Today market outlook

[Zeologic]

USDCAD extends losses as Canadian CPI data comes in higher than forecast

Yesterday's USDCAD pair price drew a bearish candle with a long body continuing the previous bears candle. Price formed a high of 1.40358, a low of 1.39542 and close at 1.39548 near the middle band line.

Canada released CPI data on Tuesday showing higher than expected inflation. The actual data of the CPI report showed that headline inflation rose to 2%, faster than expectations of 1.9% and from 1.6% in September. Monthly headline inflation rose 0.4%, at the same pace as price pressures slowed in the previous month. Economists forecast monthly headline CPI to grow 0.3%.

Faster-than-expected inflation data may weigh on the BoC to cut rates more than usual, but Canadian employment data may be another consideration for easing, Canada's Unemployment Rate was at 6.5% in October, much higher than needed to maintain full employment level.

The Dollar Index (DXY) which tracks the USD currency is now down -0.4% at 106.187. Next, investors will wait for the Fed's next steps at the December meeting, with predictions that the Fed will cut interest rates 25 basis points to 4.25%-4.50% next month according to FedWatch tool data from the CME group.

Today investors are waiting for the UK CPI data, although it does not have a direct impact on the Canadian Dollar, but the correlation between currencies allows for an impact. It is estimated that the UK CPI will rise 2.2% from the previous 1.7%.

[Zeologic]

Silver failed to continue its increase, the price dropped after the market formed a Doji candle

Silver price drew a Doji candle on November 19 indicating an indecision market. The next day the price of Silver drops and draws a bearish candle. Price formed a high of 31,326 and a low of 30,767 and closed at 30,825.

Here there are differences in market patterns compared to gold. The price of gold appears to be trending upward for three consecutive days drawing a bull candle, in contrast to Silver which drew a bearish candle in the last candle.

It seems that the escalation of the Ukrainian and Russian wars is weighing on Silver because of the pessimistic outlook for Silver's use in industry. Tensions increased further after Joe Biden allowed Ukraine to use US-made long-range weapons to attack Russia. On the other hand, Russia changed its nuclear doctrine to relax the conditions for responding with nuclear weapons which could trigger the Armageddon war.

On the other hand, the lack of stimulus from the Chinese government caused demand for Silver from the solar panel industry to decline and weighed on Silver prices. Another report said Chinese-owned solar panel companies began reducing production as Trump's election victory raised the prospect of higher tariffs on the sector.

[Zeologic]

GBPUSD fell amid market expectations of a dovish Fed ease

GBPUSD yesterday drew a bearish candle continuing the previous day's decline. Price formed a high of 1.26594, a low of 1.25755, and closed at 1.25881. This decline further widens the distance between the Bollinger bands, indicating high market volatility.

The Pound Sterling's decline may have been triggered by traders' doubts about whether the Bank of England (BoE) will cut interest rates again at its December meeting considering that the UK Consumer Price Index (CPI) for October on Wednesday showed that price pressures were increasing faster than expected. According to Forexfactory UK CPI rose 2.3% from expected 2.2% and previous data revision of 1.7%. Meanwhile, the Monetary Policy Committee (MPC) projects inflation at 2.4% and 2.5% in November and December respectively.

Another pressure from the strengthening of the USD, the dollar index (DXY) today rose 0.38% from 106,461 to a high of 107,156 continuing the previous day's rise. On the other hand, investors are starting to reduce their forecasts for the Fed to lower interest rates at its December meeting because US President Donald Trump's inflationary, growth-oriented trade policy is predicted to lead to more gradual policy easing. According to the CME group's Fedwatch Tool, the possibility of the Fed lowering interest rates by 25 basis points of 56.1% and the possibility of interest rates remaining unchanged is 43.9%.

Boston Fed Bank President Susan Collins expressed the need to gradually push monetary policy towards a neutral range from the current restrictive state. While the US Unemployment Claims data was lower than expected which was also the reason for the strengthening of the USD, the actual data was 213k from the forecast of 220k and previous data of 219k.

Today, investors will focus on UK retail sales and PMI data which will be released today.

