3% rise in October. The yearly rate declined by 2.7% against the expected decline of 1.5%. Additionally, Core Retail Sales (MoM) declined by 0.1% compared to the expected rise of 0.4%.
Investors will take more insights from the Bank of England (BoE) Monetary Policy Report Hearings scheduled for Wednesday and the European Central Bank (ECB) Monetary Policy Meeting Accounts on Thursday. These events are expected to provide valuable cues on the interest rate trajectory from both countries.
AUD/USD powers to a three-month high. Economists at Société Générale analyze the pair’s outlook.
Establishing foothold above 0.65
AUD/USD is not giving up on recouping 0.65 after another decent attempt to finish the week above last Friday’s level despite ongoing concerns about housing in China.
The decline in US yields means the currency has not had a better chance to exit the three-month range and challenge the 200-Day Moving Average (DMA) at 0.6595.
See – AUD/USD: Extra upside in store in the short term – UOB
GBP/USD advances toward 1.2500. Economists at ING analyze Sterling’s outlook.
EUR/GBP can correct back to 0.8700 this week
The UK Chancellor is looking at ways to reduce taxes. The focus this week is on the Autumn Statement, where we think Jeremy Hunt might have around £16bn to play with, given the better fiscal trajectory than expected. Our UK economist does not, however, think this moves the needle for the Bank of England rate story, where we think rates have peaked and the BoE will start easing next August.
Speculation over tax costs in a risk-positive environment should be good news for Sterling.
GBP/USD can push up to 1.2590, while EUR/GBP can correct back to 0.8700 this week.
- GBP/USD scales higher for the second straight day and remains supported by a weaker US Dollar.
- Dovish Fed expectations and the optimism over Chinese stimulus undermine the safe-haven buck.
- Bets that the BoE will start cutting rates during the first half of 2024 might cap gains for the major.
The GBP/USD pair attracts some dip-buying following an early dip to the 1.2440 area on Monday and builds on its steady ascent through the early part of the European session. Spot prices climb back closer to the 1.2500 psychological mark, with bulls now awaiting a sustained move and acceptance above the 100-day Simple Moving Average (SMA) before placing fresh bets.
The US Dollar (USD) selling bias remains unabated in the wake of dovish Federal Reserve (Fed) expectations, which, in turn, is seen pushing the GBP/USD pair higher for the second successive day. Investors now seem convinced that the US central bank is done with its policy tightening campaign and the bets were reaffirmed by the softer US CPI report released last week. Moreover, the markets are now pricing in the possibility that the Fed will start cutting rates as soon as March 2024.
A turnaround in expectations for the Fed's future policy action dragged the yield on the benchmark 10-year US government bond to a two-month low on Friday. Apart from this, the latest optimism over additional stimulus from China turns out to be another factor undermining the Greenback's safe-haven status and lending support to the GBP/USD pair. In fact, Chinese officials vowed to roll out more policy support for the country’s beleaguered real estate sector, boosting investors' confidence.
With the USD price dynamics turning out to be an exclusive driver of the GBP/USD pair's positive move, bulls seem unaffected by the fact that the markets anticipate the Bank of England (BoE) to begin cutting interest rates from their 15-year peak. In fact, interest rate futures have fully priced in a 25 bps BoE rate cut for August 2024 and a second rate cut in November 2024. Moreover, there is a greater than 50% chance that the BoE will start the policy easing cycle by June 2024.
In the absence of any relevant market-moving economic releases, either from the UK or the US, the mixed fundamental backdrop makes it prudent to wait for a breakout through the 100-day SMA before placing fresh bullish bets. Market participants now look forward to scheduled speeches by BoE Governor Andrew Bailey and Richmond Fed President Thomas Barkin to grab short-term trading opportunities later during the early North American session.
Technical levels to watch
CME Group’s flash data for crude oil futures markets noted traders reduced further their open interest positions at the end of last week, this time by around 42.1K contracts. In the same direction, volume went down by nearly 250K contracts after three consecutive daily builds.
WTI: Next target emerges at the 200-day SMA
Prices of WTI rebounded strongly on Friday, although the bounce was accompanied by shrinking open interest and volume, removing strength from the continuation of the bullish move in the very near term. So far, WTI continues to target the key 200-day SMA, today at $78.12.
- USD/MXN extends losses as the Fed is expected to adopt a dovish stance.
- US Dollar fails to gain despite improved US bond yields.
- Banxico’s policy decision will be influenced by Mexico's inflation context.
USD/MXN trades lower around 17.1800 during the European session on Monday, retracing the recent gains. Markets are biased toward the possibility that the Federal Reserve (Fed) could cut rates for the first half of 2024, leading to a weakening of the US Dollar (USD) over the previous week.
The US Dollar Index (DXY) trades lower around 103.60 despite improved US Treasury yields, with the yield on the 2-year Treasury coupon standing at 4.90% and the 10-year yield at 4.46%, by the press time.
Bank of America (BoA) has revised its forecasts, predicting higher Fed Funds Rates for an extended period. The updated forecasts indicate an increase in rates across the curve, with the projection of a 10-year US Treasury yield reaching 4.25% by the end of 2024.
Banxico, Mexico's central bank, is anticipated to keep its interest rates steady at 11.25% for quite some time as part of its efforts to achieve a 3.0% inflation target by 2025. The decision will be influenced by Mexico's inflation context, which eased to 4.26% year on year in October.
Governor Victoria Rodriguez Ceja hinted on Monday that rate cuts could be on the table for next year. Deputy Governor Jonathan Heath reinforced on Tuesday that monetary policy would persist in its restrictive stance.
The market's attention on Tuesday will be on the FOMC minutes, providing insights into the Federal Reserve committee's decision to maintain rates, along with Mexico’s Retail Sales on Wednesday.
EUR/USD has risen firmly above the 1.09 mark. Economists at ING analyze the pair’s outlook.
EUR/USD could settle into some kind of 1.0860-1.0960 range
We see good resistance for EUR/USD at 1.0950/1.0960 this week, and failure to break that on Tuesday's FOMC minute event risk could then see EUR/USD settling into some kind of 1.0860-1.0960 range.
Apart from the myriad of ECB speakers this week, the calendar highlight will be the Eurozone November PMis released on Thursday. These have been a (negative) market mover over recent months, and our Eurozone macro team sees little room for improvement here.
Here is what you need to know on Monday, November 20:
Financial markets remain calm to start the new week. The US Dollar (USD) Index fluctuates in a narrow range below 104.00 following the previous week's sharp decline and US stock index futures trade modestly lower on the day. Construction Output will be featured in the European session on Monday and there won't be any high-tier data releases from the US. Later in the day, market participants will keep a close eye on the outcome of the 20-year US Treasury note auction.
During the Asian trading hours, the People's Bank of China announced that it left the Loam Prime Rate unchanged across the time curve, maintaining one-year and five-year LPRs at 3.45% and 4.20%, respectively. Hong Kong's Hang Seng Index was last seen gaining more than 1.5% on a daily basis and the Shanghai Composite was up nearly 0.5%. AUD/USD gained traction and climbed to its highest level since August 10 above 0.6550. Early Tuesday, the Reserve Bank of Australia (RBA) will release the minutes of its latest policy meeting and Governor Michele Bullock will be delivering a speech.
