• Eurostoxx +0.5%
• Germany DAX +0.6%
• France CAC 40 +0.5%
• UK FTSE flat
• Spain IBEX +0.5%
• Italy FTSE MIB +0.5%

This comes with US futures also in a better mood. S&P 500 futures are seen up 0.2% currently. For equities though, the overall mood now largely rests on Nvidia’s shoulders. The chip giant will be reporting earnings after the close today, so that’s the key risk event to watch out for.

This article was written by Justin Low at www.forexlive.com.

The pair is now back up to around 155.50 on the day, higher by 0.5%. It comes as the push and pull continues, after the fall yesterday was arguably stirred by geopolitical headlines triggering some risk aversion in broader markets. Treasury yields were pulled lower then but are now recovering, helping to underpin the bounce in USD/JPY as well.

10-year yields are now back up to 4.418%, after having been down to a low of around 4.339% yesterday. So, that is helping to amplify the recovery in USD/JPY. Of note, the pair is now managing to nudge back up above its 100-hour moving average (red line). That has proved to be a bit of a line in the sand earlier this week.

As such, in keeping above both that and the 200-hour moving average (blue line), the near-term bias in the pair is now more bullish. But this just takes us back to levels seen last week.

Broader dollar sentiment is still looking fairly tentative, so that makes it a tougher argument to say that we’ve returned to a strong bullish tilt for USD/JPY. There’s still a good push and pull feel this week regarding the post-election sentiment. So, I’d look to that first for any clues in identifying the potential for USD/JPY to carry on with its upside break since September.

This article was written by Justin Low at www.forexlive.com.

• Prior +1.7%
• Core CPI +3.3% vs +3.1% y/y expected
• Prior +3.2%

On the month itself, consumer prices were seen up 0.6% and core prices were seen up 0.4%. Both were seen just above estimates of 0.5% and 0.3% respectively. But the emphasis remains on core annual inflation, which came in higher than expected and also above the September reading.

This now reaffirms the BOE is most certainly going to keep the bank rate unchanged next month. GBP/USD is a touch higher on the day now, up 0.2% to 1.2705.

Looking at the details, services inflation remains a key sticking point. In core terms, services inflation was seen up slightly to 5.0% compared to 4.9% in the month before.

This article was written by Justin Low at www.forexlive.com.

• Prior -0.5%

Producer prices were seen up compared to the previous month but year-on-year, remain down by 1.1%. Looking at the details, there were increases in the price for capital goods (+0.2%), consumer goods (+0.2%), and durable goods (+0.2%). This is offset slightly by a decline in prices for intermediate goods (-0.3%).

This article was written by Justin Low at www.forexlive.com.

Global Markets:

•  Asian Stock Markets : Nikkei down 0.09%, Shanghai Composite up 0.65%, Hang Seng up 0.17% ASX down 0.57%
• Commodities : Gold at $2631.35 (0.04%), Silver at $31.1 (-0.48%), Brent Oil at $73.34 (0.16%), WTI Oil at $69.3 (0.19%)
• Rates : US 10-year yield at 4.414, UK 10-year yield at 4.443, Germany 10-year yield at 2.337

News & Data:

• (USD) Housing Starts  1.31M vs 1.34M expected
• (USD) Building Permits 1.42M vs 1.44M expected
• (CAD) CPI m/m 0.4% vs 0.3% expected
• (CAD) Median CPI y/y 2.5% vs 2.4% expected
• (CAD) Trimmed CPI y/y 2.6% vs 2.4% expected

Markets Update:

Asia-Pacific markets traded mostly lower on Wednesday amid volatility, reflecting mixed signals from Wall Street and escalating geopolitical tensions between Ukraine and Russia.  

Investors evaluated Japan’s October trade data, which showed export growth of 3.1% year-over-year, surpassing expectations and recovering from a 1.7% decline in September. Imports also outperformed estimates, rising 0.4%, though lower than September’s 2.1% increase. Japan’s Nikkei 225 declined 0.16% to close at 38,352.34, while the Topix slipped 0.43% to 2,698.29.  

In other Asian markets, Hong Kong’s Hang Seng index rose 0.24%, and Mainland China’s CSI 300 edged up 0.26%. China’s central bank maintained its benchmark lending rates after a cut in October. South Korea’s Kospi gained 0.42% to 2,482.29, though the smaller Kosdaq dropped 0.47% to 682.91. Meanwhile, Australia’s S&P/ASX 200 fell 0.57% to 8,326.3.  

Overnight, U.S. markets offered a mixed performance. The Nasdaq rose 1.04% to 18,987.47, and the S&P 500 climbed 0.4% to 5,916.98. However, the Dow Jones Industrial Average slipped 0.28%, losing 120.66 points to close at 43,268.94.  

