Daily Analysis 2024/11/21

2 d - Josef Brynda

Latest news

USD

• USD remains within range but supported by rising US Treasury yields, with the 10-year yield finishing at 4.44%.
• Geopolitical tensions, including potential Ukraine-Russia ceasefire talks and missile strikes, contribute to risk aversion, boosting USD.
• Market expectations for a Federal Reserve rate cut in December have dropped to 54%, down from 82.5% a week ago, driven by inflation risks from Trump's proposed policies.
• Fed Governor Bowman's hawkish remarks emphasize the need for cautious rate cuts, keeping USD sentiment resilient.
• USD - Continuing Jobless Claims: Claims rose to 1.908M, higher than the previous 1.872M, signaling potential weakness in the labor market.
• USD - Initial Jobless Claims: Claims decreased to 213K, better than the forecast of 220K, suggesting a stronger labor market.
• USD - Philadelphia Fed Manufacturing Index (November): Fell to -5.5 from a forecast of 6.3, indicating a contraction in manufacturing activity.
• USD - Philly Fed Employment (November): Increased significantly to 8.6, recovering from the previous -2.2, showing improvement in employment metrics
• Traders await clarity on U.S. President-elect Donald Trump's policies, including trade tariffs and tax cuts, which could reignite inflation and limit the Fed's ability to cut rates.
• Economists expect the Fed to cut rates at its December meeting but at a slower pace in 2025 due to inflation concerns from Trump's policies.
• Uncertainty surrounds the potential impact of Trump's proposed tariffs on major economies like Europe and China, increasing caution in global markets.
• The dollar index rose 0.1% to 106.72, near its one-year high of 107.07, supported by expectations of higher U.S. interest rates.
• Bitcoin reached a record high of $97,902 on speculation of an easier regulatory environment under Trump and a report that Trump's social media company may acquire crypto trading firm Bakkt.

CAD

• The CAD is gaining from strong natural gas prices, which surged to a 10-month high amid cold weather and rising exports.
• Oil prices remain a key focus for CAD, with crude stuck near the range low as concerns about Chinese demand weigh on the market.
• US economic data releases, such as initial jobless claims and home sales, are expected to impact CAD via USD/CAD movement.
• CAD - RMPI (MoM, October): Rose sharply by 3.8%, exceeding the expected -1.5% and reflecting higher raw material input costs.
• Rising US Treasury yields and a broadly stronger USD weigh on CAD sentiment, despite resilient energy prices.
• The Bank of Canada remains in focus, with inflationary pressures globally potentially influencing its rate policy stance.
• Canada’s inflation rate increased to 2% in October, reducing the likelihood of a larger interest rate cut by the Bank of Canada in December.
• The re-acceleration of inflation from 1.6% in September was primarily driven by a smaller decline in gasoline prices, according to Statistics Canada.
• Core inflation measures exceeded expectations, leading markets to trim the probability of a 50-basis-point rate cut to 31%.
• The Bank of Canada anticipated the inflation uptick, citing a smaller drag from energy prices in its monetary policy forecast.
• Market analysts now lean toward a smaller 25-basis-point rate cut, with economists citing stronger-than-expected inflation and signs of economic resilience.
• Weakness in the Canadian dollar ("limping loonie") persists, creating additional considerations for the Bank of Canada as it assesses monetary policy adjustments.

EUR

• The STOXX 50 was down 0.2% and the STOXX 600 declined 0.1% on Thursday and are on track to book a fifth straight session of losses, as cautious sentiment returned amind earnings results and escalation in the Russia-Ukraine conflict.
• European equity markets were set to open higher on Thursday, as investor sentiment stabilized following four consecutive days of selling.
• The Euro fell to $1.052, the lowest level since mid-October 2023, pressured by a general dollar strength, mounting tensions between Russia and Ukraine, and growing concerns about downside risks to the Eurozone economy.
• EUR/USD remains under pressure, with the pair struggling above the psychological support of 1.0500 due to concerns about Eurozone growth and expectations of an accelerated ECB easing cycle.
• Market participants anticipate the ECB to cut its Deposit Facility Rate by 25 bps to 3% in December and move toward a neutral rate range in 2025.
• ECB policymakers express concern over downside risks to Eurozone growth and inflation, advocating for further reductions in monetary policy tightness.
• ECB Governor François Villeroy de Galhau emphasized the need for cautious and flexible rate adjustments, reflecting concerns over Eurozone growth without significant inflationary impact from US tariffs.

GBP

• Rising UK gilt yields failed to support sterling, with long-dated yields closing higher at 4.47%.
• Weakness in industrial metals and tariffs on exports could weigh on GBP due to its trade exposure.
• Political uncertainty in France adds indirect pressure on GBP as it impacts the broader European outlook.
• Higher-than-expected inflation reduced the likelihood of a December rate cut, with markets now pricing in only 60 bps of rate cuts by the end of 2025.
• UK monthly inflation (CPI MoM) for October rose to 0.6%, up from 0.0%, signaling rising price pressures that could impact Bank of England decisions.
• Annual inflation (CPI YoY) climbed to 2.3% in October, above expectations of 2.2% and the previous 1.7%, highlighting growing inflation concerns.
• Producer prices (PPI Input MoM) increased by 0.1%, below forecasts of 0.5%, but improved from -0.5%, suggesting reduced but persistent cost pressures.
• Electricity prices increased by 7.7% and gas prices rose by 11.7% in October, following the lifting of Ofgem's energy price cap, reversing declines seen in the same period last year.
• October's Budget fiscal measures are expected to keep inflation above the 2% target for longer, adding to upward price pressures.
• UK economic growth has stalled since the election, and the combination of high inflation and fiscal tightening could lead to stagflation.
• The Bank of England is likely to hold interest rates steady next week, with Governor Andrew Bailey highlighting concerns over inflationary pressures from job taxes and business costs.
• Almost half (46%) of CPI items saw price increases above 3%, a level historically inconsistent with stable 2% inflation, complicating monetary policy decisions.
•  Despite economic challenges, the British Pound remains one of 2024’s best-performing G10 currencies, supported by inflation surprises and cautious rate adjustments.

AUD

• The S&P/ASX 200 Index inched down 0.04% to close at 8,323 on Thursday, reversing earlier gains and tracking global markets lower.
• The Australian dollar rose back above $0.65 on Thursday, recovering from losses in the previous session, driven by a hawkish stance from the Reserve Bank of Australia.
• AUD remains under pressure as Chinese stimulus expectations falter after the PBoC held rates steady, dimming hopes for a boost to Australian exports.
• Industrial metals, key to Australia's exports, remain weighed down by global demand concerns tied to potential US tariffs.
• Gold’s rally amidst geopolitical tensions could lend some support to AUD due to Australia's status as a major gold exporter.
• AUD weakened on risk-off sentiment fueled by escalating geopolitical concerns around Ukraine and Russia.
• Australian superannuation funds have delivered a 10.3% growth year-to-date in 2024, benefiting millions of Australians and contributing positively to economic sentiment.
• The "Trump Trade" rally following the US elections has bolstered global share markets, positively impacting Australian superannuation fund returns and boosting the AUD's attractiveness.
• Strong global share markets, combined with favorable conditions for Australian unhedged assets, underline the interconnected nature of the AUD's performance.
• While the Australian market fell 1.3% and international shares dropped 0.9%, the AUD's depreciation provided a cushion, demonstrating the currency's role in stabilizing economic returns.

NZD

• The New Zealand dollar resumed its downturn, falling below US$0.59 as global risk-off sentiment influenced markets.
• Reports of escalating military action between Ukraine and Russia have heightened geopolitical tensions, driving demand for safe-haven assets and pressuring the NZD lower.
• Reports of escalating military action between Ukraine and Russia have heightened geopolitical tensions, driving demand for safe-haven assets and pressuring the NZD lower.
• US political developments, including Donald Trump's appointment of Howard Lutnick as commerce secretary, have raised fears of aggressive tariff policies, weighing on the NZD.
• Weakness in the Chinese yuan, which marked fresh lows since mid-July, has spilled over into the NZD, adding downward pressure
• The USD advanced amid a broader risk-off environment, benefiting from safe-haven demand and further weakening the NZD.
• Persistent strength in US Treasury yields, trading between 4.39% and 4.44%, has supported the USD, indirectly influencing the NZD's decline.
• New Zealand's inflation data and any dovish rhetoric from the RBNZ could further weigh on NZD in the near term
• The USD's broad rebound limits NZD gains despite some support from rising dairy prices.
• Weakness in global commodity demand, particularly in China, dampens NZD prospects as a commodity-linked currency.

News summary

EURUSD

• The EUR/USD pair is likely to remain under pressure as USD strength is reinforced by rising U.S. Treasury yields, with the 10-year yield finishing at 4.44%, and a drop in expectations for a Federal Reserve rate cut in December to 54%, down from 82.5% a week ago. Hawkish remarks from Fed Governor Bowman highlight caution on rate cuts, supporting the USD further. On the other hand, the Euro faces significant headwinds, with EUR/USD falling to $1.052, the lowest since mid-October, due to geopolitical tensions surrounding Russia-Ukraine, weak Eurozone economic prospects, and expectations for the ECB to cut its Deposit Facility Rate by 25 bps to 3% in December. Additionally, poor performance in European equity markets, with STOXX indices posting losses, reflects growing concerns over Eurozone growth. With the dollar index near its one-year high and ECB policymakers advocating for more monetary easing, EUR/USD is likely to test and potentially breach the psychological support of 1.0500 in the short term.

USDCAD

• USD/CAD is expected to continue its upward trajectory, supported by strong USD fundamentals, including rising U.S. Treasury yields, robust labor market data (e.g., initial jobless claims bettering forecasts at 213K), and geopolitical tensions driving safe-haven demand. Although CAD gains some support from resilient energy prices and strong inflation data, with Canada’s inflation rate climbing to 2% in October, the broader strength of the USD outweighs these factors. Market expectations for tempered Fed rate cuts and potential policy caution from the Bank of Canada further amplify USD's edge over CAD. With the dollar index near its one-year high, USD/CAD could test higher resistance levels. But we could see a little support for the Canadian dollar in the short term.

