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07:33 USD/CAD struggles near one-week low, oscillates in a range just above mid-1.3900s
The USD/CAD pair finds some support near the mid-1.3900s, or a one-week low touched during the Asian session on Wednesday and for now, seems to have stalled this week's retracement slide from the highest level since May 2020.
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Data published on Tuesday showed that Canada's annual inflation rate rose more than expected, to 2.0% in October and forced investors to scale back their bets for a big rate cut by the Bank of Canada (BoC) in December. This, in turn, is seen offering some support to the Canadian Dollar (CAD) and acting as a headwind for the USD/CAD pair. That said, subdued Crude Oil prices keep a lid on any meaningful appreciation for the commodity-linked Loonie.
Despite the prospect of supply disruptions from an escalation in the Russia-Ukraine conflict, signs of a build in US stockpiles fail to assist Crude Oil prices to build on a two-day-old recovery from over a two-month low touched on Monday. In fact, the American Petroleum Institute (API) reported that US inventories grew much more than expected, by 4.75 million barrels in the week to November 15, pointing to increased supply in the world’s biggest oil producer.
Apart from this, the emergence of some US Dollar (USD) dip-buying should limit any meaningful downside for the USD/CAD pair. Investors now seem convinced that US President-elect Donald Trump's policies will spur economic growth and rekindle inflationary pressures. This could restrict the Federal Reserve (Fed) from cutting interest rates, which, in turn, triggers a fresh leg up in the US Treasury bond yields and helps revive the USD demand.
Moving ahead, investors now look forward to speeches by influential FOMC members for cues about the future rate-cut path. This will play a key role in driving the US bond yields and the USD later during the North American session. Furthermore, traders will take cues from the official US Oil inventory data, which should influence the black liquid and contribute to producing short-term trading opportunities around the USD/CAD pair.
Bank of Canada FAQs What is the Bank of Canada and how does it influence the Canadian Dollar?
The Bank of Canada (BoC), based in Ottawa, is the institution that sets interest rates and manages monetary policy for Canada. It does so at eight scheduled meetings a year and ad hoc emergency meetings that are held as required. The BoC primary mandate is to maintain price stability, which means keeping inflation at between 1-3%. Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Canadian Dollar (CAD) and vice versa. Other tools used include quantitative easing and tightening. What is Quantitative Easing (QE) and how does it affect the Canadian Dollar?
In extreme situations, the Bank of Canada can enact a policy tool called Quantitative Easing. QE is the process by which the BoC prints Canadian Dollars for the purpose of buying assets – usually government or corporate bonds – from financial institutions. QE usually results in a weaker CAD. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The Bank of Canada used the measure during the Great Financial Crisis of 2009-11 when credit froze after banks lost faith in each other’s ability to repay debts. What is Quantitative tightening (QT) and how does it affect the Canadian Dollar?
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Bank of Canada purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the BoC stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Canadian Dollar.
07:12 USD/CHF attracts some buyers above 0.8800 amid mounting Russia-Ukraine tensions
The USD/CHF pair recovers some lost ground to around 0.8835, snapping the three-day losing streak during the early European session on Wednesday.
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The hawkish remarks from Fed Chair Jerome Powell lifts the USD broadly. Powell said that he wasn’t 'in a hurry' to lower interest rates, which reduced the possibility of rate cuts in December to less than 60%, down from 82% earlier in the week. Kansas City Fed President Jeffrey Schmid said it remains uncertain how far interest rates can fall, but the recent cuts by the Fed indicate confidence that inflation is heading toward its 2% target.
On the Swiss front, heightened tensions between Russia and Ukraine, and its allies in the West might boost the safe-haven flows, benefiting the Swiss Franc CHF). Russia’s Defense Ministry said on Tuesday that Ukraine fired six ballistic missiles at a facility in Bryansk and that ATACMS missiles had been used in the attack. Swiss Franc FAQs What key factors drive the Swiss Franc? The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone. Why is the Swiss Franc considered a safe-haven currency? The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in. How do decisions of the Swiss National Bank impact the Swiss Franc? The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF. How does economic data influence the value of the Swiss Franc? Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate. How does the Eurozone monetary policy affect the Swiss Franc? As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
The hawkish remarks from Fed Chair Jerome Powell lifts the USD broadly. Powell said that he wasn’t 'in a hurry' to lower interest rates, which reduced the possibility of rate cuts in December to less than 60%, down from 82% earlier in the week. Kansas City Fed President Jeffrey Schmid said it remains uncertain how far interest rates can fall, but the recent cuts by the Fed indicate confidence that inflation is heading toward its 2% target.
On the Swiss front, heightened tensions between Russia and Ukraine, and its allies in the West might boost the safe-haven flows, benefiting the Swiss Franc CHF). Russia’s Defense Ministry said on Tuesday that Ukraine fired six ballistic missiles at a facility in Bryansk and that ATACMS missiles had been used in the attack. Swiss Franc FAQs What key factors drive the Swiss Franc? The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone. Why is the Swiss Franc considered a safe-haven currency? The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in. How do decisions of the Swiss National Bank impact the Swiss Franc? The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF. How does economic data influence the value of the Swiss Franc? Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate. How does the Eurozone monetary policy affect the Swiss Franc? As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
06:38 EUR/USD remains below 1.0600 amid safe-haven flows, awaits ECB Lagarde's speech
EUR/USD remains subdued as the US Dollar (USD) appreciates, possibly driven by the safe-haven flows amid escalating tensions in the Russia-Ukraine conflict.
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In response, Russian President Vladimir Putin broadened Russia’s nuclear policy to include the possibility of nuclear retaliation in response to significant conventional assaults. However, market anxieties lessened somewhat when Russian Foreign Minister Sergei Lavrov reassured that the government would take all necessary measures to avert a nuclear war.
The EUR/USD received downward pressure as the Euro weakened to an over-one-year low of $1.0496 hit last week, as concerns over potential US trade tariffs' impact on Eurozone growth. Additionally, the US Dollar (USD) receives support from investors’ expectations of pro-inflationary policies from the incoming Trump administration. These policies could drive up inflation, potentially prompting the Federal Reserve to slow the pace of rate cuts.
On Wednesday, European Central Bank (ECB) President Christine Lagarde is scheduled to deliver the opening remarks at the ECB’s Conference on Financial Stability and Macroprudential Policy in Frankfurt. The ECB faces a challenging situation as European inflation remains more persistent than initially anticipated by policymakers, while the broader European economy continues to show signs of imbalance.
Euro FAQs What is the Euro?
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%). What is the ECB and how does it impact the Euro?
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde. How does inflation data impact the value of the Euro?
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money. How does economic data influence the value of the Euro?
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy. How does the Trade Balance impact the Euro?
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
06:36 India Gold price today: Gold steadies, according to FXStreet data
Gold prices remained broadly unchanged in India on Wednesday, according to data compiled by FXStreet.
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Gold prices remained broadly unchanged in India on Wednesday, according to data compiled by FXStreet.
The price for Gold stood at 7,153.49 Indian Rupees (INR) per gram, broadly stable compared with the INR 7,146.54 it cost on Tuesday.
The price for Gold was broadly steady at INR 83,435.26 per tola from INR 83,355.83 per tola a day earlier. Unit measure Gold Price in INR 1 Gram 7,153.49 10 Grams 71,533.49 Tola 83,435.26 Troy Ounce 222,498.40
FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.
Related newsGold Price Forecast: XAU/USD looks to test offers at $2,660 amid cautious optimismGold price advances to over one-week high on rising geopolitical risksGold skyrockets on heightened geopolitical tensionsGold FAQs Why do people invest in Gold?
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government. Who buys the most Gold?
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves. How is Gold correlated with other assets?
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal. What does the price of Gold depend on?
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up. (An automation tool was used in creating this post.)
06:29 GBP/JPY climbs beyond mid-196.00s, hits fresh weekly top ahead of UK CPI
The GBP/JPY cross is seen building on the previous day's strong rebound from the 193.60-193.55 area, or its lowest level since October 8 and gaining positive traction for the third consecutive day on Wednesday.