[Zeologic]

NZDUSD decline reached 0.58160 before RBNZ interest rate decision

The New Zealand Dollar (NZD) experienced three consecutive days of decline last week. At the weekend the price drew a bearish candle with a high of 0.58602, a low of 0.58160, and a close at 0.58295.

Some of the reasons for the NZD's decline are due to the USD's overall strong performance amid expectations that the Fed will follow a gradual rate cut path. This forecast has been triggered by President Trump's protectionist policy of imposing import tariffs which could trigger inflation.

Deutsche Bank analysts estimate that the Fed will maintain interest rates above 4% throughout 2025 because the import tariff policy is likely to encourage growth of 2.5% next year and cause inflation above 2.5% until 2026.

According to the CME group's FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points is 52.7% and the probability of interest rates remaining unchanged is 47.3% in December.

On the other hand, the RBNZ is predicted to cut interest rates by 50 basis points on Thursday from 4.75% to 4.25%. This forecast is the reason that the prospect of a decline in NZDUSD is still possible.

[Zeologic]

Scott Bessent was chosen by Trump to be Minister of Finance, the price of gold dropped more than $30

Yesterday's gold price fell from a high of $2721 to a low of $2615. Price drew a bearish long-body candle close at $2625. The gold price has crossed the middle band and MA 50 from the upside.

The decline in gold prices was in line with the news that US President Donald Trump chose Scott Bessent at the weekend as Minister of Finance in his next cabinet. Bessent is an experienced Wall Street professional and is seen as a safe bet by the market, thereby reducing safe-haven flows into Gold. Investors appear to think that Scott Bessent can ease some concerns about Trump's fiscal plan. It is hoped that Scott Bessent can reduce the budget deficit by 3% by 2028.

On the other hand, it is predicted that the Fed will reduce interest rates more slowly because of Trump's policies which could cause inflation. The CME FedWatch Tool assesses the probability of a 25 basis point (bp) rate cut by the Fed at its December 18 meeting at 56.1%. Probability 43.9% interest rate unchanged. The Dollar Index (DXY) is now at 106.913, down 0.54% from 107.940 which was previously at 108.071.

Meanwhile gold gets support from geopolitical risks due to fears of the outbreak of World War 3 after several NATO countries allowed Ukraine to use their weapons to target Russia.

Today investors' focus will be on the US CB Consumer Confidence news release which is predicted to rise to 111.8 from the previous 108.7.

[Zeologic]

Trump's tariff threats caused the Canadian dollar to fluctuate

USDCAD yesterday drew a long-axis bullish candlestick with a high of 1.4177, a low of 1.39799, and a close at 1.40547. The bullish candle that is formed depicts prices rising high and then facing drastic downward pressure to form a long wick. The weakening of the Canadian dollar even broke out the upper band line and left the line.

Previously USDCAD was trading in the price range of 1.39267 - 1.40177, but after Trump threatened that he would impose 25% tariffs on Canadian and Mexican imports, this has made the Canadian dollar weaken very dramatically. Trump's policy of attacking neighboring countries is predicted to reduce Canadian imports and reduce demand for buying Canadian dollars. Trump even threatened to impose an additional 10% on Chinese imports above 60%, this is predicted to greatly reduce Chinese imports, although it will likely increase inflation.

On the other hand, according to US Energy Information Bureau (EIA) data, the US is 52% dependent on Canadian crude oil, thus raising doubts about the potential negative political policy impact of Trump's tariff threats. Trump's move is expected to increase the price of goods and inflation in the US, which in turn will allow the Fed to slow down interest rate cuts more gradually. However, market projections that the Fed will probably cut interest rates by 25 basis points in December have not changed much. According to the CME group's FedWatch tool, there is a 62.8% chance that the Fed will cut interest rates by 25 basis points and a 37.2% chance that the Fed will leave interest rates unchanged.

Meanwhile, the BoC is predicted to cut interest rates by 25 basis points in December because growth is starting to pick up. The BoC in October lowered interest rates by 50 basis points from 4.25% to 3.75%.