AUDUSD

• The AUD/USD pair is likely to face further downward pressure as the USD remains supported by rising U.S. Treasury yields, safe-haven demand, and robust economic data. Geopolitical tensions, particularly around Ukraine and Russia, add to the USD's strength. Although AUD sees some support from gold's rally and the RBA's hawkish stance, it is weighed down by weaker industrial metal prices and faltering Chinese stimulus expectations. The broader risk-off sentiment and the USD's resilience near its one-year high further dampen AUD's prospects. AUD/USD may continue to decline, potentially testing lower support levels as USD strength prevails.
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AUDNZD

• AUD/NZD is likely to rise as AUD benefits from gold's rally amidst geopolitical tensions, driven by Australia's position as a major gold exporter, and a hawkish stance from the RBA. On the other hand, the NZD faces significant headwinds due to escalating global risk-off sentiment, rising U.S. Treasury yields, and a weaker Chinese yuan, which adds pressure to the commodity-linked NZD. While rising dairy prices provide some support to the NZD, expectations of dovish rhetoric from the RBNZ, combined with weakness in global demand for commodities, particularly from China, amplify the divergence between the two currencies. With these contrasting factors, AUD is likely to outperform NZD, pushing AUD/NZD higher.

EURGBP

• EUR/GBP is expected to decline as the Euro remains under pressure due to mounting downside risks to Eurozone growth, poor manufacturing activity, and expectations of an ECB rate cut in December. In contrast, GBP remains resilient, supported by stronger-than-expected UK inflation data, with CPI (YoY) rising to 2.3% in October, above the forecast of 2.2%, and a reduced likelihood of a Bank of England rate cut. UK fiscal measures, such as the removal of the Ofgem energy cap, have driven electricity and gas prices higher, maintaining inflation above 2%. Despite the broader European outlook being weighed down by geopolitical tensions and weak industrial activity, the pound remains buoyed by cautious but hawkish BoE sentiment. With EUR weakened by its dovish ECB outlook and GBP gaining from inflation surprises, EUR/GBP is likely to trend lower.

AUDCAD

• The AUD/CAD pair is likely to trade with a bearish bias as CAD benefits from strong natural gas prices, which surged to a 10-month high amid cold weather and rising exports, alongside resilient inflation data showing a rise to 2% in October. These developments reduce the likelihood of aggressive Bank of Canada rate cuts, with markets now pricing in a smaller 25-bps cut. Conversely, AUD struggles due to weaker industrial metal prices, a result of dampened global demand, and faltering Chinese stimulus expectations after the PBoC held rates steady. Although gold's rally amidst geopolitical tensions and a hawkish stance from the RBA provide some support for AUD, the overall strength of CAD, driven by robust energy prices and moderated inflation expectations, is likely to dominate, keeping AUD/CAD on a downward trajectory.

NZDCAD

• NZD/CAD is poised to decline as NZD weakness dominates, pressured by heightened geopolitical tensions, global risk-off sentiment, and the spillover effect of a weak Chinese yuan. Rising U.S. Treasury yields and safe-haven demand for the USD exacerbate NZD's struggles. Meanwhile, CAD benefits from strong natural gas prices and resilient inflation data, reducing the likelihood of aggressive rate cuts by the Bank of Canada. With the Canadian economy demonstrating resilience and commodity prices like crude oil providing additional support, CAD strength is expected to outweigh the NZD, pushing NZD/CAD lower.

Daily Analysis 2024/11/18

5 d - Josef Brynda

Latest news

USD

• Rising US Treasury yields, with the 10-year hitting 4.5%, highlighted strong economic data and hawkish Fed sentiment.
• Geopolitical concerns, including US support for Ukraine and North Korean troop involvement, drove USD safe-haven flows.
• U.S. retail sales in October grew 0.4%, surpassing forecasts.
• Volatility in equity markets, reflected in a 12% jump in VIX, sustained demand for the dollar as a safe-haven currency.
• Diverging economic data between the US and other major economies, particularly Canada and Europe, boosted USD strength.
• The U.S. Dollar Index reached its one-year high at 106.72 before slightly dropping to 106.497. This trend indicates the USD's sustained strength in the market.
• Since early November, following Donald Trump's election, the USD has experienced a structural bullish shift driven by broader macroeconomic optimism and political factors.
• Inflation in the U.S. continues to exceed the Federal Reserve's targets, supporting expectations of tighter monetary policy, which historically strengthens the USD.
• Fed Chair Jerome Powell recently emphasized caution regarding future monetary easing, reinforcing investor confidence in maintaining higher interest rates for an extended period.
• Differences in monetary policy between the Fed and other G10 central banks, which are generally more dovish, increase the USD's attractiveness.
• Futures markets now predict only 77 basis points of Fed rate cuts by the end of 2025, down from over 100 basis points previously. This reduction in easing expectations supports the strong USD.
• At least seven Fed officials are scheduled to speak this week, with expectations of cautious remarks. Even dovish members are unlikely to signal aggressive rate cuts, providing further support for the USD.
• Markets now see only a 60% probability of a quarter-point Fed rate cut in December, maintaining uncertainty around monetary easing and bolstering the USD.
• The U.S. dollar has recorded gains in six of the last seven weeks, highlighting its appeal as a safe-haven asset during periods of global economic uncertainty.
• Analysts expect any short-term weakening of the USD to be temporary, as the market lacks new economic data that could alter the current support for the currency.
• The S&P 500 and Nasdaq recorded their largest weekly declines since September, reflecting reduced risk appetite in global markets.

CAD

• USDCAD surged to multi-year highs above 1.4000, driven by diverging US-Canada economic data.
• Crude oil prices remained under pressure amid ample supply forecasts into 2025, further weakening CAD.
• Hawkish Fed sentiment and robust US retail sales data fueled USD strength, exacerbating CAD's decline.
• Softer Canadian economic outlook contrasted with the US, pushing traders toward USD over CAD.
• BoJ-related yen strength highlighted CAD’s lack of momentum against safer currencies, reflecting market uncertainty.
• The postal strike involving 55,000 workers could disrupt mail delivery during the critical holiday season, impacting e-commerce and business operations. This may dampen economic activity and weaken the CAD if prolonged.
• October housing starts data, following September's increase to 223,808 units, could indicate continued strength in the housing market. A strong report would support the CAD by highlighting resilience in this key sector.
• October's CPI release will be crucial after September's inflation slowed to 1.6%, below the Bank of Canada’s 2% target.
• Unifor’s strike vote for 3,500 Canadian National Railway workers could disrupt commodity and goods transportation. This would negatively affect exports and economic output.
• Metro Inc.'s earnings and expansion of its rewards program into Ontario could reflect consumer spending trends. 
• Government intervention in labour disputes, like those at B.C. and Montreal ports, indicates a focus on economic stability. Similar actions in the postal or rail disputes could stabilize markets and support the CAD.
• A rail strike would impact key Canadian exports like oil, lumber, and agriculture. This could harm the trade balance.
• Slowing inflation, as seen in September, could signal weaker consumer spending power and softer economic growth. 
• The federal government's proactive stance on labour disputes could reduce long-term economic disruptions. This stability might lend moderate support to the CAD in the future.
•  

EUR

• Multiple ECB speakers hinted at cautious policy moves, limiting euro strength despite dollar softness late last week.
• Stoxx 600 losses and weak UK GDP data weighed on regional confidence, indirectly pressuring the euro.
• Declining rate-cut expectations in Europe reflected persistent economic challenges, keeping EURUSD in check.
• Strong US retail sales and Empire Manufacturing data underscored economic divergence between the US and Eurozone.
• Geopolitical concerns surrounding Ukraine limited EUR gains, reflecting cautious investor sentiment.
• The EUR/USD traded 0.3% higher to 1.0568, reflecting positive market sentiment ahead of speeches from European Central Bank (ECB) officials.
• ECB President Christine Lagarde, along with other officials, is expected to adopt a dovish tone, influencing the euro's movement.
• Preliminary figures for October showed the eurozone economy grew 0.4% in the third quarter, surprising market watchers but still highlighting economic fragility.
• Germany, the eurozone's largest economy, remains particularly weak, adding pressure to the euro.
• The risk of tariffs impacting EU trade has resurfaced after Donald Trump’s election as U.S. President, which could weigh on the euro.
• The release of eurozone PMI activity data this week will be a key indicator for traders, reflecting broader economic trends.
• PMIs have gained significance as the ECB shifts focus from inflation to growth, with soft activity data now carrying more weight in policymaking.
• The ECB's ongoing dovish stance could signal further monetary easing, potentially impacting the euro’s valuation.
• Weakness in inflation and economic growth supports a narrative of continued eurozone vulnerability, weighing on the currency.
• Any unexpected changes in market sentiment following ECB speeches or data releases could lead to heightened EUR volatility.

GBP

• Weak UK GDP growth of +0.1% in Q3 underscored economic challenges, limiting GBP upside.
• Persistent concerns about BoE's policy path kept GBP under pressure, despite global rate volatility.
• Risk aversion in equities and higher volatility in global markets weighed on GBPUSD.
• Strength in US Treasury yields and hawkish Fed commentary widened GBPUSD differentials, pressuring the pair lower.
• Diminished rate-cut expectations for BoE in early 2024 offered limited support to the pound against USD strength.
• The expected rise in UK inflation to 2.2% in October (from 1.7% in September) could strengthen the Pound due to reduced likelihood of an early Bank of England rate cut.
• Stable core inflation at 3.2% indicates persistent price pressures, which could support the value of the Pound.
• Services inflation hovering around 5% year-on-year suggests the Bank of England will remain cautious about cutting rates, which may bolster the Pound.
• Negative impacts from the October budget, including increased employer national insurance contributions, could put downward pressure on the Pound.
• Rising household energy prices could increase inflationary pressures, delaying Bank of England rate cuts and supporting the Pound.
• Increased government spending from the October budget supports short-term UK growth, boosting investor confidence in the Pound.
• Warnings from retail and hospitality sectors about rising costs and potential job losses post-budget signal an economic slowdown, which could negatively affect the Pound.
• Expectations of only four Bank of England rate cuts in 2025 suggest a slower easing trajectory, which supports the Pound.
• Persistently high core inflation beyond 2024 could delay Bank of England rate cuts and strengthen the Pound.
• Recent upward revisions to UK economic forecasts by the Bank of England and the Office for Budget Responsibility improve sentiment around the Pound.

