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The European Central Bank (ECB) Governing Council member Joachim Nagel said that inflation that’s headed toward the ECB’s target will allow for more interest-rate cuts, but officials mustn’t rush, per Bloomberg.
Key quotes
Since inflation in services should gradually decline as wage pressures decrease, the point at which we can expect a sustained return to the 2% mark is approaching.
It is important to remain cautious and to loosen monetary policy only gradually and not too quickly.
It would therefore be too late to wait until the targeted inflation rate has been reached to ease policy.
Growth likely to stagnate in Q4.
Germany falling behind eurozone average
Slower wage growth to help service prices to moderate.
Trump tariffs boosting eurozone inflation a real risk.
Market reaction
At the time of writing, EUR/USD is trading 0.21% lower on the day to trade at 1.0473.
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger 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.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
Federal Reserve Bank of Minneapolis President Neel Kashkari said on Monday that it is still appropriate to consider another interest-rate reduction at the Fed’s December meeting, per Bloomberg.
Key quotes
It’s still a reasonable consideration.
Right now, knowing what I know today, still considering a 25-basis-point cut in December — it’s a reasonable debate for us to have.
Government must take steps to achieving a sustainable fiscal path.
Natural rate may be higher and policy not as restrictive.
This is what I’m trying to understand right now, is how much downward pressure are we putting on the economy, and what is the path for inflation.
I have some confidence that it’s gently trending down, and right now the labor market remains strong.
Market reaction
The US Dollar Index (DXY) is trading 0.02% lower on the day at 106.86, as of writing.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named 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 during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Federal Reserve Bank of Chicago President Austan Goolsbee said on Monday that he foresees the Fed continuing to lower rates toward a stance that neither restricts nor promotes economic activity, per Bloomberg.
Key quotes
“Barring some convincing evidence of overheating, I don’t see the case for not continuing to have the fed funds rate decline,”
“How fast that happens will be determined by the outlook and conditions.”
“But the through line to me is pretty clear that we’re on a path, and that path is going to lead to lower rates, closer to what you might call neutral.”
“I think the broad through line has been the newer months of inflation coming in oftentimes below what was expected, but not that far above the 2% target.”
Market reaction
The US Dollar Index (DXY) is trading 0.01% lower on the day at 106.87, as of writing.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named 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 during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
- USD/CAD trades with a mild positive bias around 1.3990 in Tuesday’s early Asian session.
- The US Dollar eases from a two-year high amid the profit-taking.
- Lower crude oil prices undermine the commodity-linked Loonie.
The USD/CAD pair trades with mild gains near 1.3990 during the early Asian session on Tuesday. The sell-off in crude oil prices weighs on the commodity-linked Canadian Dollar (CAD) and acts as a tailwind for USD/CAD. Trading volumes are likely to be low due to the US Thanksgiving holiday on Thursday.
The US Dollar Index (DXY) retreated to two-day lows due to profit-taking as the Trump Trade remains alive. Donald Trump announced on Friday that he will nominate Scott Bessent to be the secretary of the US Department of the Treasury. “Some market participants see him as less negative about a trade war, considering his comments on a phased approach for implementing tariffs,” said UBS Commodity Analyst Giovanni Staunovo.
Traders pared back their expectations for an interest rate cut in December. According to the CME FedWatch Tool, futures traders are now pricing in a 55.9% odds that the Fed will cut rates by a quarter point, down from around 69.5% a month ago. The FOMC Minutes will be in the spotlight on Tuesday, along with the Conference Board’s Consumer Confidence, New Home Sales, the Richmond Fed Manufacturing Index, and the Dallas Fed Services Index.
On the other hand, the decline in crude oil prices could weigh on the Loonie in the near term. It's worth noting that Canada is the largest oil exporter to the United States (US), and lower crude oil prices tend to have a negative impact on the CAD value.
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
- EUR/USD caught a much-needed bullish bounce on Monday.
- Euro-focused economic data remains limited until Friday.
- Key US inflation and growth figures land just in time for the US holiday.
EUR/USD scrambled for higher ground on Monday, clipping back into the 1.0500 handle amid a broad-market relaxing of Greenback bidding as investors step back into a risk-on mood, albeit with limited impact. Overall market flows are set to be crimped this week with the back half of the week’s US market sessions hobbled by the impending US Thanksgiving holiday on Thursday and limited market hours on Friday.
This week sees a firm drought of EU-based datapoints through most of the week, with a fresh round of European Harmonized Index of Consumer Prices (HICP) inflation slated for Friday. Preliminary pan-EU HICP inflation for November is set to swing higher on an annualized basis, a looming threat that European Central Bank (ECB) policymakers have been scrambling to get out in front of. According to ECB officials, a near-term uptick in broad EU inflation metrics shouldn’t be a cause for concern for investors.
The Federal Open Market Committee’s (FOMC) latest Meeting Minutes will be released later in the day on Tuesday, giving traders a glimpse into the Federal Reserve’s (Fed) latest discussions about the direction of interest rates looking forward. Wednesday will follow up with another update to US Personal Consumption Expenditure Price Index (PCEPI) inflation, a key reading of price increases underpinning the US economy. Wednesday also brings a quarterly update of UIS Gross Domestic Product (GDP) growth. Annualized core PCEPI inflation is set to accelerate again in October and forecast to increase to 2.8% from the previous 2.7%. QoQ US GDP growth in the third quarter is expected to hold steady at 2.8%.
EUR/USD price forecast
EUR/USD caught a bid on Greenback softness to retest the 1.0500 handle on Monday. Bids remain unable to break through the key technical metric neatly, and Fiber is set to continue struggling with familiar technical barriers in the near-term. EUR/USD price action has found a little bit of breathing room after hitting a 24-month low late last week, but the climb up is looking very far for Fiber bulls to reclaim anything approaching bullish territory.
EUR/USD daily chart
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- GBP/USD waffled near 1.2600 on quiet start to the trading week.
- Market flows are likely to remain tepid on US holiday-thinned week.
- GBP-centric economic data remains light through Friday.
GBP/USD churned chart paper near the 1.2600 handle, finding thin gains through the day’s market window but failing to recapture the technical level as market flows do little to bolster the Pound Sterling. The UK side of the week’s economic calendar is constrained, and a fresh print of key US inflation data on Wednesday will give way to a shortened trading week on the US side as Americans prepare for their Thanksgiving holiday.
A general improvement in broad-market risk appetite trimmed the top off of Greenback bidding to kick off the new trading week, giving the Pound Sterling a mild boost and keeping Cable bids chewing on bids just south of the 1.2600 handle. GBP traders will be grappling with a low-impact release calendar throughout the week, and US session market flows will be front-loaded onto Tuesday and Wednesday before the holiday slowdown.
The Federal Open Market Committee’s (FOMC) latest Meeting Minutes will be released later in the day on Tuesday, giving traders a glimpse into the Federal Reserve’s (Fed) latest discussions about the direction of interest rates looking forward. Wednesday will follow up with another update to US Personal Consumption Expenditure Price Index (PCEPI) inflation, a key reading of price increases underpinning the US economy. Wednesday also brings a quarterly update of UIS Gross Domestic Product (GDP) growth. Annualized core PCEPI inflation is set to accelerate again in October and forecast to increase to 2.8% from the previous 2.7%. Qoq US GDP growth in the third quarter is expected to hold steady at 2.8%.
GBP/USD price forecast
GBP/USD remains hobbled on the south side of the 1.2600 handle, churning bids north of 1.2500 as the pair finds some breathing room after another leg lower from early November’s choppy plateau just below 1.3000. Cable reached a six-month low of 1.2487 late last week, clipping into a 7% decline top-to-bottom from September’s peaks at 1.3434.
In the near-term, Pound bulls hoping for an end to the current Greenback upshot will be looking for intraday bids to return to the 200-day Exponential Moving Average (EMA) near 1.2840, while long-run short positions will be looking for an opportunity to redevelop momentum and drag Cable back to 2024 lows at the 1.2300 handle.
GBP/USD daily chart
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- NZD/USD staged minor losses on Monday and traded near 0.5850.
- Bulls struggle to halt losing streak, having tallied a four-day decline and reaching its lowest levels since November 2023.
- With oscillating signals from indicators, the NZD/USD may experience sideways trading in the near term.
The NZD/USD continued losing on Monday, to fall near 0.5850. Bulls struggle to halt the losing streak, now at lows since November 2023 but sellers might start to ran out of steam.
The pair's daily Relative Strength Index (RSI) is in the negative territory with a value of 37, indicating a strong selling pressure but its rising while the Moving Average Convergence Divergence (MACD) is flat and in red, reinforcing the bearish sentiment.
Despite the oscillating signals from the RSI and MACD, the overall momentum remains bearish. The pair is currently trading sideways within a range, with indicators emitting mixed signals. While the strong selling momentum may be waning, sellers still maintain the upper hand. Traders should monitor any break below the 0.5830 area which coil make the pair plunge towards 0.5800, while a break towards 0.5900 could be the trigger of a short-term recovery.
NZD/USD daily chart
- EUR/AUD sees a notable recovery, advancing 0.74% despite a disappointing IFO business climate from Germany.
- A potential head-and-shoulder pattern indicates possible continued declines, with key supports at 1.6100, 1.6003, and 1.5963. A further drop could potentially target 1.5900.
- Technical resistances are set at the 50-day SMA of 1.6266 and the psychological mark of 1.6300 if the rally extends.
The EUR/AUD recovered and rallied above the 1.6100 figure, hitting a new two-day high of 1.6163 as risk appetite improved. Softer-than-expected IFO readings in Germany were not an excuse for buyers to buy the shared currency, which the EUR/USD pair have underpinned. At the time of writing, the cross-pair trades at 1.6138, up by 0.74%.
EUR/AUD Price Forecast: Technical outlook
The EUR/AUD is still downward biased despite posting a solid recovery. Yet, the head-and-shoulder chart pattern remains in play, and failure to clear the November 7 low of 1.6161, the latest cycle low, could pave the way for a bearish continuation.
If EUR/AUD drops below 1.6100, the next support would be the November 25 low of 1.6003, followed by the November 22 low of 1.5963. If surpassed, the next support would be 1.5900.
Conversely, if EUR/AUD rallies past 1.6200, immediate resistance emerges at the 50-day Simple Moving Average (SMA) at 1.6266. A breach of the latter will expose 1.6300.
EUR/AUD Price Chart – Daily
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- AUD/USD declined by 0.14% to 0.6495 in Monday's session.
- Selling pressure near the intraday high of 0.6550 drove the AUD/USD lower.
- Markets await key US and Australian inflation data later this week.
The AUD/USD declined by 0.14% to 0.6495 in Monday's session, driven by selling pressure near the intraday high of 0.6550. Despite the US Dollar's weakness, the Australian Dollar's performance suggests its own underlying weakness. There won’t be any highlights in any of the Australian or American economic calendars.
The AUD/USD pair exhibits a mixed outlook, influenced by the interplay of a hawkish Reserve Bank of Australia (RBA) and mixed local economic data. The US Dollar's strength has weighed on AUD/USD, but the RBA's potential for future rate hikes may limit the downside.
Daily digest market movers: Australian Dollar retreats on quiet Monday, eyes on inflation data
- The AUD/USD pair retreats from its intraday high of 0.6550, losing most of its gains amid weak performance by both the Australian Dollar and the US Dollar.
- The US Dollar Index corrects to 106.80, pulling back from Friday's two-year high of 108.00.
- Investors will watch the US Personal Consumption Expenditure Price Index on Wednesday for clues on future Fed interest rate decisions.
- October’s core PCE inflation is expected to rise to 2.8%, up from 2.7% in September.
- Australia's CPI data for October, due Wednesday, is expected to show an increase to 2.3% from 2.1% in September.
- The CPI outcome could shape expectations for the RBA interest rate path in the coming months.
- The RBA is projected to keep its Official Cash Rate steady at 4.35% through year-end.
AUD/USD Technical Outlook: Pair faces resistance at 0.6540 with indicators showing mixed signals
The AUD/USD pair fell sharply after failing to break above the 20-day Simple Moving Average (SMA) at 0.6540, suggesting that the bulls are unable to stage a recovery. The Relative Strength Index (RSI) is below 50, indicating that the bears are in control. However, the Moving Average Convergence Divergence (MACD) is green, indicating that there is still some bullish momentum. Overall, the technical outlook is mixed, with the bears having the upper hand in the short term. If the AUD/USD pair breaks below the 0.6400 support level, it could fall further toward the 0.6300 level. On the other hand, if the pair can break above the 0.6540 resistance level, it could rally toward the 0.6600 level.
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
- Gold sees significant sell-off on developments in the Middle East.
- Markets viewed Scott Bessent's appointment as Treasury Secretary positively.
- Possible ceasefire between Israel and Lebanon keeps Gold heavy.
Gold price (XAU/USD) plummeted during Monday’s North American session as news from a ceasefire between Lebanon and Israel crossed the wires, exacerbating appetite for riskier assets. This, along with the nomination of Scott Bessent as the Treasury Secretary for Trump’s administration, weighed on the yellow metal. The XAU/USD trades at $2,620, down over 3%.
Improvement in risk appetite is the driver of Gold’s price action. The non-yielding metal has fallen below the 50-day Simple Moving Average (SMA) of $2,664, opening the door for further downside.
Market players cheered Bessent’s appointment. UBS Commodity Analyst Giovanni Staunovo commented, “Some market participants see him as less negative about a trade war, considering his comments on a phased approach for implementing tariffs.”
According to Joaquin Monfort, an analyst at FX Street, Bessent advocates for the “three-threes” policy. The policy suggests he would try to reduce the US deficit by 3% of annual Gross Domestic Product (GDP), achieve a 3% annual GDP rate, and raise US Crude Oil production by 3 million bpd.
A recent report revealed by Axios revealed that Israel and Lebanon are close to agreeing to terms to end the Israel-Hezbollah conflict, which lifted Gold prices to record highs.
Bullion traders are also eyeing the release of the Consumer Confidence data, the latest Federal Open Market Committee (FOMC) Meeting Minutes, Initial Jobless Claims, and the Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) Price Index.
Daily digest market movers: Gold plummets to five-day low beneath $2,650
- Gold prices recovered as US real yields collapsed 14 basis points to 1.925% from 2.068%.
- The US Dollar Index tumbles over 0.64%, down to 106.80.
- Traders trimmed the chances for a 25 bps rate cut at the December meeting. The CME FedWatch Tool sees a 56% probability of lowering rates, down from a 58% chance two days ago.
- According to Chicago Board of Trade data via the December fed funds futures contract, investors are pricing in a 22-basis-point rate cut by the Federal Reserve by the end of 2024.
Technical outlook: Gold price sellers step in, pushing prices under $2,630
Gold's price rally halted on Monday as sellers pushed XAU/USD beneath the $2,700 figure, prolonging its drop below $2,630. If bears clear the latter, the next support would be $2,600. If surpassed, a move to the 100-day SMA of $2,562 is on the cards, immediately followed by the November 14 swing low of $2,536.
If buyers recover the 50-day SMA, they could challenge $2,700. Once surpassed, the next stop would be $2,750, ahead of the all-time high at $2,790.
Oscillators like the Relative Strength Index (RSI) have shifted bearishly, indicating sellers are in charge.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
The Greenback started the week on the back foot following alleviated concerns surrounding the US political backdrop after President-elect D. Trump unveiled his pick for US Treasury Secretary. Also weighing on the US Dollar emerged news citing potential ceasefire negotiations in the Middle East.
Here is what you need to know on Tuesday, November 26:
The US Dollar Index (DXY) retreated to two-day lows and revisited the 106.60 region on Monday. A busy US docket will feature the FOMC Minutes as the salient event, seconded by the FHFA’s House Price Index, the S&P/Case-Shiller Home Price index, and New Home Sales. In addition, the Conference Board’s Consumer Confidence is due along with the Richmond Fed Manufacturing Index, the Dallas Fed Services Index, and the API’s weekly report on US crude oil inventories.
EUR/USD started the week on a strong bid bias, reclaiming the 1.0500 hurdle and above on the back of the strong sell-off in the Greenback. The ECB’s McCaul is due to speak.
GBP/USD reversed three daily drops in a row and briefly managed to trespass the key 1.2600 barrier. The CBI Distributive Trades will take centre stage across the Channel.
The sharp drop in the Greenback coupled with declining US yields across the board accompanied the move lower in USD/JPY, which retested the mid-153.00s. Next on tap on the Japanese calendar will be the usual weekly Foreign Bond Investment figures on November 28.
AUD/USD trimmed initial losses and managed to regain the 0.6500 yardstick and eventually end the day with humble gains. The next data release Down Under will be the RBA’s Monthly CPI Indicator and the Q3’s Construction Work Done, both due on November 27.
WTI prices sold off to the area of multi-day lows in the sub-$69.00 region per barrel in response to mitigated geopolitical concerns around the Israel-Lebanon crisis.
Prices of Gold plummeted to the vicinity of the $2,600 region per troy ounce on the back of the likelihood of ceasefire talks in the Middle East conflict. Silver prices followed suit and eased to two-week lows near the key $30.00 mark per ounce.
- Mexican Peso gains traction against the US Dollar, spurred by an uplift in global risk appetite and a softer Greenback.
- Wall Street responds favorably to President-elect Donald Trump's market-friendly Treasury Secretary appointment, influencing broader market trends.
- INEGI reports progress in Mexico’s disinflation process and a deceleration in Q3 GDP growth, fueling speculation of potential Banxico rate cuts.
The Mexican Peso begins the week on the front foot against the US Dollar due to an improvement in risk appetite and overall US Dollar weakness. US President-elect Donald Trump's pick of Scott Bessent as Secretary of the Treasury was cheered by investors with global equities trading in the green. The USD/MXN trades at 20.30, down by 0.45%.