US Dollar price in the last 7 days
The table below shows the percentage change of US Dollar (USD) against listed major currencies in the last 7 days. US Dollar was the weakest against the Australian Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -2.12% | -2.02% | -0.69% | -2.96% | -1.71% | -2.32% | -1.98% | |
| EUR | 2.08% | 0.10% | 1.43% | -0.83% | 0.43% | -0.18% | 0.13% | |
| GBP | 1.98% | -0.10% | 1.32% | -0.93% | 0.32% | -0.28% | 0.03% | |
| CAD | 0.67% | -1.44% | -1.34% | -2.29% | -1.01% | -1.63% | -1.31% | |
| AUD | 2.87% | 0.85% | 0.92% | 2.23% | 1.23% | 0.64% | 0.95% | |
| JPY | 1.69% | -0.45% | -0.33% | 1.00% | -1.27% | -0.62% | -0.29% | |
| NZD | 2.29% | 0.21% | 0.30% | 1.60% | -0.61% | 0.60% | 0.34% | |
| CHF | 1.95% | -0.13% | -0.03% | 1.29% | -0.96% | 0.29% | -0.31% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
EUR//USD rose more than 2% in the previous week and advanced beyond 1.0900 for the first time in over two months. The pair continued to stretch higher toward 1.0950 in the Asian session on Monday but struggled to preserve its bullish momentum.
Following the downward correction witnessed in the middle of last week, GBP/USD advanced toward 1.2500 ahead of the weekend. The pair holds its ground early Monday and clings to small daily gains. Bank of England (BoE) Governor Andrew Bailey is scheduled to speak later in the day but he is unlikely to comment on the policy outlook. Later in the week, several BoE policymakers, including Bailey, will testify before the Treasury Select Committee.
USD/CAD went into a consolidation phase near 1.3700 after posting small losses in the previous week. Statistics Canada will publish Consumer Price Index (CPI) data for October on Tuesday.
USD/JPY extended its slide after breaking below the key 150.00 level late last week. The pair stays under bearish pressure on Monday and was last seen losing 0.4% on the day below 149.00.
After rising to its highest level in nearly two weeks above $1,990 on Friday, Gold erased its gains to close the day flat. On a weekly basis, however, XAU/USD rose more than 2%. Early Monday, the pair stays relatively quiet near $1,980.
- Silver edges lower and retreat further from over a two-month peak touched on Friday.
- The technical setup supports prospects for the emergence of dip-buying at lower levels.
- A sustained move beyond a descending trend line is needed to reaffirm the positive bias.
Silver (XAG/USD) extends Friday's retracement slide from the $24.15 region, or its highest level since September 4 and remains under some selling pressure on the first day of a new week. The white metal remains depressed through the early part of the European session and currently trades around the $23.65-$23.60 area, down nearly 0.50% for the day.
From a technical perspective, last week's breakout momentum through the very important 200-day Simple Moving Average (SMA) falters near a resistance marked by a downward sloping trend line extending from the May monthly swing high. The said barrier, currently around the $24.00 round figure, should now act as a key pivotal point for the XAG/USD and help determine the next leg of a directional move.
Oscillators on the daily chart, meanwhile, are holding in the positive territory and are still far from being in the overbought zone. This, in turn, suggests that the path of least resistance for the XAG/USD is to the upside and supports prospects for the emergence of some dip-buying at lower levels. Bulls, however, need to wait for acceptance above the $24.00 mark before placing fresh bets and positioning for further gains.
The XAG/USD might then aim to surpass the $24.20-$24.25 intermediate resistance and make a fresh attempt to conquer the $25.00 psychological mark. Some follow-through buying beyond the $25.15-$25.20 region should set the stage for a more towards reclaiming the $26.00 round figure for the first time since May.
On the flip side, the 200-day SMA, currently pegged near the $23.30 region, now seems to protect the immediate downside. Any further decline could be seen as a buying opportunity and remain limited near the $23.00 mark. That said, a convincing break below the latter might prompt aggressive technical selling and drag the XAG/USD further towards the $22.35-$22.30 zone en route to the $22.00 mark.
Silver daily chart
Technical levels to watch
- USD/JPY trades around 149.00 followed by 23.6% Fibonacci retracement.
- Technical indicators suggest a bearish sentiment to navigate the support region around 146.50.
- 150.00 psychological level could be the resistance, followed by the nine-day EMA.
USD/JPY continues to trade near six-week lows, extending losses near 148.90 during the early European session on Monday. The 148.50 major level emerges as the immediate support lined up with the 23.6% Fibonacci retracement at 148.49.
The 14-day Relative Strength Index (RSI) below the 50 level signals bearish sentiment, which could inspire the bears of the USD/JPY pair to navigate the support region around 146.50 major level, followed by the 38.2% Fibonacci retracement at 146.37.
Additionally, the Moving Average Convergence Divergence (MACD) line is positioned above the centerline, showing divergence below the signal line, it typically suggests a bearish momentum in the market. This configuration indicates that the short-term moving average (MACD line) is moving further away from the long-term moving average (signal line) in the downward direction.
On the upside, the psychological level at 150.00 could be the key barrier, aligning with the nine-day Exponential Moving Average (EMA) at 150.34. A breakthrough above the latter could support the USD/JPY pair to revisit the previous week’s high at 151.90.
USD/JPY: Daily Chart
The Oil price has come under pressure due to demand concerns and the expectation of an oversupplied market. Economists at Commerzbank analyze Brent’s outlook.
Oversupply unlikely to materialize
As Saudi Arabia is likely to maintain its voluntary production cut beyond the end of the year, only a modest supply surplus is on the cards for the Oil market at the beginning of next year.
There is even a supply deficit on the horizon for the second half of 2024 due to rising demand, which would allow Saudi Arabia to reverse the production cut.
Overall, the price of Brent Crude is expected to recover to $85 per barrel in the first quarter of 2024 and to rise further to $90 per barrel by the end of 2024.
The continuation of the upside momentum in AUD/USD seems likely in the next few weeks, note UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.
Key Quotes
24-hour view: While we expected AUD to edge lower last Friday, we highlighted that “any decline is unlikely to break clearly below 0.6440.” AUD did not quite threaten 0.6440, as it rebounded from a low of 0.6453. The rebound lacks momentum, but AUD could test 0.6540 before levelling off. The major resistance at 0.6585 is highly unlikely to come under threat. The current mild upward pressure is intact as long as AUD stays above 0.6460 (minor support is at 0.6480).
Next 1-3 weeks: We continue to hold the same view as last Thursday (16 Nov, spot at 0.6510). As highlighted, while AUD is likely to advance further, upward momentum is not that strong for now, and the major resistance at 0.6585 might not come into view soon. The upside bias is intact as long as AUD stays above 0.6420 (‘strong support’ level previously at 0.6400).