.fxs-event-module-wrapper{border:1px solid #dddedf;background:#fff;margin-bottom:32px;width:100%;float:left}.fxs-event-module-title{color:#1b1c23;font-size:16px;font-style:italic;font-weight:700;line-height:22.4px;text-transform:uppercase;background:#f3f3f8;padding:8px 16px;margin:0}.fxs-event-module-container{padding:16px;width:100%;box-sizing:border-box;display:flex;flex-direction:column;gap:12px}.fxs-event-module-section{padding-bottom:16px;border-bottom:1px solid #ececf1;margin-bottom:12px}.fxs-event-module-section:last-child{border:none;margin-bottom:0}.fxs-event-module-header{color:#1b1c23;font-weight:700;font-size:16px;font-style:normal;line-height:20px;margin:0;padding:4px 0;background-color:#fff;border:none;position:relative;padding-right:32px}.fxs-event-module-header label{cursor:pointer;display:block}.fxs-event-module-header label:after,.fxs-event-module-header label:before{content:"";position:absolute;top:50%;right:16px;width:8px;height:2px;background-color:#49494f;transition:all .2s ease-in-out;transition-delay:0}.fxs-event-module-header label:after{transform:rotate(45deg) translateX(-4px)}.fxs-event-module-header label:before{transform:rotate(-45deg) translateX(4px)}.fxs-event-module-container input[type=checkbox]{display:none}.fxs-event-module-container input[type=checkbox]:checked+.fxs-event-module-section .fxs-event-module-header label:after{transform:rotate(45deg) translateX(4px)}.fxs-event-module-container input[type=checkbox]:checked+.fxs-event-module-section .fxs-event-module-header label:before{transform:rotate(-45deg) translateX(-4px)}.fxs-event-module-content{color:#49494f;font-weight:300;padding:0;font-size:14.72px;line-height:20px;margin:0;margin-top:8px}.fxs-event-module-content.why-matters{max-height:0;overflow:hidden;transition:all .3s ease-in-out}.fxs-event-module-container input[type=checkbox]:checked+.fxs-event-module-section .fxs-event-module-content.why-matters{max-height:1000px;margin-top:8px}.fxs-event-module-calendar-title{color:#1b1c23;font-size:17.6px;font-family:Roboto;font-style:normal;font-weight:700;line-height:20.8px;margin:4px 0 0 0}.fxs-event-module-calendar-title-description-wrapper{display:flex;flex-direction:column;gap:12px;border-bottom:1px solid #ececf1;padding-bottom:16px;margin-bottom:16px}.fxs-event-module-inner-calendar{padding:16px}.fxs-event-module-inner-calendar .fxs-event-module-section{padding:0}.fxs-event-module-inner-calendar .fxs-event-module-header{font-size:12.8px;line-height:17px}.fxs-event-module-read-more{display:flex;align-items:center;align-content:center;gap:4px;color:#e4871b;font-size:12.8px;font-family:Roboto;font-style:normal;font-weight:700;line-height:17px;text-decoration:none}.fxs-event-module-read-more svg{width:16px;height:16px}.fxs-event-module-read-more:hover span{text-decoration:underline}.fxs-event-module-release{margin:0;display:flex;flex-direction:column;gap:2px}.fxs-event-module-release>p{font-size:12.8px;font-family:Roboto;font-style:normal;line-height:17px;margin:0}.fxs-event-module-release>p>strong{color:#8c8d91;font-weight:700}.fxs-event-module-release>p>span{color:#8c8d91;font-weight:400}.fxs-event-module-release>p>a{color:#e4871b;font-weight:700;text-decoration:none}.fxs-event-module-release>p>a:hover>span{text-decoration:underline}.fxs-event-module-inner-calendar .fxs-event-module-container{margin:16px 0 0 0;border-top:1px solid #ececf1;padding:12px 0 0 0}@media (min-width:680px){.fxs-event-module-inner-calendar .fxs-event-module-header{font-size:14.72px;line-height:20px}.fxs-event-module-release p{font-size:14.72px;line-height:20px}.fxs-event-module-read-more{font-size:14.72px;line-height:20px}.fxs-event-module-calendar-title{font-size:22.4px;line-height:25.6px}.fxs-event-module-title{font-size:19.2px;line-height:27.2px}.fxs-event-module-header{font-size:19.2px;line-height:25.92px}.fxs-event-module-content{font-size:16px;line-height:21.6px}}GBP/JPY recovers further from over a one-month low set on Tuesday amid renewed JPY selling.Receding safe-haven demand, along with the BoJ uncertainty, undermines the safe-haven JPY. The technical setup warrants caution for bulls ahead of the crucial UK consumer inflation data. The GBP/JPY cross is seen building on the previous day's strong rebound from the 193.60-193.55 area, or its lowest level since October 8 and gaining positive traction for the third consecutive day on Wednesday. The momentum lifts spot prices beyond the mid-196.00s during the Asian session and is sponsored by the emergence of fresh selling around the Japanese Yen (JPY).
Comments from Russian and US officials helped ease market concerns about the onset of a full-blown nuclear war. This, along with the uncertainty over the timing of further monetary policy tightening by the Bank of Japan (BoJ), undermines the safe-haven JPY. Meanwhile, hopes that the UK government’s fiscal stimulus to bolster domestic demand will lead to inflationary pressures and delay the Bank of England's (BoE) rate-cutting cycle offer some support to the British Pound (GBP). This further seems to act as a tailwind for the GBP/JPY cross.
That said, speculations that Japanese authorities might intervene in the FX market to prop up the domestic currency, coupled with geopolitical uncertainties, might hold back the JPY bears from placing aggressive bets. Investors might also refrain from placing aggressive directional bets around the GBP/JPY cross and opt to wait for the release of the latest UK consumer inflation figures. The crucial data will play a key role in influencing the broader sentiment surrounding the GBP and provide some meaningful impetus to the currency pair.
From a technical perspective, the GBP/JPY cross showed some resilience below the 200-day Simple Moving Average (SMA) on Tuesday and the subsequent strength favors bullish traders. Moreover, oscillators on the daily chart have recovered from lower levels, though they are yet to confirm a positive bias. Hence, any further move beyond the 197.00 mark is more likely to confront stiff resistance near the 197.70-197.80 supply zone. Some follow-through buying beyond the 198.00 round figure, however, will set the stage for additional near-term gains.
On the flip side, the 196.00 mark now seems to protect the immediate downside, below which the GBP/JPY cross could slide to the 195.40-195.35 support en route to sub-195.00 levels. The latter represents the very important 200-day SMA, which if broken could drag spot prices back towards the overnight swing low, around the 193.60-193.55 zone, with some intermediate support near the 194.00 round figure.
GBP/JPY daily chartEconomic Indicator
Consumer Price Index (YoY)
The United Kingdom (UK) Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. It is the inflation measure used in the government’s target. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish. Read more. Next release: Wed Nov 20, 2024 07:00 Frequency: MonthlyConsensus: 2.2%Previous: 1.7%Source: Office for National Statistics Why it matters to traders?
The Bank of England is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.
06:12 Gold Price Forecast: XAU/USD looks to test offers at $2,660 amid cautious optimism
Gold price stays on the front foot early Wednesday, looking to regain the $2,650 barrier as the road to recovery extends for the third straight day.
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Gold price looks to geopolitics and Fedspeak for fresh directives
The US Dollar (USD) seems to find fresh demand in Asian trading on Wednesday, tracking the uptick in the US Treasury bond yields as broader market sentiment improves on China’s stimulus hopes.
Markets were cautious earlier following the People’s Bank of China’s (PBOC) inaction on the Loan Prime Rates (LPR). However, expectations that China will roll out more stimulus to prop up the economy are lifting the market mood.
Further, worries over a further geopolitical escalation between Russia and Ukraine seem to fade, lifting risk appetite.
However, Gold buyers refuse to give up so far, anticipating a shift in risk sentiment if the American AI giant Nvidia Inc.’s earnings report disappoints and triggers a wave of risk aversion across the financial markets.
Also, the developments surrounding Russia and Ukraine will be closely eyed, keeping the demand for the traditional safe-haven Gold price underpinned.
On Tuesday, Russia's Defence Ministry said that Ukraine fired six US-made Army Tactical Missile Systems (ATACMS) missiles at Bryansk region, just days after US President Joe Biden allowed the Ukrainian use of American-made weapons to strike inside Russia.
The Kremlin confirmed Tuesday that they lowered the threshold for a possible nuclear strike in response to non-nuclear attacks on Russia.
Besides, the Fedspeak will help gauge the US central bank’s path forward on interest rates, with markets now pricing in a 60% chance that the Fed will cut rates by 25 basis points (bps) in December.
Gold price technical analysis: Daily chartThe short-term technical outlook for Gold price remains the same, with traders likely to adopt a ‘sell on bounce’ trade strategy as the 14-day Relative Strength Index (RSI) remains below the 50 level. The indicator is currently trading near 47.
An impending Bear Cross adds credence to the downside potential. The 21-day Simple Moving Average (SMA) is looking to cross the 50-day SMA above. If that happens on a daily closing basis, it will validate the bearish crossover.
That said, failure to find acceptance above the 50-day SMA at $2,660 on a daily closing basis could reinforce sellers toward the $2,600 threshold.
The previous day’s low of $2,610 will be tested ahead of that.
On the flip side, the immediate resistance is seen at the 50-day SMA, above which the 21-day SMA at $2,682 will come into play.
Additional recovery could face stiff resistance at the $2,700 threshold.
Gold FAQs Why do people invest in Gold?
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government. Who buys the most Gold?
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves. How is Gold correlated with other assets?
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal. What does the price of Gold depend on?
