Trump Trade: A Day of Market Volatility

12 d - Josef Brynda

Donald Trump denied easing tariffs

Around noon Central European Time, an interesting event unfolded, highlighting a phenomenon often referred to as "Trump Trade." Washington News reported that Donald Trump planned to soften his pre-election stance on imposing tariffs on other countries as part of his protectionist policies. For details on the potential implications of such a move, refer to previously published articles on our profile.

This announcement triggered a reaction in the markets, causing the U.S. dollar to weaken by up to 1%. Investors adjusted their expectations, dismissing the possibility of inflationary policies linked to tariffs and the associated higher interest rates. However, shortly after 3 PM, Donald Trump himself denied these claims, prompting the dollar to recover by half a percent.

This situation perfectly exemplifies the unpredictability of "Trump Trade," where unexpected events often cause significant market swings. As Trump’s new term approaches, it’s clear that this period will be closely watched, requiring careful analysis and filtering of news to navigate the market effectively.

Daily Analysis 2025/01/06

12 d - Josef Brynda

Latest news

USD

• Instead of universal tariffs, Trump’s team focuses on defense, healthcare, and energy sectors to boost domestic manufacturing.
  • • Edit - USD moves higher on Trump comment that tariff policy story is wrong.
• ISM Manufacturing PMI rose to 49.3 in December, the highest level since March.
• New orders increased to 52.5, the highest level since March 2022.
• The US Dollar fell by 0.48% to 108.44 from a two-year high of 109.54.
• US natural gas futures jumped to $3.6/MMBtu, rebounding from a sharp 8% decline Friday, driven by forecasts of extreme cold across the central and eastern US this month.
• US Treasury yields remain firm due to strong economic data.
• The US jobs report is expected to show an increase of 180,000 jobs in December.
• Strength in US economic data challenges expectations for interest rate cuts.

CAD

• Trudeau reportedly announced his resignation as leader of the Liberal Party.
• The appreciation reflects cautious optimism that Trudeau's resignation could reduce U.S. tariff risks for Canada.
• USD/CAD is trading at 1.4395, down by 0.36%.
• A potential 25% US tariff on Canadian imports is being considered by the new administration.
• Political uncertainty and the transition period could impact economic stability and trade policy.

EUR

• HCOB Eurozone Services PMI was revised up to 51.6 in December.
• Germany's Services PMI rose to 51.2.
• EUR/USD increased by 0.55% to 1.0368.
• New export orders in the Eurozone have been declining for 19 consecutive months.
• Input and output costs in the Eurozone services sector are rising.
• The recent rise in gas prices after the Ukraine pipeline shutdown is currently pairing with protectionism fears, and any lifeline to the euro at this point would likely need to come from data.
• We suspect that unless there are some tentatively positive developments in the eurozone growth narrative.

GBP

• The S&P Global UK Composite PMI slipped to 50.4 in December 2024, the lowest since October 2023 and below preliminary estimates of 50.5.
• The S&P Global UK Services PMI was revised slightly down to 51.1 in December 2024 from a preliminary of 51.4 and compared to 50.8 in November.
• GBP/USD fell to a nine-month low of 1.2351.
• UK businesses plan price increases as Budget drives up costs.
• Goldman Sachs Predicts EUR/GBP to Continue Declining.
• About 55 per cent of companies said they were planning to increase prices in the coming three months, up from 39 per cent in the third quarter
• Technical indicators suggest short-term recovery potential.
• Input cost inflation accelerates to an eight-month high.
• Marginal increase in business activity.
• Employment declines for the third month in a row.

AUD

• S&P Global Australia Composite PMI rose to 50.2 in December from 49.9 in November.
• Bonds Update: Australia 10Y Bond Yield Rises by 14 bps.
• In China, the Caixin Services PMI increased to 52.2 in December 2024, up from 51.5 in November, surpassing market expectations of 51.7.
• Australia's services sector shows growth, while manufacturing is declining.
• Employment in Australia fell, while business costs are rising.
• Business confidence in Australia improved despite mixed economic indicators.
• Rising business costs could pressure profit margins.
• Economic indicators suggest a cautious outlook for the Australian economy.

NZD

• Regional economic conditions affect the outlook for NZD.
• The Hang Seng fell 72 points or 0.4% to end at 19,688 on Monday after trading slightly higher in the morning, dragged by losses across sectors.
• The New Zealand dollar rose to around $0.562 on Monday, extending its rebound from the previous session, driven by optimism over China's potential economic recovery.
• New Zealand's benchmark S&P/NZX 50 index closed little changed at 13,073 on Monday, amid a lack of catalyst domestically.
• The New Zealand sharemarket finished the second trading day of the year on a flat note.
• Global risk sentiment and volatility in Asian markets impact NZD performance.

News summary

EURUSD

• Based on the provided reports, EURUSD appears to be showing bullish momentum in the short term, with EUR/USD already increasing by 0.55% to 1.0368. While the Eurozone shows some positive signals with Services PMI revision up to 51.6 and Germany's improvement to 51.2, the underlying concerns about declining export orders for 19 consecutive months suggest structural weaknesses. On the USD side, despite strong ISM Manufacturing PMI data and robust employment expectations, the dollar has weakened by 0.48%, suggesting a near-term advantage for the euro. However, the US's strong economic fundamentals and potential resistance to interest rate cuts could limit EURUSD's upside potential in the medium term.

USDCAD

• The USDCAD analysis points to potential CAD weakness against USD. Despite the US dollar's recent 0.48% decline, strong US economic fundamentals, including improved ISM Manufacturing PMI and robust job market expectations, provide underlying support. Canada's significant political uncertainty with Trudeau's resignation and the threat of US tariffs create substantial headwinds for the CAD. This combination of US strength and Canadian uncertainty suggests USDCAD could maintain an upward trajectory.

AUDUSD

• AUDUSD analysis indicates mixed but potentially positive momentum for the pair. Australia's improving Composite PMI and positive Chinese economic data provide support for AUD. While the US shows strong economic fundamentals, the recent dollar weakness (down 0.48%) and market expectations regarding rate cuts could benefit the AUD. However, strong US economic data challenging rate cut expectations could limit AUDUSD's upside potential, suggesting a cautiously bullish outlook with significant resistance levels.

AUDNZD

• Analysis of AUDNZD suggests a moderate bullish bias for the Australian dollar. Australia's clear economic metrics, including the improvement in Composite PMI to 50.2 and positive business confidence, contrast with New Zealand's less definitive economic picture. While both currencies benefit from Chinese economic recovery prospects, Australia's more detailed economic indicators and direct economic ties to China provide stronger support. However, shared regional influences and risk sentiment factors could limit extreme movements.

EURGBP

• While the EURGBP pair appears positioned for gains based on comparative economic data, with Eurozone's revised PMI of 51.6 outperforming UK's downward revision to 51.1, the longer-term outlook suggests a potential downward trend. The UK's composite PMI falling to 50.4, combined with declining employment and accelerating input costs, supports short-term upward momentum. However, looking into 2025, Goldman Sachs forecasts a decline, supported by expectations of stronger UK economic growth at 1.2%. The key driver will be the divergence in central bank policies, with the ECB likely to cut rates more aggressively than the BOE, ultimately favoring sterling strength in the longer term.

AUDCAD

• The AUDCAD pair analysis suggests a potential bullish bias for AUD against CAD. Australia's Composite PMI showing improvement to 50.2 and China's stronger-than-expected Services PMI (52.2) provide support for the Australian dollar. Meanwhile, the Canadian dollar faces significant political uncertainty with Trudeau's reported resignation and the looming threat of 25% US tariffs on Canadian imports. These political and trade risks for CAD, combined with Australia's relatively stable economic indicators despite some cost pressures, suggest AUDCAD could see upward movement.

NZDCAD

• The NZDCAD cross appears to favor NZD strength against CAD. While New Zealand's economic data is relatively limited, the NZD benefits from positive Chinese economic sentiment and regional stability. In contrast, CAD faces significant headwinds from political uncertainty and potential US tariffs. The absence of major negative NZD catalysts, combined with CAD's clear challenges, suggests NZDCAD could see upward movement.

The strength of the dollar should continue.

18. 12. 2024 - Josef Brynda

The Strength of the Dollar Should Continue: What Drives the Growth of the U.S. Currency?

The dollar remains one of the most closely watched assets in financial markets, even as the Federal Reserve (Fed) has decided to lower interest rates today. According to traditional macroeconomic theory, this move should weaken the dollar while boosting equities. However, in the current environment, the rate cuts were largely priced in, as evidenced by the CME FedWatch Tool – a key indicator of interest rate trends – which showed a 96% probability of this move.

Why, then, should the dollar maintain its strength despite today’s rate cut?

The key lies in the Fed’s rhetoric and forecasts, which have once again proven to be crucial for market direction. The Fed adjusted its outlook for 2025, now projecting only two rate cuts instead of the previously planned three. Additionally, it has reduced the scope of the cuts to 50 basis points (bps). Moreover, it raised its inflation forecast for 2025 from 4.25% to 4.5%. These changes suggest that the central bank will continue to closely monitor inflationary pressures and maintain a relatively tight monetary policy. These fundamentals support the dollar’s strength, as confirmed by investor sentiment.

How Will Donald Trump's Return Impact the Markets?

Donald Trump’s return to the presidency could bring additional dynamics for the dollar. At first glance, his administration might be seen as a positive signal, but the unpredictability of his policies could complicate the situation. For instance, deportation of the labor force could increase unemployment and reduce performance in key sectors, negatively affecting consumption. On the other hand, this move could boost inflation, as domestic labor is more expensive than workers from Mexico or other countries. Higher inflation could compel the Fed to adopt an even tighter monetary policy.

