Daily analysis 10/31/2024

23 d - Josef Brynda

Latest news

USD

• Strong ADP employment data showing 233,000 jobs added in October - positive for USD
• US Q3 GDP growth at 2.8% YoY demonstrates economic strength
• Strong US economic data may delay Fed rate cuts
• US labor market remains robust
• Continuing Jobless Claims came in at 1,862K, better than the forecast of 1,890K and previous 1,888K - positive for USD.
• Core PCE Price Index (MoM) for September was 0.3%, in line with expectations but higher than previous 0.2% - slightly negative for USD.
• Core PCE Price Index (YoY) for September at 2.7%, higher than expected 2.6% but same as previous 
• Employment Cost Index (QoQ) for Q3 was 0.8%, lower than expected 0.9% 
• Initial Jobless Claims at 216K, better than forecast 229K and previous 228K 
• PCE Price Index (YoY) for September at 2.1%, in line with expectations but lower than previous 2.3%
• PCE Price Index (MoM) for September at 0.2%, in line with expectations but higher than previous 0.1%  
• Personal Spending (MoM) for September increased by 0.5%, higher than expected 0.4% and previous 0.3%  

 

CAD

• GDP (MoM) for August was 0.0%, in line with expectations but lower than previous 0.1% - slightly negative for CAD.
• GDP (MoM) for September preliminary estimate at 0.3%, higher than expected 0.0% - positive for CAD.
• Oil prices rising for second consecutive day
• Middle East tensions affecting oil prices and
• Brace yourself, Canada's deficit could swell bigger than we thought
• Canadian dollar could fall below 70 cents if Trump wins
• In Nova Scotia, the corporate tax fear is real as election campaigning begins
• U.S. economy grew at a solid 2.8% pace last quarter in 'good news' for Fed
• High housing costs are the top economic concern for business owners

EUR

• Core CPI (MoM) for October increased by 0.2%, higher than the forecasted 0.1% and a significant change from previous 0.1%
• Core CPI (YoY) for October reached 2.7%, higher than forecasted 2.6% and same as previous month (2.7%)
• CPI (YoY) for October rose to 2.0%, beating expectations of 1.9% and notably higher than previous 1.7%
• CPI (MoM) for October increased by 0.3%, a significant reversal from expected -0.1% and previous month
• Unemployment Rate for September decreased to 6.3% from previous 6.4%, better than expected 6.3%
• ECB expected to cut rates by 125bps by end of 2024
• German inflation and GDP data exceeded expectations
• Italian bonds underperforming due to stagnant GDP 
• ECB's Schnabel warned against premature rate cuts 
• European yields rising after strong German data 
• Germany Retail Sales Unexpectedly Rise in September

GBP

• Budget annoucment
  • The largest tax increases since 1993, which should strengthen Britain's fiscal position.
  • Business social security contributions will increase by 1.2 percentage points to 15%, potentially negatively impacting wages and employment.
  • The economy is projected by the OBR to grow by 2.0% in 2025, but subsequently slow to 1.5% in both 2027 and 2028.
  • Capital gains tax will increase to 18% from 10% at the lower rate, and to 24% from 20% for higher earners.
  • Stricter rules for wealthy foreign residents will be implemented, aiming to raise an additional £12.7 billion over five years.
  • North Sea oil and gas windfall tax will increase to 38% from 35% and will be extended until March 2030.
  • Personal tax thresholds will rise in line with inflation from the 2028-29 financial year.
  • The state health service will receive a day-to-day spending increase of £22.6 billion.
  • Total capital spending will reach £100 billion over the next five years.
  • New fiscal rules will create fiscal headroom of £15.7 billion by 2029-30.
  • Government wants to increase spending by £70bn a year for 5 years

AUD

• Top commodity losers are Steel Rebar (-1.63%), Platinum (-0.55%) and Gold (-0.18%).
• Chinese manufacturing PMI above 50.1
• AUD benefiting from improving Chinese trade relations
• Inflation in Australia has fallen to a three-year low of 2.8%, but core inflation remains above target at 3.5%.
• RBA likely to maintain interest rates at 4.35% until at least February 2025, confirmed by Australia's largest mortgage lender.
• ANZ Business Confidence in New Zealand increased to 65.7 in October from the previous 60.9.
•  NBNZ Own Activity slightly improved to 45.9% from 45.3%.In Australia, Building Approvals showed a significant year-over-year increase of 18.10% in September, while month-over-month growth was 4.4%.
• Private House Approvals grew by 2.22%.The Export Price Index declined by 4.3% in the third quarter, while the Import
• Price Index decreased by 1.4%.Housing Credit showed a modest increase of 0.5% in September, matching the growth rate of Private Sector Credit.
• Retail Sales in September recorded a slight month-over-month increase of 0.1%, while quarter-over-quarter growth was 0.5%.
• All these figures indicate mixed economic performance, with the construction sector showing strong growth while foreign trade and retail remain relatively weak.
• Iron ore prices and other commodities continue to determine Australia's export performance.
• Indo-Pacific regional tensions and China relations may cause AUD volatility.
• Interest rate differentials between Australia and other countries affect AUD's attractiveness to investors.
• ASX performance and global risk sentiment are crucial for short-term AUD movements..
• Labor productivity and technological innovations determine long-term Australian economic competitiveness.
• Energy resources and agricultural products remain important export items affecting AUD..
• RBA monetary policy remains the main tool for controlling inflation and AUD stability.

NZD

• Top commodity losers are Steel Rebar (-1.63%), Platinum (-0.55%) and Gold (-0.18%).
• NZD sensitive to global risk sentiment and Chinese developments
• Chinese economic recovery supporting commodity currencies
• ANZ Business Confidence came in at 65.7 (vs previous 60.9), showing improved business sentiment
• NBNZ Own Activity at 45.9% (slightly up from 45.3%)
• Gold dropping 1% today is negative for both NZD and CAD, but likely more impactful for CAD as it has stronger correlation with precious metals
• The combination of stronger NZ business confidence and weaker gold prices could create a short-term bullish scenario for NZDCAD

News summary

EURUSD

• US economy demonstrates exceptional strength with 233,000 new jobs, 2.8% GDP growth, and robust labor market indicators (Initial Claims 216K, Continuing Claims 1,862K below forecast 1,890K). Core PCE at 2.7% YoY and increased personal spending (0.5% vs expected 0.4%) indicate strong consumer activity. Employment Cost Index at 0.8% suggests moderating wage pressures. European data presents mixed signals: Core CPI at 2.7% YoY (above expected 2.6%), overall CPI surprising at 2.0% (vs 1.9% forecast), and unemployment improving to 6.3%. German data exceeded expectations with unexpected retail sales growth and positive inflation figures, though Italian bonds underperform due to stagnant GDP. The critical monetary policy divergence shows ECB planning 125bps cuts by end-2024 while Fed maintains higher rates longer, supported by Schnabel's warning against premature cuts. This policy disconnect, combined with stronger US fundamentals and mixed European performance, suggests continued EURUSD weakness despite some positive European indicators.