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
05:45 GBP/USD edges higher to near 1.2700 ahead of UK CPI inflation data
GBP/USD continues to gain ground for the third successive session, trading around 1.2690 during the Asian hours on Wednesday.
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On Wednesday, traders await key UK data, including the Consumer Price Index (CPI) inflation and Retail Price Index (RPI) figures for October. These numbers could influence the Bank of England's (BoE) decision on whether to pursue additional rate cuts this year.
The UK’s CPI inflation is projected to rise to 2.2% year-on-year in October, up from 1.7% the previous month. The monthly CPI for October is expected to increase by 0.5%, compared to a flat 0.0% in September. Additionally, the Retail Price Index (RPI) is likely to have grown by 3.4%, up from 2.7% previously.
The US Dollar (USD) remained steady on Wednesday after three days of losses, weighed down by weaker-than-expected economic data released on Tuesday. However, the downside for the Greenback may be limited as investors expect pro-inflationary policies from the incoming Trump administration, such as tax cuts and higher tariffs. These measures could drive up inflation, potentially prompting the Federal Reserve to slow the pace of rate cuts.
Kansas City Fed President Jeffrey Schmid stated on Tuesday that he anticipates both inflation and employment will move closer to the Fed's targets. Schmid explained that rate cuts reflect the central bank's confidence in inflation heading toward its 2% goal. He also noted that while large fiscal deficits might not directly cause inflation, the Fed may need to respond to any emerging inflationary pressures by raising interest rates.
Economic Indicator
Consumer Price Index (YoY)
The United Kingdom (UK) Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. It is the inflation measure used in the government’s target. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish. Read more. Next release: Wed Nov 20, 2024 07:00 Frequency: MonthlyConsensus: 2.2%Previous: 1.7%Source: Office for National Statistics Why it matters to traders?
The Bank of England is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.
05:44 Gold price advances to over one-week high on rising geopolitical risks
Gold price (XAU/USD) attracts some follow-through buying for the third consecutive day on Wednesday and climbs to a one-and-half-week high, around the $2,641-2,642 region during the Asian session.
.fxs-faq-module-wrapper{border:1px solid #dddedf;background:#fff;margin-bottom:32px;width:100%;float:left;font-family:Roboto,sans-serif}.fxs-faq-module-title{color:#1b1c23;font-size:16px;font-style:italic;font-weight:700;line-height:22.4px;text-transform:uppercase;background:#f3f3f8;padding:8px 16px;margin:0}.fxs-faq-module-container{padding:16px;width:100%;box-sizing:border-box;display:flex;flex-direction:column;gap:12px}.fxs-faq-module-section{padding-bottom:16px;border-bottom:1px solid #ececf1;margin-bottom:0}.fxs-faq-module-section:last-child{border:none;margin-bottom:0}.fxs-faq-module-container input[type=checkbox]{display:none}.fxs-faq-module-header{padding:4px 0;background-color:#fff;border:none;position:relative;cursor:pointer;margin:0}.fxs-faq-module-header label{display:block;cursor:pointer}.fxs-faq-module-header label span{display:block;width:calc(100% - 50px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{content:"";position:absolute;top:50%;right:16px;width:8px;height:2px;background-color:#49494f;transition:all .2s ease-in-out;transition-delay:0}.fxs-faq-module-header label:after{transform:rotate(45deg) translateX(-4px)}.fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(4px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{transition:transform .3s ease-in-out}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:after{transform:rotate(45deg) translateX(4px)}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(-4px)}.fxs-faq-module-content{max-height:0;overflow:hidden;transition:all .3s ease-in-out;color:#49494f;font-weight:300;padding:0;font-size:14.72px;line-height:20px;margin:0}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-content{max-height:1000px;margin-top:8px}@media (min-width:680px){.fxs-faq-module-title{font-size:19.2px;line-height:27.2px}.fxs-faq-module-header{font-size:19.2px;line-height:25.92px}.fxs-faq-module-content{font-size:16px;line-height:21.6px}}Gold price scales higher for the third straight day as Russia-Ukraine tensions continue to drive haven flows. Rebounding US bond yields offer some support to the US Dollar and might cap further gains for the XAU/USD.Traders look to speeches from influential FOMC members for rate-cut cues.Gold price (XAU/USD) attracts some follow-through buying for the third consecutive day on Wednesday and climbs to a one-and-half-week high, around the $2,641-2,642 region during the Asian session. Mounting Russia-Ukraine tensions continue to boost demand for traditional safe-haven assets, which, along with subdued US Dollar (USD) price action, act as a tailwind for the precious metal.
That said, the overnight comments from Russian and US officials helped ease market concerns about the onset of a full-blown nuclear war, which is evident from a generally positive tone around the equity markets. Apart from this, a goodish pickup in the US Treasury bond yields favors the USD bulls and warrants some caution before positioning for any further appreciating move for the Gold price.
Gold price continues to benefit from haven flows amid escalating geopolitical tensions Investors remain concerned about the risk of a further escalation of geopolitical tensions between Russia and Ukraine, which drives haven flows towards the Gold price for the third straight day. Russian President Vladimir Putin upped the ante on Tuesday and signed a decree approving its updated nuclear doctrine, which shifts the parameters on when Russia can use nuclear weapons. Ukraine acted on the go-ahead from the US to use American-made missiles for strikes within Russia and launched ATACMS missiles to attack a Russian military facility in the Bryansk border region. Russian Foreign Minister Sergei Lavrov said the country will do everything possible to avoid a nuclear war. The White House confirmed that the US does not plan to adjust its nuclear posture. Markets have been positioning for potential tariffs and tax cuts by the incoming Trump administration, which could lead to higher inflation and fewer interest rate cuts by the Federal Reserve. Kansas Fed President Jeffrey Schmid said on Tuesday that large fiscal deficits will not cause inflationary pressures because the central bank will prevent it, though that could mean higher interest rates. According to the CME Group's FedWatch Tool, traders are currently pricing in a less than 60% chance for a 25-basis-points rate cut by the Fed at the upcoming monetary policy meeting in December. The US Treasury bond yields resume their uptrend following the previous day's sharp slide and assist the US Dollar in stalling its pullback from the year-to-date peak, which might cap the XAU/USD. A slew of influential FOMC members are due to speak later today and influence expectations about the Fed's rate-cut path, providing some meaningful impetus to the non-yielding yellow metal.
Gold price could climb further toward $2,660; technical setup warrants caution for bullsThe recovery momentum from a two-month low touched last week lifts the Gold price beyond the 38.2% Fibonacci retracement level of the recent sharp retracement slide from the all-time peak, favoring bullish traders. Adding to this, bullish oscillators on hourly charts support prospects for a further intraday appreciating move towards the $2,658-2,660 region en route to the $2,670-2,672 congestion zone. Some follow-through buying could allow the XAU/USD to aim back towards reclaiming the $2,700 round figure.
On the flip side, the $2,622-2,620 area now seems to protect the immediate downside ahead of the $2,600 mark. A convincing break below the latter could make the Gold price vulnerable to accelerate the fall to the 100-day Simple Moving Average (SMA), around the $2,555 region, with some intermediate support near the $2,570 zone. This is followed by last week’s swing low, around the $2,537-2,536 area, which if broken decisively will be seen as a fresh trigger for bearish traders and set the stage for deeper losses.
Gold FAQs Why do people invest in Gold?
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government. Who buys the most Gold?
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves. How is Gold correlated with other assets?
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal. What does the price of Gold depend on?
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
05:15 UK CPI inflation expected to accelerate in October, core rate to ease slightly
The United Kingdom’s (UK) Consumer Price Index (CPI) data for October will be published by the Office for National Statistics (ONS) on Wednesday at 07:00 GMT.
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.fxs-faq-module-wrapper{border:1px solid #dddedf;background:#fff;margin-bottom:32px;width:100%;float:left;font-family:Roboto,sans-serif}.fxs-faq-module-title{color:#1b1c23;font-size:16px;font-style:italic;font-weight:700;line-height:22.4px;text-transform:uppercase;background:#f3f3f8;padding:8px 16px;margin:0}.fxs-faq-module-container{padding:16px;width:100%;box-sizing:border-box;display:flex;flex-direction:column;gap:12px}.fxs-faq-module-section{padding-bottom:16px;border-bottom:1px solid #ececf1;margin-bottom:0}.fxs-faq-module-section:last-child{border:none;margin-bottom:0}.fxs-faq-module-container input[type=checkbox]{display:none}.fxs-faq-module-header{padding:4px 0;background-color:#fff;border:none;position:relative;cursor:pointer;margin:0}.fxs-faq-module-header label{display:block;cursor:pointer}.fxs-faq-module-header label span{display:block;width:calc(100% - 50px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{content:"";position:absolute;top:50%;right:16px;width:8px;height:2px;background-color:#49494f;transition:all .2s ease-in-out;transition-delay:0}.fxs-faq-module-header label:after{transform:rotate(45deg) translateX(-4px)}.fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(4px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{transition:transform .3s ease-in-out}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:after{transform:rotate(45deg) translateX(4px)}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(-4px)}.fxs-faq-module-content{max-height:0;overflow:hidden;transition:all .3s ease-in-out;color:#49494f;font-weight:300;padding:0;font-size:14.72px;line-height:20px;margin:0}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-content{max-height:1000px;margin-top:8px}@media (min-width:680px){.fxs-faq-module-title{font-size:19.2px;line-height:27.2px}.fxs-faq-module-header{font-size:19.2px;line-height:25.92px}.fxs-faq-module-content{font-size:16px;line-height:21.6px}}United Kingdom’s Office for National Statistics is set to publish the CPI report on Wednesday.The annual UK headline CPI inflation is expected to rise in October, with the core figure easing slightly.The UK CPI data could signal a BoE December interest-rate cut pause, fuelling a Pound Sterling sell-off.The United Kingdom’s (UK) Consumer Price Index (CPI) data for October will be published by the Office for National Statistics (ONS) on Wednesday at 07:00 GMT.