[Zeologic]

Waiting for German inflation data EURUSD price is drawing a bulls candle

Yesterday the EURUSD pair drew a bulls candle and broke the previous high forming a high of 1.05871, low of 1.04738 close at 1.05655 on FXOpen. The EURUSD pair rose after consolidating movements in the range after the gap on Monday. The pair's rise seemed to be fueled by a fall in the USD as investors weighed Donald Trump's recent statement on new tariff policies targeting imports from China, Mexico, Canada and the European Union.

The decline in investor interest in the USD was seen from the dollar index (DXY) which fell 0.77% from a high of 106,924 to a low of 105,856, extending the previous decline.

While the Fed is expected to reduce interest rates more slowly because Trump's policies are predicted to cause inflation, this is because more expensive imports to obtain industrial raw materials cause production costs to rise and companies may raise product prices.

According to the CME group's FedWatch tool probability target rate at the December Fed meeting, there is a 66.5% chance that the Fed will cut interest rates by 25 basis points, and a 44.5% chance that the Fed will not change interest rates. High interest rates encourage support in the currency as treasury yields are more promising.

Fed Chair Jerome Powell has taken a cautious approach, signaling there is no immediate need for additional rate cuts.

Meanwhile, the current ECB interest rate of 3.40% has been lowered from the previous 3.65% in October according to data from Investing. Next today, investors will focus on German inflation data which is forecast at -0.2% from the previous 0.4%.

On the other hand, bank holidays in the US in observance of Thanksgiving Day may reduce trading volume in the market.

[Zeologic]

GBPJPY rebounded after a five-day decline.

GBPJPY drew a bull candle with a low of 181.197, a high of 192.457, close at 192.236. Price formed a bull candle with a long body engulfed by the previous candle reflecting weak rejection.

The GBPJPY pair started drawing a bear candle on November 21 reflecting the Japanese Yen gradually strengthening. The Japanese interest rate is now 0.25% which was updated on October 31 from previously unchanged at 0.25%. The yen is gearing up for Japanese inflation figures on Friday. Tokyo core Consumer Price Index (CPI) inflation is forecast to rise to 2.1% for the year ending November, compared to the previous period's 1.8%. Meanwhile, Japan's Unemployment Rate is also forecast to rise to 2.5% in November from 2.4%. While Retail Sales are forecast to rise from the previous 0.7% to 2.1%. The inflation data will be used by BoJ policy makers who may keep interest rates low for an indefinite time.

While the Bank of England interest rate is now at 4.75% since November 7 from 5.00% previously, the next interest rate decision is scheduled for December 19. Inflation is currently 2.3% from the target of 2%, which allows the BoE to be more cautious on the policy of cutting interest rates. Today the BoE will release M4 money supply data which calculates the Change in the total quantity of domestic currency in circulation and deposited in banks which is forecast to fall 0.4% from 0.6% previously.

In addition, Mortgage Approvals will also be released today which is forecast at 65k from 66k previously. This measures the number of new mortgages approved for home purchases during the previous month. BOE Gov Bailey Speaks will also later provide new clues that may provide hawkish or dovish statements for the December BoE interest rate.

[Zeologic]

The increase in gold prices was limited, profit-taking due to easing geopolitical risks.

The price of gold on Friday experienced a recovery, but profit-taking resulted in a gold sell-off bringing the price down. Gold drew a bull candle with a high of $2665, a low of $2633 close at $2650.

The price of gold last week tried to recover after the drop on November 25. However, gold's upward movement was limited by being swallowed by the previous bearish candlestick. The reduction in geopolitical risk tension between Israel and Hezbollah, which reached a ceasefire agreement, was one of the reasons gold fell 3% daily.

On the other hand, the weakening USD provided support for gold, helping XAU/USD maintain its gains in the middle of the week. The USD Index (DXY) fell to 105.615, extending its previous decline.

According to the US Census Bureau Durable Goods Orders increased by 0.2% MoM in October, missing market expectations of 0.5%. Meanwhile, the US Department of Labor announced that Initial Jobless Claims fell to 213k in the week ended November 23 from 215k in the previous week. The Personal Consumption Expenditure (PCE) Price Index, the Federal Reserve's preferred gauge of inflation, rose 2.3% year-on-year, up from 2.1% in September and line with market consensus, while Annual core PCE inflation edged up to 2.8% from 2.7%.