USDCAD

• USD strength stems from positive indicators: strong ADP employment, 2.8% GDP growth, better jobless claims data, and solid personal spending (0.5%). PCE shows controlled inflation at 2.7% YoY. CAD faces mixed signals with September's GDP estimate at 0.3% but August's stagnant 0.0% growth. Canadian economy struggles with expanding deficit projections, Trump-related risks potentially pushing CAD below 70 cents, and corporate tax concerns. Rising oil prices due to Middle East tensions provide support, but high housing costs remain a concern. The U.S. economy's robust growth contrasts with Canadian challenges, suggesting USDCAD upside despite commodity support.

AUDUSD

• AUD benefits from improving Chinese relations and manufacturing PMI above 50.1. Australian inflation dropped to 2.8% (three-year low), while core inflation remains at 3.5%. Building approvals surged 18.10% YoY and 4.4% MoM, showing construction strength. Export prices declined 4.3% in Q3, while retail sales grew modestly at 0.1% MoM. RBA's likely hold until February 2025 contrasts with Fed's hawkish stance. US strong economic data, including robust employment and GDP growth, combined with divergent monetary policies, suggests AUDUSD weakness despite positive Chinese influence and construction sector strength.

AUDNZD

• Both currencies react to Chinese developments and commodity prices, with AUD benefiting from improved China trade relations and strong building data (18.10% YoY growth). NZD shows positive business sentiment (ANZ Confidence at 65.7, up from 60.9) and improved NBNZ Own Activity (45.9% from 45.3%). Commodity weakness affects both currencies, with steel rebar (-1.63%), platinum (-0.55%), and gold (-0.18%) declining. Australian private sector credit grew 0.5%, while housing credit matched this pace. The combination of AUD's broader economic base, stronger Chinese ties, and robust construction sector versus NZD's improved business sentiment suggests mild AUDNZD strength.

EURGBP

• EUR faces mixed inflation data and expected ECB rate cuts (125bps by end-2024), while GBP benefits from major fiscal measures including largest tax increases since 1993. UK's economic growth projection of 2.0% for 2025, business social security contribution increase to 15%, and capital gains tax hikes (18% from 10% lower rate, 24% from 20% higher rate) strengthen fiscal position. North Sea oil tax extension and £22.6 billion health service spending increase show government commitment. The £70bn annual spending increase and £15.7bn fiscal headroom by 2029-30 support GBP, suggesting EURGBP downward pressure despite some positive European data.

AUDCAD

• AUD shows strength through improved Chinese relations, strong building approvals (18.10% YoY), and diversified economy, despite inflation moderation to 2.8%. Housing credit and private sector credit both grew 0.5%, while retail sales increased 0.1% MoM. CAD benefits from oil price increases but faces domestic challenges including deficit concerns and stagnant August GDP (0.0%). While both currencies are commodity-sensitive, AUD's broader economic base, positive Chinese developments, and robust construction sector versus CAD's structural challenges suggest potential AUDCAD upside, despite oil price support for CAD.

NZDCAD

• NZD benefits from improved business confidence (65.7 from 60.9) and Chinese economic recovery. NBNZ Own Activity improved to 45.9% from 45.3%. CAD gains from rising oil prices but faces deficit concerns, political uncertainty, and housing market challenges. Gold's decline (-0.18%) impacts both currencies but affects CAD more significantly. September's preliminary GDP estimate (0.3%) provides some CAD support, but structural challenges and uncertain political landscape suggest potential NZDCAD strength despite oil price support for CAD.

Daily analysis 10/30/2024

24 d - Josef Brynda

Latest news

USA

• Mixed US economic data affecting dollar strength - JOLTS job openings fell below expectations to 7.443M
• US consumer confidence surprisingly strong - highest since March 2021.
• GDP slightly disappointing but still robust
• Core PCE inflation slightly above expectations could support Fed's hawkish stance
• The US private sector added 233,000 jobs in October 2024, significantly beating market expectations of 110,000 and higher than the previous month's 159,000. This much stronger-than-expected employment data suggests:
• US tech sector strong - Nasdaq at record highs.
• US Mortgage Rates Highest in 3 Months: MBA
• DAX Falls About 0.5%
• The US economy likely expanded by an annualized 3% in the third quarter of 2024, the same as in the previous quarter, driven by strong consumer and business spending
• The yield on the 10-year US Treasury note held around 4.25% on Wednesday after retreating from near four-month highs in the previous session as investors prepared for key economic data that could reveal the path for Federal Reserve policy
• USD strength is primarily driven by rising long-term Treasury yields
• Markets are likely already pricing in a Trump victory, supporting expectations of higher growth and fewer rate cuts
• Australian data is strong (labor market, inflation), supporting RBA's hawkish stance
• USD will likely remain strong until:
  • Harris wins the presidential election
  • There's a correction in Treasury yields

CAD

• Oil price stabilization affecting CAD
• Uncertainty about OPEC+ December production increase impacting CAD
• The recent jumbo cut to 3.75% suggests the Bank has urgent concerns about economic growth, though some analysts are already speculating about another possible large cut in December.
• Historical examples of larger rate moves were triggered by negative economic growth, emergencies like the pandemic, or significant inflation concerns - as seen in summer 2022 when the Bank raised rates by 100 basis points in July.
• US economic development as main trading partner significantly affecting CAD
• Gold Hits New Record on Safe-Haven Bid
• OPEC+ could delay oil production hike scheduled for December by one month or more

EUR

• EUR/USD holding above 1.0800 level, indicating certain euro resilience
• German Q3 GDP data shows 0.2% growth quarter-over-quarter, beating expectations of -0.1%,
• The current year-over-year inflation in Germany (YoY) reached 2.0%, which is higher than the forecasted 1.8% and previous 1.6%.
• Month-over-month inflation in Germany (MoM) is 0.4%, exceeding expectations of 0.2% and higher than the previous value of 0.0%.
• European bond yields rising due to fiscal spending concerns
• German 10-year real yields at highest level since July (0.47%)
• Eurozone Economic Sentiment Falls to 8-Month Low
• Eurozone Services Sentiment Holds at 8-Month High
• Germany Unemployment Rate Edges Up to 2021-Highs of 6.1%
• Spanish Stocks Extend Losses
• The German economy expanded 0.2% qoq in Q3 2024, rebounding from a 0.3% fall in Q2, and beating forecasts of a 0.1% contraction, preliminary estimates showed
• German auto industry’s transformation could result in 190,000 job losses by 2035

GBP

• Key UK budget statement today - expected to have significant impact on GBP
• Sterling showing strength against euro ahead of budget statement
• UK gilts falling ahead of budget, 10-year real yield at one-year high of 0.82%
• Stocks in United Kingdom Hit 7-week Low
• Wide yield/swap spreads are significantly weighing on the Canadian Dollar
• Bank of Canada's expected easing contrasts with Fed's hesitancy to cut rates
• This divergence in monetary policy is creating downward pressure on CAD
• USD/CAD fair value is around 1.3931
• Key resistance level at 1.3945/50
• Important support levels at 1.3895 and 1.3860
• USD trend appears technically overstretched