The UK CPI inflation report could provide fresh cues on the Bank of England’s (BoE) path forward on interest rates, which will likely have a strong bearing on the Pound Sterling.
What to expect from the next UK inflation report?
The UK Consumer Price Index is set to rise at an annual pace of 2.2% in October after increasing by 1.7% in September, moving back above the BoE’s 2.0% target.
The core CPI inflation is expected to ease slightly to 3.1% YoY in October, compared with a 3.2% reading reported in September.
According to a Bloomberg survey of economists, official data is expected to show that service inflation eased slightly to 4.8% in October from 4.9% in the prior month.
The BoE projected the annual headline CPI to be 2.2% and the services CPI to be 5.0% in October.
Meanwhile, the British monthly CPI is seen rising 0.5% in the same period, compared to the previous reading of 0%.
Previewing the UK inflation data, Societe Generale analysts noted: “We expect base effects and higher utility prices to push headline inflation back above its 2.0% target in October to 2.2% year-over-year (YoY), up from 1.7% YoY in September. More importantly, we see services inflation rising by 0.1 percentage point (pp) to 5% YoY, although the risks are tilted to the downside.”
How will the UK Consumer Price Index report affect GBP/USD?
Following the November 7 decision to cut rates by 25 basis points (bps) to 4.75%, the BoE retained its cautious language on future interest rate cuts. In its policy statement, the central bank reiterated that it would need to stay "restrictive for sufficiently long" to return inflation sustainably to the 2.0% target.
The BoE predicted that the UK Finance Minister Rachel Reeves' Autumn Budget 2024 will increase the GDP size while adding to the inflationary pressures.
Testifying before the UK Parliament’s Treasury Select Committee (TSC) on Tuesday, Governor Andrew Bailey said that reiterated that the Labour government's tax rises reinforce the central bank’s gradual approach to easing interest rates,
Against this backdrop, the UK CPI data holds the key to gauging whether the BoE will pause its easing trajectory following its second rate cut since 2020 earlier this month.
A hotter-than-expected headline and core inflation data would ramp up bets for a BoE pause, lifting the Pound Sterling. In this case, GBP/USD could initiate a sustained recovery from six-week troughs. On the other hand, softer-than-expected inflation readings could exacerbate the pain in the Pound Sterling, smashing the GBP/USD toward 1.2500.
Dhwani Mehta, Asian Session Lead Analyst at FXStreet, offers a brief technical outlook for the major and explains: “GBP/USD holds its recovery mode in the UK CPI data release countdown. However, the 14-day Relative Strength Index (RSI) stays below 50, suggesting that downside risks remain intact. Further, the 21-day Simple Moving Average (SMA) looks to cut the 200-day SMA from above, representing an impending Death Cross on the daily time frame and adding credence to the bearish potential.”
Dhwani adds: “The pair could extend the recovery toward 1.2750 psychological resistance, above which the 200-day SMA at 1.2820 will be challenged. The next upside target is seen at the 21-day SMA at 1.2858. Conversely, the immediate support is seen at the multi-month lows of 1.2597, below which the 1.2500 round level could be tested.”
Economic Indicator
Consumer Price Index (YoY)
The United Kingdom (UK) Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. It is the inflation measure used in the government’s target. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish. Read more. Next release: Wed Nov 20, 2024 07:00 Frequency: MonthlyConsensus: 2.2%Previous: 1.7%Source: Office for National Statistics Why it matters to traders?
The Bank of England is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.
Inflation FAQs What is inflation?
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%. What is the Consumer Price Index (CPI)?
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls. What is the impact of inflation on foreign exchange?
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money. How does inflation influence the price of Gold?
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
04:57 Silver Price Forecast: XAG/USD remains below $31.50 after PBoC policy decision
Silver price (XAG/USD) retraces its recent gains, trading around $31.20 per troy ounce during the Asian session on Wednesday.
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The price of the safe-haven bullion gained ground amid escalating tensions in the Russia-Ukraine conflict. According to a Reuters report late Tuesday, Ukraine deployed US-supplied ATACMS missiles to strike Russian territory for the first time, signaling a significant escalation on the 1,000th day of the conflict. However, market concerns eased slightly after Russian Foreign Minister Sergei Lavrov stated that the government would "do everything possible" to prevent the outbreak of nuclear war.
The dollar-denominated Silver strengthens its demand as the US Dollar (USD) experienced profit-taking selling after a recent rally. This rally was fueled by expectations of fewer Federal Reserve (Fed) rate cuts and optimism about US economic outperformance under the incoming Trump administration. A lower US Dollar makes the precious metals cheaper for buyers with foreign currencies, which increases the Silver demand.
Jeffrey Schmid, President of the Federal Reserve Bank of Kansas City, stated on Tuesday that he expects both inflation and employment to move closer to the Fed's targets. Schmid explained that rate cuts signal the Fed's confidence in inflation trending toward its 2% goal. He also noted that while large fiscal deficits won't necessarily drive inflation, the Fed may need to counteract potential pressures with higher interest rates.
Silver FAQs Why do people invest in Silver?
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets. Which factors influence Silver prices?
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices. How does industrial demand affect Silver prices?
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices. How do Silver prices react to Gold’s moves?
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
04:57 USD/INR strengthens as geopolitical risks, foreign fund outflows drag Indian Rupee lower
The Indian Rupee (INR) loses traction on Wednesday. The local currency remains under some selling pressure due to the renewed US Dollar (USD) demand from importers and rising geopolitical tensions after Russian officials said that Ukraine used US ATACMS missiles to strike Russian territory for the first time, while Russian President Vladimir Putin approved an updated nuclear doctrine.
.fxs-faq-module-wrapper{border:1px solid #dddedf;background:#fff;margin-bottom:32px;width:100%;float:left;font-family:Roboto,sans-serif}.fxs-faq-module-title{color:#1b1c23;font-size:16px;font-style:italic;font-weight:700;line-height:22.4px;text-transform:uppercase;background:#f3f3f8;padding:8px 16px;margin:0}.fxs-faq-module-container{padding:16px;width:100%;box-sizing:border-box;display:flex;flex-direction:column;gap:12px}.fxs-faq-module-section{padding-bottom:16px;border-bottom:1px solid #ececf1;margin-bottom:0}.fxs-faq-module-section:last-child{border:none;margin-bottom:0}.fxs-faq-module-container input[type=checkbox]{display:none}.fxs-faq-module-header{padding:4px 0;background-color:#fff;border:none;position:relative;cursor:pointer;margin:0}.fxs-faq-module-header label{display:block;cursor:pointer}.fxs-faq-module-header label span{display:block;width:calc(100% - 50px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{content:"";position:absolute;top:50%;right:16px;width:8px;height:2px;background-color:#49494f;transition:all .2s ease-in-out;transition-delay:0}.fxs-faq-module-header label:after{transform:rotate(45deg) translateX(-4px)}.fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(4px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{transition:transform .3s ease-in-out}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:after{transform:rotate(45deg) translateX(4px)}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(-4px)}.fxs-faq-module-content{max-height:0;overflow:hidden;transition:all .3s ease-in-out;color:#49494f;font-weight:300;padding:0;font-size:14.72px;line-height:20px;margin:0}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-content{max-height:1000px;margin-top:8px}@media (min-width:680px){.fxs-faq-module-title{font-size:19.2px;line-height:27.2px}.fxs-faq-module-header{font-size:19.2px;line-height:25.92px}.fxs-faq-module-content{font-size:16px;line-height:21.6px}}The Indian Rupee softens in Wednesday’s Asian session. Sustained portfolio outflows and geopolitical risks could weigh on the INR, but RBI interventions might cap its downside. Investors await the speeches from the Fed’s Cook and Bowman on Wednesday. The Indian Rupee (INR) loses traction on Wednesday. The local currency remains under some selling pressure due to the renewed US Dollar (USD) demand from importers and rising geopolitical tensions after Russian officials said that Ukraine used US ATACMS missiles to strike Russian territory for the first time, while Russian President Vladimir Putin approved an updated nuclear doctrine.