Another key factor will be the independence of the central bank during Trump’s administration. It will be critical to observe how the Fed maintains its independence, particularly with a new Fed Chair taking office. Trump has previously hinted at influencing the Fed via the U.S. government, which could create significant challenges for the credibility of the entire U.S. economy. Trump favors the lowest possible rates, which make borrowing cheaper in financial markets and support sectoral activity.

What to Expect from the Dollar in 2025?

Based on current fundamental data and investor sentiment, the dollar is expected to maintain its strength in 2025. Additionally, there is potential for the EUR/USD currency pair to reach parity, given the challenges faced by the Eurozone. This would further confirm the dollar’s dominance in global markets.

For investors, it remains critical to monitor not only economic data but also political developments in the U.S., as these will have a decisive impact on the future trajectory of the U.S. currency.

Daily Analysis 2024/12/16

16. 12. 2024 - Josef Brynda

Latest news

USD

• The S&P Global Composite PMI for December came in at 55.6, beating the forecast of 55.1 and the previous 54.9
• US manufacturing PMI data came in at 48.3, slightly missing expectations of 49.4, signaling ongoing contraction in the sector.
• The US Producer Price Index (PPI) rose 0.4% in November, surpassing the 0.2% forecast and reinforcing expectations of inflation persistence.
• US CPI data showed inflation rising to 2.7% on a 12-month basis, keeping Federal Reserve policymakers cautious about rate cuts.
• The US dollar index (DXY) continues to strengthen, supported by higher Treasury yields and robust inflation indicators.
• US 10-year Treasury yields climbed toward the 4.4% mark, boosting the dollar’s attractiveness relative to other major currencies.
• The Federal Reserve is widely expected to cut rates by 25 basis points this week, but markets will watch for hints about future policy decisions.
• Recent jobless claims data came in at 242,000, worse than expectations, yet strong wage growth and labor market resilience keep USD supported.
• The US dollar remains a safe haven as investors flee risk assets amid volatility in equity markets and economic uncertainty.
• Strong momentum in USD/JPY, with the pair rising above 153, underscores the dollar’s dominance across major currency pairs.
• Weak PMI and economic challenges in the Eurozone and the UK provide further support to USD, as relative strength becomes clear.
• Oil prices remain stable above $74, but global uncertainty keeps investors favoring the safety of the US dollar.
• The Federal Reserve’s stance on slowing interest rate cuts in 2025 will be crucial for maintaining USD’s upward trajectory.
• The dollar continues to benefit from risk-off market sentiment as global investors seek safety ahead of key central bank decisions.
• China’s ongoing economic concerns add to USD strength as traders hedge risks by increasing dollar holdings.
• A series of better-than-expected economic indicators in the US keep optimism about economic resilience intact, supporting a stronger dollar.
• The divergence between the Federal Reserve’s policy outlook and those of the ECB and Bank of England further reinforces USD’s bullish momentum.

CAD

• Canada’s housing starts for November jumped to 262.4K, exceeding the forecast of 246K and signaling resilience in the housing market.
• Stable oil prices above $74 per barrel offer modest support to the Canadian dollar, but broader global concerns limit gains.
• The USD/CAD pair remains elevated as strong US economic data and rising Treasury yields keep the US dollar firmly supported.
• Concerns about Canada’s economic growth and weak PMI data add downside pressure on the Canadian dollar.
• The Federal Reserve’s policy decision this week is critical for USD/CAD, with a hawkish tone likely to push the pair higher.
• Sluggish economic data from China, Canada’s key trade partner, adds to CAD’s bearish outlook.
• Rising US PPI and inflation data signal further strength in the US dollar, keeping CAD under pressure.
• Canada’s inflation outlook remains uncertain, with the Bank of Canada’s cautious stance limiting CAD’s upside potential.
• A stable US labor market contrasts with Canada’s softer economic performance, increasing the attractiveness of USD against CAD.
• Oil futures remain stable but fail to provide significant upside for CAD amidst prevailing global uncertainty.
• Analysts note the USD/CAD pair is testing key resistance near 1.37, with upside risks tied to stronger US data.
• Canada’s economic growth outlook remains muted, with concerns over slower retail sales and domestic demand.
• Diverging central bank policies between the Federal Reserve and the Bank of Canada are tilting investor sentiment in favor of the USD.
• Market expectations of rising US yields further weigh on CAD, which struggles to find support despite stable oil prices.
• Technical analysis suggests USD/CAD remains firmly bullish as it holds above the 1.36 handle.
• CAD faces headwinds from weaker global economic trends and uncertainty about future BoC rate decisions.

EUR

• The HCOB Eurozone Services PMI rose to 51.4 in December, beating forecasts of 49.5 and signaling a return to growth in the services sector. Despite this, the euro remains under pressure amid broader economic concerns.
• Eurozone PMI data provided mixed results, with the Composite PMI rising to 49.5 in December, up from 48.5 in November, signaling a slight improvement.
• Manufacturing PMI remained weak at 45.2, below the 50.0 growth threshold, highlighting ongoing challenges in the industrial sector.
• The ECB’s cautious stance on further rate cuts reflects economic weakness across Europe, particularly in Germany and France, which remain in contraction.
• Lagarde’s recent comments suggest the ECB remains data-dependent but open to further easing if economic weakness persists into 2025.
• Rising inflation pressures remain a concern, with input and output prices accelerating, limiting optimism about an economic turnaround.
• The euro failed to capitalize on the slight PMI improvement, with EUR/USD remaining weak amid ongoing US dollar strength.
• Economic malaise in Germany, the Eurozone’s largest economy, continues to weigh on the overall outlook for growth in the region.
• France also remains in contraction, though the rate of decline has eased slightly, offering limited support to the euro.
• Despite some resilience in the services sector, weak demand and falling employment point to further challenges for the Eurozone economy.
• Investors remain cautious as diverging monetary policies between the ECB and the Federal Reserve favor a stronger US dollar.
• The EUR/USD pair remains under pressure, struggling to stay above the 1.0450 support level as the US dollar continues its bullish momentum.
• ECB policymakers highlight risks to growth, with job cuts occurring at the fastest pace in four years amid sustained declines in new orders.
• Analysts note the euro’s upside potential remains capped unless significant improvements in economic data materialize.
• Technical analysis suggests EUR/USD remains vulnerable to a breakdown below 1.0450, with a move toward parity increasingly likely in 2025.
• Inflation risks and ongoing wage pressures complicate the ECB’s outlook, reducing the likelihood of aggressive rate cuts.
• A rebound in Eurozone economic activity outside Germany and France offers modest support, though momentum remains fragile.

GBP

• The UK Services PMI for December rose to 51.4, beating expectations and signaling slight expansion in the sector, providing temporary support to GBP.
• Despite the positive PMI reading, broader economic concerns persist, with fragile consumer confidence and reduced corporate spending weighing on GBP outlook.
• The Bank of England’s upcoming rate decision will be closely watched, with markets expecting no change in policy amid rising inflation risks.
• UK inflation remains a concern, with CPI expected to tick up to 2.7%, reinforcing challenges for the Bank of England as it balances growth and price pressures.
• Recent GDP data showed the UK economy struggling to maintain momentum, increasing fears of stagnation heading into 2025.
• GBP/USD remains in a downtrend, with the pair falling to the 1.26 handle as strong US economic data boosts the dollar.
• Rising unemployment in the UK, with forecasts expecting an increase to 4.4%, could add further downside pressure on GBP.
• Analysts highlight that weak business sentiment and slow economic activity are key risks for the pound heading into the new year.
• Markets remain wary of potential surprises in UK labor market data, with wage growth expected to play a significant role in GBP movements this week.
• The BoE’s tone on future rate cuts will be critical, with any dovish signals likely to drive GBP lower against both the USD and EUR.
• The pound’s recent rally against the euro has reversed, with GBP/EUR slipping back to 1.2028 from last week’s highs.
• Rising US Treasury yields and ongoing dollar strength have limited GBP/USD’s ability to regain upward momentum.
• The Bank of England’s outlook for rate cuts in 2025 remains a key driver, with markets expecting a cautious approach given inflation concerns.
• The UK retail sales report later this week will be a key indicator of consumer demand heading into the holiday season.
• Technical analysis suggests GBP/USD remains bearish, with support near the 1.26 level and further downside risk toward 1.2480.
• Weak GDP growth and rising inflation risks could see the UK economy enter a period of stagflation, limiting upside for the pound.