AUD

• Chinese 10 trillion yuan stimulus package may support AUD
• CPI (QoQ) for Q3 was 0.2%, below expected 0.3%
• CPI (YoY) for Q3 reached 2.8%, above expected 2.3%
• CPI Index Number for Q3 stood at 139.10, slightly up from 138.80
• Trimmed Mean CPI (YoY) for Q3 remained steady at 3.5%
• Trimmed Mean CPI (QoQ) for Q3 was 0.8%, in line with expectations
• Commodity prices, especially copper, affecting AUD due to Chinese stimulus
• Gold prices at record highs supporting commodity currencies including AUD
• Top commodity losers are Platinum (-1.45%) and Iron Ore CNY (-1.08%). Gains are led by Steel Rebar (0.67%) and Gold (0.27%).
• Copper stabilized around $4.34 per pound on Wednesday, trading within a sideways range since mid-October, buoyed by expectations that China, the world’s top consumer, will announce additional stimulus measures during a leadership meeting next week.

NZD

• Commodity markets and Asian developments significantly affecting NZD
• Chinese economic data and stimuli having direct impact on NZD
• Asian market sentiment crucial for NZD development
• Top commodity losers are Platinum (-1.45%) and Iron Ore CNY (-1.08%). Gains are led by Steel Rebar (0.67%) and Gold (0.27%).
• Copper stabilized around $4.34 per pound on Wednesday, trading within a sideways range since mid-October, buoyed by expectations that China, the world’s top consumer, will announce additional stimulus measures during a leadership meeting next week.

News summary

EURUSD

• The EUR/USD pair is showing resilience above 1.0800, supported by better-than-expected German Q3 GDP growth of 0.2% QoQ. However, the USD remains strong due to robust US economic data, including surprisingly strong private sector job additions of 233,000 in October and sustained 3% GDP growth. The divergence between US and European economic performance suggests potential downward pressure on EUR/USD, with US yields and strong tech sector performance supporting the dollar. European concerns about rising bond yields due to fiscal spending and Germany's increasing unemployment rate (6.1%) could further weaken the euro, while the Fed's hawkish stance supported by above-expectation Core PCE inflation data could strengthen the USD

USDCAD

• The Canadian dollar is facing pressure from oil price uncertainty and OPEC+ production decisions, while the USD continues to show strength from robust economic data and higher Treasury yields. The Bank of Canada's dovish stance contrasts with the Fed's hawkish position, suggesting continued upward pressure on USD/CAD, with fair value around 1.3931. Technical resistance at 1.3945/50 and support at 1.3895 and 1.3860 will be key levels to watch

AUDUSD

• The Australian dollar is being influenced by mixed domestic data, with Q3 CPI showing higher-than-expected yearly inflation at 2.8% but lower quarterly figures at 0.2%. The potential Chinese 10 trillion yuan stimulus package could provide support for AUD, while strong US economic data and tech sector performance continue to support the USD. The commodity market dynamics, particularly copper stabilizing around $4.34 and record-high gold prices, could provide some support for the AUD, though USD strength might dominate in the near term.

AUDNZD

• Both currencies are heavily influenced by Chinese economic developments and commodity markets, with the announced stimulus package potentially benefiting both currencies. Australia's stronger economic data and inflation figures might give the AUD a slight edge over the NZD, though both currencies remain sensitive to commodity price movements, particularly in metals and gold

EURGBP

• This pair might trend lower as UK data shows resilience in mortgage markets while European manufacturing concerns persist. French bonds' outperformance after Moody's Aa2 rating affirmation provides some EUR support, but German industrial weakness and broader European car industry concerns could weigh more heavily. Sterling's relative strength, supported by positive lending data and gilt market performance, could dominate.

AUDCAD

• The Australian dollar might find support against the CAD due to stronger domestic data and potential benefits from Chinese stimulus, while the CAD faces headwinds from oil market uncertainty and the Bank of Canada's dovish stance. The commodity price dynamics, particularly gold's record highs and copper stability, could provide additional support for the AUD against the CAD.

NZDCAD

• The New Zealand dollar's performance against the CAD will likely be influenced by the contrasting drivers of Asian market sentiment and oil price dynamics. The uncertainty surrounding OPEC+ decisions could weaken the CAD, while potential Chinese stimulus measures could support the NZD, though both currencies remain vulnerable to commodity market fluctuations.

Daily analysis 10/29/2024

25 d - Josef Brynda

Latest news

USA

• US Treasury yields rising on weak auction demand
• US Job Openings Unexpectedly Fall from 7.980M to 7.443M.
• US Stocks Fall, Earnings On The Radar
• US House Prices Rise the Least in Ten Months
• US Futures Lower, Earnings Eyed
• US Goods Trade Deficit Rises to Over 2-Year High
• Fed rate cut expectations for November 7th remaining high
• Major tech earnings (Alphabet, Microsoft, Meta) potentially impacting dollar
• US election uncertainty affecting currency markets
• Treasury auctions showing weak demand for 2- and 5-year notes
• 10-year yield around 4.30% aroud around a 3 months high" 
• Multiple US economic data releases this week including growth and employment figures
• Federal Reserve rate-cut path being closely monitored

CAD

• Oil price slump putting pressure on CAD (crude tumbling the most in two years)
• Canada Wholesale Sales Seen Rebounding in September
• Natural gas decline of nearly 10% potentially impacting CAD
• Canadian dollar sensitivity to commodity market volatility
• North American trade dynamics affecting CAD movement
• US election uncertainty impacting CAD due to close economic ties with US
• Energy sector performance crucial for CAD outlook

EUR

• German 10-Year Bund Yield Climbs to 8-Week High
• European banks (Santander, HSBC) reporting better than expected earnings
• Volkswagen closing three German plants, indicating manufacturing sector weakness
• French bonds outperforming after Moody's affirmed Aa2 rating
• Italian 10-year yields at 3.49%
• French 10-year yields at 3.01%
• European car industry facing weak demand environment
• BASF and Volkswagen earnings upcoming
• The GfK Consumer Climate Indicator for Germany rose to -18.3 heading into November 2024 from a marginally revised -21.0 in the previous period.

