Daily Forex News By XtreamForex
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Australian inflation fell but just ‘weight’ a minute
Australian inflation rose only to 6.9% y/y, down from a peak of 7.4% and lower than the 7.5% expected. Housing, food and non-alcoholic beverages and transport were most significant contributors. CPI rose 0.2% m/m, below its long-term average of 2.5%.
The RBA will be happy to hear that inflation was much lower than expected, even if it does remain historically high. But the ABS report also highlighted that they performed their annual weight adjustment to the CPI basket, and that inflation would have been 7.1% if last year’s methodology was used. But even a move down from 7.4% to 7.1% is noteworthy as it leaves the potential that inflation has in fact peaked.
More broadly the inflationary drivers. It’s nice to see import prices are falling, wages remain well below inflation and that inflation expectation remain well anchored. So now the annualized inflation drop 5 percent points in a month, the case for RBA to pause in December is becoming stronger for a central bank that really does not want to raise rates any more than they need to.
And that is being reflected within the OIS curve, which suggests money markets are now pricing in a lower terminal rate and slower pace of hikes. And that in turn could mean we’ve seen the best part of the AUD/NZD move lower, which so far is struggling to reach the 1.0700 target.
On Monday AUD/JPY fell to a 30-day low and closed beneath 93.00, yet the 92.0 handle and trend support remain close by. And as markets are weighing up the dynamics of a possible China reopening amidst a more hawkish Fed, we are waiting the market to tip its hand and either break beneath 92.0 or rally from it, as part of a clear risk-on or risk-off move.XtreamForex -
USD/CAD Nears Two-Month Highs at 1.3850 as Traders Turn Cautious Before US Election
The USD/CAD pair holds steady with two consecutive days of gains, trading around 1.3850 in Friday’s Asian session. This level sits close to Thursday’s two-month high of 1.3868. The US Dollar’s strength underpins the pair’s resilience, fueled by growing expectations that the Federal Reserve may adopt a less aggressive stance on interest rate cuts.
Speculation surrounding the US presidential election in November is also boosting the Dollar, with former President Donald Trump gaining attention. His inflation-focused policies, including higher tariffs and tax cuts, are thought to be adding upward pressure on the Greenback.
During a rally in Las Vegas on Thursday, Trump emphasized his administration’s commitment to economic growth for all Americans, including African American, Hispanic, and Asian American communities, as reported by Reuters. Meanwhile, in Georgia, Vice President Kamala Harris held a rally with the support of prominent figures, including Bruce Springsteen, Tyler Perry, and former President Barack Obama, drawing thousands in the battleground state.
The Canadian Dollar (CAD), sensitive to commodity prices, is facing pressure as crude oil prices decline. Canada, the largest oil exporter to the US, is affected by West Texas Intermediate (WTI) crude’s drop, currently marking its third consecutive day of losses and trading around $70.20 per barrel.
Traders are watching for Canada’s Retail Sales data, due later in the North American session, and Bank of Canada (BoC) Governor Tiff Macklem’s speech at the IMF meeting, which could provide further insights into Canada’s economic outlook.
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USD/CHF Stays Below 0.8650 as Market Caution Intensifies Ahead of US Presidential Election
USD/CHF remains steady around 0.8640 in Asian trading hours on Tuesday, following losses in the previous session. The US Dollar (USD) is holding its ground as market participants exercise caution amid uncertainties surrounding the upcoming US presidential election. Additionally, rising US Treasury yields provide further support for the Greenback.
Opinion polls indicate a tight race between former President Donald Trump and Vice President Kamala Harris. The outcome could remain undetermined for days after Tuesday’s vote, with both Trump and Harris expressing confidence while campaigning in Pennsylvania on the final day of this highly contested race.
The US Dollar Index (DXY), which tracks the USD against six major currencies, is trading around 103.90, with 2-year and 10-year US Treasury yields at 4.16% and 4.29%, respectively, as of this writing.
The Swiss Franc (CHF) faces potential challenges as the likelihood of rate cuts by the Swiss National Bank (SNB) grows. This outlook is fueled by ongoing inflation slowdown in Switzerland, evidenced by a 0.6% year-over-year decline in the Consumer Price Index (CPI) for October. This CPI figure falls below the SNB’s fourth-quarter inflation target of 1%, raising the possibility of a more significant rate cut in December to maintain inflation within the bank’s target range of 0-2%.XtreamForex -
EUR/USD Hovering Near 1.0750 with Downward Pressure Amid Political Shifts in the U.S
The EUR/USD pair remains around 1.0740 during the Asian session on Thursday, after experiencing a 2% decline in the previous session. The pair appears to be under downside pressure as the U.S. Dollar gains traction, potentially benefiting from renewed interest in “Trump trades” following the Republican Party’s victory in the U.S. elections.
