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Following the publication of the high-impact China’s activity data for October, the National Bureau of Statistics (NBS) expressed its outlook on the economy during its press conference on Friday.
China's consumer expectations improved in October.
Will step up policy adjustments, expand domestic demand.
Will consolidate trend in economic recovery.
Recent policies have showed positive effects on the economy.
more to come ...
AUD/USD is extending gains above 0.6450, up 0.18% on the day, at the press time.
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.20% | -0.14% | 0.03% | -0.02% | -0.22% | -0.25% | -0.19% | |
| EUR | 0.20% | 0.07% | 0.21% | 0.19% | -0.02% | -0.05% | 0.01% | |
| GBP | 0.14% | -0.07% | 0.16% | 0.14% | -0.08% | -0.11% | -0.05% | |
| JPY | -0.03% | -0.21% | -0.16% | -0.04% | -0.27% | -0.30% | -0.23% | |
| CAD | 0.02% | -0.19% | -0.14% | 0.04% | -0.22% | -0.24% | -0.18% | |
| AUD | 0.22% | 0.02% | 0.08% | 0.27% | 0.22% | -0.03% | 0.02% | |
| NZD | 0.25% | 0.05% | 0.11% | 0.30% | 0.24% | 0.03% | 0.06% | |
| CHF | 0.19% | -0.01% | 0.05% | 0.23% | 0.18% | -0.02% | -0.06% |
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).
The Gold price (XAU/USD) struggles to gain ground around $2,570 on Friday after bouncing off a two-month low in the previous session. The precious metal remains under selling pressure amid the strong US Dollar (USD) and the rising uncertainty surrounding the Federal Reserve's (Fed) pace of interest rate reductions. The expectations of higher inflation next year due to Donald Trump’s policies have led to fewer expected rate cuts, weighing on the yellow metal as higher interest rates make holding non-yielding assets like gold less appealing.
However, the escalating tensions in the Middle East and the ongoing conflict between Ukraine and Russia could boost the Gold price, a traditional safe-haven asset. Looking ahead, investors will monitor the US Retail Sales for October, which are due later on Friday. Also, the NY Empire State Manufacturing Index and Industrial Production data will be published. The Fed’s Susan Collins and John Williams are set to speak later in the same day.
The Gold price edges lower on the day. The positive outlook of the precious metal seems vulnerable on the daily timeframe as the price hovers around the key 100-day Exponential Moving Average (EMA). The yellow metal could resume the downside if it can break below the 100-day EMA. The downward momentum cannot be ruled out as the 14-day Relative Strength Index (RSI) stands below the 50-midline near 33.60.
Consistent trading below the 100-day EMA could pave the way to $2,485, the low of September 8. The additional downside filter to watch is $2,353, the low of July 25. Extended losses could see a drop to the $2,300 psychological mark.
On the upside, the immediate resistance level for XAU/USD emerges near the support-turned-resistance level at $2,665. A decisive break above this level could result in a rally to $2,750, the high of November 6.
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.
Japan’s Finance Minister Katsunobu Kato on Friday that he “will take appropriate action vs. excessive FX moves.”
One-sided, sharp moves seen in the FX market.
It is important for FX rates to move stably, reflecting fundamentals.
Govt will scrutinise the FX market with very high vigilance, including speculative moves.
USD/JPY is paring back gains to trade near 156.50 following these above comments, still up 0.18% on the day.
China’s October Retail Sales increased 4.8% YoY vs. 3.8% expected and 3.2% in September, while the country’s Industrial Production rose 5.3% YoY in the same period vs. 5.6% estimated and 5.4% registered previously.
Meanwhile, the Fixed Asset Investment came in at 3.4% YTD YoY in October, matching the expected 3.5% print. The September reading was 3.4%.
China’s National Bureau of Statistics (NBS) released the official data on Friday.
The mixed Chinese data dump fails to deter the Australian Dollar, with AUD/USD holding higher ground near 0.6560. The pair is up 0.09% on the day, as of writing.
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 Australian Dollar (AUD) continues its decline for the sixth consecutive session on Friday, hovering near three-month lows against the US Dollar (USD). The recent downward trend in the AUD/USD pair is largely due to key economic data from Australia.
However, the decline of the Aussie Dollar may be limited due to less dovish remarks from Reserve Bank of Australia (RBA) Governor Michele Bullock on Thursday. Bullock stated that current interest rates are sufficiently restrictive and will stay at this level until the central bank gains confidence in the inflation outlook.
The US Dollar remains steady near its fresh 2024 highs, despite signs of slowing in "Trump trades." The US Dollar Index (DXY), which tracks the US Dollar’s performance against six major currencies, hovers around 107.06, marking its highest level since November 2023.
