GBPUSD is moving in an Ascending channel and the market has reached the higher high area of the channel
The UK Autumn Budget reveals tax reductions benefiting 27 million citizens, aligning with Prime Minister Rishi Sunak’s strategy to garner election support next year. The implementation of a fully expensed business plan in the UK is anticipated to attract £20 billion in business investments. Efforts to reduce interest rates in the coming year are expected to alleviate the national debt burden, while a deceleration in inflation is observed in the UK.
In the recent autumn, Chancellor Jeremy Hunt was initially brought in for damage control. However, with a slight expansion in his budget, he is now focused on fostering growth. Despite halving inflation and phasing out stimulus and support packages, the government has limited flexibility within the budget. Many anticipated this space would be utilized to alleviate tax burdens, and while tax cuts didn’t target income tax directly, they affected the percentage of national income tax for 27 million UK residents. This has set the stage for expectations that the upcoming pre-general election budget in the spring will feature the prime minister’s push for a reduction in the basic tax rate.
XAUUSD Gold price is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
Economists at UBS anticipate an increase in gold prices over the next 6-12 months, citing geopolitical conflicts and uncertainty in global banks’ interest rates as contributing factors.
The price of gold has surged to $2,000, prompting a detailed analysis by UBS economists regarding the future prospects of the precious metal. Gold is identified as a potentially effective hedge in the face of escalating geopolitical conflicts. Although there may be short-term choppiness due to uncertainty surrounding interest rates, investors interested in acquiring gold can explore the option of purchasing the metal through options. UBS recommends that investors currently holding long positions in gold should retain them, anticipating a recovery over the next 6-12 months.
XAGUSD Silver price is moving in the box pattern and the market has fallen from the resistance area of the pattern
According to ANZ Economists, the United States is expected to experience a soft landing in 2024, primarily due to the Federal Reserve’s gradual tightening, sluggish labor growth, and a diminishing structure in fiscal policy. The GDP growth forecast for the next year is 1.1%, a decrease from the previous projection of 2.4%. The upcoming elections in the following year may not significantly influence Federal Reserve policies, with expectations of rate cuts in the third quarter of 2024.
The United States has exceeded expectations in economic growth and is maintaining robust momentum heading into 2024. ANZ Bank economists present their baseline growth outlook for the coming year. Anticipating a gentle slowdown in 2024 due to the Federal Reserve’s assertive tightening measures, a decelerating labor market, and a diminishing impact from fiscal policy, we project that the GDP will increase by an average of 1.1% next year, compared to an estimated 2.4% in 2023. While the possibility of a brief period of mildly negative growth cannot be ruled out, this aligns with our expectation of a soft landing. We do not foresee a significant impact on growth or policy settings from next year’s presidential election, as the Fed operates independently and will continue to determine policy based on its assessment. We anticipate the commencement of rate cuts in Q3.
USDCAD is moving in an Ascending channel and the market has reached the higher low area of the channel
A temporary cessation of hostilities between Israel and Palestine has led to a decline in oil prices, subsequently impacting the value of the Canadian Dollar in the global market. Despite disappointment from Saudi Arabia and its reluctance to reduce production, the United States, with substantial oil inventories, is considering output cuts to stabilize oil prices at their current levels.
Oil prices are experiencing a sharp decline in the US trading session as markets reassess recent developments. The recent reassessment comes in the wake of a ceasefire between Israel and Palestine and substantial build in US stockpiles, as indicated by overnight data from the American Petroleum Institute. These factors are contributing to a significant drop in oil prices this Wednesday. Concurrently, the US Dollar is surging following the release of the latest Fed Minutes on Tuesday night. Although the absence of surprises, the unanimous agreement among all members not to adjust rates in the near future has caused a mild apprehension in the markets. This implies that the earlier optimism regarding potential rate cuts needs to be tempered. The recent Minutes reveal that market enthusiasm might have been a bit excessive, signaling the possibility of rising yields and a strengthening of the Greenback in the US Dollar Index.
EURCAD is moving in an Ascending channel and the market has reached the higher low area of the channel
There is a likelihood that OPEC+ may need to cancel this weekend’s meeting, given Saudi Arabia’s dissatisfaction with other countries’ reluctance to cut production in support of crude prices. The substantial build in stockpile numbers reported by the American Petroleum Institute on Tuesday evening, indicating a 9.047 million barrel increase, further underscores the trend of increasing US production. With both production and stockpiles on the rise in the US, OPEC will likely need to agree on more significant cuts. While efforts from Saudi Arabia may not be sufficient, a collaborative approach will be essential for OPEC+ to stabilize oil prices at their current levels.
EURUSD is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
Joachim Nagel, the president of the Bundesbank, stated that interest rates in the Eurozone have reached their peak, and any future rate hikes will be contingent on data.
The euro is gaining strength against its counterparts, driven by remarks from ECB President Lagarde, who suggested that rate cuts could be considered in 2024 if inflation cools down in the coming months. Meeting the inflation goal ahead of schedule is regarded as highly favorable. The possibility of rate cuts remains contingent on future data, as emphasized by other ECB members.
Bundesbank President Joachim Nagel remarked that interest rates in the Eurozone are nearing their peak. He clarified that decisions on further tightening would be contingent on economic data. While addressing an event in Milan, Nagel also noted that inflation is progressing in line with the European Central Bank’s target. The market participants eagerly anticipating the release of Eurozone HCOB PMI data and UK Global S&P PMI data on Thursday. These upcoming figures have the potential to induce volatility in the cross. Recent months have seen a greater-than-expected decline in inflation in the Eurozone, fueling market expectations of an imminent rate cut by the European Central Bank. However, ECB President Christine Lagarde, in her Tuesday statement, emphasized that the central bank is taking its time to assess inflation developments following a record streak of rate hikes.