Furthermore, sustained portfolio outflows contribute to the INR’s downside. However, any significant depreciation of the Indian Rupee might be limited as the Reserve Bank of India (RBI) is likely to sell the USD to support the INR.
In the absence of top-tier economic data released from the US and India, the USD price dynamics will continue to play a key role in influencing the pair. The Federal Reserve (Fed) Lisa Cook and Michelle Bowman are scheduled to speak later on Wednesday. Indian Rupee remains weak amid mounting geopolitical tensions "Mild weakness in the dollar will not lead to any major appreciation in the rupee because the RBI will look to replenish its foreign exchange reserves, but if the dollar index moves 2-3% lower, we may see half a per cent of move (in the rupee)," noted Nitin Agarwal, head of treasury at ANZ India. Foreign Portfolio Investment (FPI) inflows into India are estimated to remain positive in FY25, with an expected inflow of USD 20-25 billion, according to the Bank of Baroda. Markets have pared bets for a 25 basis points (bps) interest-rate cut at the December meeting to less than 59%, down from 76.8% a month ago, according to the CME FedWatch Tool. The US Building Permits declined by 0.6% from 1.425 million to 1.416 million in October. Meanwhile, Housing Starts fell by 3.1% from 1.353 million to 1.311 million during the same period. Kansas City Fed President Jeffrey Schmid said it remains uncertain how far interest rates can fall, but the recent cuts by the Fed indicate confidence that inflation is heading toward its 2% target. USD/INR’s bullish outlook remains in play The Indian Rupee weakens on the day. However, the constructive view of the USD/INR pair remains intact, with the price holding above the ascending channel throwback support on the daily chart. The upward momentum of the pair is reinforced by the 14-day Relative Strength Index (RSI), which stands above the midline near 65.55, suggesting that the path of least resistance remains to the upside.
The all-time high of 84.45 acts as an immediate resistance level for USD/INR. A break above this level could pave the way to the 85.00 psychological level.
In the bearish case, any follow-through selling below the resistance-turned-support level at 84.35 could be enough to attract some sellers and take the pair back down to the 84.00-83.90 region, representing the round mark and the 100-day EMA. Indian Rupee FAQs What are the key factors driving the Indian Rupee? The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee. How do the decisions of the Reserve Bank of India impact the Indian Rupee? The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference. What macroeconomic factors influence the value of the Indian Rupee? Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee. How does inflation impact the Indian Rupee? Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
Furthermore, sustained portfolio outflows contribute to the INR’s downside. However, any significant depreciation of the Indian Rupee might be limited as the Reserve Bank of India (RBI) is likely to sell the USD to support the INR.
In the absence of top-tier economic data released from the US and India, the USD price dynamics will continue to play a key role in influencing the pair. The Federal Reserve (Fed) Lisa Cook and Michelle Bowman are scheduled to speak later on Wednesday. Indian Rupee remains weak amid mounting geopolitical tensions "Mild weakness in the dollar will not lead to any major appreciation in the rupee because the RBI will look to replenish its foreign exchange reserves, but if the dollar index moves 2-3% lower, we may see half a per cent of move (in the rupee)," noted Nitin Agarwal, head of treasury at ANZ India. Foreign Portfolio Investment (FPI) inflows into India are estimated to remain positive in FY25, with an expected inflow of USD 20-25 billion, according to the Bank of Baroda. Markets have pared bets for a 25 basis points (bps) interest-rate cut at the December meeting to less than 59%, down from 76.8% a month ago, according to the CME FedWatch Tool. The US Building Permits declined by 0.6% from 1.425 million to 1.416 million in October. Meanwhile, Housing Starts fell by 3.1% from 1.353 million to 1.311 million during the same period. Kansas City Fed President Jeffrey Schmid said it remains uncertain how far interest rates can fall, but the recent cuts by the Fed indicate confidence that inflation is heading toward its 2% target. USD/INR’s bullish outlook remains in play The Indian Rupee weakens on the day. However, the constructive view of the USD/INR pair remains intact, with the price holding above the ascending channel throwback support on the daily chart. The upward momentum of the pair is reinforced by the 14-day Relative Strength Index (RSI), which stands above the midline near 65.55, suggesting that the path of least resistance remains to the upside.
The all-time high of 84.45 acts as an immediate resistance level for USD/INR. A break above this level could pave the way to the 85.00 psychological level.
In the bearish case, any follow-through selling below the resistance-turned-support level at 84.35 could be enough to attract some sellers and take the pair back down to the 84.00-83.90 region, representing the round mark and the 100-day EMA. Indian Rupee FAQs What are the key factors driving the Indian Rupee? The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee. How do the decisions of the Reserve Bank of India impact the Indian Rupee? The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference. What macroeconomic factors influence the value of the Indian Rupee? Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee. How does inflation impact the Indian Rupee? Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
04:44 Australian Treasurer Chalmers: Tumbling iron ore prices, softening labor market have hit government revenue
After presenting his Ministerial Statement on the economy on Wednesday, Australian Treasurer Jim Chalmers said, "tumbling iron ore prices and a softening labor market have hit government revenue.” He discussed Australia's tough fiscal outlook due to weakened trading partner China and a softening job market.
After presenting his Ministerial Statement on the economy on Wednesday, Australian Treasurer Jim Chalmers said, "tumbling iron ore prices and a softening labor market have hit government revenue.”
He discussed Australia's tough fiscal outlook due to weakened trading partner China and a softening job market.
Additional quotes
Leaving a “sliver” of the revenue windfalls that supported the Budget bottom line for the past two years.
“Confident, not complacent” that the worst of the inflation storm had passed.
04:31 Japanese Yen bears have the upper hand; USD/JPY looks to reclaim 155.00 mark
The Japanese Yen (JPY) witnessed good two-way price moves on Tuesday and ended the day nearly unchanged against its American counterpart.
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Adding to this, the uncertainty over the timing of further monetary policy tightening by the Bank of Japan (BoJ) continued to undermine the JPY and, to a larger extent, overshadowed a modest US Dollar (USD) weakness. The JPY remains depressed following the release of Trade Balance data from Japan and assists the USD/JPY pair to build on the overnight solid intraday recovery of over 150 pips. That said, speculations that Japanese authorities might intervene in the FX market to prop up the domestic currency, coupled with geopolitical uncertainties, might hold back the JPY bears from placing aggressive bets and act as a headwind for the pair.
Japanese Yen bears look to seize back control amid fading safe-haven demand, BoJ uncertainty Russian President Vladimir Putin approved the change to the country's nuclear doctrine on Tuesday, days after US President Joe Biden authorized Ukraine to use long-range American missiles against military targets inside Russia. Russian Foreign Minister Sergei Lavrov said the country would do everything possible to avoid the onset of a nuclear war and called Germany's decision on Monday not to provide long-range missiles to Ukraine a responsible position. Meanwhile, the White House said that the United States (US) does not plan to adjust its own nuclear posture in response to Russia's move, which, in turn, tempered safe-haven demand and weighed on the Japanese Yen. Bank of Japan Governor Kazuo Ueda earlier this week warned against keeping borrowing costs too low and signaled another interest rate increase, was vague on the timing and offered no hints about a hike in December. A report published by the Ministry of Finance earlier this Wednesday showed that Japan's total exports increased by 3.1% and imports grew by 0.4% from a year earlier in October, resulting in a trade deficit of ¥461.2 billion. Market participants have been anticipating slightly higher inflation after former President Donald Trump’s election victory, which was seen as a key trigger behind the recent sharp move up in the US Treasury bond yields. Federal Reserve Bank of Kansas President Jeffrey Schmid noted on Tuesday that large fiscal deficits will not cause inflationary pressures because the central bank will prevent it, though that could mean higher interest rates. The US Dollar consolidates its recent pullback from the year-to-date high and languishes near the weekly low, albeit, the downside remains cushioned in the wake of expectations of a less aggressive easing by the Fed. Scheduled speeches by a slew of influential FOMC members later this Wednesday will influence the USD price dynamics and provide some impetus to the USD/JPY pair in the absence of any relevant US macro data.
USD/JPY needs to find acceptance above 155.00 to support prospects for further appreciationFrom a technical perspective, the USD/JPY pair's overnight strong rebound suggests that the recent corrective slide from a multi-month high has run its course. The subsequent move up, along with the positive oscillators on the daily chart, supports prospects for a further appreciating move for spot prices. Bulls, however, need to wait for a sustained strength above the 155.00 mark before placing fresh bets.