Today investors will focus on US PMI data, ISM Manufacturing PMI is expected to rise to 47.7 from the previous 46.5.

[Zeologic]

CHFJPY extends losses ahead of Swiss CPI release

CHFJPY price yesterday drew a bearish candle extending its previous decline. Yesterday the price formed a high of 170,353, a low of 168,197, closed at 168,709.

On a weekly time frame, the decline starting at the end of October indicates the strengthening of the Japanese Yen against the Swiss franc.

The Japanese Yen currency tends to strengthen against other currencies including the USD and Euro. A stronger-than-expected rise in inflation in Tokyo in November, boosting expectations of the Bank of Japan's interest rate hike at next month's policy meeting.

Japan's capital spending implied lower investment than expected and was much lower than previous data. Meanwhile, the Final Manufacturing PMI showed data as expected at 49.0, the same as the previous data revision.

Apart from investors focusing on Swiss CPI data, today they will also focus on American JOLTS (Job Openings and Labor Turnover Survey) data which is expected to rise to 7.49M from the previous 7.44M.

Meanwhile, according to the Swiss Federal Statistical Office, the Swiss CPI has experienced a downward graph with data at the end of October at 0.6% from the previous 0.8%. The decline in inflation may be a consideration for the central bank to cut interest rates. The Swiss National Bank (SNB) interest rate is now 1% from the previous 1.25% updated on September 26.

[Zeologic]

AUDUSD moves in a range ahead of the release of ADP data

Yesterday the AUDUSD pair drew a bearish candle with a high of 0.65129, a low of 0.64426, and closed at 0.64734 on FXOpen. In the three weeks of movement, this pair tends to create a movement pattern in the range of 0.64336 - 0.65493.

On the fundamental front, the Australian dollar got a boost from gains in Australian exports such as copper prices, while iron ore prices also continued their ongoing recovery, albeit at a slower pace. On the other hand, the threat of US tariffs on China and doubts about the effectiveness of China's stimulus are predicted to be obstacles to Australia's commodity-driven economy.

The RBA seems to still be cautious about interest rates and maintained interest rates at 4.35% in November, it seems they are still concerned about the economic slowdown that shapes its policy. Australia's annual inflation rate fell to 2.8% in the third quarter of 2024 from 3.8% in the second quarter. The declining inflation trend gives the RBA expectations of lowering interest rates in 2025.

Furthermore, the Australian Dollar is also overshadowed by the possibility of a Fed interest rate cut. According to the CME group's Fedwatch tool, the possibility of the Fed reducing interest rates by 25 basis points is 70.3%, while the possibility of interest rates remaining unchanged is only 29.7%. This cut may indirectly provide support to the Australian dollar.

Today we are waiting for Australian GDP data, which is projected to rise 0.5% from the previous 0.2%. The Australian Bureau of Statistics reports GDP rose 1.5% in 2023-24 and The Australian economy rose 0.2% in seasonally adjusted chain volume measures.

Today will also be the release of the ADP Non-Farm Employment Change which often has a high impact on the market which is predicted to fall by 152k from the previous 233k.

[Zeologic]

Silver rises when gold is sideways

Gold and Silver are often in line as their movements are correlated with each other, but yesterday there was a slight difference in the price patterns of these two precious metals.

Silver rises drawing a long body bull candle with a long wick at the bottom of the candle. Price formed a low of 30,457 from open 31,088, high 31,472 closed at 31,287, while gold tends in a sideways market.

The soaring Silver price was in line with US ADP Employment Change data released yesterday showing the actual data was lower than expected. The agency reported that the private sector hired 146k new workers, slightly missing estimates of 150k but significantly lower than the previous release of 184k, revised down from 233k.

On the other hand, the dollar index DXY was slightly up at 106.720 from 106.090, although this was a limited increase near the middle band line.