The Republican victory suggests a potential shift in policy, with Donald Trump’s party likely to take control of both congressional chambers. This would mark a return to their agenda of tax cuts, deregulation, and border security initiatives, priorities not seen in the past eight years. Early legislative goals include extending the 2017 tax cuts, securing funds for the U.S.-Mexico border wall, cutting unspent Democratic-allocated funds, dismantling the Department of Education, and curtailing the authority of the Consumer Financial Protection Bureau, as reported by Reuters.
Despite this, the U.S. Dollar Index (DXY), which measures the dollar against a basket of six major currencies, has slightly declined from a recent four-month high of 105.44, now trading near 104.90. This comes amid a pullback in U.S. Treasury yields after reaching recent highs of 4.31% and 4.47%.
Markets widely anticipate a 25 basis-point rate cut by the Federal Reserve at its November meeting, with the CME FedWatch Tool indicating a 98.1% probability for this outcome. The move reflects market consensus for a modest reduction in interest rates this month.
In Europe, if economic growth slows due to potential new tariffs, the European Central Bank (ECB) may be pressured to implement more accommodative measures, with forecasts suggesting a potential rate cut to near zero by 2025. Expectations lean towards a 25-basis-point cut to the Deposit Facility Rate by December.
Meanwhile, EU economic data remains light this week. Pan-EU Retail Sales figures are due Thursday, and an EU leaders’ summit wraps up Friday, followed by ECB President Lagarde’s appearance on Saturday.XtreamForex -
EUR/USD Hovers Near 1.0600 as US Dollar Retreats on Profit-Taking
The EUR/USD pair remains steady with a positive bias around the 1.0600 mark during Tuesday’s Asian session. The pair’s upward momentum appears supported by a softer US Dollar (USD), which is undergoing profit-taking after its recent rally.
Despite the USD’s pullback, its downside remains limited due to hawkish comments from Federal Reserve (Fed) Chair Jerome Powell. Powell emphasized the economy’s resilience, a robust labor market, and persistent inflation pressures, cautioning that the Fed sees no urgency to cut interest rates. Market participants are now awaiting further insights from Fed officials later this week regarding the future direction of monetary policy.
The USD could also regain strength as investors expect the incoming Trump administration to implement tax cuts and higher tariffs—policies that may drive inflation, potentially slowing the pace of Fed rate cuts.
On the European side, European Central Bank (ECB) President Christine Lagarde highlighted structural challenges in the region. Speaking on Monday, Lagarde called for a consolidation of resources in areas such as defense and climate, citing stagnating productivity growth and increasing global fragmentation into competitive blocs. She noted that Europe lags behind the US and China in innovation and productivity, with barriers such as a fragmented digital market and insufficient venture capital hindering technological progress.
Looking ahead, traders are focused on key economic data. The Eurozone’s October Harmonized Index of Consumer Prices (HICP) is due for release on Tuesday, followed by US Building Permits and Housing Starts data during the North American session. These reports could provide further direction for EUR/USD in the near term.
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USD/CAD Holds Near One-Week Low, Trades Range-Bound Above Mid-1.3900s
The USD/CAD pair has found support near the mid-1.3900s, marking a one-week low during Wednesday’s Asian session. However, the pair struggles to gain upward momentum, pausing this week’s pullback from its highest level since May 2020. Mixed fundamental signals keep bullish traders cautious.
Canadian Inflation and BoC Outlook
Canada’s annual inflation rate rose more than expected to 2.0% in October, prompting a recalibration of market expectations for a significant rate cut by the Bank of Canada (BoC) in December. This has provided some support for the Canadian Dollar (CAD), offsetting pressure on the USD/CAD pair. However, subdued crude oil prices continue to cap the Loonie’s gains, limiting its appreciation.
Crude Oil Dynamics
While fears of supply disruptions due to the Russia-Ukraine conflict persist, crude oil prices remain constrained by signs of increased U.S. stockpiles. The American Petroleum Institute (API) reported a larger-than-expected build of 4.75 million barrels in U.S. inventories last week, indicating ample supply and dampening oil’s recent recovery from a two-month low.
U.S. Dollar and Treasury Yields
On the U.S. side, a resurgence in dip-buying for the U.S. Dollar (USD) offers support to the USD/CAD pair. Expectations that U.S. fiscal policies under President-elect Donald Trump could stimulate economic growth and fuel inflation have bolstered U.S. Treasury yields, enhancing USD demand. This dynamic limits the pair’s downside potential.