Wall Street rallied after Trump chose the hedge fund manager since he is deemed a market-friendly pick. Consequently, the Greenback is heavy, losing over 0.40% as depicted by the US Dollar Index (DXY). The DXY dropped beneath the 107.50 mark, undermined by falling US Treasury yields.
Last Friday, the Instituto Nacional de Estadistica, Geografia e Informatica (INEGI) revealed that the disinflation process in Mexico is evolving, approaching the Bank of Mexico's (Banxico) 3% inflation goal. At the same time, despite growing, the Gross Domestic Product (GDP) dipped from 2.1% to 1.6% QoQ in the third quarter, indicating the economy's deceleration.
Kimberley Sperrfechter, EM Economist at Capital Economics, revealed, “The good inflation data raises the possibility of a 50 basis point cut by Banxico in December.” She added that their base case is for a 25 basis points cut, “given the strong Q3 economic activity and upward pressure on US interest rates.”
Banxico revealed earlier on Monday that Mexico's economy posted a current account surplus of $733 million in Q3.
Across the border, the US economic docket remains scarce ahead of Thanksgiving, yet the Chicago Fed revealed the National Activity Index.
Ahead this week, traders await the release of the Conference Board (CB) Consumer Confidence and the latest Federal Open Market Committee (FOMC) Meeting Minutes on Tuesday, followed by Wednesday’s Durable Goods Orders, Initial Jobless Claims and the Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) Price Index.
Money market players have grown more cautious about the Fed cutting rates. The CME FedWatch Tool suggests that investors see a 56% chance of a 25-basis-point rate cut at the December meeting, unchanged from last Friday.
Daily digest market movers: Mexican Peso advances on improved risk appetite
- Last week, Bank of Mexico Governor Victoria Rodriguez Ceja said they’re ready to slash interest rates if inflation continues downward. This would exert downward pressure on the Peso, which has depreciated after former US President Donald Trump’s victory boosted the Greenback, as some of its policies are inflation prone.
- Mexico’s Chamber of Deputies approved the dissolution of autonomous bodies, which, according to experts, puts Mexico at risk of being taken out of the USMCA free trade agreement.
- Mexico’s mid-month inflation rate dived from 4.68% to 4.56%. Core inflation, seen as a better gauge of price trends because it strips out volatile energy and food prices, came below the forecast of 3.72% at 3.58% YoY.
- Data from the Chicago Board of Trade, via the December fed funds rate futures contract, shows investors estimate 22 bps of Fed easing by the end of 2024.
USD/MXN technical outlook: Mexican Peso appreciates as USD/MXN drops below 20.30
The USD/MXN uptrend remains intact, with sellers eyeing a clear break below the previous year-to-date peak of 20.22, which could pave the way to test the 20.00 mark. Once those two support levels are surpassed, the next support would be the November 7 low and the 50-day Simple Moving Average (SMA) around 19.75/82, followed by the 19.50 mark.
Conversely, if USD/MXN resumes to the upside, the first resistance would be 20.50. A breach of the latter will expose the November 22 high at 20.55, followed by the November 12 peak at 20.69. Once cleared, the next resistance would be the year-to-date high of 20.80.
Mexican Peso FAQs
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.
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.
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.
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.
- The Dow Jones tapped a new all-time high bid just shy of 44,800 on Monday.
- Equity markets are pivoting broadly bullish after Trump signals his Treasury pick.
- Market rumors are swirling that Middle East peace talks could find a resolution soon.
The Dow Jones Industrial Average (DJIA) lurched into the high side on Monday, kicking the new trading week off with a fresh record high just a hair below the 44,800 handle. Investors bid up stock prices on rumors that the ongoing conflict between Israel and Hezbollah in Lebanon may have a ceasefire deal on the table. Closer to home, investors turned further bullish after pending president-elect Donald Trump tapped Scott Bessent as his future Treasury secretary when he returns to the White House in January.
Despite US officials dampening expectations and noting that a ceasefire deal hasn't been officially reached, markets are still optimistic that the geopolitical situation in the Middle East might stabilize later this week. According to an X (née Twitter) post from an AXIOS reporter, A US-proposed truce between Israel and Lebanon that would see Israeli troops withdraw from South Lebanon is set to be voted on, and presumably approved, by both sides in the coming days. Despite an overall uptick in investor sentiment on the prospect of cooling Middle East instability, Crude Oil markets took a hard hit on the news, with West Texas Intermediate (WTI) US Crude Oil backsliding nearly 3% on Monday to $69/barrel.
Investors hit the gas pedal on news that former President Donald Trump will pick Scott Bessent as his Treasury secretary. Scott Bessent is the founder of Key Square Group and a former partner at Soros Fund Management, making Bessent an odd choice for an incoming president who has routinely courted corners of the voting public laden with anti-Soros conspiracy theories.
Despite equity markets rallying hard on the prospect of incoming President Donald Trump tapping a hedge fund manager for a federal oversight position, a notably bullish appointment for the equity field in general, former President Donald Trump’s track record of making dubious staff picks remains unchallenged: the Key Square Group’s fund performance has a notably volatile history. According to reporting from Reuters, institutional investors have fled Key Square Group in recent years, with the macro-focused hedge fund peaking over $5 billion in AUM in late 2017 and tumbling to a 2024 low of barely over $500 million. Despite Key Square Group opening its doors with seed funding from Soros Capital, Soros has reportedly withdrawn all funding from Bennet’s fund and now has no exposure to the investment vehicle.
Dow Jones news
Despite an early-week bid pin into a new record high, the Dow Jones is settling into a more reasonable stance for Monday, still trading on the high side but easing back from a record high near 44,800. Two-thirds of the major equity index are finding gains on the day, with the remaining third stuck on the red side of the day’s opening line.
Nvidia (NVDA) missed out on Monday’s bullish push, falling another 3.3% and backsliding into $137 per share as investors continue to rebalance their sky-high expectations of the chipmaker. Despite reporting annual revenue growth figures north of 90% last week, bidders in the amorphous AI-tech rally expected more, and are balking at the prospect of Nvidia’s future revenue growth easing from 2025’s 112% forecast to a comparatively sluggish 49% in 2026.
Dow Jones price forecast
The Dow Jones’ Monday bid into a fresh record high near 44,800 has left the blue-chip index back on the high side of a near-term bull run, shrugging off a recent dip into the low well before any bearish technical indicators could form. The Dow Jones is up nearly 19% bottom-to-top in 2024, and up an eye-watering 32% since daily candlesticks last touched the 200-day Exponential Moving Average (EMA) way back in November of 2023 near the 33,800 region.
Dow Jones daily chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
- The US Dollar Index softens towards 107.00.
- Profit-taking after steep rallies in November pressured Greenback lower.
- Expectations for a lower U.S. corporate tax rate and a wave of deregulation should boost foreign portfolio and FDI flows to the US.
The US Dollar Index (DXY) retreated from its fresh two-year high on Friday, softening towards 107.00. The US calendar won’t feature any major highlights on Monday’s session.
The US Dollar Index (DXY) remains bullish despite a recent pullback from a two-year high. Strong economic data and a less dovish Federal Reserve stance support the index's upward trajectory. In addition, geopolitical jitters from the Russian-Ukraine war has contributed to the upside.
Daily digest market movers: US Dollar firm despite pullback, Trump’s policies might favor the upside
- The robust U.S. economy is outperforming other advanced economies.
- Trump's proposed policies will likely prolong Fed's restrictive policy and the US is anticipated to see increased foreign investment due to potential tax cuts and deregulation.
- Higher real interest rates are predicted due to the U.S.'s favorable productivity landscape.
- For the rest of the week, investors will eye Gross Domestic Product (GDP) and Personal Consumption Expenditures (PCE) figures to be released on Thursday and Friday as they might shake the USD’s ground.
- Jobless Claims on Thursday will also be important.
DXY technical outlook: Index consolidates after retreat from highs, bullish bias intact
Technical indicators suggest a possible consolidation period due to overbought conditions, with the Relative Strength Index (RSI) easing from overbought levels and the Moving Average Convergence Divergence (MACD) histogram contracting. Despite the consolidation, the overall bullish trend remains intact, with resistance at 108.00 and support at 106.00-106.50 area. Bulls must hold this area to maintain the bullish momentum.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- EUR/CAD is up 0.87% on Monday.
- Pair broke four-day losing streak as bears eased pressure, consolidating after indicators hit oversold territory.
- EUR/CAD might embark on sideways movements as the pair corrects after a furious losing streak.
The EUR/CAD snapped its four-day losing streak on Monday, rising by 0.87% to 1.4690. The pair seems to be consolidating after a furious losing streak, with bears easing pressure as technical indicators hit oversold territory.
The technical analysis on EUR/CAD suggests a sideways trend. The Relative Strength Index (RSI) is recovering, indicating increasing buying pressure, while the Moving Average Convergence Divergence (MACD) histogram remains flat and red, implying that selling pressure is still present but not gaining momentum.
The EUR/CAD pair broke its four-day losing streak on Monday, consolidating after a steep decline. The easing of selling pressure and oversold technical indicators suggest the pair might embark on sideways movements. Although the RSI indicates buying pressure, the MACD remains flat, hinting at lingering selling interest.
EUR/CAD daily chart
- GBP/USD climbs as financial markets respond positively to Trump's choice for Treasury Secretary, Scott Bessent.
- The pair still shows a downward trend, with key support being 1.2550 and 1.2486, potentially leading to a retest of the annual low at 1.2299.
- If bulls move in, they could test 1.2600 and November's high of 1.2659, followed by the 200-day SMA at 1.2818.
The Pound Sterling advances modestly against the Greenback on Monday, with market participants digesting US President-Elect Donald Trump's naming of Scott Bessent as Treasury Secretary. Bessent, an advocate for lower taxes and tariffs, was well-received by the markets as risk appetite improved. The GBP/USD trades at 1.2586, up 0.52%.
GBP/USD Price Forecast: Technical outlook
Despite posting gains, the GBP/USD remains downward biased after slipping below the 200-day Simple Moving Average (SMA) at 1.2818. If buyers want to regain the control, they need to conquer the 1.2600 figure, followed by a clear break of November’s 21 peak at 1.2659, which could exacerbate a rally to 1.2700. On further strength, the 200-day SMA is up next.
Meanwhile, bears remain in charge, targeting 1.2550 as the first support level. Once surpassed, they will set their sights on the November 22 low of 1.2486, followed by the year-to-date (YTD) low of 1.2299.
Indicators such as the Relative Strength Index (RSI) remain bearishly biased, near oversold territory, and hints the downtrend remains strong.
GBP/USD Price Chart – Daily
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- GBP/JPY has fallen consistently during November, weakening by seven Yen to the Pound.
- It may now be in a bear trend both in the short and medium term, suggesting the odds favor more downside still.
GBP/JPY may have reversed both its short and medium-term uptrends after the last bout of weakness. If so, the pair could see more downside on the horizon since it is a principle of technical analysis that the odds favor extensions of trends.
GBP/JPY Daily Chart
GBP/JPY began selling off on October 31 after it peaked at 199.81 on the preceding day. Since then it has staircased down, reaching a new low in the 192.80s on November 22 – seven whole Japanese Yen (JPY) to the Pound Sterling (GBP) lower than at the end of October.
It has also broken below all three major Simple Moving Averages (SMA), the 50, 100 and 200-day SMAs on a closing basis.
The (blue) Moving Average Convergence Divergence (MACD) momentum indicator line has both crossed below the red signal line and below the zero level, and taken together these are bearish signs.
A break below the 192.80 level could open the way to further losses with the next target at around 189.56, the low of the Right-Angled triangle that formed in late September and early October.
- USD/JPY is declining within a potential bearish reversal pattern.
- Called a “Broadening Formation” such a pattern would have downside implications for price.
USD/JPY looks like it is falling within an evolving bearish Broadening Formation price pattern (see chart below).
If this is the case, then the pair is likely to eventually decline towards the lower boundary line of the pattern at around 151.50. After that, it could even break below that line and decline to the projected target for the actual Broadening Formation (BF) itself, at around 148.54.
USD/JPY Daily Chart
The (blue) Moving Average Convergence Divergence (MACD) is moving lower after crossing below the red signal line – a bearish indication.
USD/JPY overshot the upper boundary line of the BF on November 14 before quickly falling back down inside it on the following day. This could was probably a sign of exhaustion and is a sign of a coming reversal on the horizon.
That said, it is also possible the pattern could be false. If so, USD/JPY would still be in a strong medium-term uptrend, and given the technical analysis principle that “the trend is your friend” the odds would favor more upside.
In such a case, a break above 156.25 would likely confirm further gains towards a target at around 157.86 (July 19 high).
Another possibility is that the major trendline could provide support for price in the 152.90s, slowing its decline to the lower boundary line of the BF.
- NZD/USD surges above 0.5850 as the US Dollar extends its upside.
- The US Dollar plummets as investors expect Bessent to favor a more balanced tariff and taxation policy.
- Investors expect the RBNZ to cut interest rates by 50 bps to 4.25% on Wednesday.
The NZD/USD pair climbs above 0.5850 in the North American session on Monday. The Kiwi pair strengthens as the US Dollar (USD) extends its correction that was driven by a selection of veteran hedge fund manager Scott Bessent as Treasury Secretary by President-elect Donald Trump. The US Dollar Index (DXY), which tracks the Greenback’s value, had a weak opening near 106.80 and extends its downside to near 106.60.
The reaction from market participants was negative for the US Dollar (USD) as Treasury yields dived after bond markets gave a warm welcome to a seasoned hedge fund manager on expectations that he would bring fiscal discipline to the economy. "Bessent is seen as an antidote to Trump's most extreme economic views, XTB’s Kathleen Brook said. She added, “Bessent favors less government spending and is expected to advocate a slow and steady approach to potentially inflationary trade tariffs.”
Bessent also said in his interview with the Financial Times (FT) that he would focus on putting tariffs into action, cutting spending, and maintaining the status of the Greenback as the world's reserve currency.
For fresh guidance on United States (US) interest rates, investors look for the Personal Consumer Expenditure Price Index (PCE) data for October, which will be published on Wednesday. The PCE report is expected to show that price pressures grew at a faster pace on a year-on-year basis and rose steadily on month from readings in September.
The inflation data will influence market speculation for the Federal Reserve (Fed) interest rate decision for the December meeting. According to the CME FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points (bps) to 4.25%-4.50% in December is 56%, while the rest supports borrowing rates to remain steady.
Meanwhile, the New Zealand Dollar (NZD) will be guided by the Reserve Bank of New Zealand (RBNZ) interest rate decision, which will be announced on Wednesday. According to a Reuters poll, the RBNZ is expected to cut interest rates by 50 bps to 4.25%. This would be the second straight 50 bps interest rate cut by the RBNZ and the third one of the current rate-easing cycle.
Economic Indicator
RBNZ Interest Rate Decision
The Reserve Bank of New Zealand (RBNZ) announces its interest rate decision after its seven scheduled annual policy meetings. If the RBNZ is hawkish and sees inflationary pressures rising, it raises the Official Cash Rate (OCR) to bring inflation down. This is positive for the New Zealand Dollar (NZD) since higher interest rates attract more capital inflows. Likewise, if it reaches the view that inflation is too low it lowers the OCR, which tends to weaken NZD.
Read more.Next release: Wed Nov 27, 2024 01:00
Frequency: Irregular
Consensus: 4.25%
Previous: 4.75%
Source: Reserve Bank of New Zealand
The Reserve Bank of New Zealand (RBNZ) holds monetary policy meetings seven times a year, announcing their decision on interest rates and the economic assessments that influenced their decision. The central bank offers clues on the economic outlook and future policy path, which are of high relevance for the NZD valuation. Positive economic developments and upbeat outlook could lead the RBNZ to tighten the policy by hiking interest rates, which tends to be NZD bullish. The policy announcements are usually followed by Governor Adrian Orr’s press conference.
- EUR/GBP rallies back up to the 50-day SMA in the mid 0.8300s.
- The Pound is depreciating on doubts about the robustness of the UK economy.
- The Euro itself has problems, however, after another poor set of poor figures from Germany.
EUR/GBP trades back up to the level of the 50-day Simple Moving Average (SMA) at around 0.8350 on Monday, but more as a result of Pound Sterling (GBP) weakness than Euro strength.
The pair is safely back inside its medium-term range between roughly 0.8300 and 0.8450 as downside risks pressure both currencies lower, resulting in a lack of overall volatility and a range-bound market structure. That said, the pair is at over two-year lows, suggesting the possibility the Euro may be under valued and, perhaps, due a bounce.
The German IFO Business Climate survey out on Monday, however, was not going to provide a catalyst for such a rebound. Based on over 9,000 responses in key sectors such as manufacturing, services, construction and trade, it showed a continuation of the theme of the German economy being stuck in a phase of decline.
The IFO Current Assessment index fell to 84.3 in November from 85.7 in October and below the 85.4 forecast. It was a similar story with the Business Climate index which also fell from the previous month and fell below expectations. The Expectations index, meanwhile, came out at 87.2, above the 87.0 forecast but below the 87.3 previous. Overall the data painted a negative picture of Europe’s largest economy.
The IFO President Clemens Fuest noted that “The German economy is floundering. Companies were somewhat skeptical again about the coming months.”
The data follows weak Purchasing Manager Index (PMI) survey data for both the Eurozone and Germany on Friday, which showed the German composite PMI plunging to a nine-month low of 47.3 in October.
“Germany remains the weak link in the Eurozone,” noted Dr. Win Thin, Global Head of Markets Strategy at Brown Brothers Harriman (BBH) in a note on the data releases. Given Germany’s importance as the “engine room” of the Eurozone economy, the comment is concerning.
The Single Currency is still seeing gains against the Pound on Monday, however. This unintuitive reaction might be explained by the fact that Sterling is the weaker of the two but neither is the Euro particularly strong.