Economists at ING expect the Indian Rupee to struggle to stage a significant rally next year.
Limited upside despite economic strength
India has bucked global trends for a weakening economy and is on track to grow by about 7% in 2023 and should achieve a similar growth rate in 2024.
The long-awaited turn in the USD should support the INR in 2024 but given how tightly the RBI has controlled the rupee since October 2022, the currency is already arguably stronger than justified relative to most of its peer currencies in the region, and we would anticipate a more modest appreciation during 2024 than its peers as a result.
We suspect the RBI’s FX control is asymmetric, and that it won’t prevent the INR from appreciating slightly in the first half of 2024.
- The index looks offered around 103.70 on Monday.
- Speculation remains on the rise around potential Fed rate cuts in March.
- The US CB Leading Index will be the sole release in the docket.
The greenback, when gauged by the USD Index (DXY), maintains the bearish tone and flirts with the key 200-day SMA in the 103.70/60 band on Monday.
USD Index remains under pressure below 104.00
The selling bias remains well in place around the index, which navigates in levels last seen in early September and threatens to break below the critical 200-day SMA at the beginning of the week.
In addition, the marginal movement in the dollar coincides with a so-far directionless theme in US yields across different maturities, always against the backdrop of rising speculation that the Federal Reserve might start reducing its interest rate as soon as in March 2024.
Data wise in the US, the only release will be the CB Leading Index in a shortened week due to the Thanksgiving Day holiday (Thursday).
What to look for around USD
In the meantime, the downward bias maintains its dominance on the greenback and forces the index to put the key 200-day SMA to the test on Monday.
Furthermore, the dollar appears depressed against the backdrop of rising speculation of probable interest rate cuts in H1 2024, all in response to further disinflationary pressures and the gradual cooling of the labour market.
Some support for the greenback, however, still emerges the resilience of the US economy as well as a hawkish narrative from some Fed rate setters.
Key events in the US this week: CB Leading Index (Monday) – Chicago Fed National Activity Index, Existing Home Sales, FOMC Minutes Tuesday) – MBA Mortgage Applications, Durable Goods Orders, Initial Jobless Claims, Final Michigan Consumer Sentiment (Wednesday) – S&P Global Flash Manufacturing/ Services PMIs (Friday).
Eminent issues on the back boiler: Persistent debate over a soft or hard landing for the US economy. Speculation of rate cuts in early 2024. Geopolitical effervescence vs. Russia and China. Potential spread of the Middle East crisis to other regions.
USD Index relevant levels
Now, the index is down 0.07% at 103.73 and faces immediate contention at 103.53 (monthly low November 20) ahead of 102.93 (weekly low August 30) and then the psychological 100.00 threshold. On the upside, the breakout of 106.00 (weekly high November 10) could pave the way to a move to 106.88 (weekly high October 26) and finally 107.34 (2023 high October 3).
- USD/CAD extends its downside to 1.3700 on the weaker USD.
- The bearish outlook for USD/CAD remains intact below the 50- and 100-day EMAs.
- The first upside barrier will emerge at 1.3745; the critical support level is seen at 1.3655.
The USD/CAD pair loses momentum around 1.3700 during the early European session on Monday. The recovery of oil prices lifts the commodity-linked Loonie, as the country is the leading oil exporter to the US. Meanwhile, the US Dollar Index (DXY) drops to 103.70, the lowest since mid-July. Market players await the Federal Open Market Committee (FOMC) Meeting Minutes and Canadian inflation data on Tuesday for fresh impetus. The annual and monthly Canadian Consumer Price Index (CPI) is expected to rise by 3.2% and 0.1%, respectively.
Technically, the bearish outlook for USD/CAD remains intact as the pair holds below the 50- and 100-day Exponential Moving Averages (EMAs) on the four-hour chart. Additionally, the Relative Strength Index (RSI) is located in the bearish territory below 50, which means the path of the least resistance of USD/CAD is to the downside.
The immediate resistance level for the pair will emerge near the 100-EMA at 1.3745. The next barrier to watch is near the upper boundary of the Bollinger Band at 1.3771. Any decisive follow-through buying above the latter will see a rally to a high of November 14 at 1.3843, en route to a high of October 27 at 1.3880.
On the other hand, the critical support level is seen at 1.3655. The mentioned level is the confluence of the lower limit of the Bollinger Band and a low of November 15. The next contention level is located near a low of November 6 at 1.3629. A break below the latter will see a drop to the 1.3600-1.3605 zone, portraying the psychological round mark and a low of October 16. The additional downside filter to watch is a low of October 12 at 1.3578.
USD/CAD four-hour chart
In the view of UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang, extra upside is likely in GBP/USD while above the 1.2505 level.
Key Quotes
24-hour view: We noted last Friday that “the price movements still appear to be consolidative”, and we expected GBP to trade in a range between 1.2375 and 1.2460. Our view was not wrong, as GBP dropped to 1.2375, rebounded to a high of 1.2465, and then closed at 1.2462 (+0.38%). Upward momentum has improved, albeit just a tad. Today, there is room for GBP to rise further, but any advance is likely to encounter solid resistance near last week’s high, near 1.2505. In order to maintain the buildup in momentum, GBP must stay above 1.2420 (minor support is at 1.2440).
Next 1-3 weeks: After GBP soared to a high of 1.2506 last Tuesday, we indicated GBP “is likely to continue to advance, but it has to break clearly above 1.2580 before a further sustained rise is likely.” GBP pulled back sharply from the high, and last Friday (17 Nov, spot at 1.2415), we highlighted that “while upward momentum has waned somewhat, only a breach of 1.2350 would indicate that GBP is not advancing further.” In NY trade on Friday, GBP rebounded and closed at 1.2462 (+0.38%). Despite the rebound, there has been no significant increase in momentum. From here, GBP has to break and stay above 1.2505 before an advance to 1.2580 can be expected. The likelihood of GBP breaking clearly above 1.2505 will remain intact as long as it stays above 1.2385 (‘strong support’ level previously at 1.2350).
Open interest in gold futures markets increased for the second session in a row on Friday, this time by around 1.1K contracts according to preliminary readings from CME Group. Volume, instead, resumed the downtrend and shrank by around 73.8K contracts following the previous daily build.
Gold appears supported by the 200-day SMA
Gold prices could not sustain a move to the area above $1990 on Friday, closing with marginal losses near $1980. The move was amidst rising open interest and decreasing volume, exposing further range bound trade in the very near term. In the meantime, the precious metal appears well supported by the key 200-day SMA at $1937 per troy ounce for the time being.
If EUR/USD clears the 1.0945 level, it could open the door to a potential test of the 1.1000 threshold in the next few weeks, suggest UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.
Key Quotes
24-hour view: We expected EUR to trade in a range between 1.0820 and 1.0880 last Friday. However, after dipping to a low of 1.0823, EUR staged a surprisingly sharp bounce to a high of 1.0915. Further EUR strength appears likely, even though overbought conditions suggest that a sustained rise above 1.0945 is unlikely. The next major resistance at 1.1000 is also unlikely to come into view. Support is at 1.0885, followed by 1.0860.