AUD

• The Australian dollar remains under pressure, unable to break above the 0.64 handle as risk-off sentiment dominates markets following Wall Street’s sell-off.
• Mainland Chinese stocks are weaker, with the Shanghai Composite down 0.4% and the Hang Seng Index nearly 1% lower, dragging AUD due to economic ties with China.
• Australia’s ASX200 closed 0.5% lower, reflecting weak investor confidence and putting additional downward pressure on the Australian dollar.
• A stronger US dollar has pushed AUD lower, with USD gains driven by rising Treasury yields and persistent inflation data.
• The Reserve Bank of Australia’s decision to delay action until February or March creates further uncertainty, limiting AUD’s upside potential.
• Oil futures remain stable above $74 per barrel; however, this offers little relief for AUD amidst global market caution.
• Japan’s Nikkei 225 closed slightly lower (-0.1%), signaling broader Asian market weakness that reinforces AUD’s decline.
• Investors remain risk-averse as traders await the US Federal Reserve’s decision this week, which adds further pressure on the Australian dollar.
• The Australian dollar continues its downtrend, with repeated failures to break above the 0.64 level raising the likelihood of further declines toward 0.63.
• Weak PMI readings from China remain a significant concern, as sluggish Chinese economic activity further weighs on AUD sentiment.
• The strength in USD/JPY, as the pair holds above the 153 handle, highlights a strong US dollar environment that suppresses AUD’s gains.
• Investors’ concerns about slowing global growth and lack of stimulus from China continue to undermine AUD’s performance.
• Oil price stability offers limited support for AUD, as broader economic concerns overshadow the commodity-linked currency.
• Broader global market volatility and risk-off sentiment limit the upside potential for AUD, which remains under bearish pressure.
• Analysts note AUD is vulnerable to further losses if the US dollar extends its strength amid upcoming Federal Reserve announcements.
• Technical indicators show AUD/USD facing strong resistance at 0.64, with a potential move lower if risk sentiment does not improve.

NZD

• The New Zealand dollar remains weak, trading at 0.5726, as it faces its fourth consecutive day of declines. Concerns about China’s economic recovery and weak domestic indicators weigh heavily on the NZD.
• BusinessNZ Manufacturing PMI fell to 45.5, signaling the sector remains under significant pressure with no clear signs of recovery.
• Ongoing expectations of policy easing by the Reserve Bank of New Zealand (RBNZ) continue to undermine NZD’s strength as investors price in further rate cuts.
• Weak Chinese economic performance further adds downside risks for NZD, given New Zealand’s reliance on trade with China.
• Investors are eyeing Thursday’s release of New Zealand GDP and ANZ Business Confidence data, which will be crucial for determining the outlook for NZD.
• The US dollar’s strength, supported by rising Treasury yields and strong economic data, has pushed NZD/USD lower toward its November 2022 lows.
• The BusinessNZ Services Index and upcoming Food Price Index results will provide further insights into the health of New Zealand’s domestic economy.
• Global risk-off sentiment, fueled by concerns over slowing growth in major economies, continues to pressure risk-sensitive currencies like NZD.
• Technical analysis shows strong resistance at 0.58, with a further decline likely if NZD fails to regain upward momentum.
• Weak manufacturing PMI data aligns with broader signs of a sluggish economy, leaving investors wary of near-term gains in NZD.
• The RBNZ’s dovish outlook contrasts sharply with other major central banks, further driving bearish sentiment in the New Zealand dollar.
• Export-driven sectors remain under pressure, with falling global demand impacting New Zealand’s key trade industries.
• Traders are increasingly skeptical of any short-term rebound in NZD as concerns over China’s economy and domestic data persist.
• Rising US PPI and inflation data keep the US dollar well supported, limiting any upside for NZD/USD.
• Upcoming Westpac Consumer Sentiment data midweek will indicate consumer confidence trends, a key driver of New Zealand’s economic outlook.
• Analysts note that NZD/USD remains vulnerable to further losses, with a move below the 0.57 handle increasingly likely if risk sentiment does not improve.

News summary

EURUSD

• The EUR/USD pair remains under pressure as diverging economic performance and monetary policy between the Eurozone and the United States weigh heavily on the euro. While the HCOB Eurozone Services PMI showed a slight improvement to 51.4, the manufacturing sector remains deeply in contraction at 45.2, signaling a fragile economic outlook. Additionally, ECB policymakers maintain a cautious stance, with hints of further rate cuts in 2025, contrasting sharply with the US Federal Reserve, which remains wary of easing policy aggressively due to persistent inflation. Strong US economic data, including the rise in Composite PMI to 55.6, along with higher US Treasury yields approaching 4.4%, reinforces the dollar’s strength. This divergence favors the US dollar, keeping EUR/USD near its key support at 1.0450, with risks skewed toward further downside and a possible test of parity in 2025.

USDCAD

• The USD/CAD pair is likely to remain elevated as strong US economic data and rising Treasury yields continue to support the US dollar. The S&P Global Composite PMI rose to 55.6, highlighting robust economic activity in the US, while the Producer Price Index (PPI) increased 0.4%, reinforcing inflation persistence. This keeps the Federal Reserve cautious about rate cuts, supporting the dollar’s bullish momentum. In contrast, while Canada’s housing starts provided a positive surprise, broader concerns about slower economic growth and sluggish retail sales weigh on CAD. Oil prices remain stable but have not provided significant upside for the Canadian dollar amid global uncertainty. With the US economy showing clear resilience, USD/CAD is likely to remain bullish, testing resistance near 1.37 and possibly extending higher.

AUDUSD

• The AUD/USD pair is expected to remain under pressure as risk-off sentiment and a strong US dollar dominate market dynamics. The Australian dollar struggles to break above the 0.64 handle, weighed down by weak Chinese economic data and concerns about global growth. Meanwhile, the US dollar remains supported by robust economic indicators, including a better-than-expected Composite PMI at 55.6 and rising Treasury yields approaching 4.4%. Persistent inflation in the US, as shown by the higher PPI and CPI data, keeps the Federal Reserve cautious about aggressive rate cuts, further strengthening the dollar. Given this backdrop, AUD/USD faces strong resistance near 0.64 and is likely to test lower levels around 0.63 if risk sentiment does not improve.

AUDNZD

• The AUD/NZD pair is expected to remain under pressure as both currencies face significant headwinds, but the New Zealand dollar’s relative weakness gives AUD a slight advantage. The NZD continues to struggle due to weak domestic data, with the BusinessNZ Manufacturing PMI falling to 45.5 and expectations of further RBNZ policy easing undermining its strength. Concerns about China’s economic recovery also weigh on NZD, given New Zealand’s trade reliance. Meanwhile, the Australian dollar faces similar pressures but benefits from stable commodity prices and a delayed RBA policy decision, which has already been priced into the market. With technical resistance at 0.58 for NZD/USD and further declines likely, AUD/NZD could see a slight upward move, with AUD gaining ground as NZD sentiment remains more bearish.

EURGBP

• The future development of the EUR/GBP currency pair will depend on economic and political factors in the Eurozone and the UK. The Eurozone is facing challenges especially in its key economies such as Germany and France, which may limit the Euro's appreciation despite the improvement in the services sector. The European Central Bank remains cautious on interest rates due to persistent inflationary pressures and economic weakness. The UK, on the other hand, is struggling with rising inflation and fears of economic stagnation, which could weaken the Pound, especially if the Bank of England adopts a dovish tone on future interest rates. Monetary policy differences between the ECB and the Bank of England will be key, as will economic data from both regions, which could lead to further volatility in EUR/GBP, with the specific move depending on which economy shows more strength or weakness. However, based on the current economic situation, it can be assumed that if the problems in the Eurozone, particularly in Germany and France, persist and the ECB remains cautious about cutting interest rates, while the UK continues to struggle with inflation and economic stagnation, EUR/GBP could move in a range with moderate pressure on the Pound to strengthen.

AUDCAD

• The AUD/CAD pair is likely to remain under pressure due to contrasting economic signals and commodity influences. While Canada’s housing starts surprised positively at 262.4K, signaling resilience in the housing market, broader concerns over Canada’s economic growth and sluggish retail sales limit CAD’s upside. Oil prices remain stable above $74 per barrel, offering modest support to the Canadian dollar. On the other hand, the Australian dollar remains vulnerable, unable to break above the 0.64 level amid risk-off sentiment and concerns about China’s economic slowdown, Australia’s key trade partner. Weak global sentiment and RBA’s reluctance to act until February or March further cap AUD gains. Given this backdrop, CAD appears to have a slight edge over AUD, with the pair expected to drift lower as AUD weakness persists.

NZDCAD

• The NZD/CAD pair is expected to remain under downward pressure as the New Zealand dollar continues to struggle with weak economic data and dovish expectations from the Reserve Bank of New Zealand. The BusinessNZ Manufacturing PMI fell further to 45.5, signaling significant pressure on the sector, while concerns about China’s economic outlook weigh heavily on NZD sentiment. In contrast, Canada benefits from stronger housing starts at 262.4K and stable oil prices above $74 per barrel, providing modest support for CAD. However, global uncertainties limit any substantial CAD strength. Given the divergence in economic data and central bank outlooks, NZD weakness is likely to dominate, with NZD/CAD drifting lower toward multi-month lows.

Daily Analysis 2024/12/11

11. 12. 2024 - Josef Brynda

Latest news

USD

• The US CPI data confirmed inflation steady at 0.3% MoM and 3.3% YoY, adding support to USD.
• Core CPI print of 0.3% met expectations, reinforcing the narrative of gradual disinflation.
• Market anticipation of Fed policy actions hinges on the CPI data, supporting a strong USD.
• The DXY index rose 0.4% as the USD gained against major currencies like EUR, JPY, and AUD.
• Rising US Treasury yields further bolster USD strength, with the 10-year yield at 4.23%.
• Fed's December policy outlook is less likely to deliver a rate cut after steady inflation data.
• The USD/JPY pair continues to break above key levels, nearing the 152 handle.
• Oil prices stabilizing around $72 per barrel indirectly support USD.
• US equity markets' cautious sentiment keeps USD demand elevated.
• Market focus on geopolitical tensions, including Syria, supports safe-haven USD demand.
• Real earnings growth of 0.3% MoM provides additional support for USD strength.
• The NASDAQ and S&P500 retraced slightly but maintained USD-positive trends.
• Positive momentum in the USD keeps EUR/USD from breaking above 1.06.
• Strong small business sentiment (NFIB index) supports USD as a resilient economy signal.
• Limited immediate downside risk for USD as market braces for further macro data.
• High demand for USD assets ahead of the FOMC next week adds bullish pressure.

