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The Pound Sterling (GBP) weakens against a majority of its peers, except Asia-Pacific currencies, as the United Kingdom (UK) Retail Sales data for October contracted at a faster-than-expected pace. The British currency trades near 1.2550 against the US Dollar (USD) in Friday’s London session, a six-month low.
Retail Sales, a key measure of consumer spending, declined by 0.7% compared with the previous month. In September, sales increased by a marginal 0.1%, downwardly revised from the 0.3% previously reported. Year-on-year, Retail Sales grew by 2.4%, less than the estimates of 3.4% and the former release of 3.2% (downwardly revised from 3.9%).
Weak Retail Sales data is expected to boost expectations of interest-rate cuts by the Bank of England (BoE) in the December meeting as they highlight weakness in consumer spending, a key growth factor for the UK economy.
Still, for now, traders expect the BoE to leave interest rates unchanged at 4.75% not only in the December meeting but also in the one to be held in February. This is because UK inflation data came in hotter than expected in October, with services inflation – a closely watched inflation indicator by BoE officials for decision-making on interest rates – rising to 5%.
Investors should brace for more volatility in the British currency as the flash S&P Global/CIPS Purchasing Managers’ Index (PMI) data is scheduled to be published at 09:30 GMT. The Composite PMI is expected to come in at 51.8, unchanged from the previous month, suggesting that the country's private-sector activity continued to expand. Investors will also focus on the impact of the Labour Party’s first budget on business sentiment.
The Pound Sterling slides to near 1.2550 against the US Dollar on Friday, extending losses for a third consecutive trading day. The GBP/USD pair's outlook has turned bearish given that all short-to-long term Exponential Moving Averages (EMA) are sloping down.
The 14-day Relative Strength Index (RSI) remains in the 20.00-40.00 range, suggesting that a strong bearish momentum is 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 around 1.2720 will act as key resistance.
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 extends its losing streak for the third consecutive day, trading around 0.5830 during the European hours on Friday. This downside of the NZD/USD pair is attributed to growing expectations that the Reserve Bank of New Zealand (RBNZ) could deliver a bumper interest rate cut next week.
Markets are fully anticipating a 50 basis point cut in the RBNZ's cash rate to 4.25% at next week's monetary policy meeting, aligning with the reduction seen in October. Additionally, there is a 25% probability priced in for a more aggressive 75-basis-point cut.
On Thursday, New Zealand's Treasury Chief Economic Adviser, Dominick Stephens, indicated that economic and fiscal forecasts are likely to be revised downward, citing a prolonged slowdown in productivity.
Traders await the US S&P Global PMI data, set to be released later in the North American session. The US Manufacturing PMI for November is forecast to increase to 48.8 from 48.5, while the Services PMI is expected to rise to 55.3 from 55.0.
The US Dollar Index (DXY), which measures the USD against a basket of major currencies, rises to a fresh yearly high of 107.20 during the European session on Friday. The US Dollar gains strength following the release of last week's Initial Jobless Claims data.
US 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 forecast of 220,000. This development has sparked speculation that the pace of Federal Reserve rate cuts could slow.
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.
The EUR/GBP cross gains momentum to near 0.8330 during the early European session on Friday. The Pound Sterling (GBP) weakens after the release of UK Retail Sales data for October. Later on Friday, traders await the preliminary Eurozone HCOB Purchasing Managers Index (PMI) and the European Central Bank's (ECB) President Lagarde speech for fresh impetus.
Data released by the Office for National Statistics (ONS) on Friday showed that UK Retail Sales declined 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%. Meanwhile, Retail Sales, stripping the auto motor fuel sales, fell by 0.9% MoM in October, compared to a 0.1% rise (revised from 0.3%) in the previous reading, missing the estimation of a 0.4% decline.
The GBP attracts some sellers in an immediate reaction to the downbeat UK Retail Sales and acts as a tailwind for the EUR/GBP cross. The attention will shift to the preliminary UK S&P Global/CIPS PMI data, which is due later on Friday.
On the other hand, the rising speculation for more aggressive interest rate cuts by the European Central Bank (ECB) weighs on the shared currency. The ECB policymaker Yannis Stournaras said earlier this week that the central bank will reduce interest rates by 0.25% in December, with further cuts possible in 2025. Additionally, Bank of Italy governor Fabio Panetta said the ECB must commit to faster interest rate cuts in a bid to lift the Eurozone economy. However, Panetta also called on the ECB to ditch its current “meeting-by-meeting” guidance that avoids a longer-term commitment to its monetary policy.
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.
GBP/JPY remains steady around 194.50 during the early European hours, following the lower-than-expected UK Retail Sales figures for October released on Friday. Traders now focus on S&P Global UK Purchasing Managers’ Index (PMI) figures due later in the day.
UK Retail Sales dropped by 0.7% month-over-month in October, significantly exceeding the expected 0.3% decline and reversing the previous 0.1% increase. On an annual basis, Retail Sales grew by 2.4%, falling short of the anticipated 3.4% rise and the prior reading of 3.2%.
The GBP/JPY cross faced challenges during the Asian session as the Japanese Yen (JPY) gained ground following insights from a Reuters survey on expectations for the Bank of Japan (BoJ). According to the survey, 56% of economists anticipate the BoJ will raise interest rates at its December meeting, driven by the JPY’s depreciation and improving economic conditions.
Additionally, Governor Kazuo Ueda stressed the need to address Yen's impact on economic and price stability, suggesting the possibility of further rate hikes. Additionally, Prime Minister Shigeru Ishiba’s administration is considering a $90 billion stimulus package aimed at alleviating the burden of rising prices on households.