Upcoming Market Catalysts
Looking ahead, market participants will closely monitor speeches by Federal Open Market Committee (FOMC) members for insights into the Federal Reserve’s rate trajectory. Additionally, the U.S. Energy Information Administration (EIA) will release official crude oil inventory data, which could impact oil prices and generate near-term trading opportunities for the USD/CAD pair.
In the absence of clear directional drivers, the USD/CAD pair is likely to remain range-bound in the short term, with traders focusing on incoming data and policy signals for further cues.XtreamForex -
EUR/USD Slips Below 1.0550 Amid Awaited ECB Lagarde Speech and US PMI Data
The EUR/USD pair extended its decline to around 1.0530 during early Asian trading on Monday, pressured by a strengthening US Dollar (USD). Traders are focusing on key events scheduled for later in the day, including European Central Bank (ECB) President Christine Lagarde’s speech and the release of the US ISM Manufacturing PMI.
In the Eurozone, November’s Harmonized Index of Consumer Prices (HICP) rose to 2.3% year-over-year, up from October’s 2.0%, aligning with market expectations and surpassing the ECB’s 2.0% target. Core HICP also edged higher, rising to 2.8% YoY from 2.7% in the prior reading, meeting forecasts.
Markets are pricing in a 25 basis-point (bps) rate cut by the ECB in December, marking the central bank’s fourth reduction of the year. However, expectations for a larger 50 bps cut have waned, supported by marginal improvements in the Eurozone’s subdued growth outlook. Anticipation of rate cuts continues to weigh on the Euro (EUR).
Meanwhile, the US Dollar finds support from the Federal Reserve’s cautious stance. Fed Chair Jerome Powell recently emphasized the lack of urgency to lower interest rates, citing the economy’s resilience. “The strength we are seeing in the economy allows us to make decisions carefully,” Powell stated. According to the CME FedWatch Tool, markets currently estimate a 65.4% probability of a 25 bps Fed rate cut in December.
The diverging monetary policy outlooks between the ECB and the Fed are likely to drive further volatility in the EUR/USD pair as traders assess upcoming data and central bank signals.XtreamForex -
GBP/USD Price Forecast: Bearish Bias Remains Unchanged Below 1.2700
The GBP/USD pair remains in positive territory for the second consecutive day, trading near 1.2690 during Wednesday’s early European session. However, the upside potential appears limited as expectations of a less aggressive interest rate cut by the US Federal Reserve and concerns over President-elect Donald Trump’s tariff policies lend support to the US Dollar. Investors are closely watching Federal Reserve Chair Jerome Powell’s speech for insights into the interest rate outlook.
From a technical perspective, the bearish bias for GBP/USD persists, with the pair holding below the critical 100-day Exponential Moving Average (EMA) on the daily chart. Additionally, the 14-day Relative Strength Index (RSI), hovering below the midline at 45.35, signals potential further downside.
Key support is located at the psychological level of 1.2600. A break below this level could expose the next target at 1.2467, the lower limit of the Bollinger Band, with further declines potentially testing 1.2331, the low from April 23.
On the upside, resistance is initially seen at 1.2750, the high from November 29. A sustained move above this level could pave the way for a rally toward 1.2875 (the 100-day EMA), with an additional resistance zone at 1.2920, aligning with the upper Bollinger Band boundary.XtreamForex -
EUR/USD Gains Momentum Ahead of Key NFP Data Release
The EUR/USD pair climbed on Thursday, rising by 0.7% to approach the 1.0600 level. The move comes as better-than-expected European retail sales data for October temporarily buoyed sentiment, despite a monthly decline. Meanwhile, expectations of an ECB rate cut and a risk-on market mood ahead of Friday’s US Nonfarm Payrolls (NFP) report are keeping the currency pair in focus.
ECB Poised for Another Rate Cut Amid Mixed Economic Signals
October retail sales across the EU increased by 1.9% YoY, beating the 1.7% forecast, though still sharply lower than September’s revised 3.0%. This decline in broader economic activity has led to rising expectations of more aggressive rate cuts from the European Central Bank (ECB). ECB President Christine Lagarde reiterated the bank’s commitment to fostering growth, projecting that inflation would ease again by 2025 despite a near-term bump in Q4.
Markets are pricing in a 25-bps rate cut from the ECB next week. Political turmoil in France, including President Emmanuel Macron surviving a no-confidence vote and planning to appoint a new Prime Minister, has been largely brushed aside by investors.