Next 1-3 weeks: Last Wednesday (15 Nov, spot at 1.0880), we highlighted that “further EUR strength appears likely, and the level to monitor is 1.0945.” We also highlighted that “only a breach of 1.0770 (‘strong support’ level) would indicate that EUR is not strengthening further.” Last Friday, EUR soared to a high of 1.0915. We continue to expect EUR to strengthen. If it breaks above 1.0945, the next level to watch is 1.1000. On the downside, the ‘strong support’ level has moved higher to 1.0820.
- Asian markets rose across the board following upbeat Chinese markets.
- Chinese property shares boost on expectations of additional government stimulus measures.
- PBoC injected around 80 billion Yuan of liquidity into the markets.
- Australia's ASX 200 rose on improved commodity stocks ahead of RBA’s meeting minutes.
Asian shares saw gains on Monday, buoyed by a rebound in Chinese markets driven by expectations of additional government stimulus measures. The People's Bank of China (PBoC) injected around 80 billion Yuan of liquidity into the markets.
As of now, China's SSE Composite Index is showing a gain of 0.54% at 3,070, while the Shenzhen Component Index has improved by 0.63% to 10,042. Japan’s Nikkei 225 has risen to 33,403, up by 0.54%. Hong Kong’s Hang Seng is at 17,716, and the Korean KOSPI has risen to 2,495. However, Taiwan's Weighted Index has dipped by 0.13% to 17,185.
Despite the positive momentum, gains were limited as investors awaited the Federal Open Market Committee (FOMC) minutes scheduled for Tuesday. The minutes are anticipated to offer insights into the Fed's stance on inflationary pressure and its approach to monetary policy.
Chinese stocks experienced a boost from a rebound in property stocks, following regulators' commitment to providing more policy support to the struggling real estate sector. Moreover, the interest rate decision in China, with the PBoC keeping its loan prime rate at 3.45%, provided few cues to the markets.
Australia's ASX 200 showed a 0.13% rise, with support from strength in commodity stocks. The focus shifted to the Reserve Bank of Australia's (RBA) November meeting minutes for additional insights into monetary policy.
Japan's Nikkei 225 remained flat post reaching near highs since 1990, fueled by strong earnings and foreign investors attracted by the Bank of Japan's dovish stance and asset control measures.
- GBP/USD trades in positive territory for the second consecutive day on the weaker USD.
- The pair holds above the 50- and 100-hour EMA on the four-hour chart, RSI indicator holds in the bullish zone.
- The key resistance is seen at the 1.2500–1.2505 region; the 1.2370–1.2375 zone acts as a key support level.
The GBP/USD pair holds positive ground around 1.2485 during the early European session on Monday. The recovery of the pair is bolstered by the softer US Dollar (USD) and lower US Treasury bond yields. Investors will take more cues from Bank of England (BoE) Governor Andrew Bailey's speech on Monday ahead of the Federal Open Market Committee (FOMC) Meeting Minutes on Tuesday.
From the technical perspective, GBP/USD holds above the 50- and 100-hour Exponential Moving Averages (EMAs) with an upward slope on the four-hour chart, suggesting the path of least resistance is to the upside. Furthermore, the Relative Strength Index (RSI) holds in the bullish territory above 50, which means further upside looks favorable.
That being said, the critical resistance level for the major pair will emerge near the confluence of the upper boundary of the Bollinger Band and a high of November 14 at the 1.2500–1.2505 region. A decisive break above the latter will see a rally to a high of September 11 at 1.2548. The next upside barrier is seen at a high of September 6 at 1.2588.
On the flip side, the 1.2370–1.2375 zone acts as a key support level. The mentioned level is the congestion of the lower limit of the Bollinger Band, the 50-hour EMA, and a low of November 16. The additional downside filter to watch is the 100-hour EMA at 1.2313. A breach of the level will see a drop to a low of November 8 at 1.2242, followed by a low of November 10 at 1.2187.
GBP/USD four-hour chart
- WTI scales higher for the second straight day and recovers further from a multi-month low.
- Expectations for additional supply cuts by OPEC+ turn out to be a key factor lending support.
- Worries that a deeper global economic downturn will dent fuel demand might cap the upside.
West Texas Intermediate (WTI) Crude Oil prices build on last week's goodish rebound from the $72.40-$72.35 area, or the lowest level since July 7 and gain some follow-through positive traction for the second successive day on Monday. The commodity currently trades around the $76.65 region, up nearly 1% for the day, though any meaningful appreciating move still seems elusive.
Media reports suggested that OPEC+ could discuss deeper supply cuts to shore up prices at its upcoming meeting on November 26, which, in turn, is seen as a key factor lending support to the black liquid. Furthermore, Saudi Arabia and Russia – the two major producers – are also expected to extend oil production cuts through next year. This comes after OPEC, in its monthly report, to its relatively high 2024 oil demand growth forecast.
That said, the International Energy Agency (IEA) has a lower 2024 demand growth forecast and said the market could shift to a surplus in the first quarter. Moreover, worries that a deeper global economic downturn will dent fuel demand might continue to undermine Crude Oil prices and keep a lid on any further gains. This, along with the recent technical breakdown below the 200-day Simple Moving Average (SMA), warrants caution for bulls.
Traders might also refrain from placing aggressive directional bets and prefer to wait for the release of the FOMC meeting minutes on Tuesday for cues about the future rate-hike path. The outlook will play a key role in influencing the near-term US Dollar (USD) price dynamics and drive USD-denominated commodities. This makes it prudent to wait for strong follow-through buying before confirming that Oil prices have formed a near-term bottom.
Technical levels to watch
- EUR/USD could reach immediate resistance around the major level at 1.0950.
- Technical indicators suggest a stronger momentum; bulls could target August’s high at 1.1064.
- A firm break below 1.0900 could inspire the bears to navigate the nine-day EMA.
EUR/USD continues the winning streak, trading around a three-month high at 1.0920 during the Asian session on Monday. The pair seems to approach immediate resistance around the major level at 1.0950 as the US Dollar (USD) faces pressure on the likelihood of the Federal Reserve (Fed) to conclude its interest rate-hike cycle.
A breakthrough above the latter could support the bulls of the EUR/USD pair to target the next barrier at the 1.1000 psychological level, following August’s high at 1.1064.
The ongoing upward trend is backed by the technical indicators for the EUR/USD pair. The 14-day Relative Strength Index (RSI) above the 50 level signals bullish sentiment, indicating a stronger momentum for the pair.
Additionally, the Moving Average Convergence Divergence (MACD) line lies above the centerline, with divergence above the signal line, suggesting a bullish momentum in the EUR/USD pair.
On the downside, the psychological level at 1.0900 emerges as a key support, following the next major level at 1.0850. A firm break below the level could put pressure on the EUR/USD pair to navigate the region around the nine-day Exponential Moving Average (EMA) at 1.0819, aligning with the 23.6% Fibonacci retracement at 1.0811.
EUR/USD: Daily Chart
- Gold price regains positive traction amid expectations that US interest rates have peaked.