AUD

• Weak Chinese industrial output data pressured AUD due to Australia's trade dependence on China.
• Strong Chinese retail sales provided slight relief to AUD, though overall sentiment remains cautious.
• Commodities downturn, particularly in crude oil, added downward pressure on AUD as resource exports faced challenges.
• Hawkish comments from Fed Chair Powell and rising US Treasury yields widened yield differentials, pressuring AUDUSD lower.
• RBA's lack of significant rate action contrasted with other central banks, limiting AUD's appeal amid global volatility.
• Aussie mortgage holders are in theory the most exposed to interest rates rises in the world, yet there is little evidence of a mortgage cliff, the RBA said.
• Despite 13 rate hikes, Australians have continued to meet mortgage payments, reflecting economic resilience.
• Household savings remain at similar levels as before the pandemic, supporting investor confidence in the AUD.
• Low unemployment and strict banking regulations help maintain household repayment capacity.
• Mortgage arrears remain low and comparable to the US, confirming market stability.
• Major banks report most customers are ahead on repayments, enhancing the banking sector's stability.
• Westpac reported a 10% increase in offset balances, demonstrating household financial discipline.
• Fed Chair Jerome Powell’s stance on keeping US rates higher reduces the relative attractiveness of the AUD.
• Australian uranium stocks rose due to Russia limiting uranium exports to the US.
• Geopolitical tension around uranium has increased demand for Australian supplies.
• The ASX strengthened due to uranium miners, signaling stock market stability.

NZD

• NZD faced pressure from mixed Chinese data, particularly weak industrial output, given New Zealand's trade ties with China.
• Commodity weakness, particularly in dairy, a key export for New Zealand, weighed on NZD performance.
• Hawkish Fed sentiment and rising US yields made NZD less attractive for carry trades.
• Market caution around global growth and demand for safe-haven currencies limited NZD upside.
• Broader risk aversion in financial markets, reflected in higher VIX, negatively impacted the risk-sensitive NZD.
• The NZD/USD exchange rate has stopped its three-day decline during the Asian session, suggesting potential stabilization.
• China's retail sales increased by 4.8% year-over-year in October, exceeding expectations and indicating strong consumer demand in a key trading partner for New Zealand.
• China's industrial production grew by 5.3% year-over-year, demonstrating continued economic growth, which could benefit New Zealand's export-driven economy.
• The release of the BusinessNZ Performance of Services Index could provide further insights into New Zealand's business activity and influence the NZD.
• Statistics New Zealand will publish the latest Producer Price Index (PPI), which could reflect inflationary pressures and impact market expectations for monetary policy.
• The Business NZ Performance of Manufacturing Index dropped to 45.8 in October, the lowest since July 2024, signaling challenges in the manufacturing sector.
• Although China's industrial production rose, it fell slightly short of market expectations, which might limit optimism for New Zealand’s exports..
• The Dow Jones Industrial Average declined by 0.7%, contributing to a broader risk-off sentiment that often weighs on currencies like the NZD.

News summary

EURUSD

• The EURUSD is likely to remain under pressure as the USD benefits from strong retail sales, hawkish Fed sentiment, and geopolitical safe-haven flows. The USD's structural bullish shift, supported by rising Treasury yields and reduced expectations for Fed rate cuts, contrasts with the eurozone’s economic fragility. Weak growth in Germany and dovish signals from the ECB underscore the EUR's vulnerability. While EUR/USD may see short-term relief from slight dollar softness or upbeat ECB commentary, the overall divergence in economic performance and monetary policy between the U.S. and eurozone suggests a bearish outlook for EURUSD.

USDCAD

• USDCAD is expected to trend higher as the USD capitalizes on strong retail sales, hawkish Fed commentary, and safe-haven demand, while CAD struggles with weak economic data and falling crude oil prices. Labor disputes in Canada and softer inflation exacerbate CAD’s weakness, while the U.S. Dollar Index remains near one-year highs. Diverging monetary policies and economic fundamentals further favor USD strength. Unless Canada delivers stronger-than-expected housing or CPI data, USDCAD is poised to test higher levels above 1.4000.

AUDUSD

• AUDUSD is poised for further downside as the USD continues to strengthen amid robust economic data, rising Treasury yields, and hawkish Fed sentiment. The AUD faces pressure from weaker Chinese industrial output, declining commodity prices, and the RBA’s dovish stance. While Australia’s housing market and banking resilience provide some economic stability, they are insufficient to counter the USD's appeal as a safe-haven currency. Unless significant upside surprises emerge from Australian data or global risk sentiment shifts, AUDUSD is likely to trend lower in the near term.

   

AUDNZD

• AUDNZD is likely to remain range-bound with a slight bearish bias as both currencies contend with mixed data from China, their primary trading partner. Weak industrial output and commodity performance weigh on AUD, while dairy price pressures and manufacturing challenges impact NZD. However, Australia's economic resilience in housing and low unemployment may provide slight support for AUD, while New Zealand’s softer economic indicators limit NZD strength. In the short term, market risk aversion and broader dollar strength may keep AUDNZD in a narrow range, with a slight tilt towards NZD gains.

EURGBP

• EURGBP may see a modest upside as both currencies face significant challenges, but the euro holds a slight edge. The UK's weak GDP growth, persistent inflation, and policy uncertainty weigh on the GBP, while the EUR remains constrained by dovish ECB sentiment and weak economic data. However, the eurozone’s Q3 growth figures and resilience in PMI data may provide some support. The dovish tones from both central banks create a tug-of-war, but the euro's marginally better growth outlook could see EURGBP edge higher in the near term.

AUDCAD

• AUDCAD is expected to weaken as Australia faces commodity downturns and limited RBA action, while CAD remains subdued by diverging economic strength with the U.S. and falling crude oil prices. Weak Chinese industrial output dampens AUD sentiment due to trade dependence, while a hawkish Fed widens yield differentials unfavorable to both currencies. However, CAD's additional headwinds, such as labor disputes and weaker inflation, make it more vulnerable. Overall, AUD's resilience in housing and banking sectors may slightly mitigate losses against CAD, suggesting a gradual downtrend for AUDCAD with potential short-term stabilization.

NZDCAD

• NZDCAD is likely to weaken as CAD faces challenges from falling oil prices, labor strikes, and soft economic outlooks, while NZD struggles with risk aversion and commodity headwinds. New Zealand’s dependence on dairy exports and weaker manufacturing data weigh on its currency, but better-than-expected Chinese retail sales may provide marginal relief. Meanwhile, Canada’s inflation concerns and potential economic disruption from strikes could further support NZD resilience relative to CAD. However, CAD’s energy export reliance and broader global commodity trends suggest a slightly bearish trajectory for NZDCAD.

Daily Analysis 2024/11/14

9 d - Josef Brynda

Latest news

USD

• USD strength remains across the board as October CPI met expectations, reinforcing rate cut speculations but strengthening the dollar for now.
• U.S. Treasury yield curve steepening signals market confidence in Fed rate cuts, providing short-term support for USD.
• Strong jobless claims and CPI data support USD’s dominance, as expectations for Fed policy shifts later in the year attract dollar buyers.
• Fed Chair Powell’s upcoming speech is a key focus for USD traders, with potential policy insights affecting USD positioning.
• Fed's Kugler: If disinflation progress stalls, it could call for a pause to rate cuts
• U.S. October PPI and other macro data keep the USD in focus as economic resilience supports dollar strength against most currencies.
• Continuing Jobless Claims: 1,873K, lower than forecast of 1,880K.
• Core PPI (MoM) Oct: 0.3%, matching forecast and above previous 0.2%.
• Initial Jobless Claims: 217K, below forecast of 224K.
• PPI (MoM) Oct: 0.2%, in line with forecast, slightly higher than previous 0.1%.

CAD

• USD strength puts pressure on CAD as U.S. economic stability supports the dollar over commodity currencies like CAD.
• Crude oil prices remain stagnant, limiting CAD gains as oil is a major Canadian export.
• Market focus on IEA’s oil demand forecast could influence CAD, especially if it signals future oil price adjustments.
• Lower implied volatility in CAD/USD suggests market caution as traders await insights from Fed Chair Powell’s speech.
• Treasury yield shifts and U.S. inflation data impact CAD, with the Canadian dollar tracking U.S. economic health closely.
• Canada's record economic gap with the United States is about to get wider
• Donald Trump is bullish for oil — even Canadian oil
• Saudi Fund's $1 Billion Deal Boosts Burgeoning Mideast Selldowns
• USD/CAD rises above 1.40 for the first time since 2020

EUR

• EUR/USD dropped below 1.0550 following USD strength, reaching new lows for 2024 amid a lack of euro-supportive data.
• European sovereign bond yields declined, led by German Bunds, as Trump’s potential trade policies raise concerns over Eurozone exports.
• Weak EU sentiment, driven by political uncertainties, dampens the EUR's appeal in comparison to USD.
• ECB rate-cut expectations remain stable, but weaker economic data could amplify downside risks for EUR.
• The EUR remains sensitive to upcoming ECB minutes, with traders seeking clarity on Eurozone monetary policy direction.
• GDP (QoQ) Q3: 0.4%, matching forecast and previous.
• GDP (YoY) Q3: 0.9%, in line with forecast.
• Industrial Production (MoM) Sep: -2.0%, worse than forecast of -1.3% and previous growth of 1.5%.

