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14:00 Mexico Trade Balance s/a, $ down to $-0.775B in November from previous $0.463B
Mexico Trade Balance s/a, $ down to $-0.775B in November from previous $0.463B
14:00 Mexico 1st half-month Core Inflation above expectations (0.43%) in December: Actual (0.5%)
Mexico 1st half-month Core Inflation above expectations (0.43%) in December: Actual (0.5%)
14:00 Mexico 1st half-month Inflation came in at 0.42%, above expectations (0.36%) in December
Mexico 1st half-month Inflation came in at 0.42%, above expectations (0.36%) in December
14:00 Mexico Trade Balance, $ fell from previous $0.371B to $-0.133B in November
Mexico Trade Balance, $ fell from previous $0.371B to $-0.133B in November
13:52 Crude Oil flattens amid rather positive market sentiment ahead of Christmas
Crude Oil prices consolidate on Monday, with WTI hovering above $69, with some room to the upside as market sentiment improves helped by a broad tailwind coming from Asian equities.
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At the time of writing, Crude Oil (WTI) trades at $69.76 and Brent Crude at $72.94.Oil news and market movers: Headlines reduced The amount of Crude Oil held on tankers that have been stationary for at least seven days rose to 70.20 million barrels as of December 20, Vortexa data show, Bloomberg reports. That is a 7% increase against last week. Recent EU sanctions on Russian Oil vessels are being circumvented via Bulgaria, Romania and Turkey, Zerohedge published in a special report on Monday. President-elect Donald Trump lashed out at Panama during a rally over the weekend that the country charges exorbitant fees for passing via its key waterway, Bloomberg reports. With the Christmas holidays, the weekly Energy Information Administration release for the US Crude stockpile change numbers is due Thursday at 16:00 GMT. Oil Technical Analysis: Respect the time horizonCrude Oil prices could see a small uptick, supported by some broad risk on tailwinds in the markets. Experienced traders will know that as of Monday and going into January, the rule of thumb is to have smaller positions on and take profit possibly even before the end of the same trading day. This means that any rally that might unfold in Oil in the coming days needs to be taken with caution as it might be very short-lived.
Looking up, the 100-day Simple Moving Average (SMA) at $70.79 and $71.46 (February 5 low) act as firm resistance levels nearby. Should more tailwinds emerge in support for Oil, the next pivotal level will be $75.27 (January 12 high). However, watch out for quick profit-taking as the year-end quickly approaches.
On the downside, $67.12 – a level that held the price in May and June 2023 and during the last quarter of 2024 – is still the first solid support nearby. In case that breaks, the 2024 year-to-date low emerges at $64.75, followed by $64.38, the low from 2023.US WTI Crude Oil: Daily Chart
WTI Oil FAQs What is WTI Oil?
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media. What factors drive the price of WTI Oil?
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa. How does inventory data impact the price of WTI Oil
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency. How does OPEC influence the price of WTI Oil?
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
13:03 AUD/USD consolidates around 0.6250 as focus shifts to RBA minutes
The AUD/USD pair trades sideways around 0.6250 at the start of the week.
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In the policy meeting on December 10, the RBA left its Official Cash Rate (OCR) unchanged at 4.35%, as expected, for the ninth meeting in a row. RBA Governor Michele Bullock didn’t guide a specific interest rate cut path and committed to remain data-dependent.
When asked about whether the RBA will start reducing interest rates from February, as expected by market participants, “I honestly don’t know if we’re going to be cutting in February,” Bullock said. She said that the RBA is going to be “looking at the data and be data-driven.”
The speculation about the RBA pivoting interest rate cuts in February was fueled by weaker-than-expected Q3 Gross Domestic Product (GDP) data.
Meanwhile, the US Dollar (USD) advances in European trading hours as investors digest moderate growth in the United States (US) monthly Personal Consumption Expenditure inflation (PCE) data for November. The month-on-month headline and core PCE rose by 0.1%, slower than estimates and their former releases