Recent data indicated that Japan’s National Consumer Price Index (CPI) slowed to a nine-month low of 2.3% year-over-year in October. Similarly, the annual core CPI, which excludes fresh food, also dropped to 2.3%, a six-month low, slightly above the forecast of 2.2%.
Additionally, the Jibun Bank Japan Services Purchasing Managers’ Index (PMI) increased to 50.2 in November, up from 49.7 in October, which had marked the lowest level in four months. However, the Manufacturing PMI unexpectedly fell to 49.0 in November, the lowest reading since March, down from 49.2 in October, missing market expectations of 49.5.
The Retail Sales data, released by the Office for National Statistics on a monthly basis, measures the volume of sales of goods by retailers in Great Britain directly to end customers. Changes in Retail Sales are widely followed as an indicator of consumer spending. Percent changes reflect the rate of changes in such sales, with the MoM reading comparing sales volumes in the reference month with the previous month. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.
Read more.Last release: Fri Nov 22, 2024 07:00
Frequency: Monthly
Actual: -0.7%
Consensus: -0.3%
Previous: 0.3%
Source: Office for National Statistics
The UK's Office for National Statistics (ONS) reported on Friday that Retail Sales declined 0.7% on a monthly basis in October. This reading followed the 0.1% increase recorded in September and came in worse than the market expectation for a decline of 0.3%. On a yearly basis, Retail Sales rose 2.4%, compared to the market expectation of 3.4%.
In the same period, Retail Sales ex-Fuel fell 0.9% on a monthly basis, while increasing 2% annually.
GBP/USD stays under bearish pressure following these figures and was last seen trading at its lowest level since May near 1.2550, losing 0.3% on the day.
Here is what you need to know on Friday, November 22:
Following a quiet European session, the US Dollar (USD) regathered its strength in the second half of the day on Thursday and continued to push higher early Friday, reaching its highest level since October 2023 above 107.00. S&P Global will release preliminary November Manufacturing and Services Purchasing Managers Index (PMI) data for Germany, the Eurozone and the UK.
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.68% | 0.39% | 0.46% | -0.76% | -0.51% | 0.55% | -0.10% | |
| EUR | -0.68% | -0.12% | -0.11% | -1.32% | -1.03% | -0.02% | -0.67% | |
| GBP | -0.39% | 0.12% | 0.04% | -1.20% | -0.92% | 0.11% | -0.55% | |
| JPY | -0.46% | 0.11% | -0.04% | -1.23% | -0.90% | 0.14% | -0.50% | |
| CAD | 0.76% | 1.32% | 1.20% | 1.23% | 0.28% | 1.32% | 0.66% | |
| AUD | 0.51% | 1.03% | 0.92% | 0.90% | -0.28% | 1.03% | 0.37% | |
| NZD | -0.55% | 0.02% | -0.11% | -0.14% | -1.32% | -1.03% | -0.65% | |
| CHF | 0.10% | 0.67% | 0.55% | 0.50% | -0.66% | -0.37% | 0.65% |
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).
The data from the US showed on Thursday that the weekly Initial Jobless Claims declined to 213,000 from 219,000. In the meantime, Existing Home Sales increased by 3.4% on a monthly basis in October. In addition to these upbeat data releases, hawkish comments from Federal Reserve (Fed) officials further supported the USD during the American trading hours. In the European morning on Friday, US stock index futures trade marginally lower, while the benchmark 10-year US Treasury bond yield holds steady at around 4.4%.
In the Asian session on Friday, Statistics Bureau of Japan announced that the National Consumer Price Index (CPI) rose 2.3% on a yearly basis in October, down from 2.5% in September. Meanwhile, Reuters reported that Japan is preparing a fresh stimulus package valued at 13.9 trillion yen ($89.7 billion), aiming to mitigate the financial strain on households caused by rising prices. After losing more than 0.5% on Thursday, USD/JPY edges higher early Friday and was last seen trading near 155.00.
EUR/USD turned south in the American session on Thursday and broke below 1.0500. The pair struggles to stage a rebound early Friday and trades at around 1.0470.
GBP/USD lost 0.5% on Thursday and extended its slide during the Asian trading hours on Friday. At the time of press, the pair was trading at its weakest level since May below 1.2600.
The data from Australia showed that the Judo Bank Composite PMI declined to 49.4 in November's flash estimate from 50.2 in October. AUD/USD came under modest bearish pressure after this data and was last seen trading slightly below 0.6500, where it was down 0.3% on the day.
Gold extended its weekly rally and closed the fourth consecutive day in positive territory on Thursday. XAU/USD preserves its bullish momentum in the European morning on Friday and continues to advance toward $2,700.
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.
AUD/JPY continues its decline, nearing 100.30 during the Asian trading hours on Friday. This drop is likely due to a stronger Japanese Yen (JPY), following insights from a Reuters survey on expectations for the Bank of Japan (BoJ). According to the survey, 56% of economists anticipate the BoJ will raise interest rates at its December meeting, driven by the JPY’s depreciation and improving economic conditions.
Additionally, 90% of economists expect the BoJ to increase rates to 0.50% by the end of March 2025. The median forecast for the terminal rate is 1.00%, with estimates ranging from 0.50% to 2.50%. Furthermore, 96% of economists believe that a potential return of Donald Trump to the US presidency could prompt the BoJ to hike rates further, as his policies are expected to increase global inflation.