GBP’s decline could be due to the string of poor data releases out of the UK recently. These have led investors to reappraise the future path of interest rates in the UK. This is key for Sterling since higher interest rates attract more foreign capital inflows, supporting the currency, whilst lower rates do the opposite and weaken GBP.
Previously the perception had been that in the UK interest rates would remain at a relatively high 4.75% whilst in many other developed economies they would start to slide rapidly. This was mainly because of the UK economy’s high wages, high services sector inflation, robust labor market and relatively positive outlook for growth.
The release of UK unemployment data for September, which showed the Unemployment Rate surprising to the upside at 4.3% from 4.0% previously, suggested the true picture might be less flattering.
However, it was the release of preliminary UK PMI data for November, on Friday, which really began sowing seeds of doubt. The UK Composite PMI came out much lower than expected, and fell shockingly into contraction territory below 50.
This poor PMI data resulted in market-based projections of the low point for UK interest rates to be revised down from 4.00% to 3.75%.
“Looking at the November composite PMIs, Australia fell below 50 to 49.4, Japan remained below 50 but improved slightly to 49.8, and the Eurozone fell below 50 to 48.1. However, the biggest surprise came from the U.K. as its composite plunged to 49.9 and joined the ranks of the sub-50,” says BBH’s Thin.
That said, despite the weak data and the fact that swaps markets are pricing in a lower terminal interest rate, Bank of England (BoE) officials – who are tasked with adjusting interest rates – do not seem to have radically changed their stance.
It is possible that more poor data is required before they are ready to reassess their “gradualist” position. This was summed up by comments from the Deputy Governor of the BoE Clare Lombardelli on Monday, who said, “We should not focus too much on one set of data (regarding last week's weak PMI data).”
Rather, “We remain focused more on services prices and wages…(..)..The labor market is still relatively tight,” and that “I view the probabilities of downside and upside risks to inflation as broadly balanced. But at this point I am more worried about the possible consequences if the upside materializes, as this could require a more costly monetary policy response.”
- AUD/USD gives up a majority of intraday gains while the US Dollar remains on the backfoot.
- The US Dollar weakened as US Trump nominated veteran hedge-fund manager Bessent as Treasury Secretary.
- Investors await the monthly Aussie inflation data for fresh RBA interest rate guidance.
The AUD/USD pair surrenders a majority of its intraday gains after facing selling pressure near the intraday high of 0.6550 in Monday’s North American session. The Aussie pair drops even though the US Dollar (USD) wobbles near the intraday low, suggesting that the Australian Dollar (AUD) is also performing weakly.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, corrects to near 106.80 after posting a fresh two-year high of 108.00 on Friday.
The Greenback had a negative start at the open on Monday as President-elect Donald Trump chose hedge-fund manager Scott Bessent as Treasury Secretary. The market reaction to the news appeared positive for risky assets while the US Dollar and bond yields were hit badly.
However, analysts at MUFG commented that Monday's dollar depreciation is a temporary correction after Friday's steep gains. Bessent has indicated "a possible more balanced approach" to trade tariffs. However, this won't change prospects of the United States (US) economy performing much better than others.
This week investors will focus on the US Personal Consumption Expenditure Price Index (PCE) data for October to get fresh interest rate guidance, which will be published on Wednesday. Investors will pay close attention to the core PCE inflation data, a Federal Reserve’s (Fed) preferred inflation gauge, which is estimated to have grown by 2.8%, faster than 2.7% in September.
Meanwhile, the Australian Dollar (AUD) will be guided by the monthly Consumer Price Index (CPI) data for October, which will be published on Wednesday. Economists estimate the inflation data to have risen at a faster pace of 2.3% from 2.1% in September. The inflation data will significantly influence market expectations for Reserve Bank of Australia (RBA) interest rate path. Currently, the RBA is expected to leave its Official Cash Rate (OCR) unchanged at 4.35% by the year-end.
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
The Pound Sterling (GBP) is a middling performer among the major currencies on the session, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
GBP gains modestly, capped around 1.26
“Bank of England (BoE) DG Lombardelli’s first speech since joining the Bank earlier this year emphasized caution in easing rates amid signs that wage growth trends remain sticky. The remarks follow similarly cautious comments from Governor Bailey last week.”
“Swaps pricing continues to reflect market expectations that the BoE will remain on hold in December but will likely resume easing—cautiously—in early 2025.”
“The GBP gapped higher over the weekend and while the rebound is challenging the short-term resistance (minor trend off the early November high at 1.2610), it is not doing so all that aggressively. Some drift back to the low 1.25s—to fill the overnight gap—may be needed before the GBP can push higher and perhaps see a minor relief rally towards 1.27/1.28.”
Hopes that a Treasury Secretary Bessent could curb a more aggressive approach to trade policies in the Trump administration has allowed the Euro (EUR) to outperform on the session so far, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
EUR slightly positive on minor relief rally on Bessent news
“EUR gains tested the 1.05 area despite Germany’s Ifo survey weakening more than expected in November (85.7), reflecting subdued growth prospects amid heightened uncertainties abroad as well as at home following the recent collapse of the German government. New elections are set for February.”
“Spot has recovered from Friday’s drop to the low 1.03s quite well - just not well enough at this point to suggest that the rebound will extend. It’s a close call though. I think further EUR gains through 1.0500/10 today could prompt a deeper, short-term correction in spot to the 1.0600/50 zone. Support is 1.0450 intraday.”
In a recent column, we addressed the question of recent sharp depreciation of the Hungarian forint exchange rate, asking if the central bank (MNB) might have to intervene as an emergency. The Hungarian forint’s depreciation is accelerating, even versus a weak euro; and the underperformance versus eastern European peers is widening further (the PLN/HUF cross, for example, is continuously rising), Commerzbank’s FX analyst Tatha Ghose notes.
Weak euro environment is bad for high-beta FX in the region
“There is not much to add fundamentally at this point. A weak euro environment is bad for high-beta FX in the region – the forint tops the list of vulnerable currencies. Idiosyncratically, it does not help that the country’s leader Viktor Orban has been in the media a lot recently with his high-profile geo-political meetings, which are connected with the very issue hitting the euro – the regional security situation – and his stance is deviant from the central EU position.”
“Nevertheless, from our perspective, the central bank’s possible reaction function is of interest. MNB has paused cutting rates and switched to more hawkish language. This is not proving enough. We already wrote in our last piece that when we say ‘intervention’, we do not mean direct FX intervention. In fact, we find the question of whether or not MNB might intervene in the FX market not very interesting – because such things usually do not have large or lasting impact.”
“What we mean by intervention is whether at some point MNB might have to come out and hike rates back. We think that a level such as 420.0 or 425.0 in EUR/HUF might well force the CB’s hand in this regard. This is why we are watching closely.”
- The US Dollar broadly steadies at the beginning of a holiday-shortened week due to Thanksgiving.
- President-elect Donald Trump has nominated Scott Bessent for the role of Treasury Secretary.
- The US Dollar Index struggles to stay afloat above 107.00.
The US Dollar (USD) is flat at the start of the week after President-elect Donald Trump confirmed his nomination for Scott Bessent over the weekend for the Treasury Secretary in his upcoming cabinet. Bessent is considered a fiscal hawk, targeting a budget deficit of 3% of GDP by 2028 while indicating that he is backing tariff and tax cut plans. Investors seem to be taking this nomination as mildly positive as it eases some concerns regarding the impact of Trump’s fiscal plans.
The US economic calendar is facing a bit of an odd week with the public holiday on Thursday for Thanksgiving. All US data for Thursday and Friday has been moved to Wednesday, with the Personal Consumption Expenditures (PCE) for October, the second estimate of the third quarter US Gross Domestic Product (GDP) and the weekly jobless claims as most influential data points. A rather soft start for this Monday with the Chicago Fed National Activity Index for October and the Dallas Fed Manufacturing Business Index for November due.
Daily digest market movers: Hold on to your hats
- Monday’s calendar kicks off at 13:30 GMT, with the Chicago Fed National Activity Index for October. No forecast is available, and the previous month’s number stood at -0.28.
- The Dallas Fed Manufacturing Business Index for November will follow a bit later at 15:30 GMT. There isn’t any consensus forecast either, and the October reading was at -3.
- Equities are broadly in the green across the globe. Japanese indices already closed off higher on the day, near 1% gains on average. European equities and US futures are in a positive tone, up around 0.50% on average.
- The CME FedWatch Tool is pricing in another 25 basis points (bps) rate cut by the Fed at the December 18 meeting by 56.1%. A 43.9% chance is for rates to remain unchanged.
- The US 10-year benchmark rate trades at 4.40%, sliding further away from the high printed on Friday at 4.50%.
US Dollar Index Technical Analysis: Headline risks with data releases
The US Dollar Index (DXY) eased somewhat during the Asian trading session on the back of President-elect Donald Trump’s nomination of Scott Bessent for the Treasury position. A knee-jerk reaction could be taking place as this weakness has been fully erased and might see the DXY advance further. On the upside, 107.35 remains key before looking for any levels above 108.00.
The fresh two-year high at 108.07 seen on November 22 is the first level to beat next. Further up, the 109.00 big figure level is the next one in line to look at. The support from October 2023 at 109.36 is certainly a level to watch out for on the topside.
Support comes in around 106.52, the double top from May. A touch lower, the pivotal 105.53 (April 11 high) should avoid any downturns towards 104.00. Should the DXY fall all the way towards 104.00, the big figure and the 200-day Simple Moving Average at 103.98 should catch any falling knife formation.
US Dollar Index: Daily Chart
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
The Canadian Dollar (CAD) is up the least against the USD among the G10 currencies so far today, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
CAD underperforms on the day
“That is probably because it was up the most on the strong USD overall last week. CAD outperformance was helped by narrower US/Canada spreads last week but scope for more CAD strength seems limited, however. In contrast to what are expected to be mostly positive key US data releases this week, the Canadian data release of most significance—GDP on Friday—may show growth momentum ebbing somewhat.”
“The soft USD tone overnight drove USDCAD below support at 1.3945/50 briefly. This area remains pivotal in the short run, I think. A clear break back under support could see spot ease back to the 1.3800/50 zone—which should represent deep value for USD buyers. Late morning European trade was a little more USD-positive, however, and a push back above 1.4020 resistance could see funds retest 1.41.”
“One quibble from the USD-positive perspective on the charts was its failure to hold the weekly break above 1.4040 retracement resistance last week. That could be a pointer to more chop and consolidation in the next few weeks.”
The UK macro data released on Friday was a double whammy: first, October retail sales surprised to the downside (and previous months were also revised downwards), followed by similarly weak November PMIs. The outlook for fourth-quarter growth is not good, given that third-quarter growth was already quite weak, Commerzbank’s FX analyst Michael Pfister notes.
Growth to accelerate somewhat from next year
“It should be noted that retail sales and the PMIs are quite volatile and subject to further revisions, and the data's predictive power for growth has been rather weak in recent quarters. At the same time, however, the figures also highlight the problems that the UK still faces: the weak retail sales in October were probably at least partly due to consumers holding back on spending ahead of the new budget.”
“On the other hand, the PMIs probably indicate that companies are less optimistic about the future, precisely because the budget is mainly targeting companies for tax increases. Despite these figures, we still expect growth to accelerate somewhat from next year. This is supported by the fact that the government is significantly increasing its spending, while wages continue to rise faster than prices, giving consumers more money to spend in real terms.”
“Only if the coming months also bring weaker data from the real economy can we really speak of a turnaround, although the risks to this are clearly increasing.”
The US Dollar (USD) is starting off Thanksgiving week on the defensive as markets react to the President-elect Trump’s selection of Scott Bessent as Treasury Secretary, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
Markets see Treasury Sec. pick as moderating force
“Bessent, a hedge fund manager with more market-friendly views (pro-growth, hawkish on the Federal deficit, favours gradualist approach to tariffs) is viewed as someone who may be able to temper the president-elect’s more aggressive policy initiatives. He has also said he wants to preserve the USD’s status as the world’s reserve currency. Stocks are mostly firmer in Europe and US equity futures are positive.”
“Treasurys are outperforming other major bond markets by 5-6bps. The minor drift in the USD does not mean its post-election rebound is over. I had noted last week that some market participants may want to square up USD longs into the US holiday break this week and the Bessent news is a good excuse to do that. The USD is unlikely to lose too much ground, particularly because much of the USD’s recent strength has been tied to solid data reports and the resulting adjustment in Fed policy expectations.”
“And what data reports we do get this week from the US—GDP, PCE primarily—might just encourage markets to rein back Fed easing expectations just a bit more. Core PCE is expected to show a 0.3% increase in the October month for a 2.8% rise in the year, up from 2.7% in September. Firm data may bolster Fed hawks’ concerns that progress on inflation has slowed. Recall that core PCE based around 2.6% Y/Y in June.”
Anyone hoping that the data would allow EUR/USD to move higher was bitterly disappointed on Friday. The first estimates for both the UK and euro area PMIs were much worse than expected, while the US PMIs surprised to the upside. Leading indicators continue to point to completely different worlds on both sides of the Atlantic, and worse, the data seems to be diverging even further. It is therefore not surprising that EUR/USD briefly fell below 1.04 on Friday, Commerzbank’s FX analyst Michael Pfister notes.
Interest rate expectations are one of the last hopes for a EUR/USD turnaround
“It is not just the case that the expected economic policies of a Trump administration will increase the outlook for US growth and inflation in the near future. Rather, Friday's figures showed once again that the US already has a significant growth advantage, with the risk that this will increase. Given the combination of Trump and the already strong figures, the market is now pricing in just over 50 basis points of rate cuts by October 2025.”
“There is now a not so small case for the Fed to pause on rate cuts in December. On the other hand, Jerome Powell made it very clear at the last meeting that they will only analyze the impact of the new Trump administration when plan are put into action. Until then, they will continue as before. And despite the surprisingly strong September jobs report, the underlying trend is still pointing downwards. In addition, the Fed is likely to be more inclined to cut rates again in December to avoid the impression that it is doing so just to help one side in the election campaign.”
“In addition to US interest rate expectations, expectations for the euro area are also encouraging. The market is now more inclined to expect a big move in December, i.e. a 50bp cut has become more likely in recent weeks. Here, too, our economists see a 25 basis point move as more likely. This is especially true in view of Friday's inflation figures for November, which are expected to show a further increase. In short, interest rate expectations are currently one of the last hopes for an imminent turnaround in EUR/USD.”
- USD/CHF is correcting back within an established uptrend.
- This is likely just a correction of the dominant trend with a resumption higher to follow.
USD/CHF is pulling back within an established short and medium-term uptrend. At the moment the pullback looks corrective in nature and this suggests bulls will eventually push price higher again. Given the technical analysis theory that “the trend is your friend” the odds favor a continuation higher to the next set of targets.
USD/CHF Daily Chart
USD/CHF may find support at the 0.8873 support level (green dashed line) or the (green) 200-day Simple Moving Average (SMA) at 0.8822.
A break above the 0.8958 November 22 high would probably confirm a continuation up to the next target at 0.9000 (round number and psychological area), followed by 0.9050 (July 2 swing high).
The (blue) Moving Average Convergence Divergence (MACD) line is above the zero line and the red signal line, reinforcing the bullish bias.
The Japanese Yen (JPY) is starting to show a little strength on the crosses. Helping that has been the shift in the fiscal-monetary policy mix, ING’s FX analyst Chris Turner notes.
USD/JPY can withstand the strong USD trend
“Driving the former has been local politics, where the Liberal Democratic Party (LDP) has had to bring the Democratic Party for the People (DPP) into the governing coalition and accede to the DPP's policy demands of an increase in the lower thresholds for income tax. Along with other measures, this is seen as a $250bn fiscal stimulus package and is a reminder that no such package will be coming in Germany – at least until federal elections are held in late February.”
“At the margin, Japanese fiscal stimulus is encouraging the view that the Bank of Japan will hike in December after all. Nearly 15bp of a 25bp hike is now priced. ING expects a 25bp hike. Looser fiscal and tighter monetary policy is usually a supportive mix for a currency and should continue to pressure EUR/JPY, for example, lower.”
“It may also help USD/JPY to withstand the strong dollar trend and a further period of consolidation in the 153.50-155.50 range may be due.”
- Crude Oil is looking for direction after geopolitical tensions between Russia and Ukraine faded over the weekend.
- The OPEC+ meeting on December 1 could be pivotal as a delay in production normalization is expected.
- The US Dollar Index retreats slightly after breaking a fresh two-year high last week.
Crude Oil takes a step back on Monday, trading at around $70, after a calmer weekend on the geopolitical front and ahead of a holiday-shortened week in the US due to Thanksgiving. The focus for the week, apart from any headlines from Russia-Ukraine or the Middle East, will be on the OPEC+ meeting set to take place on Sunday, December 1.
Meanwhile, the US Dollar Index (DXY), which measures the Greenback’s performance against a basket of currencies, is also taking a step back after its stellar performance last week. Over the weekend, President-elect Donald Trump nominated former hedge fund manager Scott Bessent for the Treasury Secretary position. Markets perceive Bessent as a fiscal hawk, targeting a budget deficit of 3% of GDP by 2028, while indicating that he is backing tariff and tax cut plans.
At the time of writing, Crude Oil (WTI) trades at $70.70 and Brent Crude at $74.35.
Oil news and market movers: Bumpy ride ahead
- With the US Thanksgiving holiday taking place on Thursday, the weekly American Petroleum Institute release (API) will stay on Tuesday, while the weekly stockpile change numbers from the Energy Information Administration (EIA) and the Baker Hughes Oil Rig Count will be released on Wednesday.
- Volatility and low liquidity could be an issue on Thursday and Friday, with the historic pattern from OPEC+ members to communicate their stance or opinions ahead of the December 1 meeting, Bloomberg points out. Any comments could move Oil markets during Thanksgiving and Black Friday.