Markets are now focused on US October Retail Sales data, set to be released on Friday, along with comments from Federal Reserve officials. On Thursday, Fed Chair Jerome Powell noted that the recent performance of the US economy has been "remarkably good," allowing the Fed room to gradually lower interest rates.
AUD/USD trades near 0.6460 on Friday. An analysis of the daily chart shows short-term downward pressure, as the pair remains below the nine-day Exponential Moving Average (EMA). Additionally, the 14-day Relative Strength Index (RSI) is slightly above 30, indicating potential oversold conditions. If the RSI dips below 30, it could signal an oversold situation, suggesting a possible upward correction.
The AUD/USD pair may find a key level near 0.6400 for support. A break below this psychological threshold could amplify downward pressure, potentially driving the pair toward the yearly low of 0.6348, last touched on August 5.
The immediate resistance lies at the psychological level of 0.6500. A break above this could lift the pair toward the nine-day EMA at 0.6525, followed by the 14-day EMA at 0.6553. Surpassing these EMAs may pave the way for a move toward the three-week high of 0.6687.
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.13% | -0.07% | 0.17% | 0.00% | -0.08% | -0.07% | -0.12% | |
| EUR | 0.13% | 0.06% | 0.28% | 0.15% | 0.05% | 0.05% | 0.02% | |
| GBP | 0.07% | -0.06% | 0.22% | 0.09% | -0.01% | -0.01% | -0.05% | |
| JPY | -0.17% | -0.28% | -0.22% | -0.13% | -0.25% | -0.25% | -0.27% | |
| CAD | -0.01% | -0.15% | -0.09% | 0.13% | -0.11% | -0.09% | -0.13% | |
| AUD | 0.08% | -0.05% | 0.01% | 0.25% | 0.11% | 0.00% | -0.04% | |
| NZD | 0.07% | -0.05% | 0.00% | 0.25% | 0.09% | -0.01% | -0.04% | |
| CHF | 0.12% | -0.02% | 0.05% | 0.27% | 0.13% | 0.04% | 0.04% |
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).
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.
Japan's Economy Minister Ryosei Akazawa said on Friday that he “expects modest economic recovery to continue, driven by improving employment and wage environment.”
He further noted that there is a “need to carefully monitor downside risks from overseas economies and volatility in financial, capital markets.”
On Friday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.1992, as compared to the previous day's fix of 7.1966 and 7.1966 Reuters estimates.
The USD/JPY pair extends the rally to around 156.60, the highest level since July 23 during the early Asian session on Friday. The upward movement of the pair is bolstered by the firmer US Dollar (USD) broadly. Traders brace for the US October Retail Sales, which is due later on Friday.
The preliminary Japan’s Gross Domestic Product (GDP) expanded by 0.2% QoQ in the third quarter (Q3) versus 0.5% prior, in line with the market consensus. The country’s GDP Annualized grew 0.9% in Q3, above the market consensus of 0.7%, and slowed sharply from the 2.2% growth seen in Q2. The Japanese Yen remains weak in an immediate reaction to the GDP report.
The Bank of Japan (BoJ) Governor Kazuo Ueda warned during the October monetary policy decision that the central bank would scrutinize income data for future policy decisions. The uncertainty surrounding the BoJ rate-hike plans is likely to weigh on the JPY against the Greenback in the near term. However, the verbal intervention from Japanese authorities might help limit the JPY's losses.
On the USD’s front, Federal Reserve (Fed) Chair Jerome Powell noted on Thursday that strong US economic growth will allow policymakers to take their time in deciding about the size and the pace to cut interest rates. “The economy is not sending any signals that we need to be in a hurry to lower rates,” said Powell. The cautious stance of Powell prompted traders to lower their expectations for a December rate cut, lifting the Greenback.
Meanwhile, Richmond Fed President Thomas Barkin stated on Thursday that while the Fed has made strong progress so far, there’s still more work to be done to keep the momentum going. The markets have priced in nearly 59.1% of the 25 basis points (bps) rate cut by the Fed at the December meeting, down from 75% last week, according to the CME FedWatch Tool.
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.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $68.40 on Friday. The WTI price remains steady as a steep draw in US fuel stocks offset oversupply fears.
The Energy Information Administration (EIA) weekly report showed crude stocks increased last week. Crude oil stockpiles in the United States for the week ending November 8 rose by 2.089 million barrels, compared to a rise of 2.149 million barrels in the previous week. The market consensus estimated that stocks would increase by 1.85 million barrels. Meanwhile, US gasoline inventories hit a two-year low, falling by 4.4 million barrels last week, compared with analysts' expectations of a 600,000-barrel build.