CAD

• The Bank of Canada cut interest rates by 50 basis points to 3.25%, aligning with market expectations.
• This marks a shift to a more accommodative policy stance as the Canadian economy faces rising unemployment and weaker growth prospects.
• CAD remains under pressure as the BoC's dovish stance contrasts with expectations for slower rate cuts in the US by the Fed.
• The USD/CAD pair continues its upward trajectory, reflecting market sentiment favoring the USD over the CAD.
• Oil prices stabilized around $72 per barrel, offering some support to the CAD as Canada remains a major oil exporter.
• Weakening domestic economic indicators, such as higher unemployment, support the rationale for BoC’s aggressive rate cuts.
• The rate cut highlights the BoC's focus on stimulating the economy amid signs of slowing demand and inflationary pressures.
• The market will now focus on further policy announcements, with expectations of additional cuts in early 2025 if the economic situation does not improve.
• The CAD trades near multi-year lows against the USD, as dovish policy dampens investor interest in the currency.
• The BoC’s rate cut adds to selling pressure on the CAD, despite stable energy prices.
• Foreign exchange markets view the rate cut as a necessary response to domestic economic challenges, keeping the CAD in a bearish trend.
• Speculation about further easing measures by the BoC continues to drive volatility in CAD-related pairs.
• The dovish BoC stance has shifted market focus to upcoming Canadian economic data, including employment and GDP figures.
• Rising US Treasury yields further weigh on the CAD, amplifying USD strength relative to CAD.
• Technical indicators for USD/CAD signal continued bullish momentum, with support at 1.42 and potential resistance at 1.43.
• Short-term volatility in CAD is expected to persist as markets digest the implications of the rate cut and await further guidance.

EUR

• ECB’s expected rate cut tomorrow weighs heavily on EUR sentiment.
• EUR/USD failed to break above 1.06 and reversed towards 1.05 on USD strength.
• Political instability in Germany and France adds downside risks for the Euro.
• Trade tensions, including potential US tariffs, pose significant headwinds for EUR.
• ECB’s dovish stance contrasts with Fed policy, further pressuring EUR.
• Eurozone manufacturing sector weakness continues to drag on EUR performance.
• German bunds gain as investors anticipate ECB rate cuts.
• EUR momentum is capped as market braces for major macro data.
• Weak economic data adds further downside risk to EUR/USD.
• Eurozone’s political challenges contribute to EUR underperformance.
• EUR/USD’s potential for a dead cat bounce remains under scrutiny.
• ECB decisions this week are crucial for EUR medium-term outlook.
• Euro remains vulnerable to USD strength in the global market.
• Energy supply concerns in Europe limit EUR upside.
• Diverging interest rate policies with the UK favor GBP over EUR.
• Medium-term forecasts for EUR remain cautious, with parity still on the table.

GBP

• The UK’s resilient services sector supports GBP amidst global uncertainty.
• EURGBP hit a new 2024 low, reflecting interest rate divergence.
• Bank of England’s policy to hold rates contrasts with ECB’s expected cuts, aiding GBP.
• Sterling remains supported by political stability in the UK compared to Eurozone uncertainties.
• Tariff concerns from the US add potential downside risks for GBP.
• Strong investor sentiment boosts GBP’s medium-term outlook.
• Goldman Sachs forecasts GBP/EUR to reach 1.25 by the end of 2025.
• Political uncertainty in Germany and France impacts EUR/GBP dynamics.
• Rising gilt yields support GBP in the near term.
• Bank of England’s cautious approach keeps GBP steady.
• GBP momentum remains robust against a weakening Euro.
• Risk of Eurozone political instability further favors GBP strength.
• UK labor market resilience offers underlying support for Sterling.
• Brexit aftermath concerns gradually recede, aiding GBP optimism.
• GBP/USD remains range-bound as USD strength caps gains.
• Economic forecasts for 2025 suggest long-term GBP resilience

AUD

• The RBA decision to hold rates has kept the AUD under pressure, failing to rise above the 0.64 handle, because of Less hawkish interest rate outlook after the statement. 
• Australian employment data tonight could provide critical direction for the AUD, with expectations leaning towards a flat or negative trend.
• Risk-off sentiment in global markets weighs on the AUD, following a bearish mood on Wall Street.
• Weak Chinese economic performance impacts AUD, as China remains Australia's largest trading partner.
• Volatility in commodity markets, particularly iron ore, adds to the downward pressure on the AUD.
• The AUD is likely to stay weak amid dovish expectations for the RBA until February or March next year.
• Short-term rallies in AUD/USD are likely to face resistance at the 0.65 level.
• A broad strengthening of the USD adds downward momentum to the AUD.
• Ongoing concerns about global trade policies, including US-China tariffs, hurt the AUD.
• Strong US CPI data adds additional bearishness to the AUD outlook.
• Australian equities’ poor performance (ASX200 down 0.4%) reflects negatively on the currency.
• Stabilization in oil prices could limit downside risks for the AUD.
• Rising US Treasury yields dampen demand for higher-yielding currencies like the AUD.
• Global commodity price fluctuations heavily influence AUD strength.
• Short-term momentum in AUD/USD remains in negative settings.
• Weakness in NZD also weighs on the broader Pacific Peso (AUD).

NZD

• NZD fell below the 0.58 handle following RBA dovishness and USD strength.
• Political and trade uncertainties, including China tariffs, weigh on NZD performance.
• NZD hits fresh 2024 lows, opening near 0.5790 in weak domestic sessions.
• A lack of global risk appetite and rising US yields pressures NZD/USD downward.
• Weak commodity outlook and China Politburo delays hinder NZD recovery.
• Market awaits the US CPI print to determine further NZD/USD moves.
• Short-term rallies in NZD/USD face resistance at the 0.5850 handle.
• NZD remains vulnerable to global macroeconomic shifts, especially in China trade.
• AUD weakness contributes to correlated bearishness in NZD/USD.
• Any potential rate cut by the Fed could offer limited relief to NZD.
• A dovish Bank of Canada decision indirectly affects NZD sentiment.
• Broad USD strength suppresses any upside in NZD.
• Momentum indicators signal further downside potential for NZD/USD.
• Weakening dairy prices add downside risk to the NZD.
• Higher-than-expected US CPI data further exacerbates NZD losses.
• NZD’s medium-term outlook remains bearish amid weak global growth.

News summary

EURUSD

• The EUR/USD pair is likely to remain under pressure in the near term as the USD strengthens on the back of steady inflation data (0.3% MoM, 3.3% YoY) and rising US Treasury yields (10-year yield at 4.23%). The USD gains additional support from robust real earnings growth and positive small business sentiment, while geopolitical tensions further elevate demand for the safe-haven currency. In contrast, the EUR faces headwinds from expectations of an ECB rate cut, political instability in Germany and France, and weak Eurozone manufacturing data. Diverging between the strenght  amplify downside risks for EUR/USD, with the pair struggling to break above 1.06 and likely to test lower levels near 1.05.

USDCAD

• The USD/CAD pair is likely to maintain its bullish trajectory as contrasting monetary policies between the Fed and the BoC fuel USD strength. The Fed’s steady inflation narrative and robust real earnings growth, combined with rising US Treasury yields, bolster the USD. Meanwhile, the BoC’s 50-basis-point rate cut highlights Canada’s economic struggles, including rising unemployment and slowing growth. Stable oil prices provide limited support to the CAD, but the pair is expected to break higher toward resistance at 1.43, with continued momentum in favor of the USD.

AUDUSD

• The AUD/USD pair remains under downward pressure as the USD strengthens on steady inflation data, robust Treasury yields, and safe-haven demand. The AUD’s struggles stem from weak Chinese economic performance, subdued commodity prices, and a dovish RBA stance. Resistance at the lower boundary of 0.63. handle appears firm, with the pair likely to drift lower. The AUD’s weakness is compounded by risk-off sentiment in global markets and the USD’s positive outlook ahead of the FOMC, signaling limited recovery potential for the Australian currency in the near term.

AUDNZD

• The AUD/NZD pair is expected to remain volatile as both economies react to similar factors, such as global inflation trends, trade relations with China, and commodity price movements. Both the Australian dollar and the New Zealand dollar are under pressure due to concerns about a global economic slowdown and cautious stances from their central banks. The Reserve Bank of Australia has signaled a less hawkish outlook, while the New Zealand dollar suffers from weaker export prospects and negative market sentiment. This dynamic is likely to lead to further fluctuations in the AUD/NZD pair as markets continue to respond to new developments.

EURGBP

• EUR/GBP is likely to continue its downward trajectory as GBP strength contrasts with EUR weakness. The Euro remains under pressure due to expectations of an ECB rate cut, political instability in major Eurozone economies, and ongoing manufacturing sector weaknesses. Meanwhile, the GBP benefits from resilient UK services sector performance, political stability relative to the Eurozone, and rising gilt yields. Diverging monetary policy stances between the Bank of England (holding rates steady) and the ECB (expected cuts) further favor GBP over EUR. As such, EUR/GBP may test new lows in the short term.