- The recent decline in the US bond yields undermines the US Dollar and remains supportive.
- Looming recession risks and geopolitical tensions further benefit the safe-haven XAU/USD.
Gold price (XAU/USD) attracts some dip-buying near the $1,973 area on the first day of a new week and stalls Friday's modest pullback from a two-week high. The precious metal currently trades just below the $1,985 level, up nearly 0.20% for the day. It seems poised to build on its recent goodish rebound from the monthly low touched last Monday in the wake of dovish Federal Reserve (Fed) expectations.
Growing acceptance that the Fed will maintain the status quo at its December 2023 meeting and ultimately start cutting interest rates in 2024 could keep the US Dollar (USD) depressed near its lowest level since September 1. Apart from this, the worsening global economic outlook, along with geopolitical risks, turns out to be another factor underpinning the safe-haven Gold price and remains supportive of the upwards move.
However, it remains to be seen if bulls can retain control or prefer to wait on the sidelines ahead of this week's release of the FOMC meeting minutes on Tuesday. Investors will get a fresh insight into the path of interest rates and policymakers' views on whether the US Central Bank should raise interest rates again this year. This, in turn, should provide some meaningful impetus to the non-yielding Gold price.
Daily Digest Market Movers: Gold price continues to draw support from a combination of factors
- Gold price continues to draw support from firming expectations that the Federal Reserve (Fed) will not hike interest rates amid signs that the high-prices nightmare has ended.
- The US CPI report last week indicated that consumer inflation was cooling faster than anticipated, while the US Jobless Claims last Thursday pointed to a cooling labour market.
- The markets seem convinced that the Fed will leave rates unchanged at its December 2023 policy meeting and are pricing in nearly 100 bps of rate cuts by the end of 2024.
- A turnaround in expectations for the Fed's future policy action dragged the benchmark 10-year US Treasury yield to a two-month low on Friday and benefit the non-yielding metal.
- The US Dollar languishes near its lowest level since September and is seen as another factor lending support to the XAU/USD ahead of the FOMC minutes on Tuesday.
- The escalation of violence between Israel and Hamas has sparked concerns about its potential impact on the world economy and, in a worst-case scenario, could push it into recession.
- Israel and the US rejected reports of a potential breakthrough in negotiations with Hamas to free some of the 240 hostages in Gaza in exchange for a five-day pause in the war.
Technical Analysis: Gold price could retest multi-month top once $1,990 barrier is cleared decisively
From a technical perspective, bulls need to wait for sustained strength and acceptance above the $1,990 supply zone before placing fresh bets. The Gold price might then aim to surpass the $2,000 psychological mark and retest a multi-month peak, around the $2,009-2,010 region touched on October 27. On the flip side, the Asian session low, around the $1,973 area, now seems to protect the immediate downside. Some follow-through selling could expose the next relevant support near the $1,963 region, below which the XAU/USD could challenge the 200-day Simple Moving Average (SMA), currently pegged near the $1,938-1,937 zone.
US Dollar price today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.16% | -0.23% | -0.14% | -0.53% | -0.69% | -0.49% | -0.17% | |
| EUR | 0.16% | -0.08% | 0.02% | -0.36% | -0.52% | -0.32% | -0.01% | |
| GBP | 0.23% | 0.09% | 0.11% | -0.27% | -0.45% | -0.24% | 0.09% | |
| CAD | 0.14% | -0.01% | -0.10% | -0.38% | -0.54% | -0.34% | -0.01% | |
| AUD | 0.51% | 0.37% | 0.28% | 0.38% | -0.18% | 0.03% | 0.35% | |
| JPY | 0.71% | 0.55% | 0.23% | 0.56% | 0.18% | 0.22% | 0.54% | |
| NZD | 0.47% | 0.32% | 0.24% | 0.35% | -0.04% | -0.22% | 0.34% | |
| CHF | 0.17% | 0.01% | -0.07% | 0.03% | -0.36% | -0.52% | -0.32% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Gold FAQs
Why do people invest in Gold?
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Who buys the most Gold?
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
How is Gold correlated with other assets?
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
What does the price of Gold depend on?
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
- USD/CHF continues to lose ground as US bond yields face pressure.
- Bank of America forecasts higher Fed Funds rates across the curve.
- Swiss Franc gains strength as SNB could raise interest rates in the future.
USD/CHF continues to move on a downward trajectory, trading lower around 0.8840 during the Asian session on Monday. The USD/CHF pair faces downward pressure as the market perceives signs of a cooling labor market in the United States (US). This indicates that the Federal Reserve (Fed) might have concluded its hiking cycle, leading to a weakening of the US Dollar (USD) over the previous week.
However, the Bank of America (BoA) is anticipating higher Fed Funds rates for an extended period, identifying upside risks. The revised forecasts indicate higher rates across the curve, with a projection of a 10-year US Treasury yield at 4.25% by the end of 2024. BoA's forecasts are positioned below market forwards but surpass consensus estimates, especially toward the conclusion of 2024. The 2-year yield forecasts suggest a potential for a higher cutting trough than the baseline in US economics.
US Dollar Index (DXY) extends its losses, bidding around 103.70 at the time of writing, with pressure on the US bond yields. The yield on the 2-year Treasury coupon bids lower at 4.88% by the press time.
On Friday, Swiss Industrial Production (YoY) for the third quarter came in at 2.0%, surpassing the previous quarter's -0.7%. The revised figure for the previous quarter was slightly higher, changing from -0.8%. This data reflects an improvement in Switzerland's industrial output, contributing positively to the Swiss Franc (CHF).
Additionally, Swiss National Bank (SNB) Chairman Thomas Jordan's hawkish comments mentioned not ruling out the possibility of more interest rate hikes in the future, continue to support and underpin the strength of the Swiss Franc (CHF).
The focus this Tuesday will be on the FOMC minutes, offering insights into the Fed committee's decision to hold rates, along with Swiss Import and Export data. These releases are anticipated to provide further clarity on the economic outlook for both nations.
- USD/CAD loses traction above the 1.3700 mark on Monday.
- Traders believe the Fed is done with the hiking cycle and expect the Fed will begin easing monetary policy in May 2024.
- FOMC Meeting Minutes and Canadian CPI will be closely watched events.
The USD/CAD pair trades in negative territory for the second consecutive day in the Asian session on Monday. The downtick of the pair is backed by the weaker US Dollar (USD) and the lower US Treasury bond yield. At the time of writing, USD/CAD is holding lower ground near 1.3705, losing 0.07% on the day.
The Federal Reserve (Fed) officials maintained their messages on the monetary policy outlook last week. Boston Federal Reserve (Fed) President Susan Collins said the Fed would bring down inflation without causing significant harm to the labor market while being patient with the next interest rate moves. Meanwhile, Fed President Austan Goolsbee said that inflation is on track to achieve the Fed's target as long as house price pressures decrease. Market players place their bet that the Fed is done with the hiking cycle and expected Fed will begin easing monetary policy in May 2024.