- Weekly Vortexa data shows that the amount of Crude Oil held around the world on tankers that have been stationary for at least 7 days rose to 74.83 million barrels as of November 22, a 34% increase compared with the previous week at 55.76 million barrels in the week of November 15th, Bloomberg reports.
Oil Technical Analysis: OPEC+ meeting to spark volatility
Crude Oil price is set to enter a dangerous phase ahead of one of the last OPEC+ meetings for this year. Not only is this meeting crucial in terms of when in 2025 the production normalization will take place, but in the days running up towards that meeting on Sunday, US markets will be closed due to Thanksgiving and Black Friday. In this context, any market moving comments could see sharp moves with thin liquidity and less-than-normal market participants in place.
On the upside, the 100-day Simple Moving Average (SMA) at $72.67 together with the pivotal level at $71.46 just below, are the two main elements acting as a resistance. The 200-day SMA at $76.42 is still far off, although it could be tested if tensions intensify further. In its rally towards that 200-day SMA, the pivotal level at $75.27 could still slow down any upticks.
On the other side, traders need to look towards $67.12 – a level that held the price in May and June 2023 – to find the first support. In case that breaks, the 2024 year-to-date low emerges at $64.75, followed by $64.38, the low from 2023.
US WTI Crude Oil: Daily Chart
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
The US Dollar (USD) net short positions have increased, driven by a decrease in long positions. The Euro (EUR) net short positions have increased, driven by an increase in short positions. The Pound Sterling (GBP) net long positions have decreased, driven by a decrease in long positions, and the Japanese Yen (JPY) net short positions have decreased, driven by an increase in long positions, Rabobank’s FX analysts Molly Schwartz and Jane Foley note.
USD has the strongest returns in the month-to-date in the G10
“USD net short positions have increased, driven by a decrease in long positions. US CPI inflation registered in line with expectations at 0.2% m/m and 2.6% y/y—an increase from September’s print of 2.4% y/y. According to Bloomberg, the USD has had the strongest returns in the month-to-date in the G10.”
“EUR net short positions have increased, driven by an increase in short positions. EUR/USD has pulled away from Friday’s low in the spot market, currently trading at 1.0484. We are forecasting EUR/USD parity on a 6-month view. EUR has been the worst performing G10 currency against USD month to date, depreciating by 3.28%.”
“GBP net long positions have decreased, driven by a decrease in long positions. GBP has lost its status of the best performing G10 currency year-to-date to the might greenback, having depreciated by 0.17% against USD. JPY net short positions have decreased, driven by an increase in long positions. The market has priced in 14.1p worth of cuts for the December 19th BoJ meeting. JPY continues to be the worst performing G10 currency year-to-date, depreciating 7.86% against USD.”
The US Dollar (USD) is expected USD to trade between 7.2300 and 7.2600. In the longer run, momentum is beginning to slow; a breach of 7.2000 would mean that USD is not rising further, UOB Group’s FX analyst Quek Ser Leang and Lee Sue Ann notes.
Below 7.2000, USD set to not rise further
24-HOUR VIEW: “Last Friday, we held the view that USD ‘could rise to 7.2630.’ We were also of the view that ‘the major resistance at 7.2800 is likely out of reach.’ Our view was not wrong, as USD rose to 7.2670. USD closed at 7.2590 but opened sharply lower today. The outlook is mixed, and today, we expect USD to trade between 7.2300 and 7.2600.”
1-3 WEEKS VIEW: “We have a positive view for more two weeks now. In our latest narrative from last Monday (18 Nov, spot at 7.2350), we indicated that ‘momentum is beginning to slow, and if USD breaks below 7.2000 (‘strong support’ level) would mean that USD is not rising further.’ There is no change in our view.”
Friday's soft eurozone PMI releases – especially the drop in the services component – hit the short-end of the region's rate market hard and took EUR/USD to the lowest levels since 2022, ING’s FX analyst Chris Turner notes.
Current bounce may stall in the 1.0500/0550 area
“The view here remains there is no fiscal calvary coming in the eurozone and that the only way to address the current malaise is for the European Central Bank to cut rates more quickly than usual. The market now prices 37bp of a 50bp ECB cut in December and short-dated US; eurozone spreads remain very wide at 190bp.”
“Futher updates on eurozone business and consumer confidence are released by the European Commission on Thursday. Also in the eurozone this week will be Friday's flash release of November CPI, where core inflation is unhelpfully expected to creep a little higher.”
“EUR/USD is having a decent bounce after what looked like an FX option barrier-triggered mini-collapse to 1.0335 on Friday. The trend very much remains bearish and we are wary of more extended EUR/USD losses into year-end despite supportive seasonal patterns. We suspect the coming weeks may be characterized by periods of shallow corrections and then marginal new lows. The current bounce may stall in the 1.0500/0550 area.”
The US Dollar (USD) is expected to edge below 153.70; the major support at 153.30 is unlikely come under threat. In the longer run, USD is expected to trade in a range, likely between 153.30 and 156.50, UOB Group’s FX analyst Quek Ser Leang and Lee Sue Ann notes.
USD is expected to trade in a range
24-HOUR VIEW: “Last Thursday, we expected USD to pullback. After USD pulled back, we indicated last Friday that ‘although downward momentum has not increased much, the bias for USD is still tilted to the downside.’ However, we stated that ‘the major support at 153.30 is unlikely to come under threat and that there is another support at 153.70.’ Our view did not turn out, as USD traded between 153.96 and 155.01, closing at 154.74 (+0.15%). Today, it opened and traded lower. We continue to detect a soft bias and expect USD to edge below 153.70. The major support at 153.30 is still unlikely to come under threat. Resistance levels are at 154.55 land 154.90.”
1-3 WEEKS VIEW: “Our most recent narrative was from last Thursday (21 Nov, spot at 155.25), wherein USD ‘is expected to trade in a range, likely between 153.30 and 156.50.’ There is no change in our view.”
The Dollar Index (DXY) briefly traded above 108 on Friday, although this was primarily a euro rather than dollar-driven move, ING’s FX analyst Chris Turner notes.
DXY can consolidate in a 106.50-107.50 range
“Recall the euro has by far the largest weight in the DXY at 58%. The dollar trend is a little more settled and news over the weekend confirms that Scott Bessent has been picked as the next US Treasury Secretary. We are not sure whether the recent bullish flattening in the US Treasury curve represents the market seeing him as a 'safe pair of hands', but he certainly does not sound like someone who will be pushing President-elect Donald Trump into weak dollar policy.”
“Looking ahead in this US Thanksgiving-shortened week, the highlights of the US data calendar will be Tuesday's release of the Federal Reserve's November FOMC minutes (where the central bank cut rates by 25bp) and Wednesday's release of the core PCE deflator for October. The latter is expected at a little sticky 0.3% month-on-month and will keep the market guessing over whether the Fed will cut in December after all. Currently the market prices 14bp of a 25bp rate cut.”
“Currently, our team are still going for a 25bp Fed cut in December and combined with positioning and seasonal dollar weakness may now offer some headwinds to the DXY. It looks like geopolitics and the diverging US-eurozone macro story will keep the dollar bid into year-end after all. DXY could start to consolidate in a 106.50-107.50 range this week, but the bias remains higher.”
Provided that 0.5825 is not breached; the New Zealand Dollar (NZD) could edge higher to 0.5880. The next resistance at 0.5905 is unlikely to come under threat. In the longer run, the underlying tone has softened, but any decline is likely part of a lower trading range of 0.5815/0.5905, UOB Group’s FX analyst Quek Ser Leang and Lee Sue Ann notes.
The next resistance at 0.5905 is unlikely to come under threat
24-HOUR VIEW: “We indicated last Friday that NZD ‘is under mild downward pressure.’ We also indicated that it ‘is likely to edge lower, possibly testing 0.5835 before the risk of a rebound increases.’ We pointed out, ‘the next support at 0.5815 is unlikely to come under threat.’ Our view turned out to be correct, as NZD dropped to 0.5817 before rebounding. NZD closed at 0.5835 but opened higher today. From here, provided that 0.5825 is not breached, NZD could edge higher to 0.5880. This time around, the next resistance at 0.5905 is unlikely to come under threat.”
1-3 WEEKS VIEW: “Last Friday (22 Nov, spot at 0.5860), we highlighted that ‘While the underlying tone has softened, any decline is likely part of a lower trading range of 0.5815/0.5905.’ We added, ‘NZD is unlikely to break clearly below 0.5815.’ NZD subsequently dipped to 0.5817 and then rebounded. There has been no clear increase in either upward and downward momentum, and we continue to hold the same view for now.”
USD/SGD fell in early trade this morning, tracking the broad USD pullback. Pair was last seen at 1.3464, OCBC’s FX analysts Frances Cheung and Christopher Wong note.
Technical patterns suggest signs of bearish pullback
“Mild bullish momentum on daily chart continues to fade while RSI turned lower. Bearish divergence on MACD appears to be playing out.”
“Technical patterns suggest signs of bearish pullback in the near term. Support at 1.3340 (200 DMA), 1.3290 (61.8% fibo retracement of Jun high to Oct low). Resistance at 1.3490, 1.3520 levels. S$NEER was last at 1.21% above model implied mid.”
The Australian Dollar (AUD) could advance above 0.6560 but is unlikely to reach the major resistance at 0.6600. In the longer run, if AUD breaks below 0.6470, it would mean it is not rebounding further, UOB Group’s FX analyst Quek Ser Leang and Lee Sue Ann notes.
Below 0.6470, AUD not to rebound further
24-HOUR VIEW: “When AUD was at 0.6510 last Friday, we noted that ‘The price action still appears to be part of a range trading phase.’ We expected AUD to ‘trade in a range of 0.6490/0.6535.’ AUD then traded between 0.6472 and 0.6521, closing at 0.6500. It opened higher in Sydney trade today. Today, AUD could advance above 0.6560 but is unlikely to reach the major resistance at 0.6600. Support levels are at 0.6520 and 0.6500.”
1-3 WEEKS VIEW: “Last Wednesday (20 Nov, spot at 0.6530), we indicated that AUD could rebound to 0.6560, possibly 0.6600. After AUD struggled to extend its advance, we indicated last Friday (22 Nov, spot at 0.6510) that it ‘has not been able to make any headway on the upside.’ We added, ‘if AUD breaks below 0.6470 (‘strong support’ level), it would indicate that it is not rebounding further.’ AUD subsequently dipped briefly to 0.6472. Given that our ‘strong support’ level at 0.6470 has not breached, we will maintain our view for now. That said, AUD opened and traded on a strong note today, and the short-term momentum appears to be building again.”
USD/JPY turned lower, amid pullback in UST yields and USD. Bessent relief is the latest trigger behind the USD pullback. Pair was last at 154.41 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.
USD/JPY’s travel may be bumpy
“Last Thu, Governor Ueda mentioned there would be vast amount of data and information between now and the next BoJ meeting, suggesting the December meeting is a live one; he opined that the central bank will seriously assess the impact of FX rate (level) on inflation and the economy. We still look for USD/JPY to trend lower, premised on Fed cut cycle while the BoJ has room to further pursue policy normalisation.”
“On the data front Japan core CPI rose this morning, alongside services PMI, reinforcing our view that BoJ should proceed with another hike next month. Divergence in Fed-BoJ policies should bring about further narrowing of UST-JGB yield differentials and this should underpin the broader direction of travel for USD/JPY to the downside. Elsewhere, escalation in geopolitical tensions may also support safe-haven demand (positive JPY).”
“That said, any slowdown in pace of policy normalisation - be it the Fed or BoJ - would mean that USD/JPY’s direction of travel may be bumpy or face intermittent upward pressure. Daily momentum is mild bearish while RSI fell. Risks skewed to the downside. Support at 153.30 (61.8% fibo retracement of 2024 high to low) and 152 (200 DMA). Resistance at 155.70, 156.60 (76.4% fibo).”
- Silver price falls sharply below $31.00 after Scott Bessent’s appointment as US Treasury Secretary by President-elect Donald Trump.
- The impact of Bessent’s pick was also viewed on the US Dollar and bond yields.
- Investors await the US PCE inflation data for fresh guidance on interest rates.
Silver price (XAG/USD) plunges below $31.00 in European trading hours on Monday. The white metal weakens after the appointment of hedge fund manager Scott Bessent as Treasury Secretary by President-elect Donald Trump.
The market reaction seems to be favoring risk-perceived assets on Bessent’s selection, as S&P 500 futures have posted significant gains in the European session. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, corrects to near 107.00. 10-year US Treasury yields plummet to near 4.33%.
However, his decisions are expected to be supportive of Trump’s policies regarding trade and taxes. Bessent said in an interview with the Wall Street Journal (WSJ) that he would focus on putting tariffs into action, cutting spending, and maintaining the status of the Greenback as the world's reserve currency after Trump picked him as the highest-ranked United States (US) economic official. This could keep the US Dollar (USD) prepared for a sharp recovery.
Trump’s policies are expected to boost US inflation and growth, which could result in fewer interest rate cuts from the Federal Reserve (Fed) in 2025. For the December meeting, traders are divided over whether the Fed will cut interest rates by 25 basis points (bps) to 4.25%-4.50% or leave them unchanged at their current levels.
This week, investors will focus on the US Personal Consumption Expenditure Price Index (PCE) data for October, which will be published on Wednesday. The core PCE inflation, the Fed’s preferred inflation measure, is estimated to have accelerated to 2.8% from 2.7% in September on year-on-year.
Silver technical analysis
Silver price resumes its declining trend after a mean-reversion move to near the 20-day Exponential Moving Average (EMA) around $31.40. The white metal is expected to retreat to the November 14 low of around $29.70. The white metal weakened after the breakdown of the horizontal support plotted from the May 21 high of $32.50.
The upward-sloping trendline from the February 29 low of $22.30 will act as key support for the Silver price around $29.50.
The 14-day Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, suggesting a sideways trend.
Silver daily chart
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
- Gold declines by over $30 on Monday after the news that Donald Trump has chosen Scott Bessent as the new US Secretary of the Treasury.
- Bessent is a seasoned Wall Street professional and is viewed as a safe pick by markets, reducing haven flows to Gold.
- Technically, XAU/USD pulls back after peaking and risks forming a bearish candlestick pattern on a daily close.
Gold (XAU/USD) falls over one percent on Monday to trade in the $2,670s after markets let out a sigh of relief at the appointment of a “safe pair of hands” to take over from Janet Yellen as the next US Treasury Secretary.
President-elect Donald Trump has chosen hedge fund manager Scott Bessent to be in charge of the US Treasury when he becomes President in January 2025. Gold is losing ground because of Bessent’s reputation as a cautious operator who is likely to curb some of President Trump’s more radical economic and trade policies. This has likely calmed markets and reduced safe-haven demand for the precious metal.
Further anesthetizing markets are rumors that Israel and Hezbollah are close to reaching a ceasefire deal. Despite exchanging heavy fire over the weekend, the two enemies have also made “signs of progress in US-led ceasefire talks,” according to Reuters. Any breakthrough in talks would reduce geopolitical risk and safe-haven flows into Gold.
Gold falls on Bessent appointment
Gold is trading lower on Monday after President-elect Donald Trump announced Wall Street tycoon and founder of Key Square Group – a global macro investment firm – Scott Bessant as the US’s new Treasury Secretary.
Although Bessent supports the thrust of Trump’s protectionist and tax-cutting policy agenda, markets expect him to probably soften the blow from Trump’s tariffs and counterbalance inflation by reducing government spending. Based on his prior comments, the two things Bessent is passionate about are cutting the US’s debt pile and thwarting competition from China.
“This election cycle is the last chance for the United States to get out from under a mountain of debt without becoming some kind of European-style socialist democracy," Vijesti News quoted Bessent as telling Bloomberg in August.
Bessent has advocated a “three-threes” policy in which he will try to reduce the US Budget Deficit to 3% of annual Gross Domestic Product (GDP) from a current estimated 6% in 2024, achieve a 3% annual GDP growth rate, and raise US Crude Oil production by 3 million barrels-a-day, according to Bloomberg News.
Technical Analysis: XAU/USD pulls back down to 50-day SMA
Gold pulls back down to the (red) 50-day Simple Moving Average (SMA) at around $2,671 on Monday after peaking at $2,721 in early trade. The steep drop could form a Bearish Engulfing candlestick if it closes at or below its current level.
If the pattern is confirmed and followed by a bearish candle tomorrow (Tuesday), this would signal a short-term reversal and more downside ahead.
XAU/USD Daily Chart
That said, the (blue) Moving Average Convergence Divergence (MACD) indicator crossed above its red signal line recently, providing a bullish “buy” signal and suggesting more upside on the cards for the price.
The precious metal’s trend is also bullish, and given the maxim that “the trend is your friend,” the odds still favor a continuation higher.
A break above $2,721 would be a bullish sign and give the green light to a continuation higher. The next target would be at $2,790, matching the previous record high.
The Euro (EUR) fell to 2-year low last Fri after PMIs slumped in Germany and France. Pair was last at 1.0472 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.
Upside surprise may aid the squeeze in EUR shorts
“Elsewhere, worsening of geopolitical development between Ukraine-Russia (higher natural gas prices), fears of US protectionism measures, German political uncertainty, an acceleration in dovish re-pricing of ECB cut cycle further undermined EUR. Last Fri, Villeroy said that decision made at ECB are independent of those of the Fed.”
“And he elaborated saying that ECB can lower rates with the fall in inflation. He also added that prices are increasing less quickly than wages on average – allowing ECB to lower interest rates. This morning, EUR rose amid pullback in USD. Bearish momentum on daily chart intact while RSI shows signs of turning higher from near oversold conditions.”
“Bullish divergence is also observed on daily MACD. Not ruling our EUR short squeeze intra-day. Resistance at 1.0510, 1.06 and 1.07 (21 DMA). Key support at 1.0450 levels before 1.03 levels. Focus this week on Euro-area CPI. Upside surprise may aid the squeeze in EUR shorts.”