Upcoming Events: 

• 03:30 PM GMT – USD Crude Oil Inventories

The post Wednesday 20th November 2024: Asia-Pacific Markets Decline Amid Geopolitical Tensions first appeared on IC Markets | Official Blog.

IC Markets Europe Fundamental Forecast | 20 November 2024

What happened in the Asia session?

It was a relatively quiet session as the dollar index (DXY) hovered above 106 while spot prices for gold stalled under the $2,650/oz-mark. This precious metal pulled back towards $2,620/oz but it should remain elevated in the latter part of the day.

What does it mean for the Europe & US sessions?

Headline consumer inflation fell under the Bank of England’s (BoE) target of 2% in September for the first time since April 2021 while the core remained stubbornly sticky at 3.2% YoY – headline CPI came in at 1.7% YoY. However, October’s forecast of 2.2% points to an acceleration in headline CPI and should prices surge higher, demand for the pound is likely to spike before the start of the European trading hours.

ECB President Christine Lagarde will be delivering her opening remarks at the ECB Conference on Financial Stability and Macroprudential Policy in Frankfurt following yesterday’s inflation result that showed headline CPI accelerating from 1.7% to 2.0% YoY in October. Traders will be looking to see if she passes any remarks on the outlook for future monetary policy action based on the latest inflation data and should brace themselves for higher volatility during this event.

The Dollar Index (DXY)

Key news events today

FOMC Member Bowman Speaks (5:15 pm GMT)

What can we expect from DXY today?

Federal Reserve Governor Michelle Bowman – the first FOMC official to dissent at September’s meeting – will be speaking on policymaking at the Forum Club of the Palm Beaches in West Palm Beach where audience questions are expected. Following the acceleration in consumer and producer prices last week along with robust retail sales, traders will be keeping a close ear on what Governor Bowman has to say at today’s event.

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted unanimously to lower the Federal Funds Rate target range by 25 basis points to 4.50% to 4.75% on 7th November.
• The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run and judges that the risks to achieving its employment and inflation goals are roughly in balance.
• The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.
• Recent indicators suggest that economic activity has continued to expand at a solid pace while labour market conditions have generally eased, and the unemployment rate has moved up but remains low.
• Inflation has made further progress toward the Committee’s 2% objective but remains somewhat elevated.
• In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.
• In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook and would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.
• In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities. Beginning in June, the Committee slowed the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion.
• The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities.
• Next meeting runs from 17 to 18 December 2024.

Next 24 Hours Bias

Medium Bearish

Gold (XAU)

Key news events today

FOMC Member Bowman Speaks (5:15 pm GMT)

What can we expect from Gold today?

Federal Reserve Governor Michelle Bowman – the first FOMC official to dissent at September’s meeting – will be speaking on policymaking at the Forum Club of the Palm Beaches in West Palm Beach where audience questions are expected. Following the acceleration in consumer and producer prices last week along with robust retail sales, traders will be keeping a close ear on what Governor Bowman has to say at today’s event. Gold prices are likely to face higher volatility later today.

Next 24 Hours Bias

Medium Bullish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The Aussie rose strongly as it climbed above the threshold of 0.6500 with ease on Tuesday. This currency pair continued its upward momentum as it approached 0.6550 as Asian markets came online – the support and resistance levels for today.

Support: 0.6450

Resistance: 0.6590

Central Bank Notes:

• The RBA kept the cash rate target unchanged at 4.35% on 5th November, marking the eighth consecutive pause.
• Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance but the forecasts published in today’s Statement on Monetary Policy (SMP) do not see inflation returning sustainably to the midpoint of the target until 2026.
• Headline inflation was 2.8% over the year to the September quarter, down from 3.8% over the year to the June quarter; this was as expected due to declines in fuel and electricity prices in the September quarter.
• However, this decline reflects a temporary cost of living relief; abstracting from these effects, underlying inflation (as represented by the trimmed mean) was 3.5% over the year to the September quarter and is still some way from the 2.5% midpoint of the inflation target.
• Growth in output has been weak as past declines in real disposable incomes and the ongoing effect of restrictive financial conditions continue to weigh on household consumption, particularly discretionary consumption.
• However, growth in aggregate consumer demand, which includes spending by temporary residents such as students and tourists, has remained more resilient.
• A range of indicators suggest that labour market conditions remain tight, and while conditions have been easing gradually, some indicators have recently stabilised.
• Employment grew strongly over the three months to September, by an average of 0.4% per month but the unemployment rate was 4.1% in September, up from the trough of 3.5% in late 2022.
• While headline inflation has declined substantially and will remain lower for a time, underlying inflation is more indicative of inflation momentum, and it remains too high while the November SMP forecasts suggest that it will be some time yet before inflation is sustainably in the target range and approaching the midpoint.
• This reinforces the need to remain vigilant to upside risks to inflation and the Board is not ruling anything in or out.
• Policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range and it will continue to rely upon the data and the evolving assessment of risks to guide its decisions.
• Next meeting is on 10 December 2024.