GBP

• UK September Mortgage Approvals data due at 0930 GMT
• UK gilts flattening and outperforming US Treasuries
• British gilt remit expected to favor short-dated issuance
• UK Consumer Credit Growth Slows, Misses Forecasts
• UK Mortgage Lending Falls More Than Expected
• UK Mortgage Approvals Above Forecasts, at 2-Year High
• UK Shares Edge Higher on Strong Earnings

AUD

• AUD showing weakness ahead of Australia's Q3 CPI data release
• Metals Commodities Updates: Steel Rebar Drops by 1.20%, Iron Ore CNY (-0.64%), Gains are led by Platinum (0.63%), Silver (0.58%) and Gold (0.26%).
• Market sentiment affecting AUD due to its risk-sensitive nature
• China Stocks Fall as More Stimulus Eyed

NZD

• NZD movement closely correlated with risk sentiment and commodity prices
• Following similar risk-sensitive pattern as AUD
• Affected by broader market concerns about global growth
• Trading influenced by Chinese economic outlook as major trading partner
• Steel Pares Rebound on Stimulus Skepticism
• China Stocks Fall as More Stimulus Eyed
• New Zealand Shares Close Nearly Flat

News summary

EURUSD

• The pair is impacted by diverging economic signals between the Eurozone and the United States. Recent data reveals a mixed economic environment in the US, with rising Treasury yields due to weak demand in recent auctions and an unexpected dip in job openings, which could suggest economic cooling. Simultaneously, the Eurozone's bond yields are climbing, with Germany's Bund yields reaching an 8-week high. Despite rising Eurozone yields, the U.S. dollar might still see strength given the Fed's high interest rate expectations and ongoing safe-haven demand amid U.S. economic uncertainties, such as looming election uncertainties and significant tech earnings that could impact investor sentiment. Therefore, while EUR/USD could experience near-term volatility, the U.S. dollar may hold an upper hand unless European growth shows stronger signs of resilience, potentially leading to a gradual weakening of the euro.

USDCAD

• USD/CAD is particularly influenced by the recent slump in oil prices, given Canada’s reliance on the energy sector. The steep decline in crude oil to a two-year low has weighed heavily on the CAD, while the U.S. dollar has found support from elevated Treasury yields and firm rate expectations. This scenario points to a strengthening of the USD against the CAD, as weaker oil prices could further hamper Canadian economic growth and reduce the likelihood of any significant CAD rally. Unless oil prices rebound or the U.S. faces economic setbacks, USD/CAD may see upward momentum in the near term.

AUDUSD

• The Australian dollar is heading towards its largest monthly decline since September 2022, pressured by concerns over declining Chinese industrial profits and overall Chinese economic slowdown. While Australia's technology sector shows growth thanks to positive Wall Street results, the change in expectations regarding US interest rate cuts suggests further potential pressure on AUDUSD. Given current fundamentals, continued downward pressure on this pair can be expected.

AUDNZD

• AUD/NZD is influenced by global risk sentiment and commodity price fluctuations, with both currencies experiencing downside pressure from falling steel and iron prices. However, with China’s economic outlook remaining critical, the AUD may be slightly more vulnerable than the NZD if China's economic support measures fall short. Therefore, the AUD/NZD could see some downside for the Australian dollar against the NZD, especially if New Zealand’s economy shows resilience or if commodity prices continue their downward trajectory, aligning with global growth concerns.

EURGBP

• This pair might trend lower as UK data shows resilience in mortgage markets while European manufacturing concerns persist. French bonds' outperformance after Moody's Aa2 rating affirmation provides some EUR support, but German industrial weakness and broader European car industry concerns could weigh more heavily. Sterling's relative strength, supported by positive lending data and gilt market performance, could dominate.

AUDCAD

• Commodity dependencies shape, with recent energy and metal price declines impacting both currencies. CAD feels the pressure from the slump in oil prices, while AUD is affected by falling metals and China’s market slowdowns. Both commodity currencies face significant headwinds. The pair's direction might depend on relative commodity performance, but given oil's dramatic decline versus more modest metal price movements, AUD might show relative strength against CAD in the near term.

NZDCAD

• Commodity market trends are also pivotal for the pair, with both currencies impacted by natural gas and oil declines. Canada’s reliance on energy exports places CAD under greater pressure amid falling prices, while New Zealand’s economy, though sensitive to Chinese demand, could be less immediately affected. As a result, NZD/CAD could see some modest upward movement favoring the NZD, particularly if Canadian energy markets remain unstable, barring a recovery in oil prices.

Daily analysis 10/28/2024

26 d - Josef Brynda

Latest news

USA

• Strengthening on rising odds of Republican sweep in upcoming US elections
• University of Michigan survey revision higher to 70.5 supports US economic resilience narrative
• Treasury yields rising with 2-year reaching 4.10%, highest since August
• Oil Sinks as Israeli Strikes Avoid Iranian Crude Facilities
• Strong September durable goods data supporting dollar strength
• Critical jobs report coming this Friday could further influence USD direction
• Copper Eases on Stronger Dollar, Treasury Yields
• US 10-Year Yield Hits Fresh 3-Month High

CAD

• Showing resilience despite Bank of Canada's 50bps rate cut last week
• Oil price volatility affecting CAD as crude slumped 4% after Israeli strikes
• Performing better than other commodity currencies in current market conditions
• US-Canada trade relations could be impacted by potential Trump presidency
• Housing market and domestic economic data remain key factors
• Bank of Canada Governor Tiff Macklem's parliamentary appearances on Tuesday and Wednesday could signal future monetary policy direction, potentially affecting CAD through interest rate expectations.
• Thursday's GDP data release for August and September preliminary estimates will be crucial, especially after August's indication of economic stagnation.
• Friday's earnings reports from energy giants Enbridge and Imperial Oil are significant for CAD, given the energy sector's importance to Canada's economy and Enbridge's new $700 million Gulf investment.

EUR

• European Stocks Start the Week Higher
• Trading around 1.08 with increasing odds of 50bps ECB rate cut in December
• European bond yields rising with Germany's 10-year up 11 basis points to 2.29%
• Upcoming credit reviews for France and Belgium adding market tension
• ECB's monetary policy stance remains crucial for euro direction
• Regional economic performance disparities affecting euro stability
• Wednesday's preliminary October inflation data from Spain and Germany could impact EUR
• French Stocks Open the Week Higher

GBP

• Capped below 1.30 ahead of UK's Labour party first budget in 15 years
• Pound to Euro exchange rate is hovering around the 9-day moving average at 1.20
• There's significant selling pressure at 1.2030-1.2050 level
• This psychological barrier is proving difficult for GBP bulls to break through
• UK 10-year yield saw largest weekly rise since January, up 18 basis points
• Economic data and BOE monetary policy expectations driving sterling movement
• Inflation concerns continue to influence GBP trading patterns
• Housing market stability remains a key factor for sterling outlook
• Friday's U.S. jobs report could create market volatility, strong report might cause GBP/EUR to pull back below 1.20
•  

AUD

• Metals Commodities Updates: Steel Rebar Rises by 2.53%
• AUD is heading towards its biggest monthly decline since September 2022 (potential decline of 4.80% for October 2024).
• Australian Dollar Falls to 2-½-Month Low
• China Industrial Profits Decline 3.5% YoY in Jan-Sept
• Weakened amid broader USD strength and concerns over China's industrial profits declining 27.1% YoY in September
• PBoC Launches Monthly Reverse Repo Operations
• Facing pressure from potential Trump trade policies and higher tariff risks affecting commodity currencies
• The Nikkei 225 Index Closes 1.86% Higher
• Australia 10Y Bond Yield Rises by 10 bps
• Chinese economic slowdown continues to impact AUD as Australia's largest trading partner
• The technology sector in Australia recorded strong growth thanks to positive results from Wall Street, mainly due to the performance of large technology companies (e.g., Tesla +22% after earnings announcement)
• Expectations regarding US interest rate cuts have changed - from the original 40-50 basis points to 23 points, indicating a stronger US economy and potentially further affecting the AUD/USD exchange rate.
• Resource sector performance remains crucial with commodities showing mixed performance
• RBA monetary policy stance remains important for future direction