Lagarde cautioned that while progress has been made, achieving victory is not guaranteed, and discussions about rate cuts are premature. Several ECB policymakers, including Bundesbank President Joachim Nagel and ECB Vice President Luis de Guindos, echoed the sentiment that the ECB’s decisions are data-dependent. They emphasized that economic data will dictate whether further tightening is appropriate and that it is premature to discuss rate cuts. Looking ahead to Thursday, market players will closely monitor the release of Eurozone and German HCOB PMI data. The Eurozone Manufacturing PMI for November is anticipated to increase to 43.4, while the Services PMI is expected to climb to 48.1.
EURJPY is moving in the Descending channel and the market has reached the lower high area of the channel
The Japanese Yen strengthened against its counterparts following dovish policy comments from the Federal Reserve and adverse domestic data affecting the US Dollar. The Bank of Japan is considering an interest rate hike in the first quarter of 2024.
The Japanese Yen retraced some of its recent gains against the US dollar today following the FOMC minutes, which reiterated a more cautious yet restrictive monetary policy stance by the Federal Reserve. The agreement between Israel and Hamas to pause fighting has somewhat limited the upside for the JPY from a safe haven perspective. The recent weakening of the USD could be advantageous for the Bank of Japan, potentially eliminating the need for intervention in FX markets if this trend persists. Japanese government officials stated early today that the economic outlook for Japan has been downgraded due to weakened domestic demand negatively affecting the yen.
Later in the day, key US economic data is expected, and it could reinforce a bearish outlook for the currency pair. Forecasts for both durable goods orders and Michigan consumer sentiment appear to be significantly lower. Jobless claims will also be closely watched after reaching 3-month highs last week. While minimal movement is expected in FX markets during tomorrow’s Thanksgiving holiday, Friday’s Japanese inflation figures will be crucial for short-term guidance on the pair and may influence current pricing for potential rate hikes starting in late 2024.
GBPNZD is moving in the Box pattern and the market has reached the support area of the pattern
This week, there is no significant data expected from New Zealand. The economic support from China is expected to boost New Zealand’s exports.
On the British Pound front, Bank of England Governor Andrew Bailey underscored that there is no immediate need to change the central bank’s policy on interest rates. Bailey expressed confidence that inflation is on track to return to the central bank’s 2% target. However, he noted that the ongoing conflict in the Middle East has added to the risk that inflation could rise again.
GBPCHF is moving in the Descending channel and the market has reached the lower high area of the channel
In 2022, the Swiss National Bank (SNB) decreased its foreign reserves from 950 billion Francs to 657 billion Francs. The Swiss Franc has strengthened as a result of the SNB’s increased selling of foreign currencies.
The Swiss Franc maintains its strength, driven by the ongoing CHF repatriation by the Swiss National Bank. The Swiss Franc continues to receive upward support as the SNB gradually reduces its foreign currency reserves, which peaked at CHF 950 billion in 2022. As of October, the SNB’s balance sheet of currency reserves has reached a seven-year low of CHF 657 billion.
AUDCHF is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
The Australian Dollar received a boost following a speech by RBA Governor Michelle Bullock, indicating a potential rate hike. However, concerns persist as inflation remains below expectations, and a rate hike may still be on the table if inflationary pressures persist. The Manufacturing, Services, and Composite PMI for Judo registered negative figures compared to previous data.
The Australian Dollar rebounded from recent losses as the US Dollar retreated after two consecutive days of gains. However, the AUDUSD pair experienced downward pressure, likely attributed to increased demand for the Greenback in the preceding session following the release of economic reports from the United States. Market activity remained subdued as traders prepared for the Thanksgiving Day holiday in the US on Thursday, with expectations of shortened trading sessions on Friday. Data from Thursday indicated signs of a slowdown in Australia’s economic activity for November. The preliminary Judo Bank Manufacturing PMI for the month was reported at 47.7, down from the previous month’s 48.2. Additionally, the Judo Bank Services PMI declined to 46.3 from the prior 47.9, and the Composite PMI decreased to 46.4 from the previous reading of 47.6.
Australia’s Westpac Leading Index for October contracted by 0.03%, contrasting with the previous 0.07% rise. The Reserve Bank of Australia’s meeting minutes revealed acknowledgment of a credible case against an immediate rate hike, but the board considered the case for tightening stronger due to increased inflation risks. Further tightening decisions would depend on data and risk assessment. The minutes emphasized the importance of preventing even a modest rise in inflation expectations. Board forecasts assumed one or two more rate rises, and the rise in house prices suggested that policy might not be overly restrictive. Chinese authorities are expected to support the real estate sector by drafting a list of 50 eligible developers, encompassing both private and state-owned entities. This list is anticipated to guide financial institutions in providing support through various means such as bank loans, debt, and equity financing. The Federal Open Market Committee meeting minutes revealed that members would consider tightening monetary policy further if incoming information indicates insufficient progress toward the Committee’s inflation objective. FOMC members unanimously agreed that policy should remain restrictive for some time until there is clear and sustainable evidence of inflation moving down toward the Committee’s target. In the US, Existing Home Sales Change for October declined by 4.1%, compared to the previous fall of 2.2%.
Don’t trade all the time, trade forex only at the confirmed trade setups.
Get more confirmed trade setups here: forexgdp.com/buy/