Some follow-through buying beyond the weekly top, around the 155.35 area, will reaffirm the positive outlook and lift the USD/JPY pair to the 155.70 intermediate hurdle en route to the 156.00 round-figure mark. The momentum could extend further towards retesting the multi-month top, around the 156.75 region touched last Friday.
On the flip side, the 154.40-154.35 area now seems to protect the immediate downside ahead of the 154.00 mark. Any further decline might continue to find decent support near the 153.30-153.25 region, or the overnight swing low. This is followed by the 153.00 round figure and the next relevant support near the 152.70-152.65 area, below which the USD/JPY pair could drop to the very important 200-day Simple Moving Average (SMA), around the 151.90-151.85 region.
Japanese Yen FAQs What key factors drive the Japanese Yen?
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors. How do the decisions of the Bank of Japan impact the Japanese Yen?
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen. How does the differential between Japanese and US bond yields impact the Japanese Yen?
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential. How does broader risk sentiment impact the Japanese Yen?
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
04:13 Australian Dollar remains steady following PBoC interest rate decision
The Australian Dollar (AUD) attempts to extend its gains for the fourth consecutive day on Wednesday, following the People’s Bank of China’s (PBoC) interest rate decision.
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The AUD/USD pair may face downward pressure as the US Dollar (USD) gains ground on safe-haven flows amid escalating tensions in the Russia-Ukraine conflict. According to a Reuters report late Tuesday, Ukraine deployed US-supplied ATACMS missiles to strike Russian territory for the first time, signaling a significant escalation on the 1,000th day of the conflict. However, market concerns eased slightly after Russian Foreign Minister Sergei Lavrov stated that the government would "do everything possible" to prevent the outbreak of nuclear war.
The Reserve Bank of Australia's (RBA) November Meeting Minutes indicated that the central bank’s board remains cautious about the potential for inflation to rise further, emphasizing the need for restrictive monetary policy. Board members also indicate no "immediate need" to adjust the cash rate, though they left the door open for future changes, noting that nothing can be ruled in or out.
The US Dollar (USD) steadies on Wednesday after three consecutive days of losses, pressured by weaker-than-expected economic data released on Tuesday. However, the downside for the Greenback may be capped as investors anticipate pro-inflationary policies from the incoming Trump administration, including tax cuts and higher tariffs. These measures could elevate inflation, possibly influencing the Federal Reserve to slow the pace of rate cuts.
The Australian Dollar receives support from hawkish sentiment surrounding RBA Jeffrey Schmid, President of the Federal Reserve Bank of Kansas City, stated on Tuesday that he expects both inflation and employment to move closer to the Fed's targets. Schmid explained that rate cuts signal the Fed's confidence in inflation trending toward its 2% goal. He also noted that while large fiscal deficits won't necessarily drive inflation, the Fed may need to counteract potential pressures with higher interest rates. An official from China’s National Development and Reform Commission (NDRC) stated on Tuesday that the country has "ample policy room and tools to support economic recovery." The official expressed confidence in China's economic trajectory, anticipating that the recovery momentum will persist through November and December. Any change in the Chinese economy could impact the Australian markets as both nations are close trade partners. Fed Chair Jerome Powell downplayed the likelihood of imminent rate cuts, highlighting the economy's resilience, robust labor market, and persistent inflationary pressures. Powell remarked, "The economy is not sending any signals that we need to be in a hurry to lower rates." On Friday, Chicago Fed President Austan Goolsbee stated that markets often overreact to changes in interest rates. Goolsbee emphasized the importance of the Fed adopting a cautious, gradual approach in moving toward the neutral rate. Meanwhile, Boston Fed President Susan Collins tempered expectations for continued rate cuts in the near term while maintaining market confidence in a potential rate reduction in December. Collins stated, "I don't see a big urgency to lower rates, but I want to preserve a healthy economy." Last week, RBA Governor Michele Bullock emphasized that current interest rates are sufficiently restrictive and will remain unchanged until the central bank is confident about the inflation outlook. US Retail Sales increased by 0.4% month-over-month in October, exceeding the market consensus of 0.3%. Additionally, the NY Empire State Manufacturing Index for November posted an unexpected surge, coming in at 31.2 compared to the anticipated 0.7 decline, signaling robust manufacturing activity. China’s Retail Sales rose by 4.8% year-over-year in October, surpassing the expected 3.8% and the 3.2% increase seen in September. Meanwhile, Industrial Production grew by 5.3% YoY, below the forecasted 5.6% and the 5.4% growth recorded in the previous period.
Technical Analysis: Australian Dollar surpasses nine-day EMA to approach 0.6550
AUD/USD traded near 0.6530 on Wednesday. Technical analysis of the daily chart indicates a continued decline within a descending channel pattern, underscoring a bearish outlook. The 14-day Relative Strength Index (RSI) is below the 50 mark, further validating the prevailing bearish sentiment.
In terms of support, the AUD/USD pair may approach the lower boundary of the descending channel at the 0.6380 level. A decisive break below the descending channel could amplify selling pressure, potentially driving the pair toward its yearly low of 0.6348, last recorded on August 5.
On the upside, a breach above the nine-day EMA at 0.6525 weakens the bearish bias and supports the AUD/USD pair to test the 14-day EMA at 0.6543 level further. Surpassing this level could pave the way for a rally toward the four-week high of 0.6687 level.
AUD/USD: Daily ChartAustralian Dollar PRICE Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the Japanese Yen. USD EUR GBP JPY CAD AUD NZD CHF USD -0.09% -0.11% 0.14% -0.04% -0.04% -0.05% 0.02% EUR 0.09% -0.02% 0.21% 0.05% 0.05% 0.03% 0.10% GBP 0.11% 0.02% 0.24% 0.07% 0.07% 0.05% 0.13% JPY -0.14% -0.21% -0.24% -0.17% -0.17% -0.19% -0.11% CAD 0.04% -0.05% -0.07% 0.17% -0.01% -0.01% 0.06% AUD 0.04% -0.05% -0.07% 0.17% 0.00% -0.01% 0.07% NZD 0.05% -0.03% -0.05% 0.19% 0.01% 0.01% 0.07% CHF -0.02% -0.10% -0.13% 0.11% -0.06% -0.07% -0.07%
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
Economic Indicator
PBoC Interest Rate Decision
The People’s Bank of China’s (PBoC) Monetary Policy Committee (MPC) holds scheduled meetings on a quarterly basis. However, China’s benchmark interest rate – the loan prime rate (LPR), a pricing reference for bank lending – is fixed every month. If the PBoC forecasts high inflation (hawkish) it raises interest rates, which is bullish for the Renminbi (CNY). Likewise, if the PBoC sees inflation in the Chinese economy falling (dovish) and cuts or keeps interest rates unchanged, it is bearish for CNY. Still, China’s currency doesn’t have a floating exchange rate determined by markets and its value against the US Dollar is fixed mainly by the PBoC on a daily basis. Read more. Last release: Wed Nov 20, 2024 01:15 Frequency: IrregularActual: 3.1%Consensus: 3.1%Previous: 3.1%Source: The People's Bank of China
04:03 Japan Adjusted Merchandise Trade Balance: ¥-357.7B (October) vs previous ¥-187.2B
Japan Adjusted Merchandise Trade Balance: ¥-357.7B (October) vs previous ¥-187.2B
03:30 NZD/USD weakens to near 0.5900 on dovish RBNZ bets, geopolitical risks
The NZD/USD pair trades in negative territory near 0.5910 during the Asian session on Wednesday.
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ANZ chief economist Sharon Zollner expects the RBNZ to cut its Official Cash Rate (OCR) by 50 basis points (bps) next week, bringing the rate to 4.25%. “If there is going to be a surprise, a larger cut seems likelier than a smaller one,” added Zollner. Markets are fully pricing in a 50 bps reduction, with 12% odds of a larger 75 bps rate cut. The rising bets of the RBNZ are likely to weigh on the Kiwi in the near term.
Elsewhere, the People’s Bank of China (PBOC) announced to leave its Loan Prime Rates (LPRs) unchanged on Wednesday. The one-year and five-year LPRs were at 3.10% and 3.60%, respectively.
On the other hand, analysts expect incoming US President Donald Trump's policies could reignite inflation and might slow the path of interest rate cuts. This, in turn, could lift the USD against the New Zealand Dollar (NZD). Markets have pared bets for a 25 basis points (bps) interest-rate cut at the December meeting to less than 59%, down from 76.8% a month ago, according to the CME FedWatch Tool.