US Labor Market Data Adds Complexity to NFP Expectations
In the US, Initial Jobless Claims rose to 224,000 for the week ending November 29, the highest in six weeks, missing expectations of 215,000. Challenger Job Cuts also increased to 57,727 in November, signaling potential cracks in the labor market. However, these figures are seen as less significant compared to the looming NFP data, which is expected to show a strong rebound of 200,000 job additions in November following October’s hurricane- and strike-impacted figure of 12,000.
EUR/USD Technical Analysis
Current Outlook: The EUR/USD daily chart reflects a consolidation phase following a substantial downtrend that started in mid-July. After peaking near 1.1270, the pair experienced a steep decline, breaking below major support levels, including the 200-day EMA (1.0834) and the critical psychological level of 1.0600.
Recent Action: The pair recently rebounded from a November low of 1.0450, showing resilience around the 1.0588 level. Thursday’s bullish daily candle indicates growing momentum, with the pair breaking above the short-term resistance at 1.0550.
Upside Potential: A sustained move above 1.0600 could set the stage for further gains, potentially targeting the 50-day EMA at 1.0715. Breaking this level could validate a broader trend reversal and pave the way for a test of the 200-day EMA at 1.0834.
Downside Risks: On the downside, the MACD remains negative but shows signs of weakening bearish momentum. A failure to maintain the current rally could see EUR/USD revisiting support at 1.0500, with the critical 1.0450 low serving as a key threshold for bullish traders.
Key Levels to Watch:
Bullish Breakout: Daily close above 1.0600
Support Levels: 1.0500 and 1.0450
Resistance Levels: 1.0715 (50-day EMA) and 1.0834 (200-day EMA)
Market Sentiment
The EUR/USD’s performance hinges on Friday’s NFP data. A strong report could bolster the USD, potentially pressuring the pair back below 1.0550. Conversely, a weaker-than-expected NFP could fuel a risk-on rally, driving EUR/USD above 1.0600 and closer to 1.0700 in the near term. Traders should closely monitor the interplay between US labor data and ECB policy signals for the next directional move.XtreamForex -
GBP/USD Rebounds as US Dollar Weakens Amid Rising Fed Rate Cut Expectations
GBP/USD has recovered losses from the previous session, trading near 1.2770 during Thursday’s Asian session. The pair gains strength as the US Dollar (USD) retreats from a four-day winning streak, despite support from elevated US Treasury yields.
The US Dollar Index (DXY), which tracks the USD against six major currencies, hovers around 106.50. Meanwhile, yields on US 2-year and 10-year Treasury bonds are reported at 4.16% and 4.28%, respectively.
The USD faces headwinds as the latest US Consumer Price Index (CPI) data does little to deter speculation of a Federal Reserve (Fed) rate cut in December. According to the CME FedWatch Tool, there is nearly a 99% probability of a 25-basis-point rate reduction during the Fed’s December 18 meeting. Market participants now turn their attention to the US November Producer Price Index (PPI), set for release later on Thursday, for further direction.
In November, the US CPI rose to 2.7% year-over-year, up from 2.6% in October, aligning with expectations. Month-over-month, headline CPI posted a 0.3% increase, matching market consensus. Core CPI, excluding food and energy, advanced 3.3% YoY and 0.3% MoM, both in line with forecasts.
In the UK, the RICS Housing Price Balance jumped to 25% in November, up from 16% in October and exceeding the expected 19% increase. Published by the Royal Institution of Chartered Surveyors, this measure reflects a strengthening UK housing market, often viewed as a proxy for the broader economy.
The British Pound (GBP) benefits from growing market confidence in the Bank of England (BoE) maintaining its interest rate at 4.75% in December. BoE policymakers are widely expected to hold rates steady. Traders now shift their focus to the UK’s October monthly GDP data, scheduled for release on Friday, for additional economic cues.XtreamForex -
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EUR/USD edges higher as US shutdown concerns pressure the Dollar
The EUR/USD pair rose more than 0.20% on Monday, supported by renewed concerns about a potential US government shutdown. Despite improved sentiment data in the Eurozone, the common currency’s advance remained modest. At the time of writing, the pair trades near 1.1726, after touching a daily low of 1.1701.
Dollar weakens amid political deadlock in Washington
The US Dollar slipped against most G10 currencies as political uncertainty in Washington weighed on investor sentiment. President Donald Trump met with Democratic leaders from both the House and Senate, but the discussions revealed deep divisions.
Senate Democratic leader Chuck Schumer said, “We have large differences,” while House Democratic leader Hakeem Jeffries stressed that his party would not support a partisan Republican bill that threatens healthcare. Meanwhile, Vice President J.D. Vance told Bloomberg that the US is heading toward a shutdown following stalled talks.