A stronger US Dollar (USD) might cap the upside for the USD-denominated oil as it makes oil more expensive for holders of other currencies, which can reduce demand. The US Dollar Index (DXY), a measure of the value of the USD against a basket of six currencies, currently trades near 106.90 after hitting a fresh year-to-date high near 107.05.
"Crude futures are trying to establish equilibrium pricing as a rising U.S. dollar index is creating a further headwind, along with a Trump administration that will now have control of Congress, which is likely to roll back most of the Biden administration's energy policies," Dennis Kissler, senior vice president of trading at BOK Financial, said in a note.
Furthermore, the Organisation of Petroleum Exporting Countries (OPEC) latest downward revision for demand growth earlier this week might weigh on the WTI. OPEC lowered its global oil demand growth predictions for 2024 and 2025, claiming sluggish demand in China, India, and other areas, marking the producer group's fourth straight downward revision.
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.
EUR/USD briefly tested fresh year-long lows on Thursday, piercing the 1.0500 handle for the first time in 54 weeks. A lack of meaningful EU data is doing very little to provide support for the Euro, and Fiber bids continue to tilt in favor of the safe haven US Dollar. European Gross Domestic Product (GDP) growth figures failed to spark a bid under the Euro, printing exactly at-expectations. Quarterly pan-EU GDP came in at 0.4% QoQ exactly as markets expected, with annualized GDP also matching forecasts at 0.9% YoY.
Producer Price Index (PPI) producer-level inflation figures came in roughly as expected, despite a slight upswing in annualized core PPI numbers. Headline PPI matched forecasts in October, rising 0.2% MoM compared to the previous month’s revised 0.1%. Core PPI for the year ended in October accelerated more than expected, ticking up to 3.1% compared to the expected 3.0% rising above the previous period’s 2.9%, which was also revised slightly higher from 2.8%.
The economic calendar is once again one-sided on Friday, with US Retail Sales in the barrel to wrap up the trading week. The last blast of US economic data this week will be Retail Sales for October, which are expected to ease to 0.3% from the previous month’s 0.4%.
The EUR/USD daily chart is displaying sustained bearish momentum, with the pair sharply falling below the 50-day and 200-day Exponential Moving Averages (EMAs), which are positioned around 1.0867 and 1.0884, respectively. The recent "death cross," where the 50-day EMA crossed below the 200-day EMA, reinforces the downside pressure and suggests a continuation of the prevailing downtrend. EUR/USD is now trading near multi-month lows around the 1.0520 level, which could act as a psychological support in the short term. However, any recovery is likely to face strong resistance around the 1.0700 level, where the EMAs converge.
The MACD indicator further supports the bearish outlook, as the MACD line remains below the signal line in negative territory, with expanding histogram bars below the zero line. This configuration indicates a robust downward trend, with selling momentum persisting. Unless the pair manages to stage a clear breakout above the EMAs, the bias remains firmly to the downside. A break below the 1.0500 level could open the door for a deeper decline, with 1.0400 emerging as the next potential support area. Bulls would need a decisive recovery above the 1.0880 mark to negate the bearish bias.
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 USD/CAD pair trades flat near 1.4060 amid the consolidation of the US Dollar (USD) during the early Asian session on Friday. The US October Retail Sales will be in the spotlight on Friday along with the Fedspeak.
The Greenback holds steady near the fresh 2024 highs despite Trump trades showing signs of slowing. The upside of the pair might be limited amid the cautious remarks from the US Federal Reserve (Fed). On Thursday, Fed Chair Jerome Powell said that the recent performance of the US economy has been “remarkably good,” giving the Fed room to lower interest rates at a careful pace.
Furthermore, Producer inflation in the US rose more than expected in September. Data released by the US Bureau of Labor Statistics on Thursday showed that the US Producer Price Index (PPI) rose 2.4% on a yearly basis in October. This figure followed the 1.9% rise seen in September (revised from 1.8%) and came in above the market expectation of 2.3%.
On the Loonie front, the decline in crude oil prices could weigh on the commodity-linked Canadian Dollar (CAD) 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.
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.
GBP/USD fell to a fresh 19-week low on Thursday, piercing the 1.2700 handle before finding near-term technical support from 1.2650. The Pound continues to ease with a lack of meaningful faith behind it, while broader markets continue to bolster the Greenback higher across the board.