Governor Kazuo Ueda stressed the need to address the Yen's impact on economic and price stability, suggesting the possibility of further rate hikes. Additionally, Prime Minister Shigeru Ishiba’s administration is considering a $90 billion stimulus package aimed at alleviating the burden of rising prices on households.
Recent data indicated that Japan’s National Consumer Price Index (CPI) slowed to a nine-month low of 2.3% year-over-year in October. Similarly, the annual core CPI, which excludes fresh food, also dropped to 2.3%, a six-month low, slightly above the forecast of 2.2%.
Additionally, the Jibun Bank Japan Services Purchasing Managers’ Index (PMI) increased to 50.2 in November, up from 49.7 in October, which had marked the lowest level in four months. However, the Manufacturing PMI unexpectedly fell to 49.0 in November, the lowest reading since March, down from 49.2 in October, missing market expectations of 49.5.
The Australian Dollar (AUD) weakens following the release of mixed Judo Bank PMI data from Australia on Friday. However, the AUD received support from a hawkish outlook from the Reserve Bank of Australia (RBA) regarding future interest rate decisions, which could help limit the downside for the AUD/JPY cross.
The Judo Bank Australia Manufacturing PMI rose to 49.4 in November from 47.3 in October, marking its 10th consecutive month of contraction, though the decline slowed to its weakest pace in six months. Meanwhile, the Services PMI fell to 49.6 from 51.0, signaling the first contraction in services activity in ten months.
The USD/CAD pair edges higher during the Asian session on Friday, albeit it lacks follow-through buying and remains below the 1.4000 psychological mark amid mixed cues.
Hotter Canadian CPI print on Tuesday forced investors to scale back their bets for a big rate cut by the Bank of Canada (BoC) in December. Apart from this, this week's goodish recovery in Crude Oil prices, from over a two-month low touched on Monday, underpins the commodity-linked Loonie and acts as a headwind for the USD/CAD pair. The downside, however, remains cushioned on the back of a strong bullish sentiment surrounding the US Dollar (USD), which continues to draw support from bets for a less dovish Federal Reserve (Fed).
From a technical perspective, the USD/CAD pair showed some resilience below the 100-period Simple Moving Average (SMA) on the 4-hour chart. The subsequent uptick, along with positive oscillators on the daily chart, suggests that the path of least resistance for spot prices is to the downside. That said, the lack of any meaningful buying interest warrants some caution before confirming that the recent pullback from the 1.4100 mark, or the highest level since May 2020 has run its course and positioning for any further appreciating move.
Meanwhile, the 100-period SMA on the 4-hour chart, currently pegged around mid-1.3900s, and the overnight swing low, near the 1.3930 area, now seems to protect the immediate downside ahead of the 1.3900 mark. A convincing break below the latter could be seen as a fresh trigger for bearish traders and accelerate the fall towards the 1.3860-1.3855 intermediate support en route to the monthly low, around the 1.3820-1.3815 region. This is closely followed by the 1.3800 round figure, which if broken decisively will set the stage for deeper losses.
On the flip side, sustained strength and acceptance above the 1.4000 psychological mark will be seen as a key trigger for bullish traders. The subsequent move-up should allow the USD/CAD pair to surpass the weekly top high, around the 1.4035 area, and aim to conquer the 1.4100 round figure. The move up could extend further towards the 1.4170 area en route to the 1.4200 mark, mid-1.4200s, the 1.4300 round figure and the 1.4340 supply zone.
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 USD/CHF pair trades with mild losses around 0.8860 during the early European session on Friday. The fears of a potential escalation in the Russia-Ukraine conflict boost the safe-haven flows, benefiting the Swiss Franc (CHF) against the Greenback. Traders await the flash US S&P Global Purchasing Managers Index (PMI) data and the final Michigan Consumer Sentiment on Friday for fresh impetus.
Russian President Vladimir Putin said on Thursday that Russia carried out a strike with a “ballistic missile with a non-nuclear hypersonic warhead” with a medium range on the Ukrainian city of Dnipro, per CNN. Putin also warned the West that Moscow could attack any country's military facilities that utilised weapons against Russia. The development surrounding the Russia-Ukraine war will be closely watched, and any signs of rising geopolitical risks could lift the safe-haven currency like the CHF in the near term.
On the other hand, the rising expectation of less aggressive monetary policy easing by the US Federal Reserve (Fed) might support the US Dollar (USD). On Thursday, Chicago Fed President Austan Goolsbee reiterated his support for another interest rate cut and his openness to doing them more slowly. Goolsbee added that inflation over the last year and a half has eased and is on its way to the Fed's 2% target.
The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.
The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.
The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.
As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
EUR/USD remains on a downward trend for the third consecutive session, hovering around 1.0470 during the Asian trading hours on Friday. The pair dropped to a low of 1.0462 on Thursday, a level not seen since October 2023. This decline is driven by the Euro's weakness, fueled by expectations that the European Central Bank (ECB) may speed up its policy easing.
The ECB is broadly expected to reduce its Deposit Facility Rate by 25 basis points (bps) to 3% during its December meeting. Market participants also anticipate that the ECB will move toward a neutral policy stance more rapidly in 2025, amid growing concerns about the Eurozone’s economic outlook.
Traders are awaiting the release of the Eurozone HCOB Purchasing Managers Index (PMI) data for November on Friday. The Pan-EU Manufacturing PMI is expected to remain flat at a contractionary 46.0, while the Services PMI is projected to rise slightly to 51.8 from 51.6.
Attention will then shift to the US S&P Global PMI data, set to be released later in the North American session. The US Manufacturing PMI for November is forecast to increase to 48.8 from 48.5, while the Services PMI is expected to rise to 55.3 from 55.0.