The Bank of Canada (BoC) stated earlier this month that the era of historically low-interest rates was likely coming to an end and cautioned households and businesses to anticipate higher borrowing costs than in recent years. Meanwhile, a rebound in oil prices might lift the commodity-linked Loonie as the country is the leading oil exporter to the US.
Traders will monitor the Federal Open Market Committee (FOMC) Meeting Minutes and the Canadian Consumer Price Index (CPI) for October on Tuesday. The US Durable Goods Orders for October and the Michigan Consumer Sentiment Index for November will be due on Wednesday. Also, S&P Global PMI data will be released on Friday. Traders will take cue from these figures and find trading opportunities around the USD/CAD pair.
- Indian Rupee trades weaker on the rebound in oil prices, USD demand.
- Global uncertainties will have a limited impact on the Indian economy.
- Market players will monitor the FOMC Meeting Minutes on Tuesday for fresh impetus.
Indian Rupee (INR) sticks to its modest intraday losses on Monday due to the recovery in oil prices and US demand from the local companies. Last week, S&P Global Ratings published a report indicating that slower external demand and sluggish global growth will impact economic activity and may contribute to further inflation. Nonetheless, the Indian economy will be marginally less affected by global uncertainties due to the country being domestically oriented.
Investors will focus on the Federal Open Market Committee (FOMC) Meeting Minutes on Tuesday. The report could provide some hints about future policy rate direction and inflation improvement. Market participants raised bets that the Federal Reserve (Fed) is done with the hiking cycle and priced in rate cuts of 100 basis points (bps) in the first half of 2024.
Daily Digest Market Movers: Indian Rupee faces limited risk from global factors
- The momentum of change in India’s GDP is sequentially expected to be higher in October-December on the back of "ebullient" festival demand, according to a report in the Reserve Bank of India’s (RBI) monthly bulletin.
- According to the RBI, the Indian economy will see a GDP growth rate of 6.5% in 2023-24.
- The central bank also stated India's growth remains dependent on domestic demand, which provides a cushion against external shocks.
- RBI is expected to maintain the policy rate at its next monetary policy meeting, which is scheduled for December 6-8.
- India's headline retail price inflation for October fell to 4.9% from 5% the previous month, the lowest reading in four months.
- India's Wholesale Price Index (WPI) inflation arrived at -0.52% from -0.26%,previously, worse than the market consensus of -0.20%.
- The Consumer Price Index (CPI) in India grew by 4.87% year on year in October, compared to 5.02% the previous month, above the market estimate of 4.80%.
- US Housing Starts climbed by 1.9% MoM to 1.372M, better than the expectation of 1.350M. Building Permits rose by 1.1% to 1.487M, above the estimation of 1.450M.
- Federal Reserve (Fed) officials remarked on the prospects for monetary policy last week and were consistent in their tone.
- Boston Fed President Susan Collins said the central bank might bring down inflation without harming the labor market by being "patient" with future interest rate hikes.
- Fed President Austan Goolsbee stated that inflation is on pace to meet the Fed's target as long as house price pressures decrease.
Technical Analysis: The Indian Rupee keeps the bearish outlook unchanged
The Indian Rupee trades softer on the day. The USD/INR pair has traded within a wider range of 82.80–83.35 since September. From a technical perspective, the USD/INR maintains a bullish vibe as the pair holds above the key 100-day Exponential Moving Average (EMA) on the daily chart. This notion is backed by the 14-day Relative Strength Index (RSI) holding above the 50.0 midline.
The first USD/INR upside barrier is near the upper boundary of the trading range of 83.35. A decisive break above 83.35 could open the door to challenge the year-to-date (YTD) high of 83.47. Further north, the additional upside filter to watch is a psychological round figure at 84.00.
On the other hand, the confluence of the lower limit of the trading range and a low of September 12 at 82.80 act as an initial support level for the pair. If the sellers drag prices below 82.80, the next contention will emerge at a low of August 11 at 82.60, followed by a low of August 24 at 82.37.
US Dollar price in the last 7 days
The table below shows the percentage change of US Dollar (USD) against listed major currencies in the last 7 days. US Dollar was the strongest against the Canadian Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -2.19% | -2.10% | -0.72% | -2.80% | -1.67% | -2.14% | -2.00% | |
| EUR | 2.14% | 0.09% | 1.43% | -0.60% | 0.51% | 0.05% | 0.19% | |
| GBP | 2.05% | -0.09% | 1.35% | -0.72% | 0.40% | -0.07% | 0.08% | |
| CAD | 0.71% | -1.45% | -1.36% | -2.09% | -0.94% | -1.43% | -1.27% | |
| AUD | 2.75% | 0.62% | 0.71% | 2.05% | 1.12% | 0.68% | 0.81% | |
| JPY | 1.61% | -0.54% | -0.45% | 0.90% | -1.14% | -0.48% | -0.35% | |
| NZD | 2.09% | -0.02% | 0.07% | 1.41% | -0.65% | 0.44% | 0.15% | |
| CHF | 1.96% | -0.17% | -0.08% | 1.26% | -0.80% | 0.33% | -0.15% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Indian Rupee FAQs
What are the key factors driving the Indian Rupee?
The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee.
How do the decisions of the Reserve Bank of India impact the Indian Rupee?
The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference.
What macroeconomic factors influence the value of the Indian Rupee?
Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee.
How does inflation impact the Indian Rupee?
Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
- NZD/USD extends gains above 0.6000 on China’s interest rates decision.
- Kiwi PPI data raises questions about whether the window for a rate hike is closed.
- PBoC kept benchmark rates unchanged at 3.45%.
NZD/USD receives upward support following China's interest rate decision. The People's Bank of China (PBoC) has opted to keep its loan prime rate (LPR) unchanged at 3.45%, in line with expectations. The NZD/USD pair trades higher around 0.6020 during the Asian session on Monday, extending the gains for the second successive session.
While the market leans towards a slowdown in inflation, it appears the Reserve Bank of New Zealand (RBNZ) holds a different view. There's a belief that risks still tilt towards the RBNZ having to hike again in the coming year. The RBNZ faces challenges in its November policy meeting, considering the recent weaker data; striking a balance to avoid signaling aggressive rate cuts while acknowledging economic conditions will be crucial.
New Zealand's Producer Price Index (PPI) – Output for the third quarter, rose to 0.8% from the previous reading of 0.2%. The data suggests that the previously expected Q4 inflation may not materialize. This raises questions about whether the window for a hike is closing as evidence of the lagged impact of monetary policy, particularly on the labor market, becomes apparent.
US Dollar Index (DXY) continues to lose ground, bidding around 103.70 at the time of writing, with a negative bias on US bond yields. The yield on the 10-year Treasury note hovers around 4.45% by the press time.
US Dollar (USD) experienced downward pressure despite positive US housing data on Friday. Building Permits (MoM) surpassed market expectations at 1.487M for October, exceeding the consensus of 1.450M. Additionally, Housing Starts (MoM) increased to 1.372M, up from the previous figure of 1.346M.