NZD

• Weakening alongside other commodity currencies amid USD strength
• New Zealand Dollar Falls to 3-Month Lows
• NZD weakens to 0.5938 vs USD as RBNZ signals possible 50-75bp rate cut in November.
• Key data this week: ANZ Business Confidence (Thursday) and building consents (Friday) to guide NZD direction.
• Strong USD (DXY at 104.00) and US growth (3.4% Q3) continue to pressure NZD/USD.
• Potential impact from Trump trade policies creating uncertainty
• China Industrial Profits Decline 3.5% YoY in Jan-Sept
• The Nikkei 225 Index Closes 1.86% Higher
• Chinese economic slowdown affecting NZD as key trading partner
• PBoC Launches Monthly Reverse Repo Operations
• RBNZ monetary policy expectations influencing kiwi movement
• Dairy prices and agricultural exports remain crucial factors

News summary

EURUSD

• The European currency is currently trading around the 1.08 level, with the market increasingly pricing in the possibility of a 50 basis point ECB rate cut in December. European bond yields are rising, with the German 10-year yield up 11 basis points to 2.29%. Wednesday's upcoming preliminary inflation data from Spain and Germany will be key to the euro's future direction. Combined with strong US data and rising US bond yields, further downward pressure on the EURUSD can be expected, especially if Friday's US labour market report comes out positive

USDCAD

• The Canadian dollar shows resilience despite the Bank of Canada's recent 50 basis point rate cut. Oil price volatility following Israeli strikes significantly affects CAD. Key focus will be on BoC Governor Tiff Macklem's parliamentary appearances and Thursday's GDP data. Given the current US dollar strength and uncertainty regarding oil prices, USDCAD may continue to rise, especially if Canadian economic data disappoints

AUDUSD

• The Australian dollar is heading towards its largest monthly decline since September 2022, pressured by concerns over declining Chinese industrial profits and overall Chinese economic slowdown. While Australia's technology sector shows growth thanks to positive Wall Street results, the change in expectations regarding US interest rate cuts suggests further potential pressure on AUDUSD. Given current fundamentals, continued downward pressure on this pair can be expected.

AUDNZD

• This cross rate is primarily influenced by the different approaches of both countries' central banks and their exposure to Chinese slowdown. While the RBA maintains a more hawkish stance, RBNZ signals significant rate cuts. This could lead to AUDNZD strengthening, despite general pressure on both currencies due to Chinese issues. In the short term, volatility can be expected with a potential upward trend for this pair.

EURGBP

• The European currency is facing an interesting situation in relation to the British pound, with the ECB signalling a possible 50 basis point rate cut in December, while the British economy is showing mixed signals. The EURGBP is trading around the 9-day moving average at 1.20, with significant selling pressure in the 1.2030-1.2050 range. Upcoming preliminary inflation data from Spain and Germany will be key to the direction of the Euro, while the Pound awaits the first Labour Party budget in 15 years. With the UK 10-year yield posting its biggest weekly rise since January (up 18bps) and European bond yields also rising (German 10-year up 11bps to 2.29%), we can expect increased volatility in the pair. In the short term, the 1.20 level could be tested, especially if European inflation data comes in significantly different than market expectations or if the new UK budget brings in surprising elements.

AUDCAD

• The Australian and Canadian dollars are both facing unique pressures, with AUD experiencing significant weakness due to Chinese economic concerns while CAD shows resilience despite the Bank of Canada's recent rate cut. The relationship between these commodity currencies is particularly influenced by their different economic drivers - Australia's exposure to Chinese industrial demand and Canada's dependence on oil prices. With oil prices volatile following Israeli strikes and Chinese industrial profits declining, AUDCAD could see downward pressure, especially if Canadian economic data proves strong. However, the pair's direction will largely depend on the relative impact of commodity prices, with oil market dynamics potentially favoring CAD strength in the near term.

NZDCAD

• The New Zealand dollar faces significant headwinds with RBNZ's dovish stance signaling potential rate cuts of 50-75 basis points in November, while the Canadian dollar maintains relative stability despite BoC's recent actions. The upcoming Canadian GDP data and BoC Governor Macklem's parliamentary appearances could create volatility in this pair. NZDCAD might see continued downward pressure if the RBNZ confirms its dovish stance and Canadian economic indicators remain resilient. The pair is also influenced by the divergence in commodity exposures, with New Zealand's agricultural focus contrasting with Canada's energy sector dependence, making oil price movements and global trade dynamics key factors for this cross rate's direction.

Daily analysis 10/24/2024

24. 10. 2024 - Josef Brynda

Latest news

USA

• USD continues to strengthen due to higher Treasury yields and geopolitical risks.
• US election uncertainty creating volatility in forex markets.
• Rising US Treasury yields supporting USD strength across major pairs.
• Fed's Beige Book suggests further rate cuts, affecting USD sentiment.
• US Treasury yields reaching highest levels since July, supporting USD.
• Rising probability of Trump's victory creating uncertainty for USD and global trade.
• US labor market remains key indicator for Fed monetary policy.
• US-China trade tensions may escalate after US elections, impacting AUD and NZD.

CAD

• Bank of Canada's 50bps rate cut to 3.75% impacted CAD, with USDCAD reaching 1.3863.
• Canadian dollar showing sensitivity to BOC's future rate guidance.
• Bank of Canada signals more potential rate cuts if economy evolves as expected.
• Bank of Canada cut rates by 50bps to 3.75% and signaled potential further cuts, creating long-term pressure on CAD.
• BOC Governor Macklem emphasizing gradual inflation reduction and possibility of further rate cuts.
• Canadian economy aiming for "soft landing" in inflation reduction.

EUR

• EUR weakness continues due to dovish ECB comments and Trump presidency concerns.
• But today regarding to PMI data Euro Edges Up Slightly from 4-Month Low
• German 10-Year Bund Yield Drops Below 2.3%
• Euro Area Manufacturing PMI Rises to 5-Month High
• EURGBP rose to 0.8350 after rejecting 0.83 support level.
• ECB's dovish stance, with some members discussing potential 50bps cut, pressures EUR.
• Eurozone Preliminary Manufacturing PMI improves to 45.9 in October vs. 45.1 expected
• European bonds rally on ECB cut expectations, impacting EUR.
• ECB speakers showing mixed views on rate cuts, creating EUR uncertainty.
• German Preliminary Manufacturing PMI unexpectedly rises to 42.6 in October vs. 40.5 expected
• European economic concerns weighing on EUR performance.
• ECB members discussing potential 50bps cut, with Centeno warning about increasing growth risks - negative for EUR.
• ECB President Lagarde confirming disinflation trends in Eurozone..
• Weaker European industrial performance creating pressure on EUR.