Next 24 Hours Bias

Medium Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

Falling demand for the greenback lifted the Kiwi above the 0.5900-level overnight. This currency pair was rising towards 0.5950 at the beginning of the Asia session and is likely to remain elevated – the support and resistance levels for today.

Support: 0.5840

Resistance: 0.5970

Central Bank Notes:

• The Monetary Policy Committee agreed to reduce the OCR by 50 basis points, bringing it down to 4.75% in October as inflation converges to target.
• The Committee assesses that annual consumer price inflation is within its 1 to 3% inflation target range and converging on the 2% midpoint.
• Economic activity in New Zealand is subdued, in part due to restrictive monetary policy while business investment and consumer spending have been weak, and employment conditions continue to soften.
• The economy is now in a position of excess capacity, encouraging price- and wage-setting to adjust to a low-inflation economy; lower import prices have assisted the disinflation.
• High-frequency indicators point to continued subdued growth in the near term, mostly due to weak consumer spending and business investment while labour market conditions are expected to ease further, with filled jobs and advertised vacancy rates continuing to decline.
• The Committee confirmed that future changes to the OCR would depend on its evolving assessment of the economy.
• Next meeting is on 27 November 2024.

Next 24 Hours Bias

Medium Bullish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

Stronger demand for the yen drove USD/JPY to a low of 153.40 on Tuesday. However, this currency pair rebounded sharply to climb above 154.50 overnight and continued its ascent as Asian markets came online – the support and resistance levels for today.

Support: 151.60

Resistance: 156.60

Central Bank Notes:

• The Policy Board of the Bank of Japan decided on 31st October, by a unanimous vote, to set the following guideline for money market operations for the intermeeting period:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0.25%.
  2. The Bank will embark on a plan to reduce the amount of its monthly outright purchases of JGBs so that it will be about 3 trillion yen in January-March 2026; the amount will be cut down by about 400 billion yen each calendar quarter in principle.
• The year-on-year rate of increase in the consumer price index (CPI, all items less fresh food) is likely to be at around 2.5% for fiscal 2024 and then be at around 2% for fiscal 2025 and 2026.
• While the effects of a pass-through to consumer prices of cost increases led by the past rise in import prices are expected to wane, underlying CPI inflation is expected to increase gradually, since it is projected that the output gap will improve and that medium- to long-term inflation expectations will rise with a virtuous cycle between wages and prices continuing to intensify.
• Comparing the projections with those presented in the previous Outlook for Economic Activity and Prices (Outlook Report), the projected real GDP growth rates are more or less unchanged. The projected year-on-year rate of increase in the CPI (all items less fresh food) for fiscal 2025 is somewhat lower due to factors such as the recent decline in crude oil and other resource prices.
• Japan’s economy is likely to keep growing at a pace above its potential growth rate, with overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies against the background of factors such as accommodative financial conditions.
• Next meeting is on 19 December 2024.

Next 24 Hours Bias

Weak Bullish

The Euro (EUR)

Key news events today

ECB President Lagarde Speaks (1:00 pm GMT)

What can we expect from EUR today?

ECB President Christine Lagarde will be delivering her opening remarks at the ECB Conference on Financial Stability and Macroprudential Policy in Frankfurt following yesterday’s inflation result that showed headline CPI accelerating from 1.7% to 2.0% YoY in October. Traders will be looking to see if she passes any remarks on the outlook for future monetary policy action based on the latest inflation data and should brace themselves for higher volatility during this event.

Central Bank Notes:

• The Governing Council reduced the three key ECB interest rates by 25 basis points on 17th October to mark the second successive rate cut.
• Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be decreased to 3.40%, 3.65% and 3.25% respectively.
• The incoming information on inflation shows that the disinflationary process is well on track while the inflation outlook is also affected by recent downside surprises in indicators of economic activity.
• Inflation is expected to rise in the coming months, before declining to target in the course of next year. Domestic inflation remains high, as wages are still rising at an elevated pace. At the same time, labour cost pressures are set to continue easing gradually, with profits partially buffering their impact on inflation.
• The Eurosystem no longer reinvests all of the principal payments from maturing securities purchased under the pandemic emergency purchase programme (PEPP), reducing the PEPP portfolio by €7.5 billion per month on average and the Governing Council intends to discontinue reinvestments under the PEPP at the end of 2024.
• The Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner and will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim and is not pre-committing to a particular rate path.
• Next meeting is on 12 December 2024.

Next 24 Hours Bias

Medium Bullish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

As demand for the dollar wanes further, USD/CHF fell towards 0.8800 on Tuesday. This currency pair was floating around 0.8820 at the beginning of the Asia session and should continue to edge lower as the day progresses – these are the support and resistance levels for today.