United States (US) reported soft inflation figures and weak economic activity. The market interpreted signs of inflationary pressures and a cooling labor market as indications that the Federal Reserve (Fed) might have completed its hiking cycle, resulting in the weakening of the US Dollar (USD) throughout the previous week.
With a gap until the November labor data in December, the focus this week will be on the FOMC minutes, offering insights into the committee's decision to hold rates. Fed speakers are subtly pushing back against early rate cut expectations for next year.
| Raw materials | Closed | Change, % |
|---|---|---|
| Silver | 23.717 | -0.01 |
| Gold | 1980.396 | -0.04 |
| Palladium | 1050.83 | 2.36 |
- GBP/USD catches some bids for the second straight day amid the prevalent USD selling bias.
- Bets that the Fed will not hike rates again and a positive risk tone undermine the Greenback.
- Expectations that the BoE will start cutting rates in 2024 amid looming recession to cap gains.
The GBP/USD pair attracts some dip-buying during the Asian session on Monday and touched a three-day to, around the 1.2470 region in the last hour. Spot prices, however, remain below the 100-day Simple Moving Average (SMA) pivotal resistance near the 1.2500 psychological mark and a two-month peak touched last week.
The US Dollar (USD) struggles to register any meaningful recovery and languishes near its lowest level since September 1, which is seen as a key factor acting as a tailwind for the GBP/USD pair. The US CPI and the PPI report released last week indicated that the high-prices nightmare has finally ended. This should allow the Federal Reserve (Fed) to maintain the status quo at its December meeting and continue to weigh on the USD.
Furthermore, the markets have been pricing in the possibility that the Fed will start cutting interest rates in early 2024 and engineer an economic soft landing. This dragged the yield on the benchmark 10-year US government bond to a two-month low level of 4.379% on Friday. Apart from this, a generally positive tone around the Asian equity markets further undermines the safe-haven Greenback and lends support to the GBP/USD pair.
The markets, however, have brought forward the date at which they expect the Bank of England (BoE to begin cutting interest rates from their 15-year peak in the wake of looming recession risks. The bets were reaffirmed by weaker UK Retail Sales figures, which added to a slew of negative readings last week and fitted with the darkening outlook for Britain's economy. This might keep a lid on any further appreciating move for the GBP/USD pair.
Even from a technical perspective, last week's rejection near the 1.2500 mark, or the 100-day SMA barrier, makes it prudent to wait for strong follow-through buying before placing fresh bullish bets. In the absence of any relevant market-moving economic releases, either from the UK or the US, the USD price dynamics will continue to play a key role in influencing the GBP/USD pair and allow traders to grab short-term opportunities.
Technical levels to watch
- Australian Dollar gains ground after China’s interest rate decision.
- Australia’s Dollar faced pressure on recovery in the Greenback.
- PBoC remained LPR consistent at 3.45% as expected.
- US Dollar plunged despite upbeat US housing data released on Friday.
The Australian Dollar (AUD) receives upward support after China’s interest rate decision. The People’s Bank of China (PBoC) kept its loan prime rate (LPR) unchanged at 3.45% as expected. However, the AUD/USD pair faced a challenge as the US Dollar (USD) attempted to rebound from a two-month low recorded on Friday.
Australia’s central bank is expected to hike again in the first half of 2024. The Reserve Bank of Australia (RBA) Assistant Governor Marion Kohler mentioned that inflation is expected to decrease but won't hit the RBA's 2%-3% target until the end of 2025. Investors are likely watching the RBA Meeting Minutes and RBA Governor Bullock's speech on Tuesday.
Australia's Dollar (AUD) might have gained support as the United States (US) reported soft inflation figures and weak economic activity, contributing to a decline in the Greenback. Signs of inflationary pressures and a cooling labor market in the US led markets to believe that the Federal Reserve (Fed) may have concluded its hiking cycle, causing the US Dollar (USD) to weaken over the previous week.
US Dollar Index (DXY) seems to recover the recent losses on the back of a recovery in US Treasury yields. The yield on the 10-year Treasury note stands at 4.45% by the press time. US Dollar (USD) faced pressure despite upbeat US housing data released on Friday. Building Permits (MoM) improved to 1.487M against the market consensus of 1.450M for October. Housing Starts (MoM) rose to 1.372M from the previous figure of 1.346M.
Boston Federal Reserve (Fed) President Susan Collins expressed optimism on Friday that the Fed can lower inflation without causing significant damage to the labor market by being "patient" with further interest rate moves. The Federal Open Market Committee (FOMC) minutes on Tuesday are expected to provide some insights into the Fed's stance on inflationary pressure and its approach to monetary policy.
Daily Digest Market Movers: Australian Dollar trades higher after China’s interest rate decision
- Australia’s seasonally adjusted Employment Change reported an increase of 55K in October, compared with the market anticipation of 20K and 6.7K in the previous month.
- Aussie Unemployment Rate came in at 3.7% in October as expected against the previous figure of 3.6%.
- Australia’s Wage Price Index grew 1.3% as expected compared to the previous reading of 0.8%. The year-over-year data showed an increase of 4.0% more than the anticipated 3.9%.
- US Continuing Jobless Claims for the week ending on November 3 reached the highest level since 2022 at 1.865M from the previous reading of 1.833M.
- US Initial Jobless Claims for the week ending on November 10 rose to 231K against the 220K as expected, marking the highest level in nearly three months.
- The October's US Consumer Price Index (CPI) showed lower readings than expected, with the annual rate slowing from 3.7% to 3.2%, falling below the consensus forecast of 3.3%. The monthly CPI reduced to 0.0% from 0.4%.
- The US Core CPI rose by 0.2% below the expectations of 0.3%, and the annual rate decreased to 4.0% from 4.1% prior.
Technical Analysis: Australian Dollar looks to revisit the previous week’s high near 0.6550 major level
The Australian Dollar trades higher around the 0.6520 level on Monday. The AUD/USD pair could find a barrier at the previous week’s high at 0.6541, aligning with the 0.6550 major level. On the downside, the psychological level at 0.6500 appears to be the immediate support, followed by the 23.6% Fibonacci retracement at 0.6478. If a break occurs below the level, the 14-day Exponential Moving Average (EMA) at 0.6448 could be the next support backed by a 38.2% Fibonacci retracement at 0.6438.
AUD/USD: Daily Chart
Australian Dollar price today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the US Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.01% | -0.08% | 0.00% | -0.09% | -0.26% | -0.20% | -0.10% | |
| EUR | 0.01% | -0.08% | 0.01% | -0.08% | -0.24% | -0.19% | -0.08% | |
| GBP | 0.08% | 0.08% | 0.09% | 0.00% | -0.16% | -0.10% | -0.01% | |
| CAD | 0.00% | -0.01% | -0.09% | -0.09% | -0.25% | -0.20% | -0.09% | |
| AUD | 0.08% | 0.07% | -0.02% | 0.08% | -0.17% | -0.12% | -0.02% | |
| JPY | 0.26% | 0.24% | -0.07% | 0.25% | 0.16% | 0.06% | 0.16% | |
| NZD | 0.20% | 0.19% | 0.12% | 0.20% | 0.11% | -0.06% | 0.10% | |
| CHF | 0.10% | 0.09% | 0.02% | 0.10% | 0.01% | -0.16% | -0.10% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Australian Dollar FAQs
What key factors drive the Australian Dollar?