GBP

• EURGBP rose to 0.8350 after rejecting 0.83 support level.
• UK 10-Year Gilt Yield Rises Toward 16-Week High
• British economy awaiting BoE signals on future monetary policy.
• UK Business Optimism Deteriorates to 2-Year Low
• The latest reading revealed that growth in the manufacturing sector slowed for the second consecutive month, reaching its lowest level in six months and approaching a near-neutral level.
• UK Services Activity Slows More than Expected
• UK Private Sector Growth Falls to 11-Month Low

AUD

• AUDUSD is testing its 200-day moving average at 0.6629.
• Chinese government planning 2 trillion CNY market stabilization fund, affecting AUD as a China-dependent currency.
• L'Oreal reporting weak Chinese demand, signaling continued Chinese economic issues - negative for AUD/NZD.
• Australian economy remains sensitive to Chinese developments and commodity prices.
• Australian Dollar Hovers Near 2-Month Low
• Iron Ore Extends Fall on Signs of Robust Supply
• Australia Services Activity Continues to Expand for the 9th Month in October
• Australia Manufacturing PMI at 53-Month Low in October
• Australia Private Sector Activity Rises to 2-Month High

NZD

• New Zealand Dollar Remains Under Pressure
• New Zealand Stocks Fall for 3rd Session
• L'Oreal reporting weak Chinese demand, signaling continued Chinese economic issues - negative for AUD/NZD.
• US-China trade tensions may escalate after US elections, impacting AUD and NZD.

News summary

• The USD continues to show strength across major currency pairs, supported by rising Treasury yields, which have reached their highest levels since July. Geopolitical risks further contribute to this trend, as they increase demand for the USD as a safe haven. Uncertainty related to the upcoming US elections, particularly the rising probability of Trump's victory, adds volatility to the forex markets. This political uncertainty, along with rising yields, creates a mixed environment for the USD, but higher yields continue to support the currency. This affects pairs like EURUSD and GBPUSD, where the USD may continue to strengthen.
• In the Eurozone, the EUR is under pressure due to a dovish stance from the ECB, despite a slight uptick in PMI data. Manufacturing PMI has risen to a 5-month high, and German PMI showed unexpected growth, which temporarily supported the EUR. However, discussions of a potential 50bps rate cut by the ECB are likely to weigh down the currency. As a result, EURUSD remains vulnerable to further declines, while EURGBP has shown resilience, rising to 0.8350 after finding support at the 0.83 level. Future euro performance will largely depend on how the ECB balances inflation control with growth risks, as highlighted by members like Centeno.
• Commodity currencies such as the AUD and NZD are experiencing challenges amid weaker Chinese demand and economic concerns. The AUDUSD is currently testing its 200-day moving average at 0.6629, while the AUD and NZD are both closely tied to developments in China. The proposed 2 trillion CNY market stabilization fund could provide some relief, but broader Chinese economic issues continue to impact these currencies. Additionally, any post-election escalation in US-China trade tensions may exacerbate downward pressure on AUDNZD, a pair particularly sensitive to both Chinese developments and geopolitical risks.
• The CAD has faced downward pressure following the Bank of Canada's (BoC) recent 50bps rate cut to 3.75%, leading to a notable rise in USDCAD to 1.3863. Governor Macklem's emphasis on a gradual reduction in inflation and the possibility of further rate cuts suggests that the CAD may continue to weaken, especially if the US maintains its higher yields and stronger USD stance. This divergence in monetary policy between the US and Canada could drive further gains in USDCAD, while cross-pairs like AUDCAD and NZDCAD may also experience volatility depending on shifts in global commodity prices.
• Looking ahead, the divergence in central bank policies, particularly between the Fed and other major central banks like the ECB and BoC, will be a key driver of forex movements. Cross-currency pairs like AUDNZD will likely remain highly sensitive to external factors such as Chinese economic conditions, while pairs like EURGBP will continue to reflect the relative economic performance and monetary policies between the UK and Eurozone.

Daily analysis 10/23/2024

23. 10. 2024 - Josef Brynda

Latest news

• Bank of Canada is today expected to cut rates by 50bps to 3.75%, which could significantly impact CAD movement.
• USD/JPY broke above 151, reaching highest levels since July, testing 200-day moving average at 151.37.
• EUR/USD dropped below 1.08 for the first time since early August due to dovish ECB rhetoric.
• ECB officials, including Lagarde, indicated potential rate cuts, with markets pricing in 50bps cut in December.
• IMF downgraded Germany's growth forecast, adding pressure on EUR.
• USD/CAD trades above 1.38 ahead of BOC decision, with potential to reach 1.3890 on dovish guidance.
• AUD/USD approached 0.67, supported by rising commodity prices.
• IMF lowered global growth forecast for 2025 to 3.2%, but raised US growth forecasts for 2024 and 2025.
• China's growth forecast for 2024 was downgraded by IMF, potentially impacting AUD and NZD.
• Rising US Treasury yields continue to support USD strength across major pairs.
• Oil prices jumped higher, supporting commodity currencies like CAD, AUD, and NZD.
• ECB markets now expect 32bps cut in December and 58bps by January, pressuring EUR.
• Trump trade concerns continue to impact Eurozone economic outlook, affecting EUR.
• Japanese Nikkei fell 1.39%, reflecting concerns about upcoming elections and potentially impacting JPY.
• US 10-year yield broke above 4.20% for first time since July, supporting USD.
• Markets pricing in faster ECB rate cuts following Lagarde's comments about clear direction of cutting cycle.
• German short-term bond yields dropped on increased rate cut expectations, weighing on EUR.
• Rising oil prices and Middle East tensions continue to influence currency movements, particularly commodity currencies.
• McDonald's E-coli outbreak investigation could impact USD sentiment if situation escalates.
• Starbucks' poor performance and withdrawn guidance may affect USD sentiment.
• IMF expects inflation to slow to 4.3% in 2025 from 5.8%, potentially influencing central bank policies.
• US election uncertainties creating volatility in currency markets.
• Chinese stimulus measures, including potential rate cuts, could impact AUD and NZD through trade relations.
• European consumer confidence data release could affect EUR movement.
• Multiple ECB speakers emphasizing disappointing growth could pressure EUR further.
• BOC's updated economic forecasts could provide direction for CAD trading.
• Rising commodity prices, particularly gold and silver, influencing commodity currency pairs.
• US existing home sales data could impact USD through housing market sentiment.
• Fed's Beige Book release could provide insights affecting USD direction.
• Market concerns about Middle East conflict escalation affecting risk sentiment and safe-haven currencies.
   