AUDCAD

• The AUD/CAD pair is likely to remain under pressure, even though the Bank of Canada recently cut rates by 50 basis points to 3.25%. This rate cut highlights the BoC’s dovish approach to supporting the economy. However, CAD benefits from stabilizing oil prices, which provide some support to the currency. On the other hand, while the Reserve Bank of Australia kept rates unchanged, its statement reflects an increasingly dovish tone. The RBA emphasized weak growth, easing wage pressures, and subdued domestic demand, signaling the potential for future rate cuts if the economic situation deteriorates further. Weak performance in the Chinese economy and risk aversion continue to weigh on the AUD, keeping the AUD/CAD pair in a bearish trend.

NZDCAD

• With today’s 50 basis point rate cut by the Bank of Canada to 3.25% and the continued weakness of the New Zealand dollar, the NZDCAD currency pair is likely to remain under pressure. While the Canadian dollar may experience some volatility following the rate decision, the already priced-in market expectations could limit any significant gains or losses. On the other hand, New Zealand’s dovish outlook and the stronger US dollar are expected to weigh further on the NZD, potentially leading to overall weakness in the pair. The future direction of NZDCAD will depend on upcoming global macroeconomic data, particularly from the US, and the policy outlooks of both central banks for 2025.

Daily Analysis 2024/12/10

10. 12. 2024 - Josef Brynda

Latest news

USD

• U.S. Treasury yields rose, with the 10-year reaching 4.20%, supported by higher crude oil prices.
• The NY Fed survey revealed an increase in inflation expectations, with one-year-ahead rising to 3.0% from 2.9%.
• Anticipation of upcoming U.S. inflation data drove volatility, with the VIX spiking 11.12% to close at 14.19.
• U.S. equities fell, with the Nasdaq losing 0.6%, driven by Nvidia's 2.5% drop amid antitrust probes.
• The S&P 500 dropped to 6054 points as investors braced for key inflation updates.
• The USDJPY pair rebounded above the 151 level as U.S. Treasury yields strengthened.
• China's trade surplus with the U.S. ballooned, adding pressure on U.S. policymakers amid tariff disputes.
• Expectations of rate stability by the Federal Reserve supported the USD against weaker counterparts.
• Crude oil prices stabilizing around $72 per barrel helped limit USD declines against commodity-linked currencies.
• A 3-year Treasury auction worth $58 billion is set to influence short-term USD flows.
• Weak Eurozone data and dovish ECB expectations bolstered the USD against the EUR.
• The USD outperformed JPY amid rising yields and global risk-on sentiment shifts.
• The dollar remains resilient ahead of the Federal Reserve's key inflation update.
• Strength in U.S. Treasury markets supported capital flows into the USD.
• Deteriorating Eurozone trade conditions allowed the USD to push EURUSD lower toward 1.05.
• Ongoing geopolitical tensions, particularly in the Middle East, increased demand for USD as a safe haven.

CAD

• The CAD weakened ahead of the Bank of Canada (BoC) meeting, with markets pricing in a 50-basis-point rate cut.
• Oil prices hovering around $72 per barrel kept the CAD under pressure, reflecting weak energy demand.
• Rising U.S. yields widened the interest rate differential, favoring USD over CAD.
• Weak global risk sentiment limited CAD's performance against major peers.
• Markets anticipate a dovish tone from the BoC amid slowing economic growth in Canada.
• Chinese stimulus measures failed to provide significant support for CAD due to broader risk-off sentiment.
• Brent crude’s stabilization provided temporary relief for the CAD but failed to spark a sustained recovery.
• Canadian GDP data continues to weigh on the CAD as growth forecasts are revised downward.
• The CAD's reliance on energy exports makes it vulnerable to further declines in oil prices.
• Domestic inflation trends are expected to guide the BoC’s future rate policy, impacting CAD.
• Upcoming U.S. inflation data could drive further USD strength against the CAD.
• Geopolitical risks and trade uncertainties added headwinds to CAD’s recovery.
• Stronger U.S. labor market data indirectly pressured CAD through USD strength.
• CADJPY declined amid broad yen weakness and commodity-linked currency volatility.
• Chinese trade surplus expansion negatively impacted the CAD via oil-related export channels.
• The BoC’s monetary policy stance remains the key driver of CAD performance into 2025.

EUR

•  
• ECB rate cut expectations drove EUR/USD lower, with a 25-basis-point cut anticipated this week.
• Weak German CPI data reinforced expectations of ECB monetary easing.
• Eurozone trade deficits continued to weigh on the EUR as global demand weakened.
• Political uncertainty and fiscal challenges in Italy pressured EUR performance.
• Diverging monetary policy paths between the ECB and Federal Reserve favor USD over EUR.
• EUR underperformed GBP as investors priced in a more dovish ECB stance.
• Rising energy prices in Europe added to inflationary pressures, complicating ECB policy.
• EURJPY rallied amid yen weakness but struggled to sustain gains.
• German CPI data showed a monthly decline of 0.2%, raising deflationary concerns.
• Broader Eurozone economic challenges limited EUR upside.
• Market anticipation of ECB action created volatility for EUR pairs.
• The EUR remains sensitive to geopolitical developments in the Middle East.
• Italy's tightening fiscal outlook poses additional risks for EUR stability.
• ECB's dovish stance contrasts with the UK's more hawkish outlook, favoring GBP/EUR strength.
• EURCHF saw muted movements amid subdued Swiss economic data.
• Expectations for a 50-basis-point ECB rate cut could lead to further EUR downside.

GBP

• The EURGBP exchange rate hit a 2024 low, supported by expectations of slower UK rate cuts.
• Sterling strength reflects investor optimism about the UK's resilience relative to the Eurozone.
• The Bank of England is expected to maintain higher rates longer than the ECB, boosting GBP.
• A slowdown in UK labor market activity raised concerns over future economic growth.
• Improved EU-UK trade relations provided structural support for GBP performance.
• GBP outperformed commodity-linked currencies amid global risk aversion.
• Sterling traders remain cautious ahead of the Bank of England’s next policy meeting.
• Rising U.S. Treasury yields limited GBP/USD gains.
• Political uncertainty in Europe drove safe-haven flows into GBP.
• The UK’s fiscal outlook supports GBP resilience despite global macroeconomic challenges.
• Sterling remains attractive amid expectations of a less aggressive UK rate-cutting cycle.
• GBP gained against JPY as yen weakness persisted across global markets.
• Deteriorating Eurozone economic conditions provided tailwinds for GBP.
• Seasonal demand for GBP-driven assets buoyed the currency during year-end trading.
• Risks from potential UK labor market tightening may weigh on GBP in 2025.
• The GBP outlook remains cautiously optimistic amid steady monetary policy expectations.

AUD

• NAB Business Confidence for November fell to -3, below the previous level of 5, indicating worsening sentiment.
• NAB Business Survey for November dropped to 2, significantly lower than the previous value of 7, reflecting weaker business conditions.
• The Reserve Bank of Australia (RBA) kept its interest rate unchanged at 4.35% in December but shifted to a dovish tone.
• The RBA is "gaining confidence" that inflation is moving toward the target, reducing the likelihood of near-term rate hikes.
• Market odds for a February rate cut by the RBA rose to 70% from 50% after the meeting.
• Australia's two-year bond yields fell by 9 basis points, signaling a market expectation of an easing cycle starting soon.
• Australian GDP growth slowed in Q3 2024, driven mainly by government expenditure, highlighting economic fragility.
• China's monetary easing and fiscal stimulus announcement provided temporary support for AUD despite RBA dovishness.
• The AUD briefly rallied to 0.64 against the USD on Chinese stimulus hopes but fell back due to dovish RBA commentary.
• Falling commodity prices, including Brent crude and metals, added downside pressure to the AUD.
• RBA dropped the "vigilant" stance from its statement, signaling a more accommodative approach.
• The Australian dollar may face further declines as bond markets price in rate cuts by May 2025.
• China’s pro-growth policies offer some hope for stabilizing Australian exports in 2025.
• Australian equities closed lower after the RBA decision, reflecting cautious investor sentiment.
• AUD remains under pressure amid heightened global risk aversion and expectations of U.S. rate stability.
• Australian CPI trends are expected to influence the RBA’s first-quarter 2025 decisions.

NZD

• The NZD surged after China's Politburo announced a shift to "moderately loose" monetary policy.
• Promises of fiscal stimulus in China bolstered the NZD, moving it to intraday highs near 0.5880 against the USD.
• Weak domestic conditions initially pushed the NZD lower, but optimism over Chinese economic measures reversed the trend.
• Expectations of a stronger trade partnership with China provided additional support for the NZD.
• Concerns over U.S. tariff impacts on New Zealand’s key trade partner, China, weighed on long-term sentiment.
• Market focus remains on China's Central Economic Work Conference for further policy clarity.
• The NZD outperformed other majors on hopes of increased Chinese demand for exports.
• Rising U.S. yields tempered the NZD rally, limiting gains against the USD.
• Ongoing weakness in the domestic housing market and economic data capped NZD upside.
• Seasonal demand for dairy exports supported the NZD despite broader risk aversion.
• China’s pledge to boost consumption and support its property market is seen as NZD-positive in the medium term.
• A lack of significant domestic data kept NZD movements reliant on external drivers.
• Traders anticipate New Zealand's upcoming GDP report to provide directional clarity for the NZD.
• Global commodity price fluctuations remain a critical factor for NZD movements.
• A weaker yen supported NZDJPY gains amid rising risk appetite.
• Geopolitical uncertainties and commodity volatility continue to pose risks for the NZD.