Support: 0.8800

Resistance: 0.8900

Central Bank Notes:

• The SNB eased monetary policy by lowering its key policy rate by 25 basis points for the third consecutive meeting, going from 1.25% to 1.00% in September.
• Inflationary pressure has again decreased significantly compared to the previous quarter, reflecting the appreciation of the Swiss franc over the last three months.
• Inflation in the period since the last monetary policy assessment was lower than expected, standing at 1.1% in August compared to 1.4% in May.
• The new conditional inflation forecast is significantly lower than that of June: 1.2% for 2024, 0.6% for 2025 and 0.7% for 2026, based on the assumption that the SNB policy rate is 1.0% over the entire forecast horizon.
• Swiss GDP growth was solid in the second quarter of 2024 as momentum in the chemicals/pharmaceuticals industry was particularly strong.
• However, growth is likely to remain rather modest in the coming quarters due to the recent appreciation of the Swiss franc and the moderate development of the global economy.
• The SNB anticipates GDP growth of around 1% this year while currently expecting growth of around 1.5% for 2025.
• Further cuts in the SNB policy rate may become necessary in the coming quarters to ensure price stability over the medium term.
• Next meeting is on 12 December 2024.

Next 24 Hours Bias

Weak Bearish

The Pound (GBP)

Key news events today

CPI (7:00 am GMT)

What can we expect from GBP today?

Headline consumer inflation fell under the Bank of England’s (BoE) target of 2% in September for the first time since April 2021 while the core remained stubbornly sticky at 3.2% YoY – headline CPI came in at 1.7% YoY. However, October’s forecast of 2.2% points to an acceleration in headline CPI and should prices surge higher, demand for the pound is likely to spike before the start of the European trading hours.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 8 to 1 to reduce the Bank Rate by 25 basis points, to 4.75% on 7th November 2024 – one member preferred to maintain the Bank rate at 5.0%.
• The MPC also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes, and financed by the issuance of central bank reserves, by £100B over the next 12 months to a total of £558B, starting in October 2024.
• Twelve-month CPI inflation fell to 1.7% in September but is expected to increase to around 2.5% by the end of the year as weakness in energy prices falls out of the annual comparison; services consumer price inflation has declined to 4.9%.
• CPI inflation is expected to increase to around 2.75% by the second half of 2025 as weakness in energy prices falls out of the annual comparison, revealing more clearly the continuing persistence of domestic inflationary pressures.
• The MPC’s latest projections for activity and inflation are also set out in the accompanying November Report; this forecast is based on the second case where CPI inflation is projected to fall back to around the 2% target in the medium term as a margin of slack emerges later in the forecast period that acts against second-round effects in domestic prices and wages.
• GDP had grown by 0.5% in 2024 Q2, 0.2% weaker than had been expected in the August Report, and 0.1% weaker than the earlier outturn had indicated at the time of the MPC’s previous meeting. Through the second half of 2024, GDP was projected to grow at a somewhat slower rate than in Q2 – headline GDP growth is expected to fall back to its recent underlying pace of around 0.25% per quarter over the second half of this year.
• The combined effects of the measures announced in Autumn Budget 2024 are provisionally expected to boost the level of GDP by around 0.75% at their peak in a year’s time, relative to the August projections, while the Budget is provisionally expected to boost CPI inflation by just under 0.5% at the peak.
• Annual private sector regular average weekly earnings growth has continued to fall but remained elevated at 4.8% in the three months to August; the MPC judges that the labour market continues to loosen, although it appears relatively tight by historical standards.
• Based on the evolving evidence, a gradual approach to removing policy restraint remains appropriate but monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further.
• The Committee continues to monitor closely the risks of inflation persistence and will decide the appropriate degree of monetary policy restrictiveness at each meeting.
• Next meeting is on 19 December 2024.

Next 24 Hours Bias

Weak Bullish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

Hotter-than-expected consumer inflation data sparked huge demand for the Loonie as USD/CAD dived nearly 0.5% to plunge as low as 1.3955 overnight. Overhead pressures remain firmly in place as this currency pair slid below 1.3950 at the beginning of the Asia session – these are the support and resistance levels for today.