The US Dollar Index (DXY), which measures the USD against a basket of major currencies, trades near 107.00, just below its recent yearly high of 107.15 reached on Thursday. The US Dollar gained strength following the release of last week's Initial Jobless Claims data.
US 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 forecast of 220,000. This development has sparked speculation that the pace of Federal Reserve rate cuts could slow.
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 EUR/JPY cross attracts some follow-through selling for the second straight day and drops to its lowest level since October 4 during the Asian session on Friday, albeit it managed to rebound a few pips thereafter. Spot prices currently trade around 161.65-161.70 region, still down for the second straight day amid a stronger Japanese Yen (JPY).
The Bank of Japan Governor Kazuo Ueda said on Thursday that the central bank will seriously take into account the impact of the recent foreign exchange-rate movements could have on the economic and price outlook. Adding to this, data released this Friday showed that all three measures of the Consumer Price Index (CPI) in Japan remain above the BoJ's 2% target. This keeps the door open for another BoJ interest rate-hike move in December, which, along with geopolitical tensions stemming from the worsening Russia-Ukraine war, turns out to be a key factor underpinning the safe-haven JPY.
The shared currency, on the other hand, continues with its relative underperformance in the wake of bets for more aggressive interest rate cuts by the European Central Bank (ECB) amid a bleak Eurozone economic outlook. In fact, the ECB is anticipated to cut its Deposit Facility Rate again by 25 basis points (bps) in December and lower rates by a cumulative of 100 bps in 2025. Adding to this, concerns that US President-elect Donald Trump's taunted tariffs could have a significant impact on the region's economic growth further undermine the Euro and exert some pressure on the EUR/JPY cross.
That said, speculations that increased political uncertainty in Japan could delay the BoJ’s plans to raise interest rates further and hold back the JPY bulls from placing aggressive bets. Adding to this, the prevalent risk-on mood caps gains for the safe-haven JPY and helps limit the downside for the EUR/JPY cross. Next on tap is the release of the flash Eurozone PMI prints, which will provide a fresh insight into the region's economic health and influence the common currency. Apart from this, geopolitical development will drive demand for the safe-haven JPY and provide some impetus to the currency pair.
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.06% | 0.10% | -0.08% | 0.04% | 0.08% | 0.40% | -0.04% | |
| EUR | -0.06% | 0.04% | -0.13% | -0.02% | 0.02% | 0.34% | -0.09% | |
| GBP | -0.10% | -0.04% | -0.16% | -0.06% | -0.02% | 0.30% | -0.14% | |
| JPY | 0.08% | 0.13% | 0.16% | 0.11% | 0.15% | 0.46% | 0.04% | |
| CAD | -0.04% | 0.02% | 0.06% | -0.11% | 0.03% | 0.36% | -0.08% | |
| AUD | -0.08% | -0.02% | 0.02% | -0.15% | -0.03% | 0.33% | -0.11% | |
| NZD | -0.40% | -0.34% | -0.30% | -0.46% | -0.36% | -0.33% | -0.44% | |
| CHF | 0.04% | 0.09% | 0.14% | -0.04% | 0.08% | 0.11% | 0.44% |
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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
Gold prices rose in India on Friday, according to data compiled by FXStreet.
The price for Gold stood at 7,293.89 Indian Rupees (INR) per gram, up compared with the INR 7,257.32 it cost on Thursday.
The price for Gold increased to INR 85,074.45 per tola from INR 84,647.97 per tola a day earlier.
| Unit measure | Gold Price in INR |
|---|---|
| 1 Gram | 7,293.89 |
| 10 Grams | 72,941.27 |
| Tola | 85,074.45 |
| Troy Ounce | 226,865.30 |
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 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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Gold price (XAU/USD) prolongs its uptrend for the fifth consecutive day on Friday and climbs to a nearly two-week top, around the $2,690-2,691 area during the Asian session. Intensifying Russia-Ukraine tensions force investors to take refuge in traditional safe-haven assets and turn out to be a key factor underpinning the precious metal. The commodity, which is considered a hedge against inflation, draws additional support from expectations that US President-elect Donald Trump's policies could reignite inflationary pressures.
The XAU/USD bulls, meanwhile, seem rather unaffected by an extension of the post-US election US Dollar (USD) rally to its highest level since October 2023. Meanwhile, speculations that persistent higher inflation could limit the scope for the Federal Reserve (Fed) to ease monetary policy remain supportive of elevated US Treasury bond yields, albeit do little to hinder the Gold price's ongoing positive momentum. This, in turn, supports prospects for a further near-term appreciating move for the commodity, which remains on track to register strong weekly gains and snap a three-week losing streak.
The overnight breakout above the $2,665 confluence – comprising the 50% retracement level of the recent pullback from the all-time peak and the 100-period Simple Moving Average (SMA) on the 4-hour chart – was seen as a key trigger for bulls. Adding to this, technical indicators on the daily chart have again started gaining positive traction and support prospects for a further appreciating move for the Gold price. Hence, some follow-through strength beyond the $2,700 mark, towards the $2,710-2,711 supply zone, looks like a distinct possibility. Acceptance above the said barriers will reaffirm the positive bias and lift the XAU/USD towards the next relevant hurdle near the $2,736-2,737 region.
On the flip side, the $2,665 confluence hurdle breakpoint might now protect the immediate downside ahead of the $2,635-2,634 area, or the 38.2% Fibonacci retracement level. This is followed by the $2,622-2,620 intermediate support and the $2,600 round figure. A convincing break below the latter could make the Gold price vulnerable to accelerate the fall towards the 100-day SMA, around the $2,560 region, en route to last week’s swing low, around the $2,537-2,536 area. Failure to defend the said support levels will shift the bias back in favor of bearish traders and set the stage for deeper losses.