The Pound Sterling (GBP) could rise to 1.2625; the strong resistance at 1.2650 is unlikely to come into view. In the longer run, sharp drop appears to be overextended; any further decline may find it difficult to break below 1.2475, UON Group’s FX analyst Quek Ser Leang and Lee Sue Ann notes.
Strong resistance at 1.2650 is unlikely to come into view
24-HOUR VIEW: “After GBP plummeted to a low of 1.2577 last Thursday, we indicated on Friday, when GBP was at 1.2590, that ‘Given the rapid increase in momentum, a break of 1.2565 will not be surprising.’ However, we pointed out, ‘the deeply oversold conditions indicate that the next significant support at 1.2490 is not expected to come into view for now.’ GBP fell more than expected to 1.2475 before rebounding quickly, closing at 1.2535. It opened and traded higher in early Asian trade today. While upward momentum has not increased much, there is scope for it to rise to 1.2625 before levelling off. The strong resistance at 1.2650 is unlikely to come into view. On the downside, should GBP break below 1.2530 (minor support is at 1.2560), it would mean that it is not rising further.”
1-3 WEEKS VIEW: “We turned negative in GBP about two weeks ago (12 Nov), when it was at 1.2875. As we tracked the decline, we highlighted last Friday that GBP ‘is likely to break below 1.2565, and the next level to monitor is 1.2490.’ GBP subsequently plunged and exceeded both technical objectives, reaching a low of 1.2475. Although there is still room for GBP to continue to weaken, the sharp drop over the past couple of weeks appears to be overextended. To look at it another way, any further decline may find it difficult to break the 1.2475 low, which is serving as a significant support level now. That said, only a breach of 1.2650 (‘strong resistance’ level previously at 1.2665) would indicate that the weakness in GBP has stabilised.”
The US Dollar (USD) started the week on a softer footing as markets reacted to Trump’s pick for Treasury Secretary, Scott Bessent. DXY was last at 107.23 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.
Mild bullish momentum on daily chart fades
“Most FX enjoyed a rally, led by JPY, KRW and EUR while USD traded on the back foot. ‘Bessent relief’ would look to US data for cues this week.”
“US data are frontloaded due to Thanksgiving Day holiday on Thu. Focus is on conference board consumer confidence (Tue); 3Q GDP, core PCE, durable goods orders, Chicago PMI, FOMC minutes (Wed). Firmer print will add to US exceptionalism narrative, keeping USD rates and USD elevated for longer, while softer print should add to USD unwinding momentum (i.e. USD may ease more).”
“Mild bullish momentum on daily chart shows signs of fading while RSI fell. Bearish divergence on daily MACD, RSI observed. We are still not ruling out the risk of technical retracement lower. Support at 106.20, 105.40/50 levels (21 DMA, 38.2% fibo). Resistance at 107.40, 108.10 (recent high).”
- EUR/USD faces pressure after rebounding to near 1.0500 as the US Dollar bounces back.
- The US Dollar rebounds as investors digest Trump’s pick of Scott Bessent as Treasury Secretary.
- ECB Lane warned that US tariffs could lead to a big disruption in the Eurozone.
EUR/USD faces selling pressure near the psychological resistance of 1.0500 in Monday’s European session after a solid opening that lost some steam as the US Dollar (USD) attempts to rebound. The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, broadly consolidates at around 107.00 as investors digest the selection of fund manager Scott Bessent for the role of Treasury Secretary by President-elect Donald Trump.
The Greenback fell sharply early in the Asian session, as did 10-year US Treasury yields, in a warm welcome by bond markets given Bessent’s old relation with Wall Street. Still, this initial reaction appears to be short-lived as the US Dollar swings between mild gains and losses.
In an interview with the Wall Street Journal (WSJ) after his nomination for Treasury Secretary over the weekend, Bessent said that he will focus on enacting tariffs, eliminating tax cuts on social security benefits and overtime wages, and maintaining the US Dollar’s status as the world's reserve currency.
Meanwhile, the improved economic outlook in the United States (US) is expected to support the resumption of the US Dollar’s uptrend. According to PMI data released on Friday, overall business activity in the US expanded in November at the fastest pace in 31 months. The data signaled robust growth in the service sector activity and a minor contraction in the manufacturing sector’s output.
This week, investors will focus on the Personal Consumption Expenditure Price Index (PCE) data for October, which will be published on Wednesday. The inflation data will influence market speculation for the Federal Reserve’s (Fed) likely interest rate action in the December meeting. According to the CME FedWatch tool, there is a 56% chance that the Fed will cut interest rates by 25 basis points (bps) to 4.25%-4.50%, while the rest favors leaving rates unchanged.
Daily digest market movers: EUR/USD stays under pressure as ECB officials worry about Eurozone growth
- EUR/USD is expected to remain on the back foot as investors expect Scott Bessent’s selection for the role of Treasury Secretary has set the stage for tariff hikes, a move that would prompt a global trade war. Higher import tariffs by the US will adversely impact the already vulnerable Eurozone economy by dampening its export sector.
- Speaking to Les Echos on Monday, European Central Bank (ECB) Chief Economist Philip Lane said that the risk of a big disruption to the Eurozone is very high if the US government enacts a rapid and universal tariff regime, according to Mace News. Last week, Lane warned that a global trade war due to the likely implementation of President-elect Donald Trump’s higher tariffs would result in a “sizeable” loss in global economic output. "Trade fragmentation entails sizeable output losses,” Lane added.
- When asked about his outlook on interest rates, Lane said: “A lot of the final leg of bringing inflation to target could be covered next year; after that restrictive policy will not be needed.”
- The German IFO Business Sentiment index data came in mixed in November. The data showed that German businesses’ morale deteriorated slightly over the month, although the index gauging expectations came in slightly better than what economists had expected.
- Friday’s Flash HCOB Composite PMI data for November showed that the European Union (EU) is going through a rough phase. The Composite PMI unexpectedly declined as the service sector output came in below the 50.0 threshold, a figure that separates expansion from contraction. The manufacturing sector activity contracted further. The report showed that New Orders decreased for the sixth straight month running. a, “The environment in November is stagflationary,” analysts at S&P Global said.
Technical Analysis: EUR/USD finds interim support near 1.0330
EUR/USD struggles to hold its recovery to near 1.0500 seen on Monday’s opening as the broader outlook for the pair remains bearish. All short-to-long-term day Exponential Moving Averages (EMAs) are declining, pointing to a downside trend.
The 14-day Relative Strength Index (RSI) rebounded after reaching oversold territory. However, the momentum oscillator has cooled down, which could allow bears to take the charge again.
Looking down, the November 22 low of 1.0330 will be a key support for Euro bulls. On the flip side, the November 20 high round 1.0600 emerges as the first resistance.
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
The Euro (EUR) could edge higher to 1.0520; the strong resistance at 1.0560 is unlikely to come under threat. In the longer run, EUR must break and remain below the 1.0333 low before further decline can be expected, UOB Group’s FX analyst Quek Ser Leang and Lee Sue Ann notes.
EUR to decline further below the 1.0333 low
24-HOUR VIEW: “Following last Thursday’s sharp drop, we pointed out on Friday that EUR ‘could break the significant support at 1.0450.’ However, we were of the view that ‘the next technical target at 1.0400 is likely out of reach for the time being.’ While our view of a lower EUR was not wrong, we did not anticipate it to plummet to 1.0333. EUR rebounded quickly and closed at 1.0417 but opened higher in early Asian trade today. There has been a slight increase in momentum, and it could edge higher to 1.0520 today. The strong resistance at 1.0560 is unlikely to come under threat. Support is at 1.0450, followed by 1.0420.”
1-3 WEEKS VIEW: “We revised our EUR view to negative last Friday (22 Nov, spot at 1.0475), indicating that ‘EUR weakness has resumed, and the levels to monitor are 1.0450 and 1.0400.’ We also indicated that we would maintain our view provided that 1.0560 (‘strong resistance’ level) is not breached. EUR subsequently broke below 1.0450 and 1.0400, reaching a low of 1.0333. However, the decline was brief, as it rebounded to close at 1.0417 (-0.53%). While the weakness in EUR remains intact, it must now break and remain below the 1.0333 low before further decline can be expected. The likelihood of EUR breaking below 1.0333 is not high, but it will remain intact as long as 1.0560 (no change in ‘strong resistance’) is not breached in the next few days.”
Silver prices (XAG/USD) fell on Monday, according to FXStreet data. Silver trades at $30.81 per troy ounce, down 1.36% from the $31.23 it cost on Friday.
Silver prices have increased by 29.47% since the beginning of the year.
| Unit measure | Silver Price Today in USD |
|---|---|
| Troy Ounce | 30.81 |
| 1 Gram | 0.99 |
The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 86.68 on Monday, broadly unchanged from 86.63 on Friday.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
(An automation tool was used in creating this post.)
- The Mexican Peso recovered at the start of the week following news of the appointment of Scott Bessent as future US Treasury Secretary.
- He is expected to have a tempering influence on inflation and focus on targeting primarily China with tariffs.
- Technically, USD/MXN opens a market gap and is a possible opportunity for traders amid the unfolding leg higher.
The Mexican Peso (MXN) trades higher in its key pairs on Monday, with the MXN doing particularly well against the US Dollar (USD) due to the perception that with the appointment of the new US Treasury Secretary Scott Bessant, US government spending will be more restrained and tariffs will primarily target China. Overall, Bessant is seen as a tempering influence on the future administration’s more inflationary policies.
The Peso is appreciating against the Euro (EUR) after weak Eurozone economic activity data in the form of Purchasing Manager Indices (PMI) on Friday increased expectations that the European Central Bank (ECB) will slash interest rates in December to stimulate growth. Meanwhile, against the Pound Sterling (GBP), the Mexican Peso trades slightly higher for similar reasons to those of the Euro.
The Mexican Peso recovers against USD after Treasury pick
The Mexican Peso is up over half a percent against the US Dollar (USD) on Monday after President-elect Donald Trump announced hedge-fund manager Scott Bessant as the US’s new Treasury Secretary. He will take over from Janet Yellen in January 2025 when Trump begins his presidency.
Although he supports the thrust of Trump’s protectionist and tax-cutting policy agenda, markets view him as a “safe pair of hands” who will likely soften the blow from tariffs and counterbalance inflation by reducing government spending. Based on his prior comments, the two things he is passionate about are cutting the US’s debt pile and thwarting competition from China.
“This election cycle is the last chance for the United States to get out from under a mountain of debt without becoming some kind of European-style socialist democracy," Vijesti News quoted Bessent as telling Bloomberg in August.
The new Treasury Secretary is likely to focus tariffs primarily on China, reducing risk for other major importers such as Mexico and Europe, according to Reuters.
He has advocated a “three-threes” policy in which he will try to reduce the US Budget Deficit to 3% of annual Gross Domestic Product (GDP) from a current estimated 6% in 2024, achieve a 3% annual GDP growth rate, and raise US Crude Oil production by 3 million barrels-a-day, according to Bloomberg News.
Mexican Peso could see strength curtailed by deceleration in inflation
The Mexican Peso’s recovery, however, is likely to be curtailed by market expectations that the Bank of Mexico (Banxico) might cut interest rates more aggressively in future meetings following a deceleration in Mexican inflation in November’s data. Lower interest rates are usually negative for a currency as they reduce foreign capital inflows.
November’s mid-month inflation readings, released on Friday, showed inflation decelerating more than expected. Mexican financial daily El Financiero noted that headline inflation fell to 4.56% year-over-year in the first two weeks of November, below the average of 4.65% based on a Bloomberg survey of analysts.
Official data from Mexico’s Office of Statistics INEGI showed inflation rose by a softer-than-expected 0.37% in the first half of November, compared to estimates of 0.49% and the 0.43% of October’s mid-month reading. Core inflation, meanwhile, rose by only 0.04% compared to the 0.17% expected and 0.23% previous.
Technical Analysis: USD/MXN gaps down at week’s open
USD/MXN gaps down at the start of the new trading week, but according to technical analysis lore, “markets abhor a gap,” and there is a good chance price will rally back up to close the gap, which opened between 20.47 and 20.43 (green rectangle on the chart below) on Monday.
USD/MXN 4-hour Chart
The cliff drop occurred during the probable unfolding of a third “C” wave higher in what could be the completion of a Measured Move pattern. These are three-wave patterns resembling zig-zags in which the first and the third waves (A and C) are of a similar length.
USD/MXN looks range bound in the short term as it oscillates between the 19.70s and 20.80s. The extension of wave C corresponds to an up leg unfolding within this sideways consolidation towards its ceiling (green dashed line).
The (blue) Moving Average Convergence Divergence (MACD) indicator had been rising back above the zero line in line with the bullish bias, and although it fell back down and almost crossed below the red signal line during the opening of the market gap, it has not quite achieved the cross over so far, suggesting the retention of the bullish advantage.
A break above the 20.55 November 22 high would re-confirm wave C extending to at least the same level as the top of wave A at 20.69, possibly even to 20.80 and the range ceiling. The opening of the gap and the assumption it will soon close could also provide an opportunity for traders wishing to enter long positions at a more favorable price.
Mexican Peso FAQs
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.
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.
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.
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.
- USD/CAD reverses an early dip to a two-week low and draws support from a combination of factors.
- Retreating Oil prices undermines the Loonie and acts as a tailwind for the pair amid a bullish USD.
- Falling US bond yields might cap gains for the USD and any further appreciating move for the pair.
The USD/CAD pair attracts some dip-buying near the 1.3925 area, or a two-week low touched earlier this Monday and climbs to a fresh daily peak during the first half of the European session. The intraday uptick is sponsored by a combination of factors and lifts spot prices to the 1.3975 region in the last hour.
Crude Oil prices kick off the new week on a weaker note and for now, seem to have snapped a two-day winning streak to a two-week high touched on Friday. This, in turn, is seen undermining the commodity-linked Loonie, which, along with the underlying bullish sentiment surrounding the US Dollar (USD), acts as a tailwind for the USD/CAD pair.
The USD Index (DXY), which tracks the Greenback against a basket of currencies, lacks follow-through selling after the initial reaction to Scott Bessent's nomination as US Treasury Secretary amid bets for a less dovish Federal Reserve (Fed). This turns out to be another factor pushing the USD/CAD pair higher, though the upside potential seems limited.
Investors remain concerned about geopolitical risks stemming from the Russia-Ukraine war and the ongoing conflicts in the Middle East, which could potentially impact Oil supplies. Furthermore, rising fuel demand in China and India – the world's top and third-largest importers, respectively – should limit any meaningful downside for Crude Oil prices.
Meanwhile, Bessent's conservative views on fiscal policy trigger a sharp decline in the US Treasury bond yields. This might hold back the USD bulls from placing aggressive bets and keep a lid on any further gains for the USD/CAD pair. Hence, it will be prudent to wait for strong follow-through buying before confirming that spot prices have bottomed out.
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
Bank of England (BoE) Deputy Governor for Monetary Policy Clare Lombardelli said on Monday, “I support a gradual removal of monetary policy restriction.“
Additional quotes
The UK economy has made good progress on disinflation.
Persistent components of inflation and uncertainties around how the labour market will evolve are cause for concern.
We need careful observation of all the relevant economic data and intelligence as we seek to gradually reduce policy restriction.
On Bernanke review, publishing a form of expected path risks suggesting greater certainty about future rates than it is possible to give.
Will be monitoring the flow of data over the coming months so we can calibrate our policy path as needed.
Too early to declare victory on inflation.
Often said that the last mile may be the hardest, and that’s where we are now.
Outlook for wages and services prices is unclear from here.
Some signs that the process of wage disinflation may be slowing.
Am more worried about the possible consequences if the upside risk materialised.
We are hampered by the challenges of data quality, particularly in the labour force survey.
'Flash’ PMIs for November may suggest some slowing in the UK economy but i don’t take a strong signal from a single release.
An upside risk where wage rises normalise to 3.5-4% and cpi around 3% rather than 2% would be more costly to change if it becomes entrenched.
Given the lags in policy it would be important not to act late if the economy moved in direction suggested by PMIs.
I view the probabilities of downside and upside risks to inflation as broadly balanced.
At this point I am more worried about the possible consequences if the upside inflation risks.
Market reaction
The Pound Sterling fails to find a fresh boost on these above comments, leaving GBP/USD consolidating intraday gains near 1.2570, as of writing.
- GBP/JPY gains ground as the Bank of England may adopt a slower pace of policy easing.
- The Japanese Yen receives downward pressure from the uncertainty surrounding the BoJ rate hikes.
- Japan's Leading Economic Index was revised down to 109.1 in September, slightly below the anticipated 109.4.
GBP/JPY remains stable after a volatile session, trading near 194.20 during European hours on Monday. The Pound Sterling (GBP) finds support from market expectations that the Bank of England (BoE) may adopt a slower pace of policy easing. According to a Reuters report, traders anticipate the BoE will keep interest rates steady at 4.75% during its December meeting, with a projected 75 basis points (bps) cut to 4.00% by 2025.
However, the British Pound faced headwinds on Friday following disappointing economic data. UK Retail Sales contracted more sharply than expected in October, while the flash S&P Global/CIPS Composite Purchasing Managers' Index (PMI) for November dropped below the 50.0 threshold for the first time since October 2023, signaling a contraction in economic activity.
The GBP/JPY cross could move upwards as the Japanese Yen (JPY) struggles due to uncertainty surrounding the Bank of Japan's (BoJ) future rate hikes and a prevailing risk-on market environment. BoJ Governor Kazuo Ueda has hinted at the possibility of another interest rate hike as early as December. Meanwhile, Prime Minister Shigeru Ishiba's administration is reportedly considering a $90 billion stimulus package aimed at mitigating the impact of rising prices on households.