Support: 1.3850

Resistance: 1.4090

Central Bank Notes:

• The Bank of Canada reduced its target for the overnight rate by 50 basis points bringing it down to 3.75% while continuing its policy of balance sheet normalization on 23rd October; this marked the fourth consecutive meeting where rates were reduced.
• Canada’s economy grew at around 2% in the first half of the year and growth of 1.75% is expected in the second half; consumption has continued to grow but is declining on a per person basis while exports have been boosted by the opening of the Trans Mountain Expansion pipeline.
• Overall, the Bank forecasts GDP growth of 1.2% in 2024, 2.1% in 2025, and 2.3% in 2026 – as the economy strengthens, excess supply is gradually absorbed.
• The labour market remains soft with unemployment at 6.5% in September while wage growth remains elevated relative to productivity growth. Overall, the economy continues to be in excess supply.
• Headline CPI has declined significantly from 2.7% in June to 1.6% in September while shelter costs inflation remains elevated but has begun to ease; the preferred measures of core inflation are now below 2.5%.
• Excess supply elsewhere in the economy has reduced inflation in the prices of many goods and services while the drop in global oil prices has led to lower gasoline prices – these factors have all combined to bring inflation down.
• The Bank expects inflation to remain close to the target over the projection horizon, with the upward and downward pressures on inflation roughly balancing out; the upward pressure from shelter and other services gradually diminishes, and the downward pressure on inflation recedes as excess supply in the economy is absorbed.
• With inflation now back around the 2% target, the Governing Council decided to reduce the policy rate by 50 basis points to support economic growth and keep inflation close to the middle of the 1% to 3% range.
• If the economy evolves broadly in line with the latest forecast, further reduction of the policy rate can be expected but the timing and pace of additional reductions in the policy rate will be guided by incoming information and assessment of its implications for the inflation outlook.
• The Bank is committed to maintaining price stability for Canadians by keeping inflation close to the 2% target.
• Next meeting is on 11 December 2024.

Next 24 Hours Bias

Strong Bearish

Oil

Key news events today

EIA Crude Oil Inventories (3:30 pm GMT)

What can we expect from Oil today?

After rebounding sharply on Monday, crude oil prices were somewhat unchanged on Tuesday as a much larger-than-expected increase in the API stockpiles dampened demand following an escalation of geopolitical tensions between Russia and Ukraine as well as output disruptions from Europe’s highest producing oil field on Monday. WTI oil remained under $72 on Tuesday but could face higher volatility should tensions rise further in Europe. In addition, the EIA inventories could also add further spark to the mix as inventory data is released later today.

Next 24 Hours Bias

Weak Bullish

The post IC Markets Europe Fundamental Forecast | 20 November 2024 first appeared on IC Markets | Official Blog.

It is said that the two discussed the matter on the sidelines of the G20 summit, with Xi stating that China is ready to “consolidate” a strategic partnership with Germany. That before raising the matter of the tariffs imposed by the EU on Chinese-made EVs.

Xinhua also reports that China is looking to “resolve the differences through dialogue and consultation”. Adding that “it is hoped Germany will continue to play an important role in this regard”.

With Trump tariffs now a threat for both the EU and China, the ongoing dispute here is something that both sides would probably like to resolve to avoid further escalation in trade conflict. That especially with both sides still quite reliant on one another considering their fragile economic states.

This article was written by Justin Low at www.forexlive.com.

Sterling traders are gearing up for a busy session ahead, following a period of consolidation and relatively tight ranges over the past couple of days. Cable remains near recent lows, and while the overall movement of the dollar is likely to have a greater impact on the next breakout in Cable, tonight’s CPI numbers could prompt significant moves. Any result weaker than the expected 2.2% year-on-year print could lead to a swift challenge of the recent multi-month lows. Conversely, a stronger number might ease expectations of a Bank of England rate cut and trigger a pound rally.

Cable is currently trading just above these recent lows, with traders fading rallies over the past few sessions. However, a stronger CPI print could drive it higher toward the 200-day moving average at 1.2748 and possibly further to the trendline resistance near 1.2900. On the other hand, a reading below 2% (last month’s figure was 1.7%) might push it lower, with a clean break of 1.2600 opening the door to a deeper correction.

Resistance Levels:

• Resistance 2: 1.2902 – Trendline Resistance
• Resistance 1: 1.2748 – 200-Day Moving Average

Support Levels:

• Support 1: 1.2594 – November Low and Trendline Support
• Support 2: 1.2296 – 2024 Low

The post Trade Cable on the UK CPI Data first appeared on IC Markets | Official Blog.

The September report here was encouraging but all it did was help to reaffirm a 25 bps rate cut earlier this month. The BOE will next meet on 19 December and there will be two inflation reports between now and then. The first of which will be today and the second will be just a day before the policy meeting itself on 18 December.

Following the rate cut two weeks ago, BOE policymakers have been emphasising on a “gradualism” approach to cutting rates as the job is not done yet in the battle against inflation. That hints at a potential and arguably likely pause in December. However, said narrative will have to be driven by what we see in the data.

That makes today’s report the first big and real test of the above narrative.

The expectation is for headline annual inflation to come in higher at 2.2% in October, up from 1.7% in the month before. But core annual inflation is estimated to ease a little to 3.1%, down from 3.2% previously. The latter is of course the most important detail when it comes to the data release here.