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.
GBP/USD extends its losses for the third successive session, trading around 1.2580 during the Asian hours on Friday. This downside is attributed to the stronger US Dollar (USD) as traders continued to evaluate the Federal Reserve's (Fed) monetary policy outlook following the unexpected drop in US Initial Jobless Claims.
The US Dollar Index (DXY), which tracks the USD against a basket of major currencies, trades near 107.00, just below its fresh yearly high of 107.15 recorded on Thursday. The US Dollar strengthened after the release of the previous week's US Initial Jobless Claims data.
US Jobless Claims fell 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 forecast of 220,000. This development has fueled speculation about a slower pace of Fed rate cuts.
Futures traders now see a 57.8% chance of the Federal Reserve cutting rates by a quarter point, down from around 72.2% last week, according to data from the CME FedWatch Tool.
In November, the GfK Consumer Confidence Index in the United Kingdom (UK) rose by 3 points to -18, up from the previous reading of -21, marking its first improvement in three months. This increase comes as a result of lower interest rates, rising wages, and reduced concerns over tax hikes.
On Friday, traders will be looking ahead to the US S&P Global Purchasing Managers’ Index (PMI) data for both countries. Additionally, UK Retail Sales figures for October and the final Michigan Consumer Sentiment report will also be closely monitored.
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.
Silver price (XAG/USD) retraces its recent losses, trading around $31.00 per troy ounce during the Asian hours on Friday. The prices of safe-haven assets like Silver gained ground due to the escalated situation in the Russia-Ukraine war.
Russian President Vladimir Putin warned on Thursday that the Ukraine conflict is escalating toward a global confrontation, citing the use of US and British-supplied weapons by Ukraine to target Russia, according to Reuters.
Putin stated that Russia had retaliated by deploying a new hypersonic medium-range ballistic missile against a Ukrainian military facility, with further strikes possible. He added that civilians would receive warnings ahead of any future attacks involving these weapons.
Meanwhile, commodity traders continued to evaluate the Federal Reserve's (Fed) monetary policy outlook following the unexpected drop in US Initial Jobless Claims. Claims fell 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 forecast of 220,000. This development has fueled speculation about a slower pace of Fed rate cuts.
Futures traders now see a 57.8% chance of the Federal Reserve cutting rates by a quarter point, down from around 72.2% last week, according to data from the CME FedWatch Tool. Non-interest-bearing Silver may face challenges due to the higher opportunity cost associated with higher interest rates.
However, Federal Reserve Bank of Chicago President Austan Goolsbee commented on Thursday that inflation is on track to reach 2%. Goolsbee noted that over the next year, interest rates are likely to be significantly lower than their current levels. He also suggested that it might be prudent to slow the pace of rate cuts as the Fed approaches a neutral rate level.
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.
The Indian Rupee (INR) trades flat on Friday after hitting an all-time low of 84.50 against the US Dollar (USD) in the previous session. The significant sell-off in domestic equity markets and the rebound in crude oil prices amid the escalating geopolitical tensions between Russia and Ukraine exert some selling pressure on the local currency.
However, the routine intervention from the Reserve Bank of India (RBI), with state-run banks offering USD in the market, might help limit the INR’s losses. Looking ahead, traders will keep an eye on the preliminary HSBC India Manufacturing Purchasing Managers Index (PMI) and Services PMI for November. On the US docket, the flash US S&P Global PMI data and the final Michigan Consumer Sentiment will be released.
The Indian Rupee trades on a flat note on the day. The USD/INR pair remains capped under an ascending trend channel. However, the bullish outlook of the pair prevails as the price holds above the key 100-day Exponential Moving Average (EMA) on the daily chart. Meanwhile, a correction or a further consolidation cannot be ruled out as USD/INR made a new high but the 14-day Relative Strength Index (RSI) did not make a corresponding new high, as indicated by the bearish RSI divergence.
The first upside barrier emerges at the all-time high and the upper boundary of the trend channel of 84.50. Any follow-through buying above this level could pave the way to the 85.00 psychological level.
On the flip side, extended losses below the lower limit of the trend channel of 84.36 could expose the 84.00-83.90 zone, representing the round mark and the 100-day EMA.
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 Australian Dollar (AUD) continues to strengthen against the US Dollar (USD) following the release of mixed Judo Bank Purchasing Managers' Index (PMI) data from Australia on Friday. The AUD also benefits from a hawkish outlook by the Reserve Bank of Australia (RBA) regarding future interest rate decisions.
The Judo Bank Australia Manufacturing PMI rose to 49.4 in November from 47.3 in October, marking its 10th consecutive month of contraction, though the decline slowed to its weakest pace in six months. Meanwhile, the Services PMI fell to 49.6 from 51.0, signaling the first contraction in services activity in ten months.
The US Dollar Index (DXY), which tracks the USD against a basket of major currencies, trades near 107.00, just below its fresh yearly high of 107.15 recorded on Thursday. The US Dollar strengthened after the release of the previous week's Initial Jobless Claims data.
Futures traders now assign a 57.8% probability to the Federal Reserve cutting rates by a quarter point, a decrease from approximately 72.2% last week, according to data from the CME FedWatch Tool.
AUD/USD hovers near 0.6510 on Friday, with technical analysis of the daily chart pointing to a bearish outlook. The pair remains within a descending channel, and the 14-day Relative Strength Index (RSI) sits below 50, reinforcing the negative sentiment.