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
How do the decisions of the Reserve Bank of Australia impact the Australian Dollar?
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
How does the health of the Chinese Economy impact the Australian Dollar?
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
How does the price of Iron Ore impact the Australian Dollar?
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
How does the Trade Balance impact the Australian Dollar?
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
- USD/JPY faces rejection near the 150.00 mark and turns lower for the third straight day.
- Dovish Fed expectations continue to weigh on the USD and act as a headwind for the pair.
- A positive risk tone could undermine the safe-haven JPY and help limit any further losses.
The USD/JPY pair meets with a fresh supply following an Asian session uptick to the 150.00 psychological mark and drifts into negative territory for the third successive day on Monday. Spot prices currently trade around the mid-149.00s and remain well within the striking distance of the monthly low retested on Friday.
The US Dollar (USD) languishes near its lowest level since September 1 amid dovish Federal Reserve (Fed) expectations, which, in turn, is seen as a key factor acting as a headwind for the USD/JPY pair. Investors now seem convinced that the US central bank is done raising interest rates and the bets were reaffirmed by last week's data, which indicated that consumer inflation was cooling faster than anticipated. Moreover, the markets are now pricing in nearly 100 bps of Fed rate cuts by December 2024 which led to the recent sharp decline in the US Treasury bond yields.
In fact, the yield on the benchmark 10-year US government bond fell to a two-month low of 4.379% on Friday, which is holding back the USD bulls from placing aggressive bets and capping the upside for the USD/JPY pair. The Japanese Yen (JPY), on the other hand, gets a minor lift in reaction to the upbeat comments by Japan's Finance Minister Sunichi Suzuki, saying that now is a once-in-a-lifetime chance to beat deflation and that bright signs emerging in Japan's economy. This further contributes to the pair's intraday pullback of around 60 pips from the daily peak.
That said, a generally positive tone around the Asian equity markets could undermine the safe-haven JPY and lend some support to the USD/JPY pair. Nevertheless, the aforementioned fundamental backdrop suggests that the path of least resistance for spot prices is to the downside. Hence, any attempted recovery move might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly in the absence of any relevant market-moving economic releases, either from Japan or the US on Monday.
Technical levels to watch
On Monday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.1612 as compared to Friday's fix of 7.1728 and 7.2320 Reuters estimates.
The People's Bank of China announced on Monday that it maintained the Loan Prime Rate (LPR) unchanged across the time curve.
The Chinese central bank left the one-year and five-year LPR steady at 3.45% and 4.20%, respectively.
Market reaction
At the time of writing, AUD/USD is holding higher ground near 0.6522, adding 0.15% on the day.
Japanese Finance Minister Sunichi Suzuki is out with some comments this Monday, saying that now is a once-in-a-lifetime chance to beat deflation and that bright signs emerging in Japan's economy.
Last week, Suzuki repeated his usual mantra that excessive swings in the currency market were undesirable and reiterated that the government would take all possible steps necessary to respond to moves.
Market Reaction:
Suzuki's remarks do little to influence the Japanese Yen (JPY), or the USD/JPY pair, which stages a goodish recovery from a two-week low touched on Friday and climbs back to the 150.00 psychological mark during the Asian session on Monday.
- EUR/USD struggles to capitalize on last week’s strong rally amid a modest USD uptick.
- Bets that the Fed is done raising interest rates might cap any meaningful USD recovery.
- Friday’s hawkish comments by ECB policymakers should offer some support to the Euro.
The EUR/USD pair is seen consolidating last week's strong gains to its highest level since August 31 and oscillating in a narrow trading band during the Asian session on Monday. Spot prices currently trade around the 1.0900 round figure and seem poised to prolong the recent breakout momentum through a technically significant 200-day Simple Moving Average (SMA).
The US Dollar (USD) kicks off the new week on a positive note and recovers a part of Friday's decline to over a two-and-half-month low, which, in turn, is seen acting as a headwind for the EUR/USD pair. Any meaningful USD recovery, however, still seems elusive in the wake of growing bets that the Federal Reserve (Fed) is done raising interest rates, bolstered by the US data indicating that inflation was cooling faster than anticipated,
Moreover, the markets have started pricing in the possibility of rate cuts during the first half of 2024, which led to the recent steep decline in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond touched a two-month low level of 4.379% on Friday, which, along with a stable performance around the equity markets, should keep a lid on any meaningful appreciating move for the safe Greenback.
The shared currency, on the other hand, might continue to draw support from hawkish remarks by the European Central Bank (ECB) officials on Friday, pushing back against expectations for early rate cut bets. Bundesbank President Joachim Nagel said on Friday that it would be unwise to start cutting interest rates too soon. Moreover, ECB policymaker Robert Holzmann argued that the second quarter was simply too soon for a rate cut.
The aforementioned fundamental backdrop validates the near-term positive outlook for the EUR/USD pair and seems tilted firmly in favour of bullish traders. Even from a technical perspective, last week's sustained breakout through the 100- and the 200-day SMAs confluence barrier suggests that the path of least resistance for spot prices is to the upside in the absence of any relevant macro data from the Eurozone or the US on Monday.
Technical levels to watch
| Index | Change, points | Closed | Change, % |
|---|---|---|---|
| NIKKEI 225 | 160.79 | 33585.2 | 0.48 |
| Hang Seng | -378.63 | 17454.19 | -2.12 |
| KOSPI | -18.33 | 2469.85 | -0.74 |
| ASX 200 | -9 | 7049.4 | -0.13 |
| DAX | 132.55 | 15919.16 | 0.84 |
| CAC 40 | 65.51 | 7233.91 | 0.91 |
| Dow Jones | 1.81 | 34947.28 | 0.01 |
| S&P 500 | 5.78 | 4514.02 | 0.13 |
| NASDAQ Composite | 11.81 | 14125.48 | 0.08 |
Saudi Arabia, the world's largest oil exporter, is planning to extend oil production cuts through next year, while OPEC+ considers additional cuts in response to declining prices and rising tensions over the Israel-Hamas conflict, per Financial Times
After oil prices hit a four-month low of $77 a barrel last week, four sources familiar with the Saudi government's thinking said it was likely to prolong reductions 1 million barrel-a-day until at least the spring.
Market reaction
As of writing, the barrel of West Texas Intermediate (WTI) is up by 0.25% trading at $76.15
| Pare | Closed | Change, % |
|---|---|---|
| AUDUSD | 0.65131 | 0.77 |
| EURJPY | 163.224 | -0.13 |
| EURUSD | 1.09073 | 0.56 |
| GBPJPY | 186.438 | -0.21 |
| GBPUSD | 1.24579 | 0.36 |
| NZDUSD | 0.59877 | 0.31 |
| USDCAD | 1.37136 | -0.27 |
| USDCHF | 0.88567 | -0.31 |
| USDJPY | 149.653 | -0.62 |
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