Additionally, Ukraine used US ATACMS missiles to strike Russian territory for the first time, Moscow said. Meanwhile, Russian President Vladimir Putin lowered the threshold for a possible nuclear strike, per Reuters. The rising geopolitical risks between Russia and Ukraine could boost the safe-haven demand, supporting the Greenback. New Zealand Dollar FAQs What key factors drive the New Zealand Dollar? The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD. How do decisions of the RBNZ impact the New Zealand Dollar? The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair. How does economic data influence the value of the New Zealand Dollar? Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate. How does broader risk sentiment impact the New Zealand Dollar? The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
ANZ chief economist Sharon Zollner expects the RBNZ to cut its Official Cash Rate (OCR) by 50 basis points (bps) next week, bringing the rate to 4.25%. “If there is going to be a surprise, a larger cut seems likelier than a smaller one,” added Zollner. Markets are fully pricing in a 50 bps reduction, with 12% odds of a larger 75 bps rate cut. The rising bets of the RBNZ are likely to weigh on the Kiwi in the near term.
Elsewhere, the People’s Bank of China (PBOC) announced to leave its Loan Prime Rates (LPRs) unchanged on Wednesday. The one-year and five-year LPRs were at 3.10% and 3.60%, respectively.
On the other hand, analysts expect incoming US President Donald Trump's policies could reignite inflation and might slow the path of interest rate cuts. This, in turn, could lift the USD against the New Zealand Dollar (NZD). Markets have pared bets for a 25 basis points (bps) interest-rate cut at the December meeting to less than 59%, down from 76.8% a month ago, according to the CME FedWatch Tool.
Additionally, Ukraine used US ATACMS missiles to strike Russian territory for the first time, Moscow said. Meanwhile, Russian President Vladimir Putin lowered the threshold for a possible nuclear strike, per Reuters. The rising geopolitical risks between Russia and Ukraine could boost the safe-haven demand, supporting the Greenback. New Zealand Dollar FAQs What key factors drive the New Zealand Dollar? The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD. How do decisions of the RBNZ impact the New Zealand Dollar? The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair. How does economic data influence the value of the New Zealand Dollar? Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate. How does broader risk sentiment impact the New Zealand Dollar? The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
03:18 China PBoC Interest Rate Decision meets expectations (3.1%)
China PBoC Interest Rate Decision meets expectations (3.1%)
03:16 PBOC sets USD/CNY reference rate at 7.1935 vs. 7.1911 previous
On Wednesday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.1935, as compared to the previous day's fix of 7.1911 and 7.2386 Reuters estimates.
On Wednesday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.1935, as compared to the previous day's fix of 7.1911 and 7.2386 Reuters estimates.
03:09 PBOC leaves Loan Prime Rates unchanged in November
The People’s Bank of China (PBOC), China's central bank, announced to leave its Loan Prime Rates (LPRs) unchanged on Friday.
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The People’s Bank of China (PBOC), China's central bank, announced to leave its Loan Prime Rates (LPRs) unchanged on Friday. The one-year and five-year LPRs were at 3.10% and 3.60%, respectively.
Market reaction
At the time of writing, AUD/USD is holding lower ground near 0.6535, up 0.05% on the day.
Central banks FAQs What does a central bank do?
Central Banks have a key mandate which is making sure that there is price stability in a country or region. Economies are constantly facing inflation or deflation when prices for certain goods and services are fluctuating. Constant rising prices for the same goods means inflation, constant lowered prices for the same goods means deflation. It is the task of the central bank to keep the demand in line by tweaking its policy rate. For the biggest central banks like the US Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BoE), the mandate is to keep inflation close to 2%. What does a central bank do when inflation undershoots or overshoots its projected target?
A central bank has one important tool at its disposal to get inflation higher or lower, and that is by tweaking its benchmark policy rate, commonly known as interest rate. On pre-communicated moments, the central bank will issue a statement with its policy rate and provide additional reasoning on why it is either remaining or changing (cutting or hiking) it. Local banks will adjust their savings and lending rates accordingly, which in turn will make it either harder or easier for people to earn on their savings or for companies to take out loans and make investments in their businesses. When the central bank hikes interest rates substantially, this is called monetary tightening. When it is cutting its benchmark rate, it is called monetary easing. Who decides on monetary policy and interest rates?
A central bank is often politically independent. Members of the central bank policy board are passing through a series of panels and hearings before being appointed to a policy board seat. Each member in that board often has a certain conviction on how the central bank should control inflation and the subsequent monetary policy. Members that want a very loose monetary policy, with low rates and cheap lending, to boost the economy substantially while being content to see inflation slightly above 2%, are called ‘doves’. Members that rather want to see higher rates to reward savings and want to keep a lit on inflation at all time are called ‘hawks’ and will not rest until inflation is at or just below 2%. Is there a president or head of a central bank?
Normally, there is a chairman or president who leads each meeting, needs to create a consensus between the hawks or doves and has his or her final say when it would come down to a vote split to avoid a 50-50 tie on whether the current policy should be adjusted. The chairman will deliver speeches which often can be followed live, where the current monetary stance and outlook is being communicated. A central bank will try to push forward its monetary policy without triggering violent swings in rates, equities, or its currency. All members of the central bank will channel their stance toward the markets in advance of a policy meeting event. A few days before a policy meeting takes place until the new policy has been communicated, members are forbidden to talk publicly. This is called the blackout period.
02:30 WTI holds steady below $69.50 amid mounting Russia-Ukraine tensions
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $69.30 on Wednesday.
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On Tuesday, Russia’s defense ministry said that Ukraine hit a facility in the Bryansk region with six ATACAMS missiles. In response, Russian President Vladimir Putin lowered the threshold for a possible nuclear strike. The rising geopolitical tensions could boost the WTI price for the time being. "This marks a renewed build up in tensions in the Russia-Ukraine war and brings back into focus the risk of supply disruptions in the oil market," ANZ Bank analyst Daniel Hynes said.
Additionally, Iranian supreme leader Ayatollah Ali Khamenei warned of a "crushing response" to Israel's recent air strikes on Iran, which raise concerns about the region's crude supply disruption. This, in turn, might contribute to the WTI’s upside.
On the other hand, China's demand for oil slowed dramatically this year. China's crude oil imports in October fell from a year earlier for the sixth consecutive month, which might exert some selling pressure on the black gold as China is the world's major importer of crude oil. WTI Oil FAQs What is WTI Oil? WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media. What factors drive the price of WTI Oil? Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa. How does inventory data impact the price of WTI Oil The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency. How does OPEC influence the price of WTI Oil? OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
On Tuesday, Russia’s defense ministry said that Ukraine hit a facility in the Bryansk region with six ATACAMS missiles. In response, Russian President Vladimir Putin lowered the threshold for a possible nuclear strike. The rising geopolitical tensions could boost the WTI price for the time being. "This marks a renewed build up in tensions in the Russia-Ukraine war and brings back into focus the risk of supply disruptions in the oil market," ANZ Bank analyst Daniel Hynes said.
Additionally, Iranian supreme leader Ayatollah Ali Khamenei warned of a "crushing response" to Israel's recent air strikes on Iran, which raise concerns about the region's crude supply disruption. This, in turn, might contribute to the WTI’s upside.
On the other hand, China's demand for oil slowed dramatically this year. China's crude oil imports in October fell from a year earlier for the sixth consecutive month, which might exert some selling pressure on the black gold as China is the world's major importer of crude oil. WTI Oil FAQs What is WTI Oil? WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media. What factors drive the price of WTI Oil? Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa. How does inventory data impact the price of WTI Oil The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency. How does OPEC influence the price of WTI Oil? OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
01:56 EUR/USD looks for higher ground above 1.06
EUR/USD chewed through chart paper between 1.0550 and 1.0600 levels on Tuesday, testing into the low side but staging a recovery to add a thin 0.14% on the day.
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Headline HICP inflation in Europe held at a perfectly-even 2.0% YoY in October, matching preliminary figures. The data point was a non-starter in Euro markets, sparking little interest on either side of the bid-ask spread. US data remains muted until the latter half of the trading week brings unemployment claims and Retail Sales figures.
ECB President Lagarde appears on Wednesday to deliver the opening remarks at the ECB’s Conference on Financial Stability and Macroprudential Policy. The ECB is currently caught between a rock and a hard place as European inflation continues to hold stickier than European policymakers had initially expected, and the broader European economy continues to tilt lopsided.
US economic data releases remain thin in the front half of the trading week. Mid-tier Initial Jobless Claims are due on Thursday, and expected to show a slight uptick in the number of new unemployment benefits seekers for the week ended November 15. US S&P Purchasing Managers Index (PMI) activity figures will be the number to watch this week, but won’t be dropping on investors until Friday.
EUR/USD price forecast
EUR/USD has backslid nearly 6.5% top-to-bottom from September’s peak just above 1.1200, bottoming out near the 1.0500 handle before an anemic recovery into 1.0600. Despite a near-term upswing, Fiber remains staunchly in bear country, with price action trading well below the 200-day Exponential Moving Average (EMA) near 1.0900.
A swell of bearish momentum in recent weeks has kicked the 50-day EMA below the long-run moving average, and is now poised for a decline into 1.0800. If the current bullish play runs out of steam, both buyers and sellers should expect that to occur somewhere near the still-falling 50-day EMA.