On the downside, the AUD/USD pair may target the lower boundary of the descending channel at 0.6360, followed by its yearly low of 0.6348, which reached August 5.
On the upside, the AUD/USD pair faces resistance at the nine-day EMA of 0.6518 and the 14-day EMA of 0.6533. A break above these levels could diminish the bearish bias and pave the way for a rally toward the four-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 strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.09% | 0.09% | -0.05% | 0.03% | -0.02% | 0.36% | -0.01% | |
| EUR | -0.09% | -0.00% | -0.11% | -0.05% | -0.10% | 0.27% | -0.10% | |
| GBP | -0.09% | 0.00% | -0.10% | -0.05% | -0.10% | 0.25% | -0.10% | |
| JPY | 0.05% | 0.11% | 0.10% | 0.08% | 0.03% | 0.39% | 0.04% | |
| CAD | -0.03% | 0.05% | 0.05% | -0.08% | -0.06% | 0.32% | -0.05% | |
| AUD | 0.02% | 0.10% | 0.10% | -0.03% | 0.06% | 0.38% | 0.00% | |
| NZD | -0.36% | -0.27% | -0.25% | -0.39% | -0.32% | -0.38% | -0.37% | |
| CHF | 0.00% | 0.10% | 0.10% | -0.04% | 0.05% | -0.00% | 0.37% |
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 Composite Purchasing Managers Index (PMI), released on a monthly basis by Judo Bank and S&P Global, is a leading indicator gauging private-business activity in Australia for both the manufacturing and services sectors. The data is derived from surveys to senior executives. Each response is weighted according to the size of the company and its contribution to total manufacturing or services output accounted for by the sub-sector to which that company belongs. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the Australian private economy is generally expanding, a bullish sign for the Australian Dollar (AUD). Meanwhile, a reading below 50 signals that activity is generally declining, which is seen as bearish for AUD.
Read more.Last release: Thu Nov 21, 2024 22:00 (Prel)
Frequency: Monthly
Actual: 49.4
Consensus: -
Previous: 50.2
Source: S&P Global
The Japanese Yen (JPY) attracted some follow-through buying for the second successive day following the release of slightly higher-than-expected consumer inflation figures from Japan. This comes on top of Thursday's hawkish remarks from BoJ Governor Kazuo Ueda, which keeps expectations for a December interest rate hike in play. Adding to this, Japan's Prime Minister Shigeru Ishiba’s economic stimulus package worth ¥39 trillion boosts the JPY and exerts some pressure on the USD/JPY pair.
That said, the prevalent risk-on environment and elevated US Treasury bond yields hold back traders from placing aggressive bullish bets around the lower-yielding JPY. Investors remain concerned that US President Donald Trump's policies could reignite inflation and force the Federal Reserve (Fed) to cut interest rates slowly. This has been a key factor behind the recent surge in the US bond yields, which keeps the US Dollar (USD) near the year-to-date peak and lends support to the USD/JPY pair.
From a technical perspective, the USD/JPY pair has been showing some resilience below the 154.00 mark. Adding to this, oscillators on the daily chart are holding in positive territory, suggesting that any subsequent slide towards the 153.30-153.25 area, or the weekly low, could be seen as a buying opportunity. Some follow-through selling below the 153.00 mark, however, could drag spot prices to the next relevant support near mid-152.00s en route to the 152.00 round figure. The said handle coincides with the 200-day Simple Moving Average (SMA) and should act as a key pivotal point for short-term traders.
On the flip side, immediate support is pegged near the 155.00 psychological mark, above which the USD/JPY pair could climb to the 155.40 supply zone. A sustained strength beyond the latter could lift spot prices beyond the 156.00 round figure, towards the 156.25-156.30 intermediate hurdle en route to the multi-month peak, around the 156.75 region touched last week.
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 $70.25 on Friday. The WTI price edges higher as an escalation in the Russia-Ukraine conflict raises the fear of crude supply disruption.
The fears of a potential escalation in the Russia-Ukraine conflict fuelled the WTI price this week after Ukraine used missiles supplied by the US and UK into Russian territory. On Thursday, Russian President Vladimir Putin announced the launch of a hypersonic medium-range ballistic missile attack on a Ukrainian military facility. Putin also warned the West that Moscow could attack any country's military installations that utilised weapons against Russia, per Reuters. "The market's focus has now shifted to heightened concerns about an escalation in the war in Ukraine," said Ole Hvalbye, commodities analyst at SEB.
On the other hand, a rise in US crude inventories last week might weigh on the black gold. The Energy Information Administration's (EIA) weekly report showed Crude oil stockpiles in the United States for the week ending November 15 increased by 0.545 million barrels, compared to a rise of 2.089 million barrels in the previous week. The market consensus estimated that stocks would increase by 0.400 million barrels.
Furthermore, the renewed US Dollar (USD) demand might cap the upside for the USD-denominated oil for the time being 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 107.05 after hitting a fresh year-to-date high of around 107.15.
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.
On Friday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.1942, as compared to the previous day's fix of 7.1934 and 7.2502 Reuters estimates.
Japan is preparing a fresh stimulus package valued at 13.9 trillion yen ($89.7 billion), aiming to mitigate the financial strain on households caused by rising prices, per Reuters.
This new stimulus package will surpass last year’s 13.2 trillion yen plan as the country’s debt now exceeds twice the size of its economy.
At the time of writing, USD/JPY is trading 0.18% lower on the day to trade at 154.22.