As much as a further easing in core prices is a good thing for the BOE, it still being at around 3% is not quite a comfortable level to be cutting rates that aggressively. If you consider the level of services inflation, it’s definitely bothersome with that being closer to 5% in core terms still.

So, the BOE definitely has to manage policy accordingly and balance that out against the still ongoing inflation risks.

Looking to market pricing, traders are seeing ~81% odds of no change to policy in December. Therein lies the balance of risks for the pound going into the data release later.

Barring any surprises though, I would argue that it is a high bar to get the BOE to lean towards cutting rates again in December. It would require a considerable set of lower readings today and also for the November readings next month.

That is not to say that such a scenario won’t happen. But we will definitely need to see all the remaining data between now and the final policy decision next year to vindicate the BOE to cut rates further and get off their “gradualism” horse. Knowing central bankers, it’s tough to get them to change their minds. However, if need be, they will still spin the narrative to however they see fit to justify themselves being “right”.

This article was written by Justin Low at www.forexlive.com.

• Federal Reserve speeches on Wednesday from Cook, Collins, Barr, Bowman
• Barclays forecast GBP/USD to 1.30 and EUR/GBP to 0.80 over the coming quarters
• Kyle Bass says China setting up for a Taiwan invasion
• Chinese mutual fund houses cutting exchange-traded fund (ETF) fees
• Japan’s exports in October rebounded from a 43-month low – recap
• European Central Bank President Lagarde speaking Wednesday + Escriva & de Guindos
• Bank of England Deputy Governor Dave Ramsden speaking Wednesday
• Australia’s Fiscal Challenges: Treasurer Chalmers’ Economic Update
• Nomura flag higher tariffs, weaker global demand, more policy uncertainty to weigh on Asia
• ICYMI – China left benchmark lending rates unchanged for November, as expected
• PBOC sets USD/ CNY mid-point today at 7.1935 (vs. estimate at 7.2386)
• “Yen Weakens as Japan’s Verbal Warnings Appear to Be Losing Effectiveness”
• People’s Bank of China leaves its interest rates unchanged, as expected
• JP Morgan 2025 US outlook – unemployment rise, growth downshift, Core PCE infl still > 2%
• UK – Official statistics painting an overly pessimistic picture of labour market
• Australian Leading Index first clear ‘above-trend’ result since November 2023
• Japan October trade balance -461bn yen (expected -360bn yen)
• Former Fed Reserve Gov Warsh for Treasury Secretary? On irresponsible government spending
• US federal govmt debt to rocket to 122% of GDP – higher volatility, higher interest rates
• Trump said to consider Crypto lawyer Teresa Goody Guillén to lead SEC Chair
• Despite the trend higher in the US 10 year Treasury yield stocks have further 2024 upside
• ICYMI – Chinese vessel spotted where Baltic Sea cables were severed
• Forexlive Americas FX news wrap 19 Nov: CAD moves higher w/higher CPI. USD is mixed.
• Oil – private survey of inventory shows a large headline crude oil build vs expectations
• US broader indices close higher. Dow industrial average moves lower.
• Fed’s Barr speaking, doesn’t comment on the economy or monetary policy
• Trade ideas thread – Wednesday, 20 November, insightful charts, technical analysis, ideas

USD/JPY
ticked net higher during the session, breaching above 155.00 again.
News flow from Japan was quiet with, most notably, nothing in the way
of verbal intervention from Japanese authorities to slow the yen’s fall.

From
the data calendar we had Japanese trade data for October. These
showed a rise for exports y/y during the month, rebounding from a
43-month low in September.

There
was activity in China. China’s unchanged monthly loan prime rate
(LPR) fixings left the one-year LPR at 3.1%, and the five-year at
3.6%, after 25 bp cuts to each last month. The on-hold decisions were
a unanimous expectation.

• USD/CNH
  climbed after the People’s Bank of China set the daily USD/CNY
  reference rate about 450 points lower than the neutral estimate of
  7.2385. The PBoC is seeking to prop up the yuan (damping USD/CNY) in
  this way but markets are taking it lower regardless (against the super USD at least!).
• Fees
  for ETF were cut, another effort to support stock markets.

***

Major
FX tracked limited ranges with some USD weakness early (EUR, GBP,
AUD, NZD, CAD all higher before retracing).

This article was written by Eamonn Sheridan at www.forexlive.com.

Howard Lutnick has been helping to run the transition team for Pres. Trump and Punchbowl is now reporting that Trump is set to name him the head of the Commerce Department. Lutnick had been lobbying for Treasury Secretary with Elon Musk supporting him as well.

However, there was some rumblings that Trump did not like the self-promotion for the key post. .

So what is the state of the search for the Treasury post?