Japan's Leading Economic Index was revised down to 109.1 in September, slightly below the anticipated 109.4. Despite this, the index marked an improvement from August's final reading of 106.9, the lowest since October 2020. Market focus now shifts to Tokyo's upcoming inflation and employment data, due later this week.
Central banks FAQs
Central Banks have a key mandate which is making sure that there is price stability in a country or region. Economies are constantly facing inflation or deflation when prices for certain goods and services are fluctuating. Constant rising prices for the same goods means inflation, constant lowered prices for the same goods means deflation. It is the task of the central bank to keep the demand in line by tweaking its policy rate. For the biggest central banks like the US Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BoE), the mandate is to keep inflation close to 2%.
A central bank has one important tool at its disposal to get inflation higher or lower, and that is by tweaking its benchmark policy rate, commonly known as interest rate. On pre-communicated moments, the central bank will issue a statement with its policy rate and provide additional reasoning on why it is either remaining or changing (cutting or hiking) it. Local banks will adjust their savings and lending rates accordingly, which in turn will make it either harder or easier for people to earn on their savings or for companies to take out loans and make investments in their businesses. When the central bank hikes interest rates substantially, this is called monetary tightening. When it is cutting its benchmark rate, it is called monetary easing.
A central bank is often politically independent. Members of the central bank policy board are passing through a series of panels and hearings before being appointed to a policy board seat. Each member in that board often has a certain conviction on how the central bank should control inflation and the subsequent monetary policy. Members that want a very loose monetary policy, with low rates and cheap lending, to boost the economy substantially while being content to see inflation slightly above 2%, are called ‘doves’. Members that rather want to see higher rates to reward savings and want to keep a lit on inflation at all time are called ‘hawks’ and will not rest until inflation is at or just below 2%.
Normally, there is a chairman or president who leads each meeting, needs to create a consensus between the hawks or doves and has his or her final say when it would come down to a vote split to avoid a 50-50 tie on whether the current policy should be adjusted. The chairman will deliver speeches which often can be followed live, where the current monetary stance and outlook is being communicated. A central bank will try to push forward its monetary policy without triggering violent swings in rates, equities, or its currency. All members of the central bank will channel their stance toward the markets in advance of a policy meeting event. A few days before a policy meeting takes place until the new policy has been communicated, members are forbidden to talk publicly. This is called the blackout period.
- German IFO Business Climate Index misses estimates with 85.7 in November.
- The IFO Current Economic Assessment Index dropped to 84.6 in the reported month.
The headline German IFO Business Climate Index fell to 85.7 in November from 86.5 in October. The data came in below the consensus 86.0 print.
Meanwhile, the Current Economic Assessment Index declined to 84.6 in the same period from 85.7 recorded in October, missing the market expectations of 85.4.
The IFO Expectations Index, which indicates firms’ projections for the next six months, eased slightly to 87.2 in November vs. 87.3 in October and 87.0 estimates.
Market reaction to the German IFO Survey
EUR/USD picks up fresh bids despite the mixed German IFO survey. At the time of writing, the pair is trading 0.59% higher on the day at 1.0480.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.61% | -0.33% | 0.34% | 0.03% | -0.09% | 0.17% | -0.18% | |
| EUR | 0.61% | 0.11% | 0.32% | 0.05% | 0.44% | 0.20% | -0.15% | |
| GBP | 0.33% | -0.11% | 0.23% | -0.05% | 0.34% | 0.10% | -0.26% | |
| JPY | -0.34% | -0.32% | -0.23% | -0.29% | 0.00% | -0.10% | -0.33% | |
| CAD | -0.03% | -0.05% | 0.05% | 0.29% | 0.03% | 0.15% | -0.24% | |
| AUD | 0.09% | -0.44% | -0.34% | -0.01% | -0.03% | -0.24% | -0.58% | |
| NZD | -0.17% | -0.20% | -0.10% | 0.10% | -0.15% | 0.24% | -0.35% | |
| CHF | 0.18% | 0.15% | 0.26% | 0.33% | 0.24% | 0.58% | 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 US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
- NZD/USD depreciates toward the oversold region around the lower boundary of the descending channel at 0.5810 level.
- The nine-day EMA remains below the 14-day EMA, signaling continued weakness in short-term price momentum.
- The immediate resistance appears at the nine-day EMA at the level of 0.5875, followed by the descending channel’s lower boundary.
The NZD/USD pair continues its losing streak for the fourth consecutive day, trading near 0.5840 during European hours on Monday. An analysis of the daily chart indicates a strengthening bearish trend, as the pair remains confined within a descending channel pattern.
The nine-day Exponential Moving Average (EMA) stays below the 14-day EMA, indicating sustained weakness in short-term price momentum. Additionally, the 14-day Relative Strength Index (RSI) hovers just above the 30 mark, underscoring bearish sentiment. A drop below 30 would signal oversold conditions, potentially setting the stage for a corrective rebound.
On the downside, the NZD/USD pair may find support near the lower boundary of the descending channel, around 0.5810 level. A decisive break below this level would reinforce the bearish outlook, intensifying downward pressure and possibly pushing the pair toward its two-year low of 0.5772 level, last recorded in November 2023.
Regarding its upside, immediate resistance is located at the nine-day EMA at the level of 0.5873, followed by the 14-day EMA at 0.5895 level, aligning with the upper boundary of the descending channel. A breakout above the descending channel could diminish bearish momentum, opening the door for the pair to target the psychological level of 0.6000.
NZD/USD: Daily Chart
New Zealand Dollar PRICE Today
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the weakest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.31% | -0.20% | 0.29% | 0.13% | 0.06% | 0.31% | -0.07% | |
| EUR | 0.31% | -0.06% | -0.03% | -0.15% | 0.30% | 0.04% | -0.34% | |
| GBP | 0.20% | 0.06% | 0.04% | -0.08% | 0.37% | 0.10% | -0.28% | |
| JPY | -0.29% | 0.03% | -0.04% | -0.14% | 0.21% | 0.09% | -0.16% | |
| CAD | -0.13% | 0.15% | 0.08% | 0.14% | 0.08% | 0.19% | -0.23% | |
| AUD | -0.06% | -0.30% | -0.37% | -0.21% | -0.08% | -0.26% | -0.64% | |
| NZD | -0.31% | -0.04% | -0.10% | -0.09% | -0.19% | 0.26% | -0.38% | |
| CHF | 0.07% | 0.34% | 0.28% | 0.16% | 0.23% | 0.64% | 0.38% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
- The Pound Sterling rises as investors expect that the policy-easing cycle of the BoE will be slow and shallow.
- Investors await speeches from BoE MPC members Dhingra and Lombardelli for fresh interest rate guidance.
- The US Dollar weakens following the announcement that Donald Trump has chosen Scott Bessent as Treasury Secretary.
The Pound Sterling (GBP) bounces back strongly at the start of the week and outperforms its major peers after facing a sharp sell-off on Friday. The British currency declined on Friday after the United Kingdom (UK) Retail Sales contracted at a faster-than-expected pace in October and the flash S&P Global/CIPS Composite Purchasing Managers’ Index (PMI) for November came in below the 50.0 threshold for the first time since October 2023.
Monthly Retail Sales declined by 0.7% as retailers reported that shoppers held back on spending ahead of the new government's first tax and spending budget on Oct. 30, according to the Office for National Statistics (ONS).
Meanwhile, the Composite PMI fell below the 50.0 level that separates expansion from contraction as activity in the manufacturing sector declined and the service sector output stagnated. “The first survey on the health of the economy after the Budget makes for gloomy reading”, said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.
The major reason for the recovery in the Pound Sterling appears to be firm market expectations that the Bank of England (BoE) could be one of the central banks from Western nations that will follow a more gradual policy-easing path. Traders expect the BoE to leave interest rates unchanged at 4.75% in the December meeting and prices in 75 basis points (bps) cut to 4% by 2025, Reuters reports.
In Monday’s session, investors will focus on speeches from BoE Deputy Governor Clare Lombardelli and external policy member Swati Dhingra for fresh guidance on interest rates.
Daily digest market movers: Pound Sterling opens strongly against US Dollar
- The Pound Sterling opens strongly against the US Dollar (USD) on Monday, trying to extend its recovery above the round-level resistance of 1.2600. The GBP/USD gains as the US Dollar starts the week on a negative note, with the US Dollar Index (DXY) trading 0.5% down near 107.00.
- 10-year US Treasury yields plummet to near 4.33% as investors digest President-elect Donald Trump picking Scott Bessent as Treasury Secretary to oversee economic and tax policies. Contrary to market reaction, some analysts seem to be satisfied with the appointment: “There was some level of anxiety priced in that Trump was going to pick someone who was not good or some kind of absolute tariff fanatic, so this is a very good answer for Wall Street,” analysts at Tallbacken Capital Advisors said.
- Bessent said in an interview with the Wall Street Journal (WSJ) that he would focus on putting tariffs into action, cutting spending, and maintaining the status of the Greenback as the world's reserve currency.
- Upbeat flash S&P Global PMI data for November released on Friday showed an improved economic outlook in the United States. The Composite PMI rose at a faster pace to 55.3, the highest in 31 months, as contraction in the manufacturing sector lost steam and there was a faster-than-expected expansion in the services sector.
- Traders are divided over the Federal Reserve’s (Fed) action in the December monetary policy meeting. The probability of the Fed cutting interest rates by 25 bps to 4.25%-4.50% in December is at 56%, according to the CME FedWatch tool, while the remaining 44% expects rates to remain unchanged.
Technical Analysis: Pound Sterling recovers from 1.2500
The Pound Sterling rebounds after sliding below the psychological support of 1.2500 against the US Dollar. The GBP/USD pair recovers but market participants could use this rebound to build fresh shorts as the overall trend remains bearish, with 200-day Exponential Moving Average (EMA) trading near 1.2800.
The 14-day Relative Strength Index (RSI) rebounded after turning oversold but remains inside the 20.00-40.00 range, keeping the downside momentum intact.
Looking down, the pair is expected to find a cushion near May’s low of 1.2446. On the upside, the November 20 high at around 1.2715 will act as key resistance.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- AUD/JPY could gain ground due to potential foreign inflows amid an improved Australian share market.
- The AUD finds support from the RBA’s hawkish stance on future interest rate policies.
- The Japanese Yen could face challenges amid uncertainty surrounding the BoJ rate hikes.
AUD/JPY experiences volatility but remains subdued for the third successive day, trading around 100.50 during the early European hours on Monday. However, this downside of the AUD/JPY cross could be restrained as the Australian Dollar (AUD) may appreciate due to potential foreign inflows amid a rally in the domestic share market.
The S&P/ASX 200 Index climbed to fresh all-time highs on Monday as Australian shares mirrored Wall Street's momentum. On Friday, the Dow Jones achieved another record-high close, contributing to the positive sentiment.
The AUD may also find support from the Reserve Bank of Australia’s (RBA) hawkish stance on future interest rate policies, which limits the downside of the AUD/JPY cross. Market participants are now closely monitoring Australia's Monthly Consumer Price Index (CPI) for October, a key indicator that could shape expectations for the RBA’s next monetary policy moves.
The Japanese Yen (JPY) could face headwinds amid uncertainty surrounding the Bank of Japan's (BoJ) plans for rate hikes and a prevailing risk-on market environment. BoJ Governor Kazuo Ueda has hinted at the possibility of another interest rate hike as early as December. Meanwhile, Prime Minister Shigeru Ishiba's administration is reportedly considering a $90 billion stimulus package aimed at mitigating the impact of rising prices on households.
Japan's Leading Economic Index, which assesses the economic outlook based on factors like job offers and consumer sentiment, was revised down to 109.1 for September, compared to the expected 109.4 reading. However, the index showed improvement from the final 106.9 in August—the lowest level since October 2020. Traders are now turning their attention to Tokyo's upcoming inflation and employment data, expected later this week.
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
Speaking to Les Echos on Monday, European Central Bank (ECB) Chief Economist Philip Lane said that “monetary policy should not remain restrictive for too long.”
Additional quotes
The job is not done yet on inflation, services prices still need to come down.
Inflation is close to the 2% target.
Barring new geopolitical or political risks, a large part of the final stage in bringing inflation back to 2% target will be completed next year.
Monetary policy must respond to both downside and upside risks to inflation.
We have been clear that we are moving on a meeting-by-meeting basis.
Don't see spread fragmentation that would dissuade investors for the time being.
Market reaction
EUR/USD continues to hold sizeable gains at around 1.0465, at the time of writing, up 0.48% on a daily basis.
- EUR/GBP drifts higher to around 0.8320 in Monday’s early European session.
- The weaker-than-expected Eurozone PMI triggers ECB rate-cut bets.
- The downbeat UK Retail Sales and flash PMI weigh on the GBP, but the cautious stance from the BoE might cap its downside.
The EUR/GBP cross strengthens to near 0.8320 during the early European trading hours on Monday. The upside of the shared currency might be limited amid rising speculation the European Central Bank (ECB) will implement aggressive interest rate cuts to prop up the faltering regional economy.
Traders raise their bets that the ECB could deliver a bigger half-point rate cut after the downbeat Eurozone Purchasing Managers Index (PMI) data on Friday. This, in turn, might exert some selling pressure on the Euro (EUR) against the Pound Sterling (GBP).
"This report truly puts a 50-basis-point cut on the table for December,” noted Matthew Landon, JP Morgan Private Bank's global market strategist. Additionally, the ECB Governing Council member Martins Kazaks said that the central bank should lower interest rates next month due to the weak economy.
The weaker UK Retail Sales and PMI data could boost the Bank of England's (BoE) dovish bets for December and weigh on the GBP. Data released by the Office for National Statistics (ONS) on Friday showed that UK Retail Sales dropped 0.7% MoM in October versus a 0.1% increase (revised from 0.3%) in September. This figure came in below the market consensus of -0.3%.
However, the cautious stance from the BoE officials might help limit its losses. Traders will monitor the speeches from MPC members Clare Lombardelli, Swati Dhingra, and Huw Pill on Monday for fresh impetus.
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Here is what you need to know on Monday, November 25:
The US Dollar (USD) Index opened with a bearish gap after closing the previous week in positive territory. IFO business sentiment survey from Germany will be featured in the European economic docket. Later in the day, Chicago Fed National Activity Index and Dallas Fed Manufacturing Business Index from the US will be looked upon for fresh catalysts.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.61% | -0.53% | 0.22% | -0.10% | -0.26% | -0.06% | -0.11% | |
| EUR | 0.61% | -0.09% | 0.21% | -0.08% | 0.28% | -0.03% | -0.08% | |
| GBP | 0.53% | 0.09% | 0.31% | 0.01% | 0.37% | 0.06% | 0.01% | |
| JPY | -0.22% | -0.21% | -0.31% | -0.30% | -0.03% | -0.20% | -0.12% | |
| CAD | 0.10% | 0.08% | -0.01% | 0.30% | -0.01% | 0.05% | -0.03% | |
| AUD | 0.26% | -0.28% | -0.37% | 0.03% | 0.00% | -0.30% | -0.35% | |
| NZD | 0.06% | 0.03% | -0.06% | 0.20% | -0.05% | 0.30% | -0.05% | |
| CHF | 0.11% | 0.08% | -0.01% | 0.12% | 0.03% | 0.35% | 0.05% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
News of Donald Trump selecting fund manager Scott Bessent as the US Treasury Secretary triggered a sharp decline in US Treasury bond yields as the weekly opening and caused the USD to come under pressure. At the time of press, the benchmark 10-year US Treasury bond yield was down more than 1.5% on the day below 4.35% and the USD Index was losing 0.55% at 106.90. Meanwhile, US stock index futures were last seen rising between 0.6% and 0.4%.
Reporting on this development, Reuters quoted Stephen Spratt, strategist at Societe Generale, saying "the market view (is) that Bessent is a 'safe hands' candidate."
"A relief as the risk of a more unorthodox pick was priced out of markets and as Bessent has mentioned restraining US borrowing," Reuters said.
After losing more than 1% for the third consecutive week, EUR/USD benefits from the broad-based USD weakness and trades decisively higher on the day at around 1.0500.
GBP/USD started the week decisively higher and was last seen trading at around 1.2600, where it was up more than 0.5% on a daily basis. Bank of England Deputy Governor Clare Lombardelli and Monetary Policy Committee external member Swati Dhingra will be delivering speeches later in the day.
Gold rose nearly 2% in the previous week but declined sharply early Monday, pressured by improving risk mood. XAU/USD was last seen trading below $2,670, losing 1.8% on the day.
Despite the selling pressure surrounding the USD, USD/JPY's losses remain limited early Monday as the Japanese Yen struggles to find demand as a safe-haven on Monday. At the time of press, the pair was down 0.3% on the day at around 154.30.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
- EUR/USD recovers some lost ground to around 1.0475 in Monday’s early European session.
- The negative outlook of the pair remains intact below the key 100-period EMA with a bearish RSI indicator.
- The initial support level is located at the 1.0400-1.0390 region; the first resistance level is seen at 1.0545.
The EUR/USD pair trades in positive territory near 1.0475 during the early European session on Monday. The uptick of the major pair is supported by the decline in the US Dollar (USD) as Donald Trump announced that he will nominate Scott Bessent to be the secretary of the US Department of the Treasury.
However, EUR/USD keeps the bearish vibe on the 4-hour chart as the price remains capped under the key 100-period Exponential Moving Averages (EMA). The downward momentum is reinforced by the Relative Strength Index (RSI), which stands below the midline near 44.25, supporting the sellers in the near term.
The initial support level for the major pair emerges in the 1.0400-1.0390 zone, representing the psychological level and the lower limit of the Bollinger Band. A breach of this level could pave the way to 1.0331, the low of November 22. The next downside target to watch is 1.0290, the low of November 30, 2022.
On the bright side, the first upside barrier is seen at 1.0545, the high of November 21. The next hurdle is located near the upper boundary of the Bollinger Band at 1.0591. The crucial resistance level emerges at 1.0621, the 100-period EMA.