GBP

• UK house price data exceeded expectations with RICS House Price Balance at +16%, marking the highest level since 2022, providing mild GBP support.
• BOE's Mann argues for holding rates firmly until more evidence of diminished inflation
• Bank of England Governor Bailey’s upcoming speech may influence GBP sentiment, especially on future UK interest rate policies.
• Weak UK manufacturing and economic growth forecasts continue to weigh on GBP/USD.
• The GBP faces pressure from Brexit-related concerns over trade and financial stability within the UK.
• A strong USD limits GBP gains, with the pound showing signs of weakness amid a cautious U.S. trade stance.
• The FTSE 100 hovered near three-month lows as investors weighed global inflation trends and the outlook for central bank rate cuts.
• UK House Price Balance Improves for Second Month
• UK 10-Year Gilt Yield Holds at 4.492

AUD

• Australia's October Employment Change increased by +15.9k, below the expected +25k, signaling moderate job growth.
• Australia's unemployment rate held steady at 4.1%, aligning with market expectations, thus limiting AUD volatility.
• Australia's 10-year government bond yield rose to around 4.75%, hitting its highest level in a year, as investors reacted to domestic jobs report.
• Global risk sentiment shifts, especially concerning China, could impact the AUD due to Australia's trade reliance on China.
• A stronger USD limits AUD gains, with the dollar’s strength pressuring AUD/USD near critical support levels.
• Employment Change (Oct): -15.9K, below the forecast of 25.2K and previous of 61.3K.
• Full Employment Change (Oct): 9.7K, lower than previous 48.8K.
• Consumer inflation expectations in Australia dropped to 3.8% in November 2024 from 4.0% in the previous month, marking the lowest reading since October 2021 amid a further slowdown in inflation.

NZD

• The New Zealand dollar dropped to around $0.586 on Thursday, pressured by the continued strength of the US dollar, which has been buoyed by so-called Trump trades.
• A stronger yuan fix by the People’s Bank of China lent early support to the NZD. However, the impact was short-lived as the Kiwi fell back amid USD momentum.
• Risk aversion in global markets limits the NZD as traders remain cautious over China’s economic stimulus plans.
• The NZD remains sensitive to U.S. Fed decisions, especially rate cut expectations that could ease some USD strength.
• Rising U.S. Treasury yields further weigh on the NZD, adding downside pressure on the NZD/USD.
• The NZD may respond to upcoming domestic inflation and employment data, which will shape the Reserve Bank of New Zealand’s policy stance.
• New Zealand's benchmark S&P/NZX 50 index rose 0.15% to close at 12,693 on Thursday as investors assessed the latest U.S. inflation data and the Federal Reserve's interest rate outlook.

News summary

EURUSD

• With USD strength continuing amid strong jobless claims, CPI data, and Fed rate cut speculations, the dollar holds a dominant position against the euro. EUR/USD has dropped below 1.0550, marking new lows for 2024. While the USD is buoyed by economic resilience and rate cut expectations, the euro faces challenges from declining European bond yields and weak sentiment driven by political uncertainties. The upcoming ECB minutes could provide further direction, but unless Eurozone data improves significantly, EUR/USD is likely to continue its downward trend in the short term

USDCAD

• USD/CAD has climbed above 1.40, a level not seen since 2020, driven by sustained USD strength amid robust economic data and Treasury yield dynamics. With crude oil prices stagnant, CAD struggles to gain traction against the dollar, which is further buoyed by jobless claims and CPI data. U.S. economic stability and rate cut expectations support USD strength, and unless oil prices or Canadian economic data offer a strong reversal, USD/CAD may remain elevated or even trend higher.

AUDUSD

• The strong USD, underpinned by robust economic data and expectations for rate cut adjustments, continues to pressure AUD/USD. While Australian employment data was stable, it fell below forecasts, limiting AUD’s ability to offset USD strength. With Australia’s inflation expectations dropping and China’s economic uncertainty weighing on AUD, this pair may remain subdued. Unless Australia releases stronger-than-expected economic data or there’s a shift in U.S. rate expectations, AUD/USD is likely to stay near support levels or decline further.

AUDNZD

• AUD/NZD may see limited upside as both currencies are pressured by global risk sentiment and strong USD dynamics. Australia’s moderate employment gains and stable unemployment rate provide some support, but NZD remains under pressure from USD strength and cautious sentiment surrounding China’s economic outlook, which weighs on both currencies. This pair may remain near current levels unless significant shifts in risk sentiment or favorable economic data emerge for either country.

EURGBP

• The euro and pound both face domestic challenges, but EUR/GBP could remain relatively stable due to opposing pressures. The euro’s weakness stems from limited economic data and political concerns, while the pound struggles with weak manufacturing and Brexit-related trade anxieties. Although GBP gains mild support from higher UK house prices, both currencies face USD headwinds that could keep EUR/GBP trading within a narrow range until clearer guidance from ECB and BOE leaders emerges.

AUDCAD

• USD strength places pressure on CAD, while a steady USD limits AUD gains, keeping this pair constrained. With stagnant crude oil prices limiting CAD's potential for appreciation, and moderate Australian employment growth limiting AUD's momentum, AUD/CAD may experience limited volatility and trade within a narrow range. A more significant change in either crude oil prices or Australian employment data would be required to alter this dynamic meaningfully.

NZDCAD

• NZD/CAD faces downside pressure as both currencies weaken relative to USD, but CAD may hold an edge due to oil market resilience. Although the NZD initially saw support from a stronger yuan fix, USD strength quickly overshadowed this, limiting NZD gains. The market’s cautious outlook on China’s economic policies keeps NZD under pressure, while CAD remains tethered to U.S. economic performance and oil prices. In the short term, this pair could trend lower unless a positive shift in global risk sentiment favors NZD.

Daily Analysis 2024/11/13

10 d - Josef Brynda

Latest news

USD

• USD strength is supported by a surge in Treasury yields as markets prepare for the U.S. CPI release.
• Volatility is elevated with hedging activity increasing, as CPI data could solidify the USD's dominance.
• Speculation on Trump’s potential regulatory cuts and efficiency reforms is adding bullish sentiment to USD.
• USD/JPY rallies as U.S. yields rise, with the BOJ's past rate hikes failing to match the USD's momentum.
• Demand for USD is fueled by expectations of hawkish U.S. policy moves under Trump’s new administration.
• The Core Consumer Price Index rose by 0.3% month-over-month, in line with market expectations.
• The Core Consumer Price Index increased by 3.3% year-over-year, matching analysts' estimates.
• The total Core CPI Index value reached 321.67, slightly above expectations (321.65) and significantly higher than the previous month (320.77).
• Overall inflation rose by 2.6% year-over-year, meeting expectations and higher than the previous 2.4%.
• The Consumer Price Index rose by 0.2% month-over-month, in line with expectations.

CAD

• CAD faces pressure with crude oil prices near lows due to demand concerns, directly affecting the energy-driven currency.
• Rising U.S. bond yields strengthen USD against CAD, as yield differentials widen.
• President-elect Trump’s pro-oil policies could increase U.S. supply, further pressuring oil and CAD.
• Concerns over Canadian competitiveness in the face of U.S. economic policies could erode confidence in the CAD, particularly if Trump's policies favor a stronger U.S. economy.
• The U.S. administration’s stance on tariffs remains unclear. If tariffs become a policy priority, it could weaken the CAD by reducing Canadian exports to the U.S.
• U.S. CPI data anticipation is keeping CAD volatility high, particularly as inflation could impact BoC rate paths.
• Concerns about OPEC’s demand forecast are weighing on oil prices, limiting upside potential for CAD.
• Loblaw Companies (L) released earnings per share at 2.50 CAD, compared to market expectations of 2.43 CAD.
• Suncor Energy (SU) released earnings per share at 1.48 CAD, compared to market expectations of 1.14 CAD.
• The S&P/TSX Composite Index rose 0.5% to close at 24,923 on Tuesday, marking a record high and outperforming global peers, primarily due to a sharp surge in Shopify shares, which offset declines among commodity producers.
•  

EUR

• EUR is pressured by USD strength, trading below the critical 1.0600 level amid rising U.S. yields.
• The German DAX's recent declines due to political instability add further bearish sentiment to EUR.
• EU50 decreased to a 13-week low of 4726.00 Index Points. Over the past 4 weeks, Euro Area Stock Market Index (EU50) lost 6.24%, and in the last 12 months, it increased 10.14%.
• European markets are cautious on inflation data, with investors expecting it to reinforce USD strength and weaken EUR.
• Concerns over Trump's cabinet choices and potential tariffs are sparking fears of Sino-European trade impacts, weighing on EUR.
• ECB rate expectations are subdued as inflation concerns dominate, keeping EUR under pressure.
• European stocks tried to recover on Wednesday after a nearly 2% drop the day before, which left the STOXX 50 at a two-month low and the STOXX 600 at a three-month low.
• The Euro dropped below $1.06, the lowest since October 2023, pressured by a strong dollar following Donald Trump's US election victory.

GBP

• Sterling struggles as UK gilt yields rise following U.S. Treasury yield increases, widening yield differentials with the USD.
• The Labour government's new spending policies have raised volatility in UK gilts, adding uncertainty to GBP.
• The UK 10-year gilt yield edged up to 4.458% as investors processed Donald Trump’s election win and UK labor data.
• The FTSE 100 dropped 0.3% to close at 8,022 on Monday, tracking a sharp decline in European equities and erasing the gain from yesterday
• Danske Bank anticipates a strengthening pound in the coming months, reinforcing confidence in the currency based on fundamental expectations.
• November showed a drop in investor confidence in the Eurozone, which could favor the pound by increasing the appeal of UK assets.
• BoE’s Huw Pill indicated that the bank may maintain a firmer stance on monetary policy.
• The upcoming elections in Germany, scheduled for February, could increase uncertainty, potentially making the pound more attractive as a safer currency.
• Rising unemployment could weigh on the pound, though the Bank of England is unlikely to adjust interest rates in response, potentially limiting the influence of these data on rate expectations.
• The multi-week upward trend for the pound/eur remains intact, suggesting the pound could continue rising despite short-term fluctuations.
• GBP is heavily influenced by upcoming U.S. CPI data, with traders hedging for possible downside risks.
• Rising concerns about Trump's trade policies are putting the UK’s economic outlook under scrutiny, affecting GBP.
• Bank of England rate cut expectations are diminished as inflation concerns persist, limiting GBP's upside.
• GB100 decreased to a 14-week low of 8017.00 Index Points. Over the past 4 weeks, United Kingdom Stock Market Index (GB100) lost 3.3%, and in the last 12 months, it increased 7.77%.