EUR/USD daily chartEuro FAQs What is the Euro?
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%). What is the ECB and how does it impact the Euro?
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde. How does inflation data impact the value of the Euro?
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money. How does economic data influence the value of the Euro?
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy. How does the Trade Balance impact the Euro?
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
01:50 Japan Exports (YoY) registered at 3.1% above expectations (2.2%) in October
Japan Exports (YoY) registered at 3.1% above expectations (2.2%) in October
01:50 Japan Imports (YoY) came in at 0.4%, above forecasts (-0.3%) in October
Japan Imports (YoY) came in at 0.4%, above forecasts (-0.3%) in October
01:50 Japan Merchandise Trade Balance Total registered at ¥-461.2B, below expectations (¥-360.4B) in October
Japan Merchandise Trade Balance Total registered at ¥-461.2B, below expectations (¥-360.4B) in October
01:43 Ukraine hits Russia with US ATACMS missiles, Moscow says
Ukraine used US ATACMS missiles to strike Russian territory on Tuesday, the Russian government said, marking a significant uptick in hostilities on the 1,000th day of the conflict, per Reuters.
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Ukraine used US ATACMS missiles to strike Russian territory on Tuesday, the Russian government said, marking a significant uptick in hostilities on the 1,000th day of the conflict, per Reuters.
Russian President Vladimir Putin sent a message to Washington by signing a new nuclear doctrine on Tuesday. It lowers the threshold for Russia to use nuclear weapons, in addition to responding to attacks on its territorial integrity. The US said the update to the nuclear doctrine was no surprise and rejected "more of the same irresponsible rhetoric from Russia.” Market reaction At the time of writing, the gold price (XAU/USD) is trading 0.03% higher on the day to trade at $2,634. Gold FAQs Why do people invest in Gold? Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government. Who buys the most Gold? Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves. How is Gold correlated with other assets? Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal. What does the price of Gold depend on? The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Russian President Vladimir Putin sent a message to Washington by signing a new nuclear doctrine on Tuesday. It lowers the threshold for Russia to use nuclear weapons, in addition to responding to attacks on its territorial integrity. The US said the update to the nuclear doctrine was no surprise and rejected "more of the same irresponsible rhetoric from Russia.” Market reaction At the time of writing, the gold price (XAU/USD) is trading 0.03% higher on the day to trade at $2,634. Gold FAQs Why do people invest in Gold? Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government. Who buys the most Gold? Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves. How is Gold correlated with other assets? Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal. What does the price of Gold depend on? The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
01:43 GBP/USD churns below 1.27 ahead of UK CPI inflation print
GBP/USD churned chart paper just south of 1.2700 on Tuesday as Cable traders brace for a decently-sized UK data dump due on Wednesday, headlined by UK Consumer Price Index (CPI) inflation figures for October.
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The BoE put on a measured stance during its Monetary Policy Report Hearings on Tuesday, noting that interest rates are “moderately restrictive”, causing rate traders to price in less than 20% odds of another rate cut from the UK’s central bank this year.
Headline UK CPI inflation is expected to accelerate to 2.2% YoY in October from 1.7% the month before, while October’s MoM CPI figure is forecast to rise to 0.5% from a flat 0.0%. Core UK CPI inflation is still expected to chill further to 3.1% to 3.2% YoY.
UK Producer Price Index (PPI) business inflation figures are also due on Tuesday, alongside UK Retail Sales numbers, giving GBP traders plenty of data to chew on all at once. US economic data releases remain thin in the front half of the trading week. Mid-tier Initial Jobless Claims are due on Thursday, and expected to show a slight uptick in the number of new unemployment benefits seekers for the week ended November 15. US S&P Purchasing Managers Index (PMI) activity figures will be the number to watch this week, but won’t be dropping on investors until Friday.
GBP/USD price forecast
Despite finding a near-term floor in bids, GBP/USD is still leaning into the bearish camp with price action grappling with chart paper south of the 1.2700 handle, below the 50-day Exponential Moving Average (EMA) near 1.2850. The pair has lost 6.23% top-to-bottom from September’s pean of 1.3434.
GBP/USD daily chartPound Sterling FAQs What is the Pound Sterling?
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE). How do the decisions of the Bank of England impact on the Pound Sterling?
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects. How does economic data influence the value of the Pound?
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall. How does the Trade Balance impact the Pound?
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
01:20 USD/CAD softens to near 1.3950 on hotter Canadian CPI data, eyes on geopolitical risks
The USD/CAD pair trades with mild losses around 1.3955 during the early Asian session on Wednesday.
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Reuters reported late Tuesday that Ukraine used US ATACMS to strike Russian territory for the first time, marking a significant uptick in hostilities on the 1,000th day of the conflict. The immediate reaction in markets faded when Russian Foreign Minister Sergei Lavrov said that the government would "do everything possible" to avoid the onset of nuclear war. The US said that it had not adjusted its nuclear posture in response. Investors will closely monitor the developments surrounding the geopolitical risks. Any signs of escalation could boost the safe-haven flows, benefiting the Greenback.
On the Loonie front, traders trim their bets on a jumbo rate cut by the Bank of Canada (BoC) in December after Canada's annual inflation rate rose more than expected in October. Data released by Statistics Canada on Tuesday showed that the country’s Consumer Price Index (CPI) rose by 2.0% YoY in October, compared to a 1.6% gain in September, hotter than the market expectations of a 1.9% increase. On a monthly basis, the CPI increased by 0.4% versus -0.4% prior and above the market consensus of 0.3%.
The markets are now pricing in nearly 26% odds of a 50 basis point (bps) rate cut by the BoC next month, down from 37% before the CPI data release. Traders will take more cues from the Canadian Gross Domestic Product (GDP) data next week and employment data early next month, which might influence the BoC’s decision on the size of the rate reduction. Canadian Dollar FAQs What key factors drive the Canadian Dollar? The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar. How do the decisions of the Bank of Canada impact the Canadian Dollar? The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive. How does the price of Oil impact the Canadian Dollar? The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD. How does inflation data impact the value of the Canadian Dollar? While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar. How does economic data influence the value of the Canadian Dollar? Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
Reuters reported late Tuesday that Ukraine used US ATACMS to strike Russian territory for the first time, marking a significant uptick in hostilities on the 1,000th day of the conflict. The immediate reaction in markets faded when Russian Foreign Minister Sergei Lavrov said that the government would "do everything possible" to avoid the onset of nuclear war. The US said that it had not adjusted its nuclear posture in response. Investors will closely monitor the developments surrounding the geopolitical risks. Any signs of escalation could boost the safe-haven flows, benefiting the Greenback.
On the Loonie front, traders trim their bets on a jumbo rate cut by the Bank of Canada (BoC) in December after Canada's annual inflation rate rose more than expected in October. Data released by Statistics Canada on Tuesday showed that the country’s Consumer Price Index (CPI) rose by 2.0% YoY in October, compared to a 1.6% gain in September, hotter than the market expectations of a 1.9% increase. On a monthly basis, the CPI increased by 0.4% versus -0.4% prior and above the market consensus of 0.3%.
The markets are now pricing in nearly 26% odds of a 50 basis point (bps) rate cut by the BoC next month, down from 37% before the CPI data release. Traders will take more cues from the Canadian Gross Domestic Product (GDP) data next week and employment data early next month, which might influence the BoC’s decision on the size of the rate reduction. Canadian Dollar FAQs What key factors drive the Canadian Dollar? The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar. How do the decisions of the Bank of Canada impact the Canadian Dollar? The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive. How does the price of Oil impact the Canadian Dollar? The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD. How does inflation data impact the value of the Canadian Dollar? While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar. How does economic data influence the value of the Canadian Dollar? Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
00:40 EUR/AUD Price Forecast: Dips below 50-day SMA, sellers eye 1.6200
On Tuesday, the EUR/AUD tumbled over 0.39% following the release of the last meeting minutes of the Reserve Bank of Australia (RBA).
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EUR/AUD Price Forecast: Technical outlook
Technically speaking, the EUR/AUD shifted bearishly biased after clearing the 50, 100, and 200-day Simple Moving Averages (SMAs). Additionally, the successive series of lower highs and lower lows indicated the trend is downwards, and if sellers clear the November 19 low of 1.6211, a test of 1.6200 would be up next. A break below the latter will expose the October 18 low of 1.6134 before the pair drops to October’s low of 1.6005.
However, a decisive break above the 50-day SMA at 1.6296 will immediately expose 1.6300. If surpassed, buyers could regain control if they clear the 100 and 200-day SMAs, each at 1.6368 and 1.6385, respectively.
EUR/AUD Price Chart – DailyEuro FAQs What is the Euro?
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%). What is the ECB and how does it impact the Euro?
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde. How does inflation data impact the value of the Euro?
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money. How does economic data influence the value of the Euro?
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy. How does the Trade Balance impact the Euro?
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