• UK Shares Attempt Gains
• UK Stocks Close Slightly Lower
• Unilever Hits 9-week Low (It is a multinational company that is the largest consumer goods manufacturer in the UK)

News summary

• The Bank of Canada's expected 50bps rate cut to 3.75% could significantly weaken the CAD, potentially pushing USD/CAD above 1.38 and possibly toward 1.3890. This dovish shift, combined with the ECB's increasingly accommodative stance, is creating a divergent monetary policy environment globally. The ECB's signals of potential rate cuts, with markets pricing in 50bps by December, has already pushed EUR/USD below 1.08, marking its lowest level since early August.
• The IMF's downgrade of Germany's growth forecast and broader global growth concerns for 2025 (revised to 3.2%) are particularly weighing on the EUR. This could continue to pressure EUR crosses, especially EUR/GBP and EUR/USD. However, the upward revision of US growth forecasts for 2024 and 2025 is supporting USD strength across major pairs, reflected in rising US Treasury yields breaking above 4.20%.
• Rising oil prices are creating mixed effects for commodity currencies. While supporting the CAD, this support is being offset by the BOC's dovish stance. AUD/USD's approach to 0.67 reflects this commodity price support, but China's downgraded growth forecast could limit gains for both AUD and NZD. This dynamic could create interesting movements in crosses like AUD/NZD and NZD/CAD.
• USD/JPY breaking above 151 reflects both USD strength and risk sentiment shifts. The Japanese Nikkei's 1.39% fall and Middle East tensions are influencing safe-haven flows, which could continue to impact JPY crosses. Corporate news like McDonald's E-coli investigation and Starbucks' poor performance might add to market uncertainty, potentially supporting safe-haven currencies.
• Unilever's 9-week low and UK stock market performance reflect broader European market concerns. Combined with Trump trade concerns and deteriorating European consumer confidence, these factors could continue to pressure EUR and GBP. While EUR/GBP is likely to test this year's lows, it's important to note that potential BOE rate cuts could partially weaken the pound, which might prevent the pair from breaking significantly lower. This creates a complex dynamic where both currencies face downward pressure from their respective central banks' dovish stances, potentially leading to range-bound trading in EUR/GBP while both currencies weaken against other majors like USD
• These market dynamics suggest continued USD strength against most major pairs, particularly against EUR and GBP, while commodity currencies may show mixed performance depending on commodity price movements and central bank actions. Cross rates like AUD/NZD and EUR/GBP could see increased volatility as these various factors play out.

Daily analysis 10/22/2024

22. 10. 2024 - Josef Brynda

Latest news

• Dow Jones dropped 344 points, while Nasdaq 100 edged up 0.2%, indicating mixed market performance.
• Nvidia stock surged 4.1%, reaching a new all-time high.
• Japan's Nikkei fell 1.7%, leading losses in Asian markets despite yen weakness.
• Chinese stocks rose 0.7% following another interest rate cut from the PBOC.
• The US dollar approached its recent peak as US yields increased significantly.
• Precious metals remained strong despite rising yields and dollar strength.
• Sovereign bond selloff intensified as hopes for aggressive rate cuts faded.
• Philadelphia Fed and Richmond Fed will release activity reports today.
• Fed's Logan expects gradual rate cuts if the economy meets forecasts, emphasizing nimble policy choices.
• Minneapolis Fed President Kashkari warned higher budget deficits could lead to higher interest rates.
• Kansas City President Schmid favors slower interest rate reductions due to uncertainty about the ultimate low point.
• The VIX rose 1.89% to 18.37, while VIX9D increased significantly by 16.24%.
• European sovereign bonds fell, with Italian 10-year yields rising 15 basis points to 3.51%.
• The spread between Italian and German 10-year bonds widened by 6 basis points to 123.
• US 10-year Treasury yield increased by 10 basis points to 4.19%.
• Gold and silver hit new highs despite rising Treasury yields and a stronger USD.
• UK inflation unexpectedly dropped to 1.7% in September, below the Bank of England’s 2% target.
• Crude oil traded lower after Monday's Middle East-focused bounce lost momentum.
• Arabica coffee retreated as key production areas in Brazil may see rain after prolonged drought.
• USDJPY exchange rate rose above 151.00, potentially risking verbal intervention from Japanese authorities.
• The Mexican peso weakened to over 20 pesos per USD due to concerns about potential Trump presidency.
• SAP lifted annual guidance after Q3 results topped estimates.
• Nike renewed uniform partnership with NBA and WNBA as NFL opens bidding to competitors.
• Microsoft plans to roll out new autonomous AI agents next month.
• Chinese banks cut benchmark rates to revive economic growth and halt housing market crash.
• Chinese banks have lowered benchmark interest rates, which may affect AUD and NZD due to their trade ties with China. Should be weakening AUD, NZD.
• Growing demand for silver for solar panels could support AUD given Australia's mining sector.
• Weakening of active currencies like AUD and NZD against USD in response to rising bond yields.
• IMF World Economic Outlook release is scheduled.
• ECB's Lagarde, Holzmann, Knot, and Centeno are set to speak.
• Bank of England's Greene, Bailey, and Breeden will make statements.
• Earnings reports expected from Verizon, General Motors, RTX, 3M, Lockheed Martin, and Texas Instruments.
• Tesla's stock fell 0.8% ahead of its earnings report due tomorrow.
• The swaps market priced in 39 basis points of easing over the next two Fed policy meetings, down from 42 basis points
• Uncertainty about US presidential elections and a possible Trump victory is affecting global currency markets, including AUD, NZD, and CAD. Because of Trump import restriction.
   

News summary

• The U.S. dollar is approaching its recent peak as U.S. yields increase significantly. Higher yields are a key factor, as they reflect expectations that the Federal Reserve may not cut rates as aggressively as previously anticipated This trend, coupled with the intensifying sovereign bond selloff, is likely to strengthen the USD against other major currencies. As a result, currency pairs like AUDUSD, NZDUSD, and EURUSD may face downward pressure in the near term. The rising yields and stronger USD are also affecting precious metals, which remain strong despite these headwinds. This resilience in gold and silver prices could provide some support to commodity-linked currencies like the AUD and CAD. ederal Reserve officials are providing mixed signals regarding future rate cuts. Fed's Logan expects gradual cuts if the economy meets forecasts, while Minneapolis Fed President Kashkari warned that higher budget deficits could lead to higher interest rates.
• The euro has revisited its lowest levels since August against the dollar, with EURUSD facing downward pressure. This weakness could be further influenced by ECB President Lagarde's upcoming comments. Similarly, activity currencies like the Australian dollar, New Zealand dollar, and British pound have all experienced notable declines against the USD. This has implications for pairs such as AUDUSD, NZDUSD, and GBPUSD, which may continue to face headwinds if the dollar's strength persists.
• The unexpected drop in UK inflation to 1.7% in September, below the Bank of England's 2% target, could impact the GBP. This development may lead to a weakening of the pound against other major currencies, potentially affecting pairs like EURGBP and GBPUSD. The Bank of England's upcoming statements from Greene, Bailey, and Breeden will be closely watched for further guidance on monetary policy, which could cause additional movements in GBP-related pairs.
• Uncertainty surrounding the U.S. presidential elections and a possible Trump victory is affecting global currency markets. This political factor could particularly impact currencies like AUD, NZD, and CAD due to potential changes in trade policies. As a result, currency pairs such as AUDNZD, NZDCAD, and AUDCAD may experience increased volatility as markets price in the potential outcomes of the election. If Trump's victory is confirmed, currencies like NZD, AUD, CAD, and EUR could weaken due to his restrictive import policies.
• The global financial markets are experiencing mixed performances, with significant movements across various sectors and regions. The Dow Jones dropped 344 points, while the Nasdaq 100 edged up slightly, indicating divergent trends in U.S. equities. This mixed performance is likely to create uncertainty in forex markets, potentially leading to increased volatility in currency pairs like EURUSD and GBPUSD.