AUD

• The USD surge is pressuring AUD as rising U.S. yields make the dollar more attractive.
• Ongoing weakness in China’s credit data adds pressure on AUD due to Australia’s trade dependence on China.
• Gold stabilizes around key levels, providing limited support to the commodity-linked AUD.
• Australian markets are cautiously awaiting U.S. CPI data, with expectations of USD strength impacting AUD.
• Concerns over Trump's potential trade tariffs increase risk aversion, negatively influencing AUD.
• CBA’s strong Q1 profit, driven by growth in transaction accounts, home loans, and household deposits, signals resilience in Australia’s banking sector
• Despite cost-of-living pressures, CBA's assertion that the Australian economy is "fundamentally sound" could strengthen the AUD as investors may interpret it as an indicator of stability.
• CBA's $14.9 billion increase in household deposits suggests robust consumer savings, potentially reducing inflationary pressures
• Planned tax cuts may boost disposable income, supporting consumer spending and AUD, particularly if implemented in a high-rate environment.
• Australia's 10-year government bond yield climbed toward 4.7% following the release of wage data.
• The Australian dollar hovered around $0.653 on Wednesday, staying near its weakest levels in three months as the US dollar continued to gain strength, fueled by "Trump trades."
• Australia's seasonally adjusted wage price index advanced by 3.5% year-over-year in Q3 2024, easing from a 4.1% growth in the previous quarter and falling short of forecasts for a 3.6% rise.
• The S&P/ASX 200 Index dropped 0.75% to close at 8,193 on Wednesday, sliding for the third straight session as the resource-heavy bourse took a hit from weaker commodity prices.
• Iron ore, copper, gold and oil prices came under pressure as the dollar continued to rally on “Trump trades,” with markets betting on robust US economic growth and higher inflation under a second Trump presidency.

NZD

• NZD is under pressure as U.S. Treasury yields continue rising, strengthening the USD.
• Weak sentiment in Asian markets, particularly around China, creates headwinds for NZD.
• Falling commodity prices, notably in dairy, have a direct negative impact on the NZD.
• The Riksbank’s policy direction could indirectly influence NZD via risk sentiment changes in global currency markets.
• Ahead of the U.S. CPI release, NZD faces volatility as markets adjust to anticipated inflation data.
• The NZD fell below US$0.5950, marking a three-month low, indicating investor caution and potential downward pressure as the USD continues its ascent.
• US treasury yields rose by 14 basis points, reaching 4.44%. This spike strengthens the USD, making NZD less attractive due to lower relative returns.
• Iron ore, copper, gold and oil prices came under pressure as the dollar continued to rally on “Trump trades,” with markets betting on robust US economic growth and higher inflation under a second Trump presidency.
• The NZD faces resistance on moves approaching US$0.60, indicating market hesitation and selling pressure at this level.
• New Zealand Shares Track Wall Street Lower
• The NZX 50 fell 89 points, or 0.7%, to 12,660 around midday on Wednesday, erasing gains from the prior session and tracking a decline on Wall Street overnight, amid higher Treasury yields.
• New Zealand Dollar Holds Losses

News summary

EURUSD

• The EURUSD pair is likely to remain under downward pressure as the USD gains strength due to rising U.S. Treasury yields and market anticipation of a solid U.S. CPI release. These factors reinforce USD dominance, while the EUR faces additional strain from weak Eurozone economic indicators, such as the German DAX's decline and political instability in Europe. Furthermore, the ECB’s subdued rate expectations amid inflation concerns add to the EUR's weakness, suggesting that EURUSD will likely trade below key support levels in the near term, potentially testing new lows if U.S. data supports further USD strength.

USDCAD

• USDCAD is set for a bullish outlook with the USD benefiting from rising Treasury yields and increased demand driven by expectations of hawkish U.S. policies. In contrast, CAD is weakened by low oil prices and concerns over U.S.-Canadian trade relations, particularly under Trump’s policies, which could favor the U.S. economy at Canada’s expense. With widening yield differentials and subdued Canadian confidence, USDCAD may continue an upward trend, with the USD strengthening against CAD.

AUDUSD

• AUDUSD faces potential downside as USD strengthens significantly on rising yields and CPI expectations, drawing investor preference away from AUD. The AUD, though supported by solid domestic banking performance, remains vulnerable to weak Chinese economic data and commodity price pressures. As the U.S. CPI release could further boost the USD, AUDUSD may test lower levels, with AUD potentially moving towards weaker thresholds, especially if global risk aversion continues.

AUDNZD

• The AUDNZD pair is likely to trend upward in favor of AUD, as Australia’s strong economic fundamentals and slight resilience in consumer savings offset some pressures from U.S. yield impacts. Meanwhile, NZD faces more direct pressure from falling commodity prices, low dairy prices, and general market caution, exacerbated by high U.S. Treasury yields. Given these factors, AUDNZD may see further bullish movement with AUD likely holding an advantage over NZD in the near term.

EURGBP

• The EURGBP pair may lean towards GBP strength, as the euro remains under pressure from USD strength, Eurozone instability, and lower rate expectations. Meanwhile, GBP could find support from Danske Bank’s positive outlook on GBP and potential for it to act as a safer asset amid Eurozone uncertainty. The UK’s relatively stable monetary stance from the BoE, coupled with the possible safe-haven appeal of UK assets given EU risks, suggests that EURGBP may decline, with GBP gaining momentum over EUR if European political and economic challenges persist.

AUDCAD

• AUDCAD faces downside risks as both currencies are influenced by the energy and commodity sectors, yet CAD appears weaker due to lower oil prices and market concerns over Canadian competitiveness against the U.S. under Trump’s anticipated policies. The AUD, while pressured by a strong USD, shows relative resilience as Australia’s economic fundamentals remain sound, evidenced by increased deposits and robust bank earnings. However, lower Chinese credit data weighs on AUD, meaning AUDCAD might experience slight fluctuations but overall move sideways, with a bearish bias as CAD suffers from continued oil price pressure.

NZDCAD

• NZDCAD may move slightly in favor of CAD as NZD suffers from weaker commodity prices and bearish sentiment from low dairy prices and volatile Asian markets. CAD, despite oil price weaknesses, might benefit from strong domestic corporate earnings (such as those from Loblaw and Suncor), which could provide relative stability. However, with both currencies facing downside pressures, NZDCAD might trade within a range, with a slight edge for CAD over NZD if oil prices stabilize or Canadian equities provide further support.

Daily analysis 11/12/2024

11 d - Josef Brynda

Latest news

USD

• The strong dollar continues amid political factors, including Trump’s policies, which are boosting market sentiment for USD.
• With upcoming Fed speeches, markets will look for indications of policy adjustments, particularly from Fed Chair Powell.
• The NFIB Small Business survey offers insights into economic resilience, potentially influencing USD if results surprise markets.
• Strong U.S. yields and hawkish Fed policy stance are key drivers for USD strength against other currencies.
• U.S. economic data on inflation and retail sales will be pivotal for USD, with expectations of continued resilience in the
• U.S. economy.
• US Small Business Optimism Rises in October
• US 10-Year Treasury Yield Rebounds Further
• Bitcoin Approaches $90,000
• Dollar Climbs For 3rd Session
• US Futures Flat After Positive Session
• Week Ahead - Nov 11th
• US Year-Ahead Inflation Expectations Fall to Near 4-Year Low
• US Consumer Sentiment Highest in 7 Months
• US Consumer Credit Growth Below Estimates in September
• Fed Lowers Rates by 25bps as Expected

CAD

• WTI crude dropping below $68/barrel creates headwinds for CAD, as Canada’s economy is oil-reliant.
• USDCAD is influenced by rising U.S. Treasury yields, making the USD more attractive compared to CAD.
• The Canadian dollar is at risk due to Canada’s September building permits data, which could indicate economic slowdowns.
• Weakening global commodity prices, particularly in metals, could impact CAD negatively, as Canada exports several metals and minerals.
• Risk appetite changes linked to oil prices and U.S.-Canada trade relations continue to be key drivers for CAD.
• Canada Sept building permits +11.5% vs +1.7% expected.
• Crude Oil finds cushion even as traders expect more downside under Trump.
• OPEC cuts 2024 global oil demand growth forecast to 1.82 million BPD (prev. 1.93 milliong BPD).
• OPEC cuts 2025 global oil demand growth forecast to 1.54 million BPD (prev. 1.64 million BPD).

EUR

• Germany’s CPI year-over-year for October stood at 2.0%, showing stability in inflation but aligning with previous expectations, which may limit immediate impacts on EUR.
• The month-over-month CPI for Germany was at 0.4%, consistent with prior expectations, reflecting steady inflation trends in the short term.
• The Harmonized Index of Consumer Prices (HICP) for Germany showed a monthly increase of 0.4%, in line with expectations, which may not add significant pressure on EUR.
• The HICP year-over-year was at 2.4% for October, steady with prior readings and indicating manageable inflation, which may keep ECB policy on its current track.
• Stable inflation indicators from Germany suggest the ECB may not alter its policy stance soon, leaving EUR driven more by external factors and broader EU economic signals.
• Germany’s ZEW Economic Sentiment report is closely watched, as weak results may put downward pressure on EUR.
• The ECB’s lower terminal rate expectations, driven by German growth concerns, could weaken EUR further.
• The Euro remains weak amid political instability in Germany, as Chancellor Scholz faces a potential confidence vote.
• Italy’s bond performance relative to Germany’s indicates investor sentiment, which may affect EUR’s stability.
• The Euro remains under pressure due to ECB concerns on inflation and growth, contrasting with a strong USD.