News summary

EURUSD

• The EURUSD pair is likely to face downward pressure in the coming period. The ECB's anticipated 25-basis-point rate cut and weak German CPI data contrast sharply with the USD's resilience supported by rising U.S. Treasury yields and expectations of Federal Reserve rate stability. Eurozone trade deficits and political uncertainties in Italy further weaken the EUR, while the USD benefits from safe-haven demand amid global tensions. The diverging monetary policy paths between the ECB and Fed, coupled with the EUR's sensitivity to Middle East geopolitics, suggest a continued move towards the 1.05 level for EURUSD.

USDCAD

• The USDCAD pair is expected to trend higher in the coming period. The USD maintains its strength supported by rising U.S. Treasury yields, expectations of Federal Reserve rate stability, and safe-haven demand amid global uncertainties. In contrast, the CAD is under pressure due to expectations of a 50-basis-point rate cut by the Bank of Canada, weak oil prices around $72 per barrel reflecting soft energy demand, and downward revisions to Canadian GDP growth forecasts. The widening interest rate differential favors the USD, while geopolitical risks and trade uncertainties add further headwinds to the CAD's performance. These factors collectively point towards USDCAD appreciation.

AUDUSD

• The AUDUSD pair is expected to trend lower in the coming period. The AUD faces significant headwinds from deteriorating domestic conditions, including falling business confidence, a dovish shift by the RBA, and slowing GDP growth. Market expectations of RBA rate cuts by May 2025 further pressure the Australian dollar. In contrast, the USD remains resilient, supported by rising U.S. Treasury yields, expectations of Federal Reserve rate stability, and its safe-haven status amid global uncertainties. While Chinese stimulus measures provided temporary support for the AUD, pushing it briefly to 0.64, the overall trend favors USD strength. The pair remains vulnerable to global risk sentiment shifts and upcoming U.S. inflation data, with a likely continued move lower for AUDUSD.

AUDNZD

• The AUDNZD pair is likely to experience downward pressure in the near term. The AUD faces significant challenges with deteriorating business sentiment, dovish RBA signals, and slowing economic growth. In contrast, the NZD has found support from China's announcement of a shift to "moderately loose" monetary policy and promises of fiscal stimulus, which are particularly beneficial for New Zealand's export-oriented economy. While both currencies are sensitive to Chinese economic developments, the NZD appears to be better positioned to benefit from potential increases in Chinese demand. However, ongoing domestic weaknesses in both economies and global risk sentiment will continue to influence this pair's movements.

EURGBP

• The EURGBP exchange rate is poised to continue its downward trajectory, having already hit a 2024 low. This trend is driven by the stark contrast between ECB and BoE monetary policy expectations. While the ECB is anticipated to implement a 25-basis-point cut, the BoE is expected to maintain higher rates for longer. Sterling's relative strength is further supported by investor optimism about the UK's economic resilience compared to the Eurozone. However, potential headwinds for GBP include a slowdown in UK labor market activity and risks from labor market tightening in 2025. Overall, the diverging economic outlooks and monetary policy stances favor further EURGBP declines.

AUDCAD

• The AUDCAD pair is expected to trend lower based on the contrasting economic outlooks. The AUD faces significant headwinds with falling business confidence, a dovish RBA shift, and slowing GDP growth. Market expectations of RBA rate cuts by May 2025 further pressure the AUD. Meanwhile, the CAD, despite its own challenges, may find some support from stabilizing oil prices around $72 per barrel. However, both currencies are vulnerable to Chinese economic performance, with recent stimulus measures providing temporary support. The pair's movement will likely be influenced by the relative impact of global risk sentiment and commodity price fluctuations on each currency.

NZDCAD

• The NZD/CAD currency pair is expected to weaken because the Canadian dollar (CAD) may benefit from the potential stabilization of oil prices and expectations of further steps by the Bank of Canada (BoC) to support the economy. In contrast, the New Zealand dollar (NZD) faces limited growth due to weak domestic conditions, while its recent gains from Chinese stimulus measures may be short-lived. Long-term factors, such as NZD's dependence on global commodity prices and uncertainties surrounding China-U.S. trade relations, could contribute to its gradual loss of strength against the CAD.

Daily Analysis 2024/12/09

9. 12. 2024 - Josef Brynda

Latest news

USD

• November’s Nonfarm Payrolls exceeded expectations at 227K but failed to boost USD as unemployment rose to 4.2%.
• Market pricing now shows an 83% chance of a December Fed rate cut.
• USD weakened initially after mixed jobs data but stabilized as investors reassessed rate cut probabilities.
• US Treasury yields fell, adding pressure to the USD amid rate cut expectations.
• The US Dollar Index (DXY) tested the 106.00 level after soft jobs data and increased rate cut odds.
• Inflation concerns remain after wage growth stabilized at 4% YoY, above expectations.
• USD/JPY fell below 150 as Yen strength resurged on falling US yields.
• USD held firm despite global equity market strength and reduced risk sentiment volatility.
• Markets await midweek US CPI data, which could spark further USD volatility.
• A stronger USD led to sharp declines in AUD, CAD, and NZD amid commodity market weakness.
• Continued dollar strength reflects safe-haven demand amid mixed macroeconomic signals.
• USD sentiment remains resilient as equity markets absorb mixed macro data.
• Market focus shifts to December Fed decision, where a dovish stance could weigh on USD.
• US inflationary risks are being priced into commodities and equities, supporting the USD.
• USD remains favored by rate differentials against major currencies.
• Political stability concerns in Europe support USD demand over EUR.

CAD

• Canada’s unemployment rate surged to 6.8% in November, pressuring the CAD.
• Headline payrolls in Canada exceeded expectations but failed to lift the CAD.
• Market pricing now includes an 80% chance of a 50 bps rate cut by the Bank of Canada.
• Rising participation rates in Canada point to mixed labor market dynamics.
• CAD remains under pressure amid falling oil prices and weaker economic outlook.
• USDCAD surged to multi-year highs above 1.4150, reflecting CAD weakness.
• Soft Canadian GDP data adds to rate cut expectations, driving CAD lower.
• Crude oil declines toward $70/barrel weighed heavily on CAD sentiment.
• Bank of Canada policy stance remains dovish amid deteriorating economic indicators.
• CAD struggles to find support despite stronger-than-expected November jobs data.
• Falling Canadian inflation data suggests limited policy options for the BoC.
• CAD remains vulnerable to commodity market volatility, especially in energy markets.
• USDCAD remains supported by broader USD strength and weaker Canadian fundamentals.
• Risk sentiment remains a key driver for CAD, with geopolitical concerns adding pressure.
• CAD remains range-bound, with markets awaiting clearer signals from BoC policy.
• Falling Canadian exports could add to CAD's medium-term vulnerability.

EUR

• EUR/USD failed to hold above 1.06 after US jobs data, signaling further downside risks.
• Political uncertainty in France and Germany adds pressure on EUR.
• ECB is expected to cut rates by 25 bps this week, potentially weakening the EUR.
• French political turmoil failed to spark a significant reaction in the EUR.
• Weak inflation expectations in the Eurozone weigh on EUR sentiment.
• ECB policymakers lean towards gradual easing, limiting EUR downside.
• German DAX’s pause reflects uncertainty, indirectly impacting EUR.
• EUR short positions reached the highest level since March 2020.
• The ECB's cautious stance could prevent deeper EUR losses against GBP.
• EUR/USD remains under pressure from Fed rate cut anticipation.
• Sluggish Eurozone growth outlook caps EUR upside potential.
• EUR benefited from USD softness but failed to sustain gains amid mixed macro signals.
• ECB’s policy direction remains a key determinant for EUR’s medium-term outlook.
• Stronger UK fundamentals bolster GBP/EUR despite EUR support from ECB rate cuts.
• Rising geopolitical risks in Europe amplify EUR volatility.
• Key technical resistance at 1.06 may limit further EUR/USD gains.                         

GBP

• UK GDP contracted by 0.1% MoM in October, highlighting concerns about economic slowdown and limiting GBP's strength.
• Weakening consumer confidence in the UK is weighing on GBP sentiment amidst growing economic uncertainty.
• The Bank of England is expected to cut rates less aggressively than other major central banks, supporting GBP's medium-term resilience.
• Persistent inflationary pressures in the UK prevent the BoE from adopting a more dovish stance, maintaining GBP stability.
• Strong retail sales data could provide short-term support for GBP but may not offset broader economic challenges.
• Political instability in France and Germany indirectly supports GBP as investors seek alternatives to the EUR.
• Upcoming UK labor and inflation data are critical in shaping expectations ahead of the BoE's December rate decision, influencing GBP movements.
• GBP remains relatively resilient due to its perceived stability compared to politically unstable Eurozone markets.
• Weak economic growth and declining output data weigh on GBP, limiting its upside potential.
• Concerns over the UK government's fiscal stance and budget are dampening optimism around GBP.
• GBP is underpinned by stronger BoE guidance compared to other central banks, despite macroeconomic challenges.
• GBP faces challenges in breaking through key technical levels, reflecting a consolidation phase for the currency.
• Inflationary pressures keep GBP bulls optimistic about limited rate cuts, preventing significant depreciation.
• GBP benefits from a weaker global risk sentiment and a shift toward defensive assets.
• Sluggish UK growth strengthens the need for cautious monetary policy, limiting aggressive GBP appreciation.
• Consumer confidence and the impact of government policies on inflation will significantly influence GBP's performance in the coming weeks
• Stronger UK fundamentals bolster EUR/GBP despite EUR support from ECB rate cuts.