Daily analysis 10/21/2024

21. 10. 2024 - Josef Brynda

Latest news

• The US presidential election race has tightened significantly, with betting odds favoring Trump, potentially leading to increased market volatility.
• Chinese banks have cut benchmark rates more than expected, signaling a strong commitment to stimulating economic growth.
• The Federal Reserve's stance remains cautious, with officials suggesting the neutral policy rate is in the 3-3.5% range.
• Gold continues to hit record highs, while silver and platinum are outperforming, indicating growing investor concern about economic stability and inflation.
• The Canadian dollar is near its weakest levels versus the USD since the pandemic outbreak, with expectations of the Bank of Canada outpacing the Fed in rate cuts.
• Crude oil prices have slumped due to reduced demand forecasts and China's slowing economic growth, despite ongoing Middle East tensions.
• The Dow Jones Industrial Average has reached another record high, reflecting optimism in certain sectors of the US economy.
• Netflix's strong Q3 results have led to a surge in its stock price, potentially influencing the broader tech sector.
• Apple's reported strong iPhone sales in China could impact both tech stocks and US-China trade relations.
• The PBOC's larger-than-expected loan prime rate cut is part of Beijing's ongoing stimulus efforts, which could have global economic implications.
• Volatility in the market, as measured by the VIX, has eased but remains higher than earlier in the year.
• US Treasury yields have stabilized, but economic resilience suggests the Fed may keep rates elevated longer.
• European bond yields have seen slight declines, influenced by factors like potential ECB rate cuts and geopolitical tensions.
• Investors are focusing on upcoming economic reports and policy decisions from major financial institutions like the Bank of Canada, IMF, and World Bank.
• The industrial metals market is recovering amid focus on Chinese stimulus efforts, potentially impacting commodity-linked currencies.
• Middle East tensions continue to support precious metal prices but have had a limited impact on oil prices.
• The Japanese yen has gained broadly as global bond yields dipped, highlighting its status as a safe-haven currency.
• The US dollar's strength has eased, which could affect global trade and emerging market currencies.
• Procter & Gamble's missed sales forecasts could indicate shifts in consumer spending patterns.
• Boeing's tentative agreement with its union, including a significant wage increase, may influence labor market expectations.
• The close US popular vote points to a potential Trump victory due to the electoral college system, which could have significant market implications.
• Fed's Bostic's comments on the need for vigilance on inflation suggest ongoing uncertainty in monetary policy.
• The expected weekly moves for the S&P 500 and Nasdaq 100 indicate potential market fluctuations that could affect currency pairs.
• The divergence in monetary policy between the Bank of Canada and the Federal Reserve could lead to significant movements in the CAD/USD pair.
• Polls showing rising odds of former President Donald Trump winning the Nov. 5 election are also helping the dollar against some currencies, analysts say, since his proposed tariff and tax policies are seen as likely to keep U.S. interest rates high and hurt trading partners.
• ECB governors at Thursday's rate-setting meeting made the case for dropping a pledge to keep policy tight as inflation may now turn out lower than anticipated only a few weeks ago, sources told Reuter
• Eurozone PMI Data Could Weaken Euro Further

News summary

• The global financial landscape is experiencing significant shifts, with several key factors influencing forex markets and currency pairs. The tightening US presidential race, with betting odds favoring Trump, has introduced increased market volatility. This development could potentially strengthen the USD against other major currencies like EUR, GBP, and CAD, as Trump's proposed policies are perceived as likely to keep US interest rates high. Consequently, pairs such as EURUSD and GBPUSD might face downward pressure, while USDCAD could see upward movement.
• Chinese banks' larger-than-expected benchmark rate cuts signal a strong commitment to stimulating economic growth. This move by the People's Bank of China (PBOC) could have far-reaching implications for commodity-linked currencies such as AUD and NZD. As China is a major trading partner for both Australia and New Zealand, improved Chinese economic prospects could bolster these currencies. This might lead to strengthening in pairs like AUDUSD and NZDUSD, while potentially causing fluctuations in cross-pairs such as AUDNZD.
• The larger-than-expected cut in key interest rates by Chinese banks signals a strong commitment to stimulating economic growth. This move by the People's Bank of China (PBOC) could have far-reaching implications for commodity-linked currencies such as AUD and NZD. Given that China is a major trading partner of both Australia and New Zealand, these moves could ideally strengthen the currency economy in the very possible future in our case, but given that the Chinese economy is underperforming its potential output, currencies are more likely to weaken as it bumps up against a riskier slowing economy. So currencies should weaken more in the coming times.
• The Federal Reserve's cautious stance, with officials suggesting a neutral policy rate in the 3-3.5% range, contrasts with the Bank of Canada's expected rate cuts. This divergence in monetary policy could lead to significant movements in the CAD/USD pair, potentially weakening the Canadian dollar against its US counterpart. As a result, USDCAD might see upward pressure, while cross-pairs involving the Canadian dollar, such as AUDCAD and NZDCAD, could experience volatility.
• The European Central Bank's (ECB) potential shift in policy stance, with governors considering dropping the pledge to keep policy tight due to lower inflation expectations, could weaken the euro. This development, combined with potentially weak Eurozone PMI data, might put downward pressure on the EUR against other major currencies. Pairs like EURUSD and EURGBP could see the euro losing ground
• The EUR/GBP currency pair is expected to be influenced by the relatively weaker performance of the eurozone economy compared to the UK economy. Although the euro has bounced off its 2.5-year low against the British pound, its future movement may depend on macroeconomic data. If the UK economy continues to show stronger results than the eurozone, as confirmed by data such as the PMI, the pound could further strengthen against the euro. On the other hand, if the Bank of England issues dovish comments regarding rate cuts, the pound could come under pressure, and the euro might gain strength. However, we lean more towards the scenario where EUR/GBP is likely to remain under pressure.
   
• In the coming weeks, forex markets will likely be highly sensitive to upcoming economic reports and policy decisions from major financial institutions. The interplay between these factors will continue to shape currency movements, with particular attention on how the US election race, central bank policies, and global economic indicators impact major currency pairs and cross-pairs in the forex market.