EUR/USD 4-hour chart
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
FX option expiries for Nov 25 NY cut at 10:00 Eastern Time via DTCC can be found below.
EUR/USD: EUR amounts
- 1.0425 2.2b
- 1.0440 1.7b
- 1.0470 829m
- 1.0485 1.4b
GBP/USD: GBP amounts
- 1.2700 444m
USD/JPY: USD amounts
- 156.50 763m
USD/CAD: USD amounts
- 1.3925 550m
- 1.4015 485m
NZD/USD: NZD amounts
- 0.6000 1.8b
EUR/GBP: EUR amounts
- 0.8300 544m
- USD/CHF faces challenges as the US Dollar corrects downwards amid bond market optimism.
- The robust preliminary S&P Global US PMI data have weakened the likelihood of the Fed’s aggressive rate cuts.
- Traders await the Swiss Employment Level QoQ for the third quarter due on Monday.
USD/CHF corrects downwards after hitting its four-month high of 0.8957 in the previous session, currently trading around 0.8910 during the Asian session on Monday. The US Dollar (USD) receives downward pressure due to bond market optimism following President-elect Donald Trump's selection of fund manager Scott Bessent as the US Treasury secretary, a seasoned Wall Street figure and fiscal conservative.
Meanwhile, the US Dollar Index (DXY), which tracks the US Dollar's performance against six major currencies, has eased to around 107.00 after hitting a two-year high of 108.07 on Friday. However, downside risks for the USD remain limited, as the robust preliminary S&P Global US Purchasing Managers’ Index (PMI) data have strengthened expectations that the Federal Reserve (Fed) may slow the pace of rate cuts.
Futures traders are now assigning a 50.9% probability to the Federal Reserve cutting rates by a quarter point, down from approximately 61.9% a week earlier, according to the CME FedWatch Tool. Meanwhile, Treasury yields remain buoyed by expectations that President-elect Donald Trump’s proposed policies on tariffs, immigration, and taxes could spur inflation and constrain the Fed’s capacity to reduce borrowing costs further.
The Swiss Franc (CHF) has encountered difficulties as the recent decline in inflation has led to market expectations of further interest rate cuts by the Swiss National Bank (SNB) later this year and into 2025 to counter deflationary pressures. Switzerland's annual inflation rate dropped for the third consecutive month to 0.6% in October, marking the lowest level since June 2021.
SNB Chairman Martin Schlegel reaffirmed that the central bank will continue to focus on keeping inflation low as a key pillar of its monetary policy. Schlegel stressed that maintaining inflation within the 0-2% range has been vital for the Swiss economy's strong performance in recent years.
Economic Indicator
Employment Level (QoQ)
The Employment Level released by the Swiss Statistics shows the total number of employed workers. If the level goes up, it indicates economic expansion within the Swiss labor market, while a declining level suggests a lack of economic expansion. Generally, a high reading is seen as bullish for the Swiss Franc (CHF), while a low reading is seen as bearish.
Read more.Next release: Mon Nov 25, 2024 07:30
Frequency: Quarterly
Consensus: -
Previous: 5.499M
- EUR/JPY struggles to attract any meaningful buying amid mixed fundamental cues.
- The BoJ uncertainty and the risk-on mood undermine the JPY and lend support.
- Bets for a more aggressive ECB rate cuts cap any meaningful upside for the cross.
The EUR/JPY cross kicks off the new week on a positive note, albeit struggles to capitalize on its intraday move up and remains below the 162.00 mark through the Asian session. Moreover, the fundamental backdrop suggests that the path of least resistance for spot prices is to the downside.
Investors now seem convinced that increased domestic political uncertainty in Japan could restrict the Bank of Japan (BoJ) from hiking interest rates further. This, along with the prevalent risk-on environment, is seen undermining demand for the safe-haven Japanese Yen (JPY) and lending some support to the EUR/JPY cross. That said, intervention fears and retreating US Treasury bond yields help limit losses for the lower-yielding JPY.
The shared currency, on the other hand, seems vulnerable on the back of a surprise fall in the Eurozone Composite PMI to a 10-month low in November. This comes on top of potential economic risks in the wake of US President-elect Donald Trump's taunted tariffs and lifts bets for faster interest rate cuts from the European Central Bank (ECB). This, in turn, favors the Euro bears and validates the negative outlook for the EUR/JPY cross.
Even from a technical perspective, the recent repeated failures near the 200-period Simple Moving Average (SMA) on the 4-hour chart favor bearish traders. Adding to this, negative oscillators on daily/hourly charts suggest that any intraday move-up could be seen as a selling opportunity and runs the risk of fizzling out quickly. Investors, however, might wait for acceptance below the 161.00 mark before positioning for any intraday decline.
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger 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.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
Following his selection as the US Treasury Secretary, Scott Bessent said in his first interview with the Wall Street Journal (WSJ) that making President-elect Donal Trump’s first-term tax cuts permanent.
Additional quotes
“Eliminating taxes on tips, social security benefits and overtime pay.”
“Enacting tariffs and cutting spending will also be a focus, as will maintaining the status of the dollar as the world’s reserve currency.”
- Silver price may regain its ground due to safe-haven flows amid the rising Russia-Ukraine war.
- The dollar-denominated Silver may gain demand as the US Dollar depreciates due to market optimism.
- The non-interest-bearing Silver could face challenges due to increased odds of the Fed slowing the pace of rate cuts.
Silver price (XAG/USD) retraces its recent gains, trading around $30.80 per troy ounce during the Asian session on Monday. This decline may be linked to a technical pullback, similar to the weakness seen in precious metal Gold. However, Silver, as a safe-haven asset, could regain its momentum due to the escalating Russia-Ukraine conflict.
On Friday, President Vladimir Putin confirmed that Russia conducted a hypersonic intermediate-range missile test in an attack on the Ukrainian city of Dnipro. The Kremlin stated that the strike was a retaliatory measure in response to Ukraine's first assault on Russian territory using US and British-supplied weapons.
Silver prices may receive additional support from a weaker US Dollar following the announcement by US President-elect Donald Trump of his nomination of hedge fund manager Scott Bessent as the new US Treasury Secretary. Bessent, a seasoned Wall Street figure and fiscal conservative, is expected to adopt a more cautious stance on tariffs, alleviating concerns about the implementation of aggressive trade policies.
The non-interest-bearing Silver might have faced downward pressure due to the potential for a higher opportunity cost over a prolonged period. This could be attributed to the strong preliminary S&P Global US Purchasing Managers' Index (PMI) data released on Friday, which has fueled expectations that the Federal Reserve (Fed) may slow the pace of rate cuts.
Futures traders are now assigning a 50.9% probability to the Federal Reserve cutting rates by a quarter point, down from approximately 61.9% a week earlier, according to the CME FedWatch Tool.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
- USD/CAD weakens to near 1.3945 in Monday’s Asian session.
- Scott Bessent's nomination as US Treasury Secretary weighs on the USD.
- Canada's Retail Sales rose 0.4% MoM in September, as expected.
The USD/CAD pair drifts lower to around 1.3945 during the Asian session on Monday. The weakening of the US Dollar and lower US Treasury bond yields after President-elect Donald Trump said he will nominate Scott Bessent as US Treasury secretary weighs on the pair.
Donald Trump announced on Friday night that he will nominate Scott Bessent to be the secretary of the US Department of the Treasury. This, in turn, drags the USD lower by the most in over two weeks. However, the markets expect that Trump’s administration will reignite inflation and slow the path of rate cuts from the Federal Reserve (Fed), which might help limit the USD’s losses. Trump has vowed to impose massive new tariffs, eyeing a duty of 10% to 20% on all foreign goods and 60% or higher on goods coming from China.
On the Loonie front, Canada's Retail Sales grew 0.4% MoM in September, in line with the consensus, according to Statistics Canada on Friday. Retail Sales ex Autos climbed 0.9% MoM in September versus -0.8% prior, beating the estimation of 0.5%. Currency markets trimmed their bets for a 50 basis points (bps) rate reduction next month to around 14%, down from 21% before the data. They see an 86% chance of a 25 bps rate cut on December 11.
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
- Gold price falls sharply from a three-week high in the wake of the risk-on environment.
- Bets for slower Fed rate cuts also drive flows away from the non-yielding yellow metal.
- Retreating US bond yields prompt USD profit-taking and could help limit further losses.
Gold price (XAU/USD) retreats after touching a nearly three-week high, around the $2,721-2,722 region during the Asian session on Monday and for now, seems to have snapped a five-day winning streak. US President-elect Donald Trump nominates Scott Bessent as Treasury Secretary and clears a major point of uncertainty for markets. Adding to this, reports that Israel was close to reaching a ceasefire with the military group Hezbollah in Lebanon boosted investors' confidence. This is evident from the upbeat market mood and drags the safe-haven precious metal back closer to mid-$2,600s.
Moreover, expectations that Trump's proposed policies could reignite inflation and limit the scope for the Federal Reserve (Fed) to cut interest rates further turn out to be another factor undermining the non-yielding Gold price. Meanwhile, Bessent has been vocal about the need to control the deficit, and his nomination offers some respite to bond investors. This leads to a sharp fall in the US Treasury bond yields, which prompts some US Dollar (USD) profit-taking following the post-US election bullish run to the highest level since November 2022 and helps limit any further downside for the XAU/USD.
Gold price comes under heavy selling pressure on the back of the upbeat market mood
- The risk-on mood fails to assist the Gold price to capitalize on last week's strong gains and leads to an intraday turnaround from a three-week high on Monday.
- Scott Bessent's nomination as US Treasury Secretary and de-escalation in the long-running Middle East conflict boosts investors' confidence at the start of a new week.
- Media reports suggest that Israel and the Lebanon-based Hezbollah militant group are on the cusp of a ceasefire deal, though an agreement is not fully formed yet.
- Furthermore, the optimism over more business-friendly policies from the new Trump administration remains supportive of a positive tone around the equity markets.
- S&P Global's Composite US PMI rose to 55.3 in November – the highest level since April 2022 – and suggested that growth probably accelerated in the fourth quarter.
- The recent hawkish remarks from several Federal Reserve policymakers and potential inflation surprises could support an on-hold interest rate decision in December.
- The CME Group's FedWatch Tool indicates that traders are currently pricing in just over a 55% probability that the Fed will cut interest rates by 25 basis points next month.
- Investors this week will closely scrutinize the minutes from the November FOMC meeting, and the US Personal Consumption and Expenditure (PCE) Price Index data.
- Bessent's conservative views on fiscal policy trigger a corrective decline in the US Treasury bond yields and prompt some US Dollar profit-taking from a two-year top.
Gold price needs to find acceptance below the $2,650 area for bears to seize control
From a technical perspective, the sharp intraday downfall drags the Gold price below the 23.6% Fibonacci retracement level of the recent strong recovery from a two-month low touched on November 14. The subsequent decline, however, stalls near the 100-period Simple Moving Average (SMA), around the $2,660-2,658 region. Meanwhile, oscillators on the daily chart have recovered from the negative zone and are holding in positive territory on the 4-hour chart. This makes it prudent for bearish traders to wait for some follow-through selling below the 100-period SMA and the 38.2% Fibo. level, around the $2,650 area, before placing fresh bets. The XAU/USD might then accelerate the fall towards the $2,630-2,629 region, or the 50% retracement level, en route to the $2,610-2,608 zone, or the 61.8% Fibo. level.
On the flip side, the $2,677-2,678 region (23.6% Fibo. level) now seems to act as an immediate hurdle ahead of the $2,700 mark. This is followed by the Asian session high, around the $2,721-2,722 area, above which the Gold price could accelerate the move up towards the $2,748-2,750 supply zone. The momentum could extend further towards retesting the all-time peak, around the $2,790 region touched in late October.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Gold prices fell in India on Monday, according to data compiled by FXStreet.
The price for Gold stood at 7,241.09 Indian Rupees (INR) per gram, down compared with the INR 7,336.61 it cost on Friday.
The price for Gold decreased to INR 84,458.34 per tola from INR 85,572.77 per tola on friday.
| Unit measure | Gold Price in INR |
|---|---|
| 1 Gram | 7,241.09 |
| 10 Grams | 72,410.62 |
| Tola | 84,458.34 |
| Troy Ounce | 225,220.70 |
FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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- WTI may regain its ground due to rising geopolitical tensions involving major Oil producers, Russia and Iran.
- Iran took measures such as activating advanced centrifuges for uranium enrichment following a resolution passed by the UN atomic watchdog.
- Oil prices gained further support from increased demand in two of the world’s largest Oil importers, China and India.
West Texas Intermediate (WTI) crude Oil price pauses its two-day rally, trading around $70.80 per barrel during Asian trading hours on Monday. However, downside risks to Oil prices remain limited due to escalating geopolitical tensions involving major Oil producers, Russia and Iran, which have sparked concerns over potential supply disruptions.
Last week, Oil prices edged higher as geopolitical tensions intensified following Ukraine's first attack on Russia using US and British weapons. In response, Russia launched a newly developed hypersonic ballistic missile. “The recent exchanges indicate the war has entered a new and dangerous phase, raising concerns of disruptions to supplies,” analysts at ANZ, led by Daniel Hynes, stated in a note, according to Reuters.
On Thursday, Iran responded to a resolution passed by the UN atomic watchdog by initiating measures such as activating advanced centrifuges for uranium enrichment. The UN nuclear watchdog's 35-nation Board of Governors had passed the resolution, urging Iran to enhance cooperation with the agency and requesting a "comprehensive" report to press Iran into renewed nuclear negotiations.
Meanwhile, Oil prices received additional support from rising demand in two of the world’s largest Oil importers, China and India. China’s crude imports rebounded in November as lower prices encouraged stockpiling, while Indian refiners boosted crude throughput by 3% year-over-year to 5.04 million barrels per day (bpd) in October, driven by strong fuel export activity.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- The Indian Rupee gains momentum in Monday’s Asian session.
- Expected inflows from MSCI's index rebalancing support the INR, but portfolio outflows and a stronger USD might cap its gains.
- The US Chicago Fed National Activity Index and Dallas Fed Manufacturing Business Index are due later on Monday.
The Indian Rupee (INR) extends the rally on Monday, bolstered by the weakening of the Greenback and expected inflows from MSCI's index changes. However, continuous foreign outflows, renewed strength in the US Dollar (USD) and higher crude oil prices might create a headwind for the local currency and cap its upside.
Traders will keep an eye on the US Chicago Fed National Activity Index and Dallas Fed Manufacturing Business Index, which will be published on Monday. Later this week, the US Core Personal Consumption Expenditures (PCE) Price Index and preliminary Gross Domestic Product (GDP) Annualized for the third quarter (Q3) will be in the spotlight.
Indian Rupee rebounds as MSCI rebalancing draws billions
- The rebalancing of MSCI's equity indexes, effective after the markets close on Monday, is estimated to attract $2.5 billion of passive inflows into Indian stocks, according to estimates by Nuvama Alternative & Quantitative Research.
- The HSBC Flash India Composite Output Index rose to 59.5 in November from a final reading of 59.1 in October.
- The HSBC Flash India Manufacturing Purchasing Managers Index (PMI) eased to 57.3 in November from the previous reading of 57.5. The Services PMI improved to 59.2 in November from 58.5 in October.
- "Services saw a pick-up in growth, while the manufacturing sector managed to outperform expectations, despite a marginal slowdown from its October final PMI reading...Meanwhile, price pressures are rising for raw materials used by manufacturers, as well as food and wage costs in the services sector," noted Pranjul Bhandari, chief India economist at HSBC.
- The US S&P Global Composite PMI climbed to 55.3 in November's flash estimate from 54.1 in October. Meanwhile, the Manufacturing PMI improved to 48.8 in November versus 48.5 in October. The Services PMI rose to 57.0 in November from 55.0 in the previous reading, beating the estimation of 55.3.
USD/INR paints a positive picture in the longer term
The Indian Rupee trades on a stronger note on the day. However, the USD/INR remains stuck within an ascending trend channel. Nonetheless, the constructive view of the USD/INR pair prevails as the price holds above the key 100-day Exponential Moving Average (EMA) on the daily time frame, suggesting that the rally is more likely to resume than to reverse. Additionally, the 14-day Relative Strength Index stands above the midline near 59.50, indicating that the further upside looks favorable.
The all-time high and the upper boundary of the trend channel of 84.52 act as an immediate resistance level for USD/INR. Sustained bullish momentum above this level could see a rally to the 85.00 psychological level.
On the other hand, a break below the lower limit of the trend channel of 84.35 could set off a drop to the next potential floor at the 84.00-83.90 region, representing the round mark and the 100-day EMA.
Indian Rupee FAQs
The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee.
The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference.
Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee.
Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
- The Japanese Yen jumps back closer to last week’s swing high against its American counterpart.
- Retreating US bond yields prompts some USD profit-taking and benefits the lower-yielding JPY.
- The BoJ uncertainty and the risk-on mood might cap any further gains for the safe-haven JPY.
The Japanese Yen (JPY) strengthens against its American counterpart at the start of a new week, dragging the USD/JPY pair back below the 154.00 mark during the Asian session. The US Treasury bond yields fell sharply in reaction to Scott Bessent's nomination as US Treasury Secretary. This, in turn, prompts traders to lighten their US Dollar (USD) bullish bets after the recent rally to a two-year high and drives some flows towards the lower-yielding JPY.
That said, the uncertainty tied to the Bank of Japan's (BoJ) rate-hike plans, along with the prevalent risk-on environment, could cap any meaningful appreciating move for the safe-haven JPY. Moreover, expectations that US President-elect Donald Trump's policies could reignite inflation and restrict the Federal Reserve (Fed) to cut interest rates slowly might act as a tailwind for the US bond yields. This, in turn, favors the USD bulls and should offer support to the USD/JPY pair.