Another factor is the geopolitical risk that the Iranian and Israeli ceasefire still has the potential to fail. According to Reuters, an internal Hamas statement reported that the group had information that Israel intended to carry out a hostage rescue operation similar to Israel's nuseirat operation in June in Gaza.

Investors today will focus on Fed Chair Powell Speaks which can provide an overview of the Fed's future interest rates. According to the CME group's Fedwatch tool, the Fed may cut interest rates by 25 basis points at 77.5% while the probability of interest rates remaining unchanged is 22.5%.

Apart from focusing on Powell's speech, investors today are also waiting for US Unemployment Claims data which is predicted to increase by 215k from the previous 213k.

[Zeologic]

US jobless claims rise, EURUSD soars

EURUSD yesterday drew a bullish candle with a long body almost without a shadow. Price formed a low of 1.05080, a high of 1.05896, closed at 1.05880, and managed to cross the middle band line from the lower side.

Previously the pair was trading in the range of 1.04607 and consolidated for two days in a narrow space. However, the US unemployment claims data released yesterday has sent this pair soaring.

The data showed that US individual's unemployment claims were 224k, higher than the forecast and previous release of 215k. Weak US jobless claims data has renewed concerns about worsening labor demand.

While the dollar index (DXY) seems to be weakening due to higher-than-expected unemployment claims data, the DXY fell from 106,371 to a low of 105,699.

Next today, investors will focus on other important US economic data which is predicted to have a significant impact on the market, NFP, Unemployment Rate, and Average Hourly Earnings.

Investors will be paying close attention to US Average Hourly Earnings data for cues about the current status of wage growth which is forecast to fall 0.3% from the previous 0.4%.

Furthermore, Nonfarm Payrolls (NFP) is expected to increase by 218k from the previous 12k, while the Unemployment Rate is projected at 4.1%, the same as the previous revision.

Meanwhile, the Fed is expected to reduce interest rates gradually. According to the CME group's Fedwatch tool, the probability of the Fed reducing interest rates by 25 basis points at the Fed meeting on December 18 is 70.1% while the probability of interest rates remaining unchanged is only 29.9%.

[Zeologic]

Gold prices are still in the range above $2600 when the US NFP is higher than forecast.

The price of gold during weekend trading drew a Doji candle which indicated an indecision market. Price formed a low $2613 high of $2645 closed at $2632 near the open price of $2631. Gold has tended to move sideways in a range above $2600 since November 26.

On Friday after the US NFP release showed actual data was greater than expected, gold prices dropped. The precious metal fell as a labor market report showed that the number of new workers hired was higher than expected. The report showed that the economy added 227k new workers, greater than the forecast of 218k. Meanwhile, the unemployment Rate rose to 4.2%, higher than the forecast of 4.1%.

Growth in the US labor market increases expectations of the Fed reducing interest rates by 25 basis points to 4.25%-4.50%. According to the CME group's Fedwatch Tool, the Fed's probability of reducing interest rates by 25 basis points is 85.1% while the probability of interest rates remaining unchanged is 14.9%. Meanwhile, Average Hourly Earnings edged up 0.4% from the expected 0.3% but were still stable from the previous month's revision of 0.4%.

On the other side, he dollar index (DXY) was at 105.970 slightly up from a low of 105.420. The dollar index began to decline on November 22 from 108,071 to its lowest point today at 105,420.

From a geopolitical risk perspective, gold prices received support from the shaky ceasefire in the Middle East. Hezbollah and Israel tensions have heated up again, with each side blaming the other for violating the terms of the ceasefire.

The Russian and Ukrainian wars create wider risks. Russian Foreign Minister Sergey Lavrov warned that Russia was ready to use all means to prevent the West from achieving its goal of inflicting "strategic defeat" on the country.

Today gold traders will highlight economic data from China, which is a large gold importing country on a global scale. China will release CPI and PMI data which are expected to increase from the previous data revision.

[Zeologic]

AUDUSD rebounds ahead of RBA cash rate

Yesterday the AUDUSD pair drew a bullish candle with a long body and a rather long wick at the top of the candle indicating that after the price rally, there was quite a large selling action. Yesterday's AUDUSD price formed a high of 0.64715, a low of 0.63797, and closed at 0.64387.