• Scott Bessent is being touted but not without criticism: According to sources, he has been targeted for allegedly poor returns at his hedge fund, though his successful bets for George Soros bolster his reputation.
• Alternative Candidates: Trump is expanding the search, considering Kevin Warsh, Marc Rowan, Bill Hagerty, and Robert Lighthizer. However, Warsh has gained traction, with prediction markets and holds a sizeable lead
• Policy Differences: Tariffs and trade policies remain central, with Lutnick aligning closely with Trump’s economic agenda. Crypto is also a major initiative.

Polymarket has Kevin Warsh now at 56% with Scott Bessent at 21%.

This article was written by Greg Michalowski at www.forexlive.com.

DXY (US Dollar Index):

Potential Direction: Bullish
Overall momentum of the chart: Bullish

Price could potentially make a bullish bounce off the pivot and rise toward the 1st resistance

Pivot: 105.27
Supporting reasons: Identified as pullback support that aligns with 50% Fibonacci retracement, indicating a potential area where buying interests could pick up to stage a rebound.

1st support: 104.33
Supporting reasons: Identified as an overlap support that aligns with the 78.6% Fibonacci retracement, indicating a potential level where price could find support once more.

1st resistance: 106.42
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

EUR/USD:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

Price could potentially make a bearish reaction off the pivot and drop toward the 1st support 

Pivot: 1.0653
Supporting reasons: Identified as an overlap resistance close to 38.2% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 1.0519

Supporting reasons: Identified as multi-swing low support, indicating a potential level where price could find support once more.

1st resistance: 1.0770
Supporting reasons: Identified as a pullback resistance that aligns with the 61.8% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

EUR/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Price could potentially make a bearish continuation toward the 1st resistance.

Pivot: 165.01
Supporting reasons: Identified as an overlap resistance, indicating a potential area where selling pressures could intensify.

1st support: 163.88

Supporting reasons: Identified as a pullback support, indicating a potential level where price could find support once more.

1st resistance: 166.67
Supporting reasons: Identified as a swing high resistance, indicating a potential area that could halt any further upward movement.

EUR/GBP:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

Price could potentially make a bearish reaction off the pivot and drop toward the 1st support 

Pivot: 0.8387
Supporting reasons: Identified as a pullback resistance close to 61.8% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 0.8303
Supporting reasons: Identified as an overlap support, indicating a potential level where price could find support once again.

1st resistance: 0.8443
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

GBP/USD:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

Price could potentially make a bearish reaction off the pivot and drop toward the 1st support 

Pivot: 1.2796
Supporting reasons: Identified as an overlap resistance close to 38.2% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 1.2609

Supporting reasons: Identified as an overlap support, indicating a potential level where price could find support once more.

1st resistance: 1.2863
Supporting reasons: Identified as a pullback resistance close to 61.8% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

GBP/JPY:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Price could potentially make a bearish reaction off the pivot and drop toward the 1st support 

Pivot: 196.70
Supporting reasons: Identified as a pullback resistance close to 61.8% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 194.48

Supporting reasons: Identified as a swing low support, indicating a potential level where price could again find support.

1st resistance: 198.42
Supporting reasons: Identified as a multi swing high resistance that aligns, indicating a potential area that could halt any further upward movement.

USD/CHF:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

Price could potentially make a bullish bounce off the pivot and rise toward the 1st resistance

Pivot: 0.8777
Supporting reasons: Identified as pullback support that aligns with 50% Fibonacci retracement, indicating a potential area where buying interests could pick up to stage a rebound

1st support: 0.8700
Supporting reasons: Identified as an overlap support, indicating a potential level where price could find support once more.

1st resistance: 0.8911
Supporting reasons: Identified as a multi-swing high resistance, indicating a potential area that could halt any further upward movement.

USD/JPY:

Potential Direction: Bearish

Overall momentum of the chart: Bullish

Price could potentially make a bearish continuation toward the 1st resistance.

Pivot: 155.68
Supporting reasons: Identified as an overlap resistance close to 61.8% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 153.54
Supporting reasons: Identified as an overlap support that aligns with the 61.8% Fibonacci retracement, indicating a potential level where price could find support once again.

1st resistance: 156.59
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

USD/CAD:

Potential Direction: Bullish
Overall momentum of the chart: Neutral

Price is trading close to the pivot and could potentially make a bullish bounce off this level to rise toward the 1st resistance.

Pivot: 1.3953
Supporting reasons: Identified as an overlap support that aligns with a confluence of Fibonacci levels i.e. the 23.6% and 50% retracements, indicating a potential area where buying interests could pick up to resume the uptrend.

1st support: 1.3838
Supporting reasons: Identified as an overlap support that aligns with a 38.2% Fibonacci retracement, indicating a key level where price could find support once more.

1st resistance: 1.4043
Supporting reasons: Identified as a pullback resistance that aligns with a 61.8% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

AUD/USD:

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Price has made a bearish reversal off the pivot and could potentially fall towards the 1st support.