AUD

• AUD/USD fell below 0.64 as market anticipates an early 2025 rate cut by the RBA, with February odds now slightly above 50%.
• Weak Australian GDP data intensified rate cut expectations, pressuring the AUD further.
• China’s Politburo’s shift to a “moderately loose” policy is supportive of AUD but lacks immediate market impact.
• The RBA is expected to maintain its cash rate at 4.35% but may hint at dovish measures ahead.
• Falling iron ore prices have weighed on Australian equity markets and the AUD.
• AUD remains under pressure as US treasury yields drop, favoring USD.
• AUD/USD dipped near annual lows, reflecting weak domestic economic activity and RBA inaction.
• Commodity market dynamics, especially falling natural gas and crude oil prices, contribute to AUD weakness.
• The RBA is cautious on inflation, resisting immediate rate cuts despite economic softening.
• Support for AUD from Chinese policy remains tentative, with traders waiting for stronger evidence of economic recovery.
• Positive industrial metal sentiment due to China’s pivot could provide medium-term AUD support.
• Retail sales and building approval data indicate a possible recovery, but the AUD struggles to capitalize on these.
• Weak Q3 Australian GDP heightens concerns about a slowing economy and RBA's limited policy room.
• Dovish RBA outlook suggests further AUD downside if global risk sentiment remains fragile.
• AUD/USD failed to capitalize on softer US inflation, showcasing its vulnerability to domestic policy concerns.
• Persistent rate differential between the RBA and Fed continues to weigh on AUD/USD pair.

NZD

• NZD/USD fell below 0.5850 as the RBNZ signaled aggressive rate cuts through 2025.
• RBNZ’s 50 bps rate cut to 4.25% last month set a dovish tone for the NZD.
• ANZ Commodity Price Index rose 2.9% in November, offering minor support to NZD.
• NZD weakened further as markets priced in another 50 bps RBNZ cut by February.
• Upcoming BusinessNZ Performance of Manufacturing Index data will be pivotal for NZD.
• China’s pivot to a looser policy supports NZD as a China proxy, but the impact is limited.
• A 1% drop in the Trade Weighted Index added further pressure on NZD.
• NZD/USD sentiment remains bearish despite minor gains from Chinese stimulus optimism.
• RBNZ's dovish stance keeps the Kiwi vulnerable to external shocks.
• NZD saw moderate support from a rise in dairy prices but failed to sustain momentum.
• Weak inflation and manufacturing data weigh on NZD prospects.
• Geopolitical tensions and US rate cut expectations drive volatility in NZD/USD.
• Risk-sensitive NZD continues to underperform against stronger USD and GBP.
• Reduced consumer and business confidence in New Zealand add to Kiwi weakness.
• NZD's correlation with global equities suggests further downside on risk-off sentiment.
• Key NZ economic data this week may determine the medium-term direction for NZD.

News summary

EURUSD

• The EUR/USD pair is likely to face downward pressure in the near term. The US dollar's resilience, despite mixed jobs data, contrasts with the euro's vulnerability due to political uncertainties in France and Germany. While the ECB is expected to cut rates by 25 bps, potentially weakening the EUR, the Fed's anticipated rate cuts are already priced in, limiting further USD weakness. The EUR's failure to hold above 1.06 after US jobs data signals further downside risks. Weak Eurozone inflation expectations and sluggish growth outlook cap EUR upside potential, while the USD benefits from safe-haven demand amid mixed macroeconomic signals. The pair may continue to test lower levels.

USDCAD

• The USDCAD pair is poised for further upside in the near term. The CAD faces significant headwinds, including a surge in unemployment to 6.8% in November, falling oil prices, and increased expectations of Bank of Canada rate cuts. In contrast, the USD remains resilient despite mixed jobs data, benefiting from safe-haven demand and favorable rate differentials. The pair's surge to multi-year highs above 1.4150 reflects the CAD's weakness and the USD's strength. With the BoC's dovish stance amid deteriorating economic indicators and the Fed's more measured approach to potential rate cuts, the USDCAD pair is likely to maintain its upward trajectory.

AUDUSD

• The AUDUSD pair is likely to continue its downward trend in the near term. The AUD faces pressure from weak GDP data, expectations of RBA rate cuts, and falling commodity prices, particularly iron ore. The pair's drop below 0.64 reflects these concerns. While China's shift to a "moderately loose" policy could offer some support, its impact has been limited so far. On the USD side, despite mixed jobs data, the currency remains supported by safe-haven demand and favorable rate differentials. The persistent rate differential between the RBA and Fed continues to weigh on the AUDUSD pair. Given these factors, and barring any significant positive developments in the Australian economy or a major shift in Fed policy, the AUDUSD pair is expected to test lower levels.

AUDNZD

• The AUDNZD pair is expected to strengthen in favor of the AUD. While both currencies face economic headwinds, the NZD appears more vulnerable due to the RBNZ's aggressive rate cut signals. The AUD, despite facing rate cut expectations, benefits from potential support from China's economic policies and a less dovish RBA stance. The NZD/USD fell below 0.5850 as markets priced in further RBNZ cuts, whereas the AUD found some support from rising commodity prices and Chinese stimulus optimism. The divergence in central bank policies, with the RBNZ signaling more aggressive easing compared to the RBA, suggests the AUDNZD pair could see upward momentum.

EURGBP

• The EURGBP pair is likely to trend lower in the coming period. While both currencies face economic challenges, the GBP shows relative resilience. The EUR is weighed down by political uncertainties in France and Germany, weak inflation expectations, and anticipated ECB rate cuts. In contrast, the GBP benefits from the Bank of England's less aggressive rate cut expectations and perceived stability compared to the Eurozone. Despite the UK's economic slowdown, as evidenced by the 0.1% MoM GDP contraction in October, the GBP's strength against the EUR is supported by stronger fundamentals and a more hawkish central bank stance. The ECB's cautious easing approach may prevent deeper EUR losses, but overall, the EURGBP pair is likely to favor the pound.

AUDCAD

• The AUDCAD pair is likely to experience volatility with a slight bearish bias. Both currencies face challenges, but the CAD appears more vulnerable. The AUD is pressured by weak GDP data and expectations of RBA rate cuts, with AUD/USD falling below 0.64. However, potential support from China's shift to a "moderately loose" policy may provide some stability. The CAD, on the other hand, is under significant pressure due to surging unemployment rates, falling oil prices, and increased expectations of Bank of Canada rate cuts. The USDCAD surge to multi-year highs above 1.4150 reflects CAD weakness. Given these factors, the AUDCAD pair might see modest gains for the AUD, despite its own challenges.

NZDCAD

• The NZDCAD pair is expected to trend lower, favoring the CAD despite its own challenges. The NZD faces significant pressure following the RBNZ's signal of aggressive rate cuts through 2025, with the NZD/USD falling below 0.5850. While the CAD is also under pressure due to rising unemployment and falling oil prices, it appears relatively less vulnerable compared to the NZD. The RBNZ's more dovish stance compared to the Bank of Canada suggests that the NZD may underperform the CAD in this pairing. However, both currencies' sensitivity to commodity prices and global risk sentiment could introduce volatility to this pair.

Daily Analysis 2024/12/04

4. 12. 2024 - Josef Brynda

Latest news

USD

• U.S. ISM Services PMI for November fell to 52.1, reflecting softer expansion in the services sector.
• Factory orders rose by 0.2% MoM in October, signaling resilience in manufacturing despite broader economic challenges.
• Durable goods orders excluding transportation and defense increased slightly, pointing to steady industrial demand.
• The labor market showed improvement, with JOLTS job openings rising to 7.74 million in October.
• ADP Nonfarm Employment Change for November came in at 146K, missing expectations of 166K and significantly below the previous 184K, highlighting slowing private-sector job growth.
• Market participants see a 72% chance of a Fed rate cut in December amid slowing inflation.
• Fed Chair Powell's upcoming speech is expected to provide further insight into future monetary policy direction.
• Political and geopolitical tensions, such as South Korean instability, add volatility to USD performance.
• Strength in U.S. equities, particularly tech stocks, underpins optimism in the USD.
• Ongoing sanctions on Iran and OPEC+ production curbs have driven oil prices higher, impacting inflation outlooks.
• A strong U.S. dollar has weighed on commodities, limiting upside for gold and other metals.
• High yields on U.S. Treasuries continue to attract global investors, supporting USD demand.
• Fed officials remain data-dependent but signal readiness for accommodative measures if economic growth falters.
• The USD/CNY exchange rate nears 7.30, reflecting yuan weakness and potential tariff-driven risks.
• Trump-era policies, including potential tariffs on BRICS nations, add uncertainty to global trade and USD flows.
• Currency volatility has increased due to mixed macroeconomic data and Fed outlook ambiguity.

CAD

• Canadian dollar trades within its post-Trump election range, with oil prices and U.S. economic data as key drivers.
• WTI crude prices rebounded to above $70 due to U.S. sanctions on Iranian oil shipments and OPEC+ production curbs.
• Canada's economy remains sensitive to U.S. tariff threats, with Trump signaling potential 25% tariffs.
• Canadian Prime Minister Trudeau faces political challenges in securing favorable trade terms with the U.S.
• Fed rate cut expectations have influenced CAD/USD trends, with traders watching U.S. JOLTS data closely.
• Canadian bonds outperformed as traders positioned for potential Bank of Canada rate adjustments.
• Stronger U.S. labor data and oil market volatility have driven USD/CAD to test key resistance levels.
• Political instability in South Korea had little spillover impact on CAD performance.
• Canadian equity markets show resilience amid broader commodity price fluctuations.
• BRICS nations face potential tariff hikes, indirectly influencing CAD through global trade dynamics.
• Traders expect continued divergence between BoC and Fed monetary policies to impact CAD trends.
• CAD is positioned to benefit from seasonal strength in oil demand during winter months.
• Markets await Canada's GDP and employment data for further direction in CAD trading.
• Canadian manufacturing faces headwinds from rising input costs and uncertain global demand.
• U.S.-Canada trade relations remain a key focus for CAD performance amid Trump's trade rhetoric.
• Market participants remain cautious on CAD as geopolitical risks persist in global markets.