Japanese Yen benefits from retreating US bond yields and a weaker US Dollar
- US President-elect Donald Trump nominated prominent investor Scott Bessent – a fiscal conservative – as Treasury Secretary, reassuring the bond market and pulling yields lower across the board.
- The US Dollar, having risen for eight weeks in a row, retreats from its highest level since November 2022 as traders opt to take some profits off the table following the post-US election blowout rally.
- Despite stronger consumer inflation data from Japan and Bank of Japan Governor Kazuo Ueda's hawkish remarks, domestic political uncertainty could restrict the BoJ from tightening its monetary policy.
- Meanwhile, investors have been scaling back their bets for another 25-basis-points rate cut by the Federal Reserve in December amid worries that Trump's policies could boost inflationary pressures.
- According to CME Group's FedWatch Tool, traders are pricing in just over a 55% probability that the Fed will lower borrowing costs next month and a nearly 45% chance for an on-hold decision.
- The optimism over more business-friendly policies from the new Trump administration was reinforced by the flash US PMIs, showing that business activity climbed to a 31-month high in November.
- S&P Global reported on Friday that the Composite US PMI rose to 55.3 this month, or the highest level since April 2022, suggesting that economic growth probably accelerated in the fourth quarter.
- Reports suggest that a ceasefire deal between Israel and the Lebanese militant group Hezbollah is very close, which further fuels the risk-on mood and might cap the upside for the safe-haven JPY.
- The focus this week will be squarely on the US Personal Consumption and Expenditure (PCE) Price Index data, which could offer cues on the Fed's interest rate path and provide a fresh impetus.
USD/JPY finds acceptance below 100-period SMA on 4-hour chart; seems vulnerable
From a technical perspective, acceptance below the 100-period Simple Moving Average (SMA) now seems to have set the stage for a further depreciating move for the USD/JPY pair. That said, any further slide might continue to find some support near the 153.30-153.25 region. This is followed by the 153.00 round figure, which if broken decisively will be seen as a fresh trigger for bearish traders and pave the way for deeper losses. Spot prices might then accelerate the fall towards the next relevant support near mid-152.00s en route to the very important 200-day SMA, currently pegged near the 152.00 mark.
On the flip side, the 154.00 round figure now seems to act as an immediate hurdle ahead of the Asian session top, around the 154.40 region. Some follow-through buying should allow the USD/JPY pair to reclaim the 155.00 psychological mark and climb further towards the 155.40-155.50 supply zone. A sustained strength beyond the latter should pave the way for a move beyond the 156.00 mark, towards retesting the multi-month top, around the 156.75 region touched on November 15.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
- The Australian Dollar appreciates as the US Dollar pulls back after hitting a two-year high of 108.07 on Friday.
- The S&P/ASX 200 Index rose to fresh all-time highs above 8,450, as Australian shares mirrored Wall Street's momentum.
- President-elect Donald Trump has selected Scott Bessent, a seasoned Wall Street veteran and fiscal conservative, as the US Treasury Secretary.
The Australian Dollar (AUD) gains strength on Monday as the US Dollar (USD) continues its downward correction. This movement was partly influenced by bond market optimism following President-elect Donald Trump's selection of fund manager Scott Bessent as the US Treasury secretary, a seasoned Wall Street figure and fiscal conservative.
The AUD also likely benefited from foreign inflows, driven by a surge in the domestic share market to fresh all-time highs. The S&P/ASX 200 Index climbed 0.63%, surpassing 8,450, as Australian shares mirrored Wall Street's momentum. On Friday, the Dow Jones achieved another record-high close, contributing to the positive sentiment.
Additionally, the Australian Dollar received support from a hawkish stance by the Reserve Bank of Australia (RBA) on future interest rate decisions. Traders are now focused on Australia’s Monthly Consumer Price Index (CPI) for October, a crucial indicator for shaping expectations around domestic monetary policy.
The RBA emphasized in its latest meeting minutes that interest rates would remain restrictive until there is clear evidence of inflation returning sustainably to its target. However, the central bank also highlighted that any future policy adjustments would be data-dependent, underscoring the importance of upcoming economic reports.
Australian Dollar rises as the US Dollar corrects downward after hitting two-year highs
- The US Dollar Index (DXY), which tracks the US Dollar's performance against six major currencies, has eased to around 107.00 after hitting a two-year high of 108.07 on Friday. However, downside risks for the USD remain limited, as recent as robust preliminary S&P Global US Purchasing Managers’ Index (PMI) data has strengthened expectations that the Federal Reserve (Fed) may slow the pace of rate cuts.
- Futures traders are now assigning a 50.9% probability to the Federal Reserve cutting rates by a quarter point, down from approximately 61.9% a week earlier, according to the CME FedWatch Tool. Meanwhile, Treasury yields remain buoyed by expectations that President-elect Donald Trump’s proposed policies on tariffs, immigration, and taxes could spur inflation and constrain the Fed’s capacity to reduce borrowing costs further.
- The S&P Global US Composite PMI climbed to 55.3 in November, indicating the strongest growth in private sector activity since April 2022. The US Services PMI surged to 57.0, up from 55.0 in October and significantly exceeding market expectations of 55.2, marking the sharpest expansion in the services sector since March 2022. Meanwhile, the US Manufacturing PMI increased to 48.8 from 48.5 in October, aligning with market forecasts.
- The Judo Bank Australia PMI Composite Output Index dropped to 49.4 in November from 50.2 in October, indicating a modest contraction in private sector output for the second time in three months. Manufacturing PMI rose to 49.4 in November from 47.3 in October, marking its 10th consecutive month of contraction. Meanwhile, the Services PMI fell to 49.6 from 51.0, signaling the first contraction in services activity in ten months.
- Australia's four largest banks are predicting the Reserve Bank of Australia's first rate cut. Westpac has revised its forecast for the first cut to May, up from February. National Australia Bank (NAB) also expects the cut in May. Meanwhile, Commonwealth Bank of Australia (CBA) and ANZ are both cautiously forecasting a rate cut in February.
- US Initial Jobless Claims dropped to 213,000 for the week ending November 15, down from a revised 219,000 (previously 217,000) in the prior week and below the expected 220,000.
- The Reserve Bank of Australia's November Meeting Minutes indicated that the central bank’s board remains vigilant about the potential for further inflation, stressing the importance of maintaining a restrictive monetary policy. Although board members noted no "immediate need" to alter the cash rate, they kept options open for future adjustments, emphasizing that all possibilities remain on the table.
- Federal Reserve Bank of Chicago President Austan Goolsbee made headlines on Thursday, stating that inflation is steadily approaching the 2% target. Goolsbee also noted that the labor market is nearing stability and full employment. Looking ahead, he anticipates interest rates could drop significantly from their current levels over the next year.
- Fed Chair Jerome Powell downplayed the likelihood of imminent rate cuts, highlighting the economy's resilience, robust labor market, and persistent inflationary pressures. Powell remarked, "The economy is not sending any signals that we need to hurry to lower rates."
Technical Analysis: Australian Dollar breaks above the nine-day EMA to near 0.6550
The AUD/USD pair trades near 0.6540 on Monday, with technical analysis of the daily chart indicating strengthening short-term momentum. The pair has moved above the nine- and 14-day Exponential Moving Averages (EMAs), signaling a potential upward bias.
However, AUD/USD remains confined within a descending channel, suggesting the broader downtrend is still intact. Additionally, the 14-day Relative Strength Index (RSI) is slightly below the neutral 50 level. A decisive breakout above the 50 mark would provide a clearer signal for a directional shift, potentially confirming bullish momentum.
On the downside, the AUD/USD pair may test immediate support at the nine-day EMA at 0.6520. A decisive break below this level could push the pair toward the lower boundary of the descending channel, near its yearly low of 0.6348, last touched on August 5.
Regarding its upside, the AUD/USD pair could aim for the upper boundary of the descending channel at 0.6570. A breakout above this resistance could signal a shift in momentum, potentially opening the path for a rally toward the four-week high of 0.6687.
AUD/USD: Daily Chart
Australian Dollar PRICE Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.63% | -0.56% | -0.28% | -0.12% | -0.46% | -0.10% | -0.26% | |
| EUR | 0.63% | -0.10% | -0.24% | -0.09% | 0.10% | -0.05% | -0.21% | |
| GBP | 0.56% | 0.10% | -0.15% | 0.02% | 0.20% | 0.05% | -0.11% | |
| JPY | 0.28% | 0.24% | 0.15% | 0.16% | 0.26% | 0.25% | 0.21% | |
| CAD | 0.12% | 0.09% | -0.02% | -0.16% | -0.18% | 0.04% | -0.16% | |
| AUD | 0.46% | -0.10% | -0.20% | -0.26% | 0.18% | -0.15% | -0.30% | |
| NZD | 0.10% | 0.05% | -0.05% | -0.25% | -0.04% | 0.15% | -0.16% | |
| CHF | 0.26% | 0.21% | 0.11% | -0.21% | 0.16% | 0.30% | 0.16% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
| Raw materials | Closed | Change, % |
|---|---|---|
| Silver | 31.319 | 1.76 |
| Gold | 2714.35 | 1.67 |
| Palladium | 1008.47 | -2.16 |
- NZD/USD gains traction to around 0.5860 in Monday’s Asian session, up 0.55% on the day.
- RBNZ is likely to reduce the OCR by 50 bps on Wednesday, bringing the rate to 4.25%.
- The cautious stance from the Fed might support the USD.
The NZD/USD pair gathers strength to near 0.5860 on Monday during the Asian trading hours, bolstered by the softer US Dollar (USD). All eyes will be on the Reserve Bank of New Zealand (RBNZ) interest rate decision on Wednesday.
Data released by Statistics New Zealand on Monday showed that the country’s Retail Sales dropped by 0.1% QoQ in the third quarter (Q3), compared to the previous reading of a 1.2% fall. Retail sales fell for the second consecutive quarter as high interest rates dampened consumer sentiment, adding to signs that the economy was in recession in the middle of the year.
Furthermore, investors expect aggressive interest rate cuts from the RBNZ, which might exert some selling pressure on the Kiwi. The swaps market is pricing in a 50 basis points (bps) cut on Wednesday, with some seeing a small chance of a 75 bps reduction.
Meanwhile, the US Dollar Index (DXY), which measures the USD against a basket of currencies, currently trades near 106.85, down 0.62% on the day. The weaker Greenback acts as a tailwind for the NZD/USD pair.
However, the cautious stance from the Federal Reserve (Fed) might cap the USD’s downside. Fed Governor Michelle Bowman said last week that the Fed’s progress toward 2% inflation has “stalled” and the US central bank should proceed "cautiously" when cutting interest rates. Additionally, Chicago Fed President Austan Goolsbee noted that it may make sense to slow the pace of interest rate cuts as the Fed gets close to where rates will settle.
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- GBP/USD kicks off the new week on a positive note and snaps a three-day losing streak.
- Retreating US bond yields prompts some USD profit-taking and lends support to the pair.
- Reduced bets for a December BoE rate cut underpin the GBP and further act as a tailwind.
The GBP/USD pair opens with a bullish gap at the start of a new week and for now, seems to have snapped a three-day losing streak to sub-1.2500 levels, or its lowest level since May touched last Friday. Spot prices climb to the 1.2600 mark during the Asian session and draw support from a weaker US Dollar (USD).
The USD Index (DXY), which tracks the Greenback against a basket of currencies, pulls back from a two-year top as bulls opt to take some profits off the table on the back of a sharp pullback in the US Treasury bond yields. Apart from this, an extension of the risk-on rally across the global equity markets turns out to be another factor undermining the safe-haven buck and offering some support to the GBP/USD pair.
Reports that Israel was close to reaching a ceasefire with the Hezbollah military group in Lebanon fueled optimism over some de-escalation in the long-running Middle East conflict. Adding to this, Scott Bessent's nomination as US Treasury Secretary clears a major point of uncertainty for markets and eases concerns about a dire trade war under the new Trump administration, which, in turn, boosts investors' confidence.
Meanwhile, the British Pound (GBP) continues to be underpinned by reduced bets that the Bank of England (BoE) will cut rates next month, especially after data released last week showed that the underlying price growth in the UK gathered speed. In fact, the annual UK inflation climbed back above the central bank's target and accelerated sharply to 2.3% in October, suggesting that the BoE will move cautiously on interest rate cuts.
Any meaningful USD downfall, however, seems limited amid expectations that US President-elect Donald Trump's proposed expansionary policies will boost inflation and limit the scope for the Fed to cut interest rates further. This should act as a tailwind for the US bond yields and supports prospects for the emergence of some USD dip-buying, warranting caution before placing bullish bets around the GBP/USD pair.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
On Monday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.1918, as compared to Friday's fix of 7.1942 and 7.2257 Reuters estimates.
- EUR/USD rebounds from a two-year low of 1.0332 as the US Dollar retreats after hitting two-year highs on Friday.
- US Dollar may appreciate as recent US PMI data strengthen odds of the Fed slowing the pace of rate cuts.
- The Euro faced challenges as recent HCOB PMI data highlighted continued weakness in Eurozone business activity.
EUR/USD recovers from its two-year low of 1.0332, recorded on Friday, trading near 1.0480 during Monday's Asian session. This rebound can be linked to a correction in the US Dollar (USD), despite robust preliminary S&P Global US Purchasing Managers’ Index (PMI) data released in the prior session.
Meanwhile, the US Dollar Index (DXY), which tracks the US Dollar's performance against six major currencies, has eased to around 107.00 after hitting a two-year high of 108.07 on Friday. However, downside risks for the USD remain limited, as recent economic data has strengthened expectations that the Federal Reserve (Fed) may slow the pace of rate cuts.
The S&P Global US Composite PMI climbed to 55.3 in November, indicating the strongest growth in private sector activity since April 2022. The US Services PMI surged to 57.0, up from 55.0 in October and significantly exceeding market expectations of 55.2, marking the sharpest expansion in the services sector since March 2022. Meanwhile, the US Manufacturing PMI edged higher to 48.8 from 48.5 in October, aligning with market forecasts.
The Euro came under pressure after PMI data highlighted continued weakness in Eurozone business activity. The HCOB Flash Eurozone Composite PMI fell sharply to 48.1 in November, down from 50.0 in October and well below expectations of 50.0. This decline reflects a contraction in the services sector for the first time in ten months, coupled with a persistent downturn in manufacturing.
On Thursday, European Central Bank (ECB) Chief Economist Philip Lane cautioned that a potential global trade war, driven by the expected implementation of President-elect Donald Trump’s higher tariffs, could lead to significant global economic losses. "Trade fragmentation entails sizeable output losses," Lane emphasized.
Following the weaker-than-expected Eurozone PMI data, the likelihood of an aggressive rate cut by the ECB has surged. Market expectations for a 50-basis-point (bps) reduction in the Deposit Facility Rate, bringing it down to 2.5%, have risen to over 50%, compared to less than 20% before the PMI data release.
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
New Zealand’s Retail Sales, a measure of the country’s consumer spending, declined 0.1% QoQ in the third quarter (Q3) from the previous reading of a 1.2% fall, according to the official data published by Statistics New Zealand on Monday.
Market reaction to New Zealand’s Retail Sales
At the time of writing, NZD/USD is trading 0.54% higher on the day at 0.5861.
New Zealand Dollar FAQs
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD.
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair.
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate.
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
- Gold price attracts some buyers to near $2,720 in Monday’s early Asian session.
- Heightened geopolitical tensions between Russia and Ukraine lift the Gold price.
- The cautious stance from the Fed might cap the upside for Gold.
The Gold price (XAU/USD) jumps to around $2,720 during the early Asian session on Monday. The sell-off in the US Dollar (USD) provides some support to the USD-denominated Gold price. Additionally, rising geopolitical tensions continue to underpin safe-haven assets like yellow metal.
Investors will closely monitor the developments surrounding the Russia-Ukraine conflicts. Last week, Russian President Vladimir Putin lowered the threshold for a nuclear strike in response to a broader range of conventional attacks, days after reports said Washington DC, had allowed Ukraine to use US-made weapons to strike deep into Russian territory. This, in turn, might boost the safe-haven flows, benefiting the precious metal price.
"It's really one main geopolitical factor that's at play here in the gold market over the course of the last several days - the increased tensions between Ukraine and Russia is probably most notable," noted David Meger, director of metals trading at High Ridge Futures.
On the other hand, several Federal Reserve (Fed) officials remain cautious about rate reductions, which might cap the Gold’s upside. The market is adjusting its expectations for the Fed's cuts next year as inflation is becoming a bigger concern. Higher rates reduce the appeal of gold. According to the CME FedWatch Tool, futures traders are now pricing in 50.9% odds that the Fed will cut rates by a quarter point, down from around 69.5% a month ago.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
| Index | Change, points | Closed | Change, % |
|---|---|---|---|
| NIKKEI 225 | 257.68 | 38283.85 | 0.68 |
| Hang Seng | -371.14 | 19229.97 | -1.89 |
| KOSPI | 20.61 | 2501.24 | 0.83 |
| ASX 200 | 70.8 | 8393.8 | 0.85 |
| DAX | 176.42 | 19322.59 | 0.92 |
| CAC 40 | 41.69 | 7255.01 | 0.58 |
| Dow Jones | 426.16 | 44296.51 | 0.97 |
| S&P 500 | 20.63 | 5969.34 | 0.35 |
| NASDAQ Composite | 31.23 | 19003.65 | 0.16 |
| Pare | Closed | Change, % |
|---|---|---|
| AUDUSD | 0.64977 | -0.21 |
| EURJPY | 161.269 | -0.27 |
| EURUSD | 1.04129 | -0.56 |
| GBPJPY | 194.006 | -0.22 |
| GBPUSD | 1.25271 | -0.49 |
| NZDUSD | 0.58296 | -0.46 |
| USDCAD | 1.3983 | 0.1 |
| USDCHF | 0.89443 | 0.93 |
| USDJPY | 154.868 | 0.26 |
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