GBP

• Average Earnings excluding bonuses rose by 4.8% in September, higher than previous readings, indicating potential upward pressure on GBP due to wage growth.
• Average Earnings Index, including bonuses, increased by 4.3%, surpassing expectations, which could strengthen GBP by supporting consumer spending power.
• Claimant Count Change in October was 26.7K, lower than previous numbers, suggesting fewer people are claiming unemployment benefits, which may positively impact GBP.
• Employment Change for the three months ending in September showed a gain of 219K jobs, signaling continued labor market strength, although lower than the prior 373K increase.
• The unemployment rate for September increased to 4.3%, slightly above expectations, which could temper the GBP’s strength as it indicates potential softening in the labor market.
• A high level of jobless claims in October and falling payrolls signal potential economic softening, impacting GBP sentiment.
• The BOE’s upcoming decisions will be crucial, with markets watching Governor Bailey’s speech for clues on rate adjustments.
• Increased concerns over UK economic stability amid Brexit trade issues may create downward pressure on GBP.
• High inflation pressures in the UK could prompt more hawkish BOE moves, but economic strain limits their options, affecting GBP volatility.

AUD

• The Westpac-Melbourne Institute consumer confidence survey showed a 5.3% increase to 94.6 points, indicating that
• Australians are more confident in the economy and spending more.
• Despite a temporary drop after the U.S. elections, Australian consumer confidence remains stable, supporting the value of the AUD.
• The CommBank Household Spending Index rose by 0.8%, driven by spending on household goods and leisure activities.
• Anticipated rate cuts and tax relief increase disposable income.
• Declining fuel and energy prices are easing household budgets, supporting spending and economic confidence.
• The Roy Morgan Business Confidence Index reached its highest level since April 2022, signaling optimism among businesses and economic growth.
• The government’s investment to boost productivity across states could stimulate the economy.
• Competitiveness reforms could add up to AUD 45 billion to GDP annually and reduce prices, which supports the economy.
• Adoption of international product safety standards and a right-to-repair policy could boost foreign investor confidence.
• Rising commodity prices could impact the AUD positively if global demand remains strong, especially from China.
• The currency is under pressure due to concerns over China’s debt relief plan lacking fiscal stimulus, weakening demand for Australian exports.
• U.S.-China tensions create uncertainties for AUD, especially as China is a primary trade partner.
• The AUD may face further challenges if global risk sentiment declines, impacting investor appetite for risk-sensitive currencies.

NZD

• Expectations for stronger U.S. growth and inflation under a potential Trump presidency are boosting the USD, pressuring the NZD.
• China’s limited fiscal measures suggest weaker global growth, which could negatively impact risk assets and commodity-linked currencies like the NZD.
• The potential continuation of U.S. tariffs may hinder global trade and affect commodity-linked currencies like the NZD.
• The rise in the DXY index and global bearish sentiment, compounded by lower German economic confidence and UK employment data, are further weakening the NZD.
• Risk sentiment, U.S.-China tensions, and global economic uncertainties could weigh heavily on the Kiwi dollar.
• The NZD, sensitive to changes in commodity prices, may face challenges from falling commodity prices and rising oil costs.
• The Fed’s hawkish stance continues to strengthen the USD, making it challenging for the NZD to maintain levels above US$0.60.

News summary

EURUSD

• The USD remains strong due to hawkish Fed expectations, high U.S. yields, and resilience in economic data, contrasting with the Euro’s weakness amid steady but subdued German inflation and growth concerns. Germany’s stable CPI limits upward pressure on EUR, while political instability and lower growth expectations further weigh on the currency. Consequently, EURUSD may face downward pressure as the stronger USD benefits from solid economic fundamentals and potential Fed hawkishness, while the Euro struggles with regional uncertainties and a cautious ECB stance.

USDCAD

• Rising U.S. yields and strong USD fundamentals put pressure on CAD, especially as Canada’s oil-dependent economy faces challenges from falling crude prices. The Fed’s hawkish stance and potential for resilient U.S. economic data further strengthen USD. USDCAD may continue to move upward with CAD struggling due to oil price weakness and less favorable economic indicators, whereas USD gains from high yields and robust economic signals.

AUDUSD

• The resilient U.S. economy and hawkish Fed give USD an edge, while Australia’s strong consumer confidence provides some support for AUD. Global tensions and China’s fiscal stance are downside risks for AUD. AUDUSD may face downward pressure as USD strength continues with firm U.S. yields and economic stability, while AUD’s outlook is dampened by external risks, especially if China’s demand falters.

AUDNZD

• Positive consumer confidence and business optimism in Australia support the AUD, especially as domestic spending rises. However, uncertainties in global trade, particularly China’s fiscal policy, create challenges. The NZD faces pressure from lower global demand expectations and weakening risk sentiment. Given these factors, AUDNZD may trend higher if Australia’s internal confidence continues to outperform, while the NZD struggles under weaker commodity demand and global risk sentiment.

EURGBP

• Although the UK faces economic softening with rising jobless claims and Brexit-related trade pressures, strong wage growth could support GBP. In contrast, the Euro is pressured by German growth concerns and ECB dovishness. Both currencies have headwinds; however, the GBP might hold an edge if BOE hawkishness continues, driven by high inflation. The EURGBP pair could see mild bearish movement for EUR if UK labor market strength sustains, while the Euro's momentum weakens amid internal EU issues.

AUDCAD

• Weakening oil prices, which hamper CAD, alongside support for AUD from increased consumer and business confidence, create mixed forces in the AUDCAD pair. Australia’s economic stability contrasts with Canada’s vulnerabilities linked to commodities, particularly oil. Additionally, ongoing U.S.-China tensions could curb demand for AUD, while CAD is likely pressured by both declining oil prices and lackluster building permit data. AUDCAD could see bullish potential if Australian optimism continues, but global uncertainties, particularly in commodity markets, may introduce volatility.

NZDCAD

• Both NZD and CAD are affected by commodity price shifts and risk sentiment, with oil price declines hurting CAD and global demand softness pressuring NZD. Despite Canada's challenges with oil prices, NZD may face greater downward pressure due to risk aversion and limited support from China. NZDCAD could see mixed performance but may trend downward if global demand concerns weigh more heavily on NZD than on oil-sensitive CAD.

Daily analysis 11/11/2024

12 d - Josef Brynda

Latest news

USD

• Key speeches by Federal Reserve Chair Jerome Powell this week are expected to provide clarity on the Fed’s monetary policy stance, influencing USD direction.
• The U.S. 2s10s yield curve flattened as traders unwound short positions after the presidential election, impacting the
• USD through changing interest rate expectations.
• USD strengthens on Trump's tariff policies, raising inflation expectations.
• Stronger U.S. consumer and business sentiment post-election boosts USD.
• Traders are focusing on upcoming U.S. inflation, retail sales, and industrial production data that could further support the dollar’s strength.
• U.S. bond market holiday slows USD trading activity.
• Key October inflation data due Wednesday will impact USD direction.
• Higher tariffs on imports likely to bolster USD further.
• Market speculation that the Federal Reserve could pause rate cuts by December pushed up short-term yields, boosting the USD.
• The US dollar strengthened on Friday, reversing prior losses due to positive sentiment following the U.S. election and upcoming economic data releases.
• Trump's return seen inflationary, prompting USD resilience.
• Seasonal year-end patterns could cap USD gains temporarily.
• Consumer sentiment boost expected from Trump's policies, lifting USD.
• U.S. bond market holiday may lead to USD retracement.
• Fed rate cut by 25 basis points last week gives USD temporary reprieve.
• Federal Reserve’s cautious approach sustains USD rally.

CAD

• The Canadian dollar was pressured by weaker-than-expected employment data, with net job growth at 14.5k versus the anticipated 25k and a lower participation rate.
• USD/CAD seems to extend its gains as US Dollar (USD) appreciates as traders anticipate a less dovish stance from the
• Fed, as Donald Trump is likely to pursue his campaign promises to enact substantial tariffs, including a 10% increase on imports and a reduction in corporate taxes.
• This underperformance in the labor market could prompt the Bank of Canada to consider further rate cuts, influencing CAD weakness.
• Oil prices remain a key factor for the CAD; any further decline in crude oil, amid concerns over global demand, could weigh on the currency.
• The participation rate's drop to its lowest level since January 2021 and the stable unemployment rate at 6.5% suggest potential economic softening that may impact CAD sentiment.
• Market watchers will monitor any signals from the Bank of Canada about future policy moves, especially after the recent 50bps rate cut.

EUR

• The euro weakened against the pound as traders expected the Bank of England’s rate path to remain higher than that of the European Central Bank, driven by new UK fiscal policies.
• ECB rate cut expectations increased after news that German Chancellor Olaf Scholz might expedite a parliamentary confidence vote, heightening political uncertainty.
• The German 10-year yield dropped by 8 basis points to 2.37% as traders anticipated early elections, influencing EUR movement.
• Market participants are watching the upcoming ECB minutes and EU Commission forecasts for signs of future monetary policy changes that could impact the euro.
• Economic data and speeches from key ECB officials this week are critical in shaping market sentiment toward the euro and potential policy shifts.
• Speculation about potential U.S. tariffs targeting the euro area increases uncertainty, which could weaken the euro as it may hurt the eurozone's export-dependent economy.
• The U.S. dollar index reaching new highs underscores the USD's strength, putting downward pressure on the EUR/USD as investors seek the relative safety of the USD.
• The possibility of snap elections in Germany, announced by Chancellor Olaf Scholz, introduces political instability in one of the eurozone's largest economies, likely to weigh on the euro.
• U.S. policies that raise inflation and bond yields could support a stronger dollar, creating a bearish environment for EUR/USD.
• If the Fed continues with less restrictive policies, it might create fluctuations for the dollar, indirectly influencing the EUR depending on rate expectations.
• A boost in U.S. consumer and business sentiment, driven by the recent U.S. election, could strengthen the USD, making the euro less attractive by comparison.
• Japanese interventions to control the yen's strength could lead to potential spillover effects on the EUR.
• Weaker-than-expected economic data from China puts the yuan under pressure, which may indirectly impact the euro as it influences global sentiment and risk appetite.
• If Japan holds off on rate changes, it might bolster the yen, potentially impacting the euro through the EUR/JPY pair as investors seek alternatives.
• If Lighthizer pursues aggressive trade policies, this could hurt the eurozone economy, pressuring the euro.
• Limited scope for Fed rate cuts due to inflation could boost the USD, affecting EUR/USD negatively.
• Speculation around a renewed Plaza Accords-type agreement to depreciate the dollar could create anticipation and
• volatility in EUR/USD.