EUR

• EUR remains under pressure amid political instability in France and Germany’s economic struggles.
• French no-confidence vote adds uncertainty to fiscal policies, dragging EUR lower.
• Germany's manufacturing PMI shows contraction, underscoring challenges for Europe's largest economy.
• ECB rate-cut bets weigh on EUR as traders position for potential monetary easing.
• EUR/USD stabilizes above 1.05 but remains vulnerable to downside risks.
• Analysts predict a long-term EUR/USD downtrend, with parity possible in 2025.
• EUR benefits from seasonal equity market strength but faces headwinds from weak macro data.
• Political dysfunction in France limits EUR's upside potential against major currencies.
• Strong U.S. labor data and Fed policy divergence cap EUR/USD recovery efforts.
• European industrial output declines, adding downside pressure to EUR.
• Eurozone fiscal austerity measures stifle growth, weighing on EUR sentiment.
• ECB speakers emphasize data-dependency, limiting near-term EUR directionality.
• Rising energy costs challenge Europe's economic recovery, impacting EUR performance.
• EUR/GBP weakness persists as UK's fiscal policies favor GBP over EUR.
• Key focus remains on German employment and inflation data for near-term EUR trends.
• Traders see limited upside for EUR unless political and fiscal risks subside. ​

GBP

• The GBP/EUR rate is projected to rise beyond 1.20 in 2025, supported by UK's favorable fiscal policies.
• UK's budget focuses on growth-oriented measures, reducing unproductive subsidies while encouraging investment.
• The BoE's policy rate is expected to remain higher than global peers, supporting GBP strength.
• UK retail sales data disappointed in November, raising concerns over consumer spending.
• GBP remains resilient against EUR, with potential for further gains if Europe’s economic outlook worsens.
• Inflation-busting wage increases and new employment legislation pose risks to UK businesses.
• Labour government policies have drawn mixed reactions, with businesses warning of potential job losses.
• Strong nominal growth projections bolster long-term GBP sentiment.
• Europe’s fiscal struggles, particularly in France and Germany, support the bullish GBP outlook.
• Political instability in France poses risks to GBP/EUR cross rates.
• UK employment data remains critical for assessing near-term GBP trends.
• European industrial contraction favors GBP as a relative safe haven.
• GBP/USD gains remain capped by strong U.S. economic performance.
• BoE rate cut expectations are limited compared to ECB, supporting GBP strength.
• Analysts see GBP as well-positioned to benefit from Brexit-era economic stability.
• Rising UK bond yields attract foreign investment, strengthening GBP demand.

AUD

• Australia's Q3 GDP growth slowed to 0.3% QoQ, below expectations, increasing speculation of an interest rate cut by the RBA.
• On a YoY basis, the GDP grew by only 0.8%, signaling economic stagnation and recession fears.
• Weaker exports and consumer demand were offset by government spending, highlighting imbalanced economic growth.
• AUD remains under pressure due to a stronger USD and global risk aversion.
• The RBA is likely to hold rates steady at the December meeting, but traders price in a 30% chance of a rate cut by February.
• External headwinds include potential trade wars and geopolitical tensions impacting commodity demand.
• AUD/USD is testing its 0.6450 level with technicals pointing to further declines if economic data worsens.
• China’s economic challenges and a weakening yuan are dragging AUD down, reflecting tight trade ties.
• Australia's weak PMI data indicates sluggish services and manufacturing activity.
• Expectations of additional PBOC stimulus could provide a limited upside for AUD.
• Ongoing weakness in global commodity prices, especially iron ore, is a significant drag on AUD.
• Political stability in the Pacific region remains crucial to AUD performance amid regional uncertainties.
• An expected "Santa Rally" in equities could offer mild support to AUD by year-end.
• Key focus remains on Australian trade balance and upcoming retail sales data for further direction.
• South Korean political instability has had minimal spillover effect on AUD so far.
• Traders await further signals from the US Fed and RBA policy divergence to gauge medium-term AUD trends.

NZD

• NZD remains under pressure, trading below the 0.59 level amid weak domestic data and a strong USD.
• Spillover from Chinese yuan weakness has dragged NZD lower, reflecting tight trade ties with China.
• Traders fully price in the likelihood of an RBA rate cut, impacting NZD sentiment indirectly.
• New Zealand faces challenges from global geopolitical risks, including South Korean tensions and European instability.
• The RBNZ is unlikely to alter its current policy stance despite global economic pressures.
• NZD/USD remains vulnerable to breaking pandemic lows as risk aversion dominates.
• Key focus remains on domestic employment and inflation data for near-term NZD movement.
• China’s ongoing struggles have added significant downside risks to NZD due to trade dependency.
• Weak commodity prices, particularly dairy and forestry, weigh heavily on NZD.
• Traders remain cautious ahead of U.S. PMI and employment reports, which could shift NZD/USD trends.
• Risk-off sentiment has limited demand for NZD, with potential for further declines if global growth slows.
• Political tensions in Europe and Asia are unlikely to provide relief for NZD in the short term.
• Geopolitical stability in the Pacific region remains crucial for NZD strength.
• NZD's correlation with global equity markets leaves it vulnerable to downside during equity sell-offs.
• Upcoming New Zealand trade balance figures will be critical for short-term direction.
• Market participants await further guidance from RBNZ officials on future monetary policy outlook.

News summary

EURUSD

• The EUR/USD pair faces downward pressure amid diverging monetary policies and economic fundamentals. Weak German manufacturing PMI and political instability in France highlight structural challenges in the Eurozone, while stronger-than-expected U.S. labor market data and resilient manufacturing lend support to the USD. Although Fed rate cut expectations remain high, they are overshadowed by the ECB’s data dependency and potential easing measures. Rising U.S. Treasury yields and geopolitical tensions favor USD strength, capping EUR/USD recovery near the 1.05 level. Without significant improvement in European economic data or a resolution to political dysfunction, the pair remains vulnerable to further declines.

USDCAD

• The USD/CAD pair may continue testing key resistance levels as diverging economic indicators play out. While strong U.S. labor data and high Treasury yields underpin USD demand, rising oil prices due to OPEC+ production cuts and sanctions on Iran provide support for CAD. Canadian bonds’ relative outperformance suggests market positioning for potential BoC adjustments, but ongoing U.S. geopolitical tensions and trade rhetoric present downside risks for CAD. The pair remains sensitive to broader commodity price trends and upcoming Canadian economic data. Near-term, USD strength may prevail, but CAD resilience could temper gains.

   

AUDUSD

• AUD/USD remains poised for further declines, weighed down by weak Australian economic data and global risk aversion. Sluggish GDP growth, declining iron ore prices, and China's ongoing struggles exacerbate AUD weakness. Meanwhile, the USD benefits from strong U.S. Treasury yields, resilient labor markets, and manufacturing activity. While expectations of an RBA rate cut in early 2024 add bearish momentum, potential equity market rallies and PBOC stimulus could offer limited support for AUD. Unless Australia's trade and domestic data improve substantially, AUD/USD may test lower support levels near 0.6400 in the near term.

AUDNZD

• The AUD/NZD pair is expected to remain under pressure, with both currencies facing significant headwinds. Australia's weak GDP growth and fragile trade ties with a struggling Chinese economy weigh heavily on AUD. Meanwhile, NZD is similarly impacted by weak commodity prices and global risk aversion, with no immediate signs of policy adjustments from the RBNZ. Any significant divergence in trade data or monetary policy signals will dictate the pair's next move.

EURGBP

• EUR/GBP is likely to remain under pressure, favoring GBP gains due to contrasting fiscal and economic outlooks. The UK's growth-oriented budget and resilient fiscal policies contrast sharply with France's political instability and Germany's economic stagnation, which weigh on EUR. With the Bank of England maintaining a higher policy rate compared to the ECB, GBP sentiment remains bolstered. Persistent EUR weakness due to fiscal austerity measures and geopolitical headwinds further limits upside potential for the pair. Unless the Eurozone sees significant political or economic improvements, EUR/GBP may trend toward long-term lows.

AUDCAD

• The AUD/CAD pair could see continued range-bound trading with a bias toward CAD strength. Australia's slowing GDP growth and weak PMI data underscore economic vulnerabilities, further pressured by falling iron ore prices and China's economic struggles. In contrast, CAD is supported by rebounding WTI crude prices and resilient Canadian equity markets. Seasonal strength in oil demand and potential Bank of Canada rate adjustments bolster CAD. However, external factors such as U.S. tariff threats and broader commodity price volatility could add uncertainties. AUD's inability to capitalize on an expected "Santa Rally" may lead AUD/CAD to test lower support levels.

NZDCAD

• NZD/CAD is likely to face downward pressure, driven by CAD's relative strength and NZD's vulnerabilities. Canada's strong correlation with rising oil prices and seasonal demand supports CAD, while NZD struggles under weak dairy prices and trade dependency on China's faltering economy. With the RBNZ unlikely to adjust monetary policy and global risk aversion limiting NZD demand, the pair may continue to drift lower. Unless New Zealand's trade data shows significant improvement or commodity markets stabilize, NZD/CAD could test further lows in the medium term.