Fed comments mixed; US housing data supports outlook
Earlier in the session, US housing data surprised to the upside, with Pending Home Sales jumping 4% in August, far above the 0.3% expected, and reversing July’s slight decline.
Federal Reserve officials, however, struck mixed tones:
St. Louis Fed President Alberto Musalem described inflation expectations as “somewhat high,” while noting labor market weakness.
Cleveland Fed President Beth Hammack maintained that inflation remains too high and continues on the wrong path.
New York Fed President John Williams highlighted that policy is restrictive but still effective in easing inflationary pressures, while acknowledging gradual labor market softening.
Eurozone sentiment improves but stays subdued
In Europe, September data showed Consumer Confidence rising slightly to -14.9 from -15.5, though still below long-term averages. Industrial Confidence eased to -10.3 but beat forecasts, while Services Sentiment slipped to 3.6, missing expectations.
Key events ahead
Markets now shift focus to this week’s upcoming data releases, including:
ADP Employment Report
ISM Manufacturing PMI
Initial Jobless Claims
September Nonfarm Payrolls
Fed fund futures currently show an 89% chance of a 25-bps rate cut in October, with just an 11% probability of a larger 50-bps move.
Technical outlook: EUR/USD steady near 1.1740
The pair has logged two consecutive bullish sessions, hovering around the 20-day Simple Moving Average at 1.1740. The Relative Strength Index (RSI) remains neutral, hinting at possible consolidation.
A break above 1.1740 could open the way to 1.1800, followed by the yearly high at 1.1918.
On the downside, a drop below 1.1700 may expose 1.1650, with the next key support at the 100-day SMA near 1.1599.
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GBP/USD Advances Above 1.3450 Amid Rising Fed Rate Cut Expectations
GBP/USD extends its rally for the fourth straight session, trading near 1.3460 during Wednesday’s Asian session. The pair remains supported as the US Dollar (USD) weakens on the back of soft labor market data, which has heightened expectations of Federal Reserve (Fed) rate cuts. According to the CME FedWatch Tool, markets are now pricing in a 97% chance of a rate cut in October and a 76% probability of another reduction in December.
US Job Openings data signaled further cooling in the labor market, with vacancies edging up slightly to 7.23 million in August from 7.21 million, while the hiring rate slipped to 3.2%—its lowest since June 2024. Layoffs, however, remained subdued. Traders now turn their focus to September’s ADP Employment Change and ISM Manufacturing PMI, though releases may be disrupted by the ongoing US government shutdown.
The shutdown, which has left around 750,000 federal employees furloughed, came after Congress failed to pass funding bills. The US Labor Department confirmed that its statistics agency will suspend key data releases, including Friday’s nonfarm payrolls report, if the shutdown continues.
Meanwhile, the Pound Sterling (GBP) found support from stronger-than-expected UK GDP figures. Data released Tuesday showed that the UK economy expanded by 1.4% year-on-year in Q2, beating the earlier estimate of 1.2%. Quarter-on-quarter growth was confirmed at 0.3%, in line with initial projections.
Still, Sterling’s upside could be capped after Bank of England (BoE) Deputy Governor Dave Ramsden signaled support for a potential rate cut, citing growing concerns in the labor market. He added that inflationary pressures are likely to ease further, suggesting current policy settings remain restrictive.XtreamForex -
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Australian Dollar Falls Due to Weak Housing Data and Strong US Dollar
Following weak housing data, the Australian dollar (AUD) continued to decline against the US dollar (USD) on Wednesday, continuing its losses for the second straight session. The AUD/USD pair declined as investor sentiment intensified, with the S&P/ASX 200 index edging down 0.14% to trade below 8,950. It occurred due to declines in technology and gold stocks.
New data showed that Australia’s housing sector is slowing down. In August, private house approvals fell by 2.6%, after a slight rise the month before. Building permits also dropped by 6%, marking the second consecutive month of decline, and these weak data statistics have raised concerns about the economy and added pressure on the Australian dollar.
Even so, the Australian dollar received some support from the Reserve Bank of Australia (RBA), which remains cautious. The bank maintained its main interest rate at 3.6%, citing that inflation remains high and the job market remains strong. Policymakers don’t want to cut rates too early while prices for services stay above target.
Globally, the US Dollar Index reached 98.80, marking its third consecutive day of gains for forex traders who showed trust in it. The dollar remained strong, despite many traders expecting the Federal Reserve to cut rates later this year. Traders are becoming increasingly anxious due to the ongoing discussions about a potential US government shutdown, the Fed’s conflicting responses, and the delays in the publication of economic data.
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