GBP

• The British pound maintained its strength against the euro, bolstered by expectations that the Bank of England would keep rates higher than the ECB due to UK inflation concerns.
• A surprise increase in interest rates by the Bank of England can lead to a stronger pound as investors anticipate higher returns on UK assets.
• Inflation above expectations signals potential rate hikes, supporting the pound as markets adjust to tighter monetary policy.
• Strong job growth and higher wages can strengthen the pound by reinforcing confidence in the UK economy and potential policy tightening.
• Higher-than-expected GDP growth indicates economic resilience, boosting the pound as it suggests a healthy economic outlook.
• Any news that points to reduced trade barriers or improved UK-EU relations can strengthen the pound by lowering economic uncertainty.
• Hawkish comments from Bank of England policymakers about future monetary policy can lead to an appreciation of the pound as investors anticipate rate hikes.
• Announcements of significant stimulus measures or tax cuts can boost the pound by signaling potential economic growth and higher inflation expectations.
• Higher-than-expected PMI readings indicate expansion in the services or manufacturing sectors, strengthening the pound through improved economic sentiment.
• Reports of rising consumer confidence can signal robust consumer spending, supporting the pound by highlighting economic strength.
• A narrowing trade deficit or a surprise surplus can positively impact the pound by suggesting stronger export performance.
• Weak economic data or dovish policy from the US can lead to a stronger pound due to its inverse correlation with the dollar.
• News confirming political stability or favorable election outcomes can support the pound by reducing uncertainty.
  Increased global risk appetite often benefits the pound due to its status as a risk-on currency, signaling confidence in broader economic conditions.
• A strong rise in house prices and positive real estate trends can boost the pound by signaling economic resilience and consumer confidence.
• Reduced tensions or positive geopolitical developments involving key European nations can strengthen the pound due to improved trade and security outlooks.
• The announcement of new government spending under Labour’s budget added to inflationary pressures, supporting higher BOE rate expectations and GBP resilience.
• UK gilt yields fell but underperformed German Bunds, with markets slightly trimming BOE rate cut expectations, which could impact the GBP.
• This week, key UK employment data and a speech by BOE Governor Andrew Bailey will be pivotal in shaping GBP market movements.

AUD

• The Australian dollar faced downward pressure due to concerns over China’s economy, as recent stimulus measures fell short of market expectations.
• Continued deflation in China, evidenced by weak CPI and PPI numbers, raised concerns over demand, negatively impacting the AUD due to Australia's trade exposure.
• A stronger USD added to the AUD’s challenges, as it pushed down industrial metal prices, affecting Australia’s export revenues.
• AUD traders will watch for any developments in China's economic policy, as new measures or recovery signs could bolster the AUD.
• Commodity market trends, particularly in precious and industrial metals, will play a significant role in determining the near-term direction of the AUD.
• Beijing's 10 trillion yuan stimulus package failed to lift iron ore prices, reducing demand for Australian exports and pressuring the AUD.
• Major mining companies like BHP and Fortescue saw significant losses, impacting investor confidence in the AUD.
• Iron ore prices fell 1.3%, weakening Australia’s resource-dependent economy and the AUD.
• Major consumer staples, including a2 Milk and Endeavour Group, posted losses, signaling lower consumer confidence.
• Senator Canavan's support for tariffs on Chinese imports could strain trade relations, risking downside for the AUD.
• Resolute Mining shares fell 32% after executives were detained in Mali, potentially deterring foreign investment.
• Trump's proposed tariffs on Chinese imports threaten Australia’s trade relationship with China, posing risks for the AUD.

NZD

• The New Zealand dollar is currently weaker against the US dollar, trading at 0.5925, due to concerns over proposed US tariffs on Chinese goods.
• NZD faces pressure as New Zealand’s close trade relationship with China is impacted by potential US tariff increases.
• New Zealand's unemployment rate rose to 4.8% in Q3 2024, marking the highest level in nearly four years.
• The employment rate dropped to 67.8% in Q3 2024, down from 68.4% in the previous quarter.
• Labour force participation in September 2024 fell to 71.2%, a decline of 0.5 percentage points from the previous quarter.
• The RBNZ is set to announce quarterly Inflation Expectations, potentially influencing the NZD due to wage and price projections.
• The release of New Zealand’s monthly Visitor Arrivals data on Wednesday may impact economic sentiment.
• Friday’s BusinessNZ Manufacturing Index, which covers business conditions such as employment and production, is expected to influence the NZD.
• Market sentiment around Donald Trump's tariff proposals on Chinese imports is pressuring the NZD due to New Zealand's trade ties with China.
• The US Dollar Index (DXY) has strengthened to 104.50, contributing to the downward pressure on the NZD.
• Despite a post-election rally, expectations of hawkish Fed rate guidance are supporting the US dollar and affecting NZD valuation.
• The Fed cut rates by 25 basis points as expected, with Chair Powell signaling an ongoing assessment of economic conditions, impacting NZD.
• The University of Michigan Consumer Sentiment Index rose to 73.0 in November, reflecting US economic optimism that weighs on NZD.
• US 5-year Consumer Inflation Expectations increased to 3.1%, which could push USD higher and affect NZD.
• US 2-year and 10-year Treasury yields stand at 4.20% and 4.33% respectively, supporting USD strength and influencing NZD movement

News summary

EURUSD

• The euro is facing significant headwinds due to growing political uncertainty in Germany, particularly with the possibility of early elections, which has led to a drop in German yields. Speculation around ECB rate cuts and increased expectations for softer ECB monetary policy further weaken the EUR. Additionally, U.S. tariffs on European goods could harm the export-driven Eurozone economy, adding to bearish sentiment on the euro. Meanwhile, the USD remains buoyant following the U.S. election, which boosted consumer and business confidence. The potential for higher U.S. tariffs, as Trump’s policies continue to drive inflation expectations, and speculation around the Fed pausing rate cuts by December have strengthened USD yields, supporting the dollar's safe-haven appeal. With these dynamics, EUR/USD is likely to face continued downward pressure as investors favor the USD's relative safety and yield advantage.

USDCAD

• The USD has benefited from stronger post-election U.S. consumer and business sentiment, as well as speculation that Trump’s return could result in policies that drive inflation and bolster the dollar further. The potential for the Fed to pause rate cuts has pushed up short-term yields, and the dollar is finding additional support from expectations of higher tariffs on imports, which may help USD retain strength. Conversely, the CAD remains weak following softer-than-expected employment data, with job growth underperforming expectations and a declining participation rate that signals potential economic slowing. With Canada’s economy facing pressure from reduced oil prices and the Bank of Canada contemplating further rate cuts, USD/CAD is poised to rise as the USD strengthens on favorable economic indicators and CAD suffers from domestic economic challenges.

AUDUSD

• The AUD remains challenged by deflationary pressures from China, as lower Chinese demand has weakened the outlook for Australian exports and placed downward pressure on industrial metal prices. China’s economic stimulus measures have not yielded the expected support for Australia’s economy, and with Trump’s proposed tariffs on Chinese goods potentially impacting Australia-China trade, the AUD faces significant obstacles. In contrast, the USD has been bolstered by stronger U.S. sentiment following the recent election, as well as rising inflation expectations that support Fed speculation around rate hikes or pauses in rate cuts. With upcoming inflation and economic data expected to reinforce USD strength, AUD/USD is likely to continue declining, as the AUD lacks the momentum to offset the USD’s gains.

   

AUDNZD

• Both the Australian and New Zealand dollars are facing pressure from their close economic ties with China, which is currently struggling with deflationary concerns and weakened demand. The AUD is further impacted by lower iron ore prices and a lack of recovery in Australia’s key export sectors, while the NZD faces pressure from a rising unemployment rate, weakening labor force participation, and a lower employment rate in recent quarters. The New Zealand economy is also grappling with lowered market sentiment as a result of U.S. tariff discussions impacting its trade relations with China. While AUD/NZD may remain range-bound given the shared downside risk from China, the AUD could face slightly more downward pressure due to its higher dependence on commodity exports, especially if iron ore prices continue to decline.

EURGBP

• The euro is under pressure due to the potential for snap elections in Germany and heightened uncertainty around ECB policy direction. The euro’s weakness is compounded by concerns about U.S. tariffs targeting European imports, which could hurt the Eurozone’s export-heavy economy. In contrast, the GBP has maintained strength on expectations that the Bank of England will keep interest rates higher than the ECB due to persistently high inflation in the UK. Economic resilience, bolstered by strong job growth and positive real estate trends, further supports GBP strength. With the euro facing political risks and the ECB leaning towards a dovish stance, EUR/GBP is likely to continue trending lower as the GBP remains comparatively more attractive to investors.

AUDCAD

• The Australian dollar is being weighed down by challenges in China, as weaker-than-expected CPI and PPI numbers from China have raised deflationary concerns that negatively impact demand for Australian exports. Moreover, China's recent stimulus measures were insufficient to boost AUD sentiment, leaving the currency vulnerable. On the Canadian side, weaker employment data and the potential for further rate cuts by the Bank of Canada amid economic softening are factors against CAD. However, oil prices remain a crucial driver for CAD; any further declines in crude oil would weigh on CAD, while a recovery could lend it strength. Given these conditions, AUD/CAD may remain in a narrow range, though any pronounced declines in oil or further weakness in China could tilt the pair in favor of CAD.

NZDCAD

• The NZD is under considerable pressure due to a higher unemployment rate, falling employment rate, and lower labor force participation, all of which point to economic softening. The prospect of U.S. tariffs on Chinese goods impacts New Zealand due to its close trade relationship with China, while the USD’s strength continues to weigh down the NZD further. CAD also faces pressure from weaker employment data and the potential for the Bank of Canada to consider more rate cuts, especially if oil prices decline further, though stable crude prices could lend some resilience to CAD. As a result, NZD/CAD could see downward movement in the near term, with CAD possibly retaining a slight advantage given its relatively stronger position amid New Zealand’s economic downturn.