Producer Price Index (PPI) producer-level inflation figures came in roughly as expected, despite a slight upswing in annualized core PPI numbers. Headline PPI matched forecasts in October, rising 0.2% MoM compared to the previous month’s revised 0.1%. Core PPI for the year ended in October accelerated more than expected, ticking up to 3.1% compared to the expected 3.0% rising above the previous period’s 2.9%, which was also revised slightly higher from 2.8%.
Coming up on Friday, UK Gross Domestic Product (GDP) figures will give Cable bidders something to chew on, while Greenback buyers will be looking for a surprise improvement in US Retail Sales. UK GDP for the third quarter is expected to sink to 0.2% QoQ from the previous quarter’s print ofg 0.5%. US Retail Sales are likewise forecast to ease slightly in October, expected to print at 0.3% MoM compared to September’s 0.4%.
The GBP/USD daily chart shows a pronounced downtrend with significant bearish momentum. After a brief consolidation period around the 1.2900 level, the pair has broken below the 50-day and 200-day Exponential Moving Averages (EMAs), which were providing support near 1.2990 and 1.2865, respectively. This bearish cross between the 50-day EMA (blue line) and the 200-day EMA (black line) is a strong sell signal, commonly known as a "death cross," suggesting further downside potential. The recent break below these key moving averages reinforces the likelihood of continued downward pressure, with the next significant support zone around 1.2600.
The MACD indicator also confirms the bearish bias, as the MACD line has crossed below the signal line in negative territory. This indicates a strong bearish trend with increasing downside momentum. The histogram bars are deepening below the zero line, suggesting that selling pressure remains strong and the pair may struggle to find support. If the bearish momentum persists, GBP/USD could extend its losses, potentially testing the psychological 1.2500 level. A break above the 1.2865 resistance (200-day EMA) would be required to alleviate some of the immediate downside pressure, though the bias remains bearish as long as price remains below the 50-day EMA.
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.
The Canadian Dollar (CAD) backslid into new lows against the Greenback on Thursday, slipping to a fresh 54-month low and sending the USD/CAD pair to its highest prices in four and a half years. The pair broke through the 1.4000 handle, with the US Dollar getting sent even higher on the back of a slight upswing in US Producer Price Index (PPI) inflation figures on Thursday, sending the Loonie to multi-year lows.
Canada remains absent from the economic calendar this week with a notable lack of meaningful data releases on the radar. CAD traders will be forced to sit on their hands until next Tuesday’s Canadian Consumer Price Index (CPI) inflation update for October, which is unlikely to deliver much good news to Loonie fans.
With USD/CAD breaching into multi-year highs, a chasm is opening up below the Canadian Dollar (CAD). After a brief reprieve last week, the Greenback is once again on pace to close higher against the CAD on a weekly basis. USD/CAD has risen nearly 5% since finding a floor near 1.3400 in September, cracking through long-term technical resistance and piercing the 1.4000 handle.
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.
The NZD/USD pair declined by 0.65% during Thursday's session and fell below the 0.5900 mark, extending declines for the sixth day and hitting lows since November 2023. The bearish momentum escalated and oversold signals emerged.
The NZD/USD pair's bearish sentiment is reinforced by technical indicators. The Relative Strength Index (RSI) has slipped below 30, indicating oversold territory and rising selling pressure. The declining slope of the RSI suggests that this pressure is intensifying. Furthermore, the Moving Average Convergence Divergence (MACD) remains bearish, with the histogram declining and red. These indicators align with the price action, confirming the pair's downward trajectory.
Support levels are at 0.5830, 0.5810, and 0.5800, while resistance levels are at 0.5900, 0.5950, and 0.5970. Traders should monitors these levels in case the oversold nature of the movements push the pair into a consolidation mode.
Fonte de dados: FX Street
Declaração de exoneração de responsabilidade:Este material é fornecido pela FXStreet como uma comunicação de marketing geral apenas para fins de informação e não constitui uma pesquisa de investimento independente. Nada nesta comunicação contém, ou deve ser considerado como contendo, um conselho de investimento ou uma recomendação de investimento ou uma solicitação para efeitos de compra ou venda de qualquer instrumento financeiro. Toda a informação fornecida é recolhida de fontes conceituadas e qualquer informação que contenha uma indicação de desempenho passado não constitui uma garantia ou indicador fiável de desempenho futuro. Os utilizadores reconhecem que qualquer investimento em produtos FX e CFDs é caracterizado por um certo grau de incerteza e que qualquer investimento desta natureza envolve um elevado nível de risco pelo qual os utilizadores são os únicos responsáveis e suscetíveis. Não assumimos qualquer responsabilidade por qualquer perda resultante de qualquer investimento feito com base nas informações aqui apresentadas.
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