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 NZD/USD pair trades in negative territory for the third consecutive day near 0.5855 during the early Asian session on Friday. The firmer US Dollar (USD) to the fresh 2024 tops drags the pair lower. Later on Friday, the flash US S&P Global Purchasing Managers Index (PMI) data and the final Michigan Consumer Sentiment will be released.
Data released by the US Department of Labor on Thursday showed that the Initial Jobless Claims fell to 213,000 for the week ending November 16, down from 219,000 (revised from 217,000) in the previous week and below the forecast of 220,000. This upbeat data suggested that the labor market remains strong and the Federal Reserve (Fed) could achieve a soft landing.
Fed Chair Jerome Powell signaled last week that the Fed isn’t necessarily inclined to cut rates at the next upcoming meetings. “The economy is not sending any signals that we need to be in a hurry to lower rates,” said Powell. Meanwhile, Chicago Fed President Austan Goolsbee said on Thursday that it may make sense to slow the pace of Fed rate cuts as inflation is on its way down to 2%. The cautious stance from the Fed continues to underpin the Greenback and acts as a headwind for NZD/USD.
On the Kiwi front, the rising bets that the Reserve Bank of New Zealand (RBNZ) will lower interest rates by 50 basis points (bps) next week might exert some selling pressure on the New Zealand Dollar (NZD). "The economy is growing sluggishly at best, and the labor market is pretty weak. So that sets up the RBNZ next week to deliver another 50 basis point cut, the same as we saw in October," said Shannon Nicoll, associate economist at Moody's Analytics.
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.
EUR/USD trimmed further into the low end on Thursday, continuing to shed weight in the near-term and falling to the lowest bids since November of 2023. All but one of the last eight trading weeks are in the red, and Fiber is set to continue declining unless the Euro finds a reason to materially appreciate.
Europe’s HCOB Purchasing Managers Index (PMI) numbers for November are due early in the European market window. Pan-EU Manufacturing PMI figures are expected to hold flat at a contractionary 46.0, with the European Services PMI component expected to tick up to 51.8 from 51.6.
Median market forecasts for the US side of Friday’s PMI release schedule call for a general upswing in activity expectations, with November’s US Manufacturing PMI expected to rise to 48.8 from 48.5. The Services PMI component is likewise forecast to increase to 55.3 from 55.0.
The EUR/USD pair remains under sustained bearish pressure, trading near 1.0470 as sellers dominate. The price continues to trend below both the 50-day EMA at 1.0890 and the 200-day EMA at 1.0866, reinforcing the bearish outlook after a death cross formed in recent weeks. The downtrend has been unbroken since late October, with the pair hitting fresh multi-month lows. Immediate support lies at 1.0450, a psychological level that could attract buyers; a break below this area might expose 1.0400 as the next target.
The MACD indicator remains firmly bearish, with the MACD line staying below the signal line and the histogram deep in negative territory. Although the histogram shows subtle signs of easing, the overall momentum suggests limited prospects for a bullish reversal in the near term. Bulls need to reclaim the 50-day EMA to initiate a meaningful recovery, while bears will aim for further losses if the pair fails to hold above the 1.0450 threshold. Traders should watch for any significant price action around this support zone for clues about the pair's next move.
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.
Japan’s National Consumer Price Index (CPI) rose 2.3% YoY in October, compared to the previous reading of 2.5%, according to the latest data released by the Japan Statistics Bureau on Friday,
Further details unveil that the National CPI ex Fresh food arrived at 2.3% YoY in October versus 2.4% prior. The figure was above the market consensus of 2.2%.
Following Japan’s CPI inflation data, the USD/JPY pair is down 0.15% on the day at 154.27.
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 preliminary reading of Australia's Judo Bank Manufacturing Purchasing Managers Index (PMI) improved to 49.4 in November from 47.3 in October, the latest data published by Judo Bank and S&P Global showed on Friday.
The Judo Bank Australian Services PMI eased to 49.6 in November from the previous reading of 51.0, while the Composite PMI declined to 49.4 in November versus 50.2 prior.
At the press time, the AUD/USD pair was up 0.08% on the day to trade at 0.6509.
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 USD/CAD pair trades with mild gains around 1.3975 during the early Asian session on Friday. The strengthening of the US Dollar (USD) to new 2024 peaks provides some support to the pair. Investors brace for the flash S&P Global Manufacturing and Services Purchasing Managers Index (PMI), along with the final Michigan Consumer Sentiment, which is due later on Friday.
Recent comments from the Federal Reserve (Fed) officials boost the USD broadly. Chicago Fed President Austan Goolsbee said on Thursday that it may make sense to the slow pace of Fed rate cuts as inflation is on its way down to 2%. Additionally, markets expect Trump's proposed policies including tax cuts, trade tariffs and deficit spending could trigger a fresh wave of inflation and could compel the US Fed to slow the pace of rate reductions.
The rising expectation that the Fed may take a slower course in its rate cut path continues to underpin the Greenback. Meanwhile, the US Dollar Index (DXY), which measures the USD against a basket of currencies, currently trades near 107.00, the highest level since November 2023. Futures traders are now pricing in a 57.8% odds that the Fed will cut rates by a quarter point, down from around 72.2 % last week, according to data from the CME FedWatch Tool.
On the other hand, the possibility that the Bank of Canada (BoC) would deliver a second oversized rate cut next month has diminished after the latest Canadian inflation report came in slightly hotter than expected. The markets have priced in a nearly 23% chance of a 50 basis-points (bps) rate cut by the BoC at the December meeting, down from nearly 40% before the inflation report.