Analysis of the Impact of U.S. Elections

18 d - Josef Brynda

 

 

Daily analysis 11/04/2024

19 d - Josef Brynda

Latest news

USD

• The US dollar weakened after a weak October jobs report, with only +12k nonfarm payrolls vs. +100k expected.
• USD sold off in the Asian session as Trump's odds of winning the US election faded in betting markets.
• The US election tomorrow and the Fed's rate decision on Thursday are key events that could significantly impact USD.
• Strong earnings from major US companies like Amazon and Intel could influence risk sentiment in currency markets.
• The put/call ratio at 1.61, the highest since early August, suggests increased hedging and potential forex market volatility.
• Expectations for the Fed's rate decision on Thursday could cause significant forex market movements.
• The US 3-year Treasury Auction may affect bond yields and, consequently, currency valuations.
• The US ISM Manufacturing index came in lower than expected at 46.5, potentially influencing USD and other major currencies
• Dollar Drops as Some US Polls Shift Toward Harris
• US 10-Year Yield Falls Ahead of Election, Fed Decision

CAD

• Oil Rises as OPEC+ Delays Output Hike
• WTI crude climbing toward $71 per barrel.
• OPEC+ delaying its December production plans may further influence oil prices and, consequently, CAD.
• Gold and silver prices remaining steady may indicate a cautious approach in forex markets ahead of key events.
• Renewed Middle East tensions could increase safe-haven demand
• OPEC secretary general Al Ghais: We are very positive on demand

EUR

• European markets rebounded on Friday, with the STOXX 50 and STOXX 600 each gaining over 1%, potentially supporting EUR
• Eurozone October final manufacturing PMI 46.0 vs 45.9 prelim
• EUR: Boosted by weaker US Dollar
• German bonds saw the two-year yield dip to 2.25%, while the 10-year Bund yield rose to 2.40%, affecting EUR outlook.
• Euro Area Manufacturing PMI Revised Slightly Higher
• Eurozone Sentix Investor Confidence Index edges higher to -12.8 in November vs. -13.8 previous
• France October final manufacturing PMI 44.5 vs 44.5 prelim
• Italy October manufacturing PMI 46.9 vs 48.6 expected

GBP

• The new budget adds at least £142 billion in borrowing over five years, increasing the national debt.
• Sterling stabilized after a steep decline following the UK Autumn Budget announcement.
• UK gilts will be closely watched this week.
• Expectations for BOE rate cuts were adjusted to 95bps by the end of 2025, compared to 125bps a week earlier.
• Sterling Rebounds from 2-1/2-Month Low ahead BoE Decision
• The Office for Budget Responsibility (OBR) downgraded future economic growth projections, which could diminish confidence in the Pound
• 10-year gilt yields spiked by up to 20 basis points, indicating higher borrowing costs and nervousness among investors.
• UK 10-Year Gilt Yield Up to 1-Year High Ahead BoE
• UK Shares Extend Rebound

AUD

• We expect the RBA to keep the cash rate unchanged at 4.35% at the 5 November meeting.
• Australian Dollar Jumps as Greenback Slides
• Top commodity gainers are Copper (1.40%), Steel Rebar (1.06%) and Silver (0.61%). Biggest losers are Gold (-0.05%).
• The Reserve Bank of Australia (RBA) meeting is scheduled for Tuesday, which could significantly impact AUD.
• China's October Caixin PMI release could affect AUD due to Australia's economic ties with China.
• Iron Ore Falls on Weak Fundamentals
• China are reportedly reviewing a bill to raise local government debt ceilings
• Australian Shares Rise in Broad Rebound
• Australia Job Ads Slow Sharply
• Australia Melbourne Institute Inflation Gauge Rises Further
• AUD/USD: Advance expected to face strong resistance at 0.6620

NZD

• New Zealand Dollar Rebounds
• The performance of Asian stock markets, particularly in China, could influence AUD, NZD, and overall risk sentiment in forex.
• NZD may be influenced by the overall risk sentiment in the market, especially given the upcoming US election.
• China's economic data and market performance could impact NZD due to New Zealand's trade relations with China.
• Top commodity gainers are Copper (1.40%), Steel Rebar (1.06%) and Silver (0.61%). Biggest losers are Gold (-0.05%).
• New Zealand Stocks Snap 3-Day Loss
• China are reportedly reviewing a bill to raise local government debt ceilings

News summary

EURUSD

• The US dollar weakened after a disappointing employment report for October, when the number of non-farm jobs rose by only +12,000 compared to the expected +100,000. This below average performance suggests a slowing US economy and raises the possibility of a softer stance by the Federal Reserve in its upcoming interest rate decision. Meanwhile, the euro found support in recovering European markets and a slightly better-than-expected Eurozone Purchasing Managers' Index (PMI), which was revised to 46.0 from a preliminary 45.9. This week will be confirm whether the worse US data is confirmed, which may further influence the direction of the EUR/USD currency pair.  However,the upcoming election results will be crucial. Historical data show that the USD has consistently strengthened when Republicans win, and vice versa. Trump’s intention to reduce corporate and other taxes could lead to inflationary pressures and economic growth, prompting the central bank to raise interest rates, which would benefit the USD. Conversely, Kamala Harris's proposal for an unrealized gains tax could lead to capital outflows abroad, weakening the USD. Additionally, Trump's tariffs on the European Union would put downward pressure on the EUR. Based on current exchange rates and analyses, a victory for D.J. Trump is anticipated. In this scenario, we would be open to short positions, as this has historically led to up to a 10% change.

   

USDCAD

• The weakening U.S. dollar contrasts with a strengthening Canadian dollar against USD, supported by rising oil prices. The decision by OPEC+ to postpone December’s production increase is pushing oil prices higher, benefiting Canada’s economy as a key oil exporter. While there is a risk that OPEC members may not fully adhere to the set rules, the officially planned supply cut in December could further strengthen the CAD. Additionally, the decline in 10-year U.S. Treasury yields ahead of key events, such as the elections and the Fed's decision, could add more pressure on the USD. This week, U.S. economic data will be crucial to watch; if it mirrors the weaker results from last week, the USD/CAD pair may continue to weaken in favor of the Canadian dollar. On the other hand, if the elections bring greater certainty and stability, the USD could regain momentum, potentially leading to a reversal in the USD/CAD trend. But again, if Trump wins, the USD should strengthen significantly against the CAD

AUDUSD

• The Australian dollar strengthened as the U.S. dollar weakened, influenced by weak U.S. economic data, including the disappointing jobs report and a lower-than-expected ISM Manufacturing Index at 46.5. Expectations that the RBA (Reserve Bank of Australia) will keep the cash rate unchanged add further stability for the AUD. Additionally, the upcoming release of China’s October Caixin PMI could impact the AUD due to Australia's close economic ties with China. If U.S. economic data continues to disappoint while the AUD remains supported by stable monetary policy and positive commodity trends, the AUD/USD pair could see upward movement favoring the Australian dollar. This week’s U.S. elections could also bring significant volatility to the pair, potentially shaking up the market further, it will depends who is going to win. In case of Trump, we are expectation downtrend.

AUDNZD

• The New Zealand dollar rebounded but remains sensitive to overall risk sentiment and developments in China, given New Zealand's trade relations. Due to the tied economies and the upcoming elections, we can expect a lot of volatility on this pair, which we will try to trade with one of our scenario instruments.

EURGBP

• Based on recent market data, the EUR/GBP currency pair could trend in favor of the euro against the British pound. European markets have seen a recovery, with the STOXX 50 and STOXX 600 indices each rising by more than 1%, which could strengthen the euro. The final manufacturing PMI for the eurozone in October was revised slightly higher to 46.0 from the preliminary 45.9, indicating a slight improvement in the manufacturing sector. Additionally, the Sentix Investor Confidence Index in the eurozone increased to -12.8 in November from the previous -13.8, signaling a modest improvement in investor sentiment.On the other hand, the British pound faces potential headwinds due to the new UK budget, which adds at least £142 billion in borrowing over five years, increasing national debt and possibly weakening investor confidence. The Office for Budget Responsibility (OBR) has downgraded future economic growth forecasts, which could further weigh on the pound. UK 10-year gilt yields have surged by as much as 20 basis points, indicating higher borrowing costs and investor nervousness. Although the pound has stabilized after a sharp drop and UK stocks continue to recover, the overall economic outlook and increased borrowing may continue to put pressure on the pound to weaken.

AUDCAD

• Rising oil prices, with WTI crude climbing toward $71 per barrel due to OPEC+'s decision to delay its output hike, could strengthen the Canadian dollar given Canada's status as a major oil exporter. However, the AUD is also supported by steady commodity prices and expectations of stable monetary policy from the RBA. The interplay between Australia's commodity exports and Canada's oil revenues could create a balanced movement in the AUD/CAD pair. If oil prices continue to rise significantly, the CAD might gain an edge over the AUD.

NZDCAD

• The New Zealand dollar rebounded, breaking a three-day losing streak, supported by positive developments in Asian stock markets, especially China, which is reviewing a proposal to raise local government debt limits. This could lead to economic stimulus, benefiting New Zealand’s economy due to strong trade ties with China. Rising commodity prices, such as copper (up 1.40%), steel rebar (1.06%), and silver (0.61%), further support the NZD. Meanwhile, the Canadian dollar gains strength from rising oil prices, with WTI nearing $71 per barrel after OPEC+ postponed its planned December production increase. OPEC’s Secretary General expressed optimism about demand, boosting oil prices, which benefit Canada as a major energy exporter. Stable gold and silver prices reflect caution in forex markets ahead of key events like the upcoming U.S. elections, which could impact global risk sentiment. Heightened Middle East tensions could also drive demand for safe-haven assets, affecting NZD and CAD. Overall, if oil prices continue to rise, CAD could gain an edge, while strong Chinese economic data could support NZD, making the NZD/CAD pair subject to increased volatility depending on which of these factors prevails