Pivot: 0.6542
Supporting reasons: Identified as an overlap resistance that aligns close to a 23.6% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 0.6448
Supporting reasons: Identified as a swing-low support that aligns close to a 161.8% Fibonacci extension, suggesting a key support area where price could find support once again.

1st resistance: 0.6678
Supporting reasons: Identified as a swing-high resistance that aligns close to a 50% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

NZD/USD

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Price is rising towards the pivot and could potentially make a bearish reversal off this level to fall towards the 1st support.

Pivot: 0.5931
Supporting reasons: Identified as an overlap resistance that aligns close to a 38.2% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 0.5839
Supporting reasons: Identified as a swing-low support, suggesting a key support area where price could find support once more.

1st resistance: 0.6025
Supporting reasons: Identified as an overlap resistance that aligns close to a 38.2% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

US30 (DJIA):

Potential Direction: Bearish
Overall momentum of the chart: Bearish

Price is rising towards the pivot and could potentially make a bearish reversal off this level to fall towards the 1st support.

Pivot: 43,879.76

Supporting reasons: Identified as an overlap resistance that aligns close to a 61.8% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 42,928.70

Supporting reasons: Identified as a swing-low support that aligns close to a 61.8% Fibonacci retracement, indicating a potential level where price could find support once again.

1st resistance: 44,396.85

Supporting reasons: Identified as a swing-high resistance that aligns close to the all-time high, indicating a potential area that could halt any further upward movement.

DE40 (DAX):

Potential Direction: Bearish
Overall momentum of the chart: Neutral

Price could rise towards the pivot and potentially make a bearish reversal off this level to fall towards the 1st support.

Pivot: 19,277.90
Supporting reasons: Identified as a swing-high resistance that aligns with a 100% Fibonacci projection, indicating a potential level where selling pressures could intensify.

1st support: 18,819.90
Supporting reasons: Identified as a swing-low support, indicating a key level where price could find support once more.

1st resistance: 19,508.40
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

US500 (S&P 500): 

Potential Direction: Bearish
Overall momentum of the chart: Neutral

Price is rising towards the pivot and could potentially make a bearish reversal off this level to fall towards the 1st support.

Pivot: 5,963.30

Supporting reasons: Identified as a pullback resistance that aligns close to a 61.8% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 5,837.60
Supporting reasons: Identified as a swing-low support that aligns close to a 61.8% Fibonacci retracement, indicating a potential level where price could find support again.

1st resistance: 6,018.10
Supporting reasons: Identified as a swing-high resistance that aligns close to the all-time high, indicating a potential area that could halt any further upward movement.

BTC/USD (Bitcoin):

Potential Direction: Bearish
Overall momentum of the chart: Neutral

Price has made a bearish reversal off the pivot and could potentially pull back towards the 1st support.

Pivot: 93,537.57
Supporting reasons: Identified as a pullback resistance, indicating a potential area where selling pressures could intensify.

1st support: 86,719.44
Supporting reasons: Identified as a pullback support that aligns close to a 23.6% Fibonacci retracement, indicating a potential level where price could find support once more.

1st resistance: 97,859.16
Supporting reasons: Identified as a resistance that aligns with a 161.8% Fibonacci extension, indicating a potential area that could halt any further upward movement.

ETH/USD (Ethereum):

Potential Direction: Bullish
Overall momentum of the chart: Neutral

Price is falling towards the pivot and could potentially make a bullish bounce off this level to rise towards the 1st resistance.

Pivot: 3,014.97
Supporting reasons: Identified as a pullback support that aligns close to 38.2% Fibonacci retracement, indicating a potential area where buying interests could pick up to stage a rebound.

1st support: 2,853.86
Supporting reasons: Identified as a pullback support that aligns close to 50% Fibonacci retracement, indicating a potential level where price could find support.

1st resistance: 3,374.82
Supporting reasons: Identified as a swing-high resistance, indicating a potential area that could halt any further upward movement.

WTI/USD (Oil):

Potential Direction: Bearish
Overall momentum of the chart: Neutral

Price could rise towards the pivot and potentially make a bearish reversal off this level to fall towards the 1st support.

Pivot: 70.38
Supporting reasons: Identified as a pullback resistance that aligns close to a 61.8% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 66.98
Supporting reasons: Identified as a multi-swing-low support, indicating a key level where price could find support once again.

1st resistance: 72.82
Supporting reasons: Identified as a multi-swing-high resistance that aligns with a 50% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

XAU/USD (GOLD):

Potential Direction: Bearish

Overall momentum of the chart: Bearish

Price could potentially make a bearish reversal off the pivot to drop towards the 1st support.

Pivot: 2641.22
Supporting reasons: Identified as a pullback resistance close to 38.2% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 2591.68

Supporting reasons: Identified as pullback support, indicating a potential level where price could find support.

1st resistance: 2710.14
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

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