The AUDUSD pair has been more in the direction of bearish sentiment in the long term since September 2024. The dollar index DXY is trading in a range near the middle band line, now DXY at 106.174 slightly up from 106.173

Australia's economy grew just 0.3% QoQ and 0.8% year-on-year, falling short of expectations, reviving speculation that the RBA will take a dovish stance at today's meeting. prices for key Australian exports such as copper rose to multi-week highs weak price action in iron ore.

China is expected to add additional stimulus after disappointing inflation figures in November. The Australian dollar is also facing potential challenges from the Fed's policy of providing gradual interest rate policies due to President Trump's protectionist policies. The Australian dollar also faces the challenge of China's economic slowdown. Meanwhile the Australian labor market with the unemployment rate holding steady at 4.1% and 16k new jobs added in October.

The RBA will decide on interest rates today which is forecast to keep interest rates unchanged at 4.35%.

[Zeologic]

USDCAD is at a high level ahead of the BOC interest rate policy

USDCAD yesterday drew a small bullish candlestick near the upper band line. Price formed a high of 1.41948, a low of 1.41556, and closed at 1.41786 on FXOpen. USDCAD price is moving in the highest area this month.

The dollar index (DXY), which tracks the value of the USD against six major currencies, rose to a high of 106,637 from a low of 106,040. However, DXY is showing reduced volatility marked by deflated Bollinger bands.

CAD is still weak, one of the factors is investors still predict that the Bank of Canada (BoC) will cut interest rates again by 50 basis points (bp) to 3.25% from 3.75% at today's monetary policy meeting.

On the other hand, the Fed is also predicted to cut interest rates by 25 basis points (bp) to 4.25%-4.50% at its December 18 meeting according to the CME Fedwatch tool.

Apart from investors' focus on the BoC's interest rate policy, investors will also focus on US CPI data.

Economists expect the annual CPI to rise 2.7% from the previous 2.6%. Meanwhile, monthly CPI is expected to rise 0.3% from the previous 0.2%. Meanwhile, the core CPI is expected to be the same 0.3% as the previous revision.

Signs of easing price pressures will accelerate the Fed's dovish bet for next week's policy meeting. On the other hand, inflationary pressures that are still high will weaken them.

[Zeologic]

USDCHF moves up ahead of the SNB Policy Rate

The USDCHF pair yesterday drew a bullish candle with a small body extending the previous bullish candle. Price formed a high of 0.88542, a low of 0.88112, and closed at 0.88402.

The Swiss Franc weakened slightly following US inflation data which was in line with expectations. US Core CPI showed actual data at 0.3% as expected. Monthly CPI was also 0.3% as expected, higher than the previous 0.2%, and annual CPI was 2.7% as expected but higher than the previous period's 2.6%.

The US CPI is unlikely to change market expectations of the Fed cutting interest rates by 25 basis points on December 18, but reduces expectations of monetary easing next year which ultimately supports US government bond yields and sends the US dollar higher. According to the CME group's FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points is 98.6% and the probability of interest rates remaining unchanged is only 1.4%.

The dollar index (DXY) which tracks the US dollar with six major currencies showed strength at 106.645 from a low of 106.268.

In Switzerland, the SNB is expected to cut interest rates by 25 basis points from 1.00% to 0.75% today and may leave the door open for further cuts in early 2025 given the weak inflation rate. A large rate cut, which is not completely undone, would shock the markets and hit the CHF.

Besides investors focus on SNB interest rates, they will also focus on US economic data, PPI, and Unemployment Claims, which are likely to have a broad impact on other foreign currencies including CHF.

[Zeologic]

GBPUSD plunged after the US released hot PPI data

Yesterday the GBPUSD pair drew a bearish candle with a long body with a shadow on the top of the candle. Price formed a high of 1.27879, a low of 1.26666, and closed at 1.26720. The decline in GBPUSD from the upper band to the middle band line reflects a sharp decline.