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 shed another four-tenths of a percent on Thursday, tapping the pair’s lowest bids in six months as the Pound Sterling’s underlying weakness drags the pair further into the low end against the Greenback. Market pressures are coiling ahead of Friday’s key prints that are due on both sides of the pond to wrap up an otherwise low-impact week.
Friday will kick off with an early print of UK Retail Sales figures for October. UK Retail Sales are expected to contract by 0.3% MoM compared to September’s 0.3%. On an annualized basis, UK Retail Sales growth is forecast to ease to 3.4% YoY from the previous 3.9%.
Global Purchasing Managers Index (PMI) business activity figures will release on Friday on a rolling schedule, with PMI figures due on both sides of the Atlantic. UK Manufacturing PMI survey results for November are expected to hold steady at 49.9, just beneath the contraction cutoff level, while UK Services PMI numbers are forecast to tick upwards to 52.1 from 52.0.
Median market forecasts for the US side of Friday’s PMI release schedule call for a general upswing in activity expectations, with November’s US Manufacturing PMI expected to rise to 48.8 from 48.5. The Services PMI component is likewise forecast to increase to 55.3 from 55.0.
The GBP/USD daily chart reveals a bearish narrative as the pair continues its downward trajectory, trading around 1.2590. The price action has remained below the 50-day (blue) and 200-day (black) Exponential Moving Averages (EMAs), confirming a death cross pattern formed earlier, which signals prolonged downside momentum. The pair is testing a key support zone near 1.2590, a level that coincides with previous consolidation in May. A decisive breakdown below this region could open the door to further losses toward 1.2500, where psychological support might offer temporary respite.
The MACD indicator at the bottom underscores the bearish sentiment, with the MACD line extending below the signal line, maintaining a downward slope. Additionally, the histogram remains in negative territory, albeit showing minor signs of tapering momentum. This suggests potential consolidation in the near term before the next decisive move. On the flip side, for the bulls to regain control, a recovery above the 50-day EMA at 1.2925 would be critical, with further resistance seen near 1.3000. Traders should monitor developments around the support and EMA levels closely, as they could determine the pair's medium-term direction.
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) drove into near-term highs early on Thursday before running out of gas and settling close to the day’s opening bids. A fresh acceleration in Canadian manufacturing inflation will add further pressure to the Bank of Canada (BoC) in the face of its acceleration of rate cuts throughout 2024, but immediate market reaction was limited.
Canada’s Industrial Product Prices and Raw Material Price Index both accelerated to the top end of their near-term ranges in October, kicking inflationary pressures on the high end at the manufacturing level of the Canadian economy. Despite the whipsaw in producer inflation pressures, The CAD saw little market impact from the low-tier figure as Loonie markets await Friday’s Canadian Retail Sales print.
The Canadian Dollar (CAD) tested a six-day low on Thursday, despite getting pushed back into the day’s opening bids. USD/CAD eased back below 1.3950 for the first time since November 13, but a lack of sustained momentum kept the pair pinned just below 1.4000.
The USD/CAD pair is stuck close to medium-tern highs with the US Dollar trading well north of the 200-day Exponential Moving Average (EMA) against the Loonie. A fresh round of CAD bidding will send the pair back into the 50-day EMA near 1.3825.
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.
مصدر البيانات: FX Street
إخلاء المسئولية : يتم توفير هذه المادة من قِبل أف اكس ستريت باعتبارها وسيلة اتصال تسويقية عامة لأغراض المعلومات فقط ولا تشكل بحثًا استثماريًا مستقلًا. لا يوجد في هذا البلاغ ما يحتوي على أو يجب اعتباره مشورة استثمارية أو توصية استثمارية أو طلب لغرض شراء أو بيع أي أداة مالية. يتم جمع جميع المعلومات المقدمة من مصادر محترمة وأي معلومات تحتوي على إشارة إلى الأداء السابق ليست ضمانًا أو مؤشرًا موثوقًا للأداء في المستقبل. يقر المستخدمون بأن أي استثمار في منتجات العملات الأجنبية والعقود مقابل الفروقات يتميز بدرجة معينة من عدم اليقين وأن أي استثمار من هذا النوع ينطوي على درجة عالية من المخاطرة يتحمل المستخدمون وحدهم المسؤولية والموثوقية. نحن لا نتحمل أي مسؤولية عن أي خسارة تنشأ عن أي استثمار يتم على أساس المعلومات المقدمة هنا.
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بند قانوني: تأسست HF Markets (السلفادور) ذات المسؤولية المحدودة في سانت فينسنت والغرينادين كشركة أعمال دولية تحت رقم التسجيل 22747 IBC 2015.
يتم تشغيل الموقع الإلكتروني ويوفر المحتوى من قبل مجموعة شركات HF Markets ، والتي تشمل:
تحذير من المخاطر: قد لا يكون تداول المنتجات ذات الرافعة المالية مثل الفوركس والمشتقات، مناسبًا لجميع المستثمرين؛ إذ إنها تحمل درجة عالية من المخاطرة لرأس مالك. رجاءً التأكد من فهمك الكامل للمخاطر المتضمَّنة، مع مراعاة أهداف استثماراتك ومستوى الخبرة، قبل التداول، وفي حالة الضرورة، حاوِل الحصول على المشورة المستقلة. رجاءً قراءة كامل بيان الإفصاح عن المخاطر.
لا تقدّم شركة HFM خدماتها للمقيمين في ولايات قضائية بعينها، بما فيها الولايات المتحدة الأمريكية وكندا والسودان وسوريا وإيران وكوريا الشمالية وغيرها.
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