The US dollar strengthened against the British pound starting from the previous day, but after the US released PPI data and unemployment claims, the pound sterling weakened further against the US dollar. The US Bureau of Labor Statistics reported the Producer Price Index for final demand rose 0.4 percent in November, seasonally adjusted. Final demand prices increased by 0.3 percent in 2018 October and 0.2 percent in September. Without adjustment, the index for final demand rose 3.0 percent for the 12 months ending in November, the biggest gain since it rose 4.7 percent for the 12 months ending February 2023.

On the other hand, Unemployment Claims increased by 242k from the previous revision of 225k, higher than the expected 221k. The market response to mixed US economic data brought the dollar index (DXY) up to 107.041 from a low of 106.354. As a result, the strengthening of the USD put pressure on other currencies, including the British Pound Sterling.

Investors still hope that the Fed will cut interest rates by 25 bps at its December 18 meeting. According to the CME group's Fedwatch tool, the probability of the Fed reducing interest rates by 25 basis points is 94.7% and the probability of interest rates remaining unchanged is only 5.3%.

Meanwhile, the Bank of England (BoE) is predicted to follow a more gradual policy easing cycle because UK inflation is still high so the BoE is still on the slow path to cutting interest rates.

Today investors will focus on UK GDP data which is forecast to rise 0.1% from the previous data revision of -0.1%.

[Zeologic]

EURGBP surges as UK GDP data disappoints

In Friday trading, the EURGBP pair drew a bullish candle with a long body almost without a shadow. Price formed a low 0.82560 high 0.83208 closed at 0.83181 on FXOpen. The price has crossed the middle band from the downside near MA 50.

The Euro strengthened against the Pound Sterling for the second day in a row on Friday. Data from the UK released Friday Gross Domestic Product contracted for the second month in a row, with manufacturing production falling sharply. This data casts doubt on the UK's economic prospects and adds pressure on the BoE to continue easing monetary policy.

The publication from the Office for National Statistics revealed that the actual GDP data was -0.1%, the same as the previous revision, even though it had been predicted that GDP would increase by 0.1%.

On the other hand, the ECB lowered its benchmark interest rate by 25% basis points on Thursday and is predicted to continue lowering interest rates in the first half of next year.

On the other hand, the BoE looks to move more slowly and maintains interest rates at 4.75%.

Today investors will see the Euro and UK economic data which is the focus of traders, PMI Manufacturing and German services which are expected to rise from before. and the UK PMI is also expected to be higher than before.

[Zeologic]

USDCAD rises further ahead of Canadian inflation data

The US Dollar seems to be maintaining its strengthening against the Canadian Dollar this week. Yesterday USDCAD rose drawing a bullish candle with a small body extending the previous increase. Price formed a low of 1.42166, a high of 1.42704, and closed at 1.42437. Prices are at their highest peak throughout 2024.

One of the reasons for the weakening of the Canadian dollar is the divergence in policy between the Fed and the BoC, and US President-elect Trump's threat to increase tariffs on Canadian products. Sometime after Trump stated tariffs on imports from Canada, the market response caused the Canadian dollar to depreciate against the US dollar, and it seems that this effect is still ongoing.

The Fed is predicted to cut interest rates more carefully next year considering that Trump's deeper protectionist policies could cause inflation to rise. Even though it is predicted that the Fed will cut interest rates by 25 basis points tomorrow. The CME group's Fedwatch tool puts the probability of a 25 basis point rate cut at 95.4% and the probability of rates remaining unchanged at just 4.6%.

On the other hand, the Bank of Canada cut interest rates by 50 bp last week for the second time in a row. The Bank of Canada has lowered interest rates by 1.75% to 3.25% since June and is likely to cut them even lower.

Today investors will focus on Canadian inflation data and American retail sales which may be triggers for currency changes.

Canada's CPI is forecast to fall 0.1% from the previous 0.4%. Median CPI is expected to be 2.4% from the previous 2.5% while Trimmed CPI is predicted to be the same as the previous 2.6%.

Meanwhile, US Core Retail Sales are predicted to increase by 0.4% from the previous 0.1%, and retail sales which measure Change in the total value of sales at the retail level are expected to increase by 0.6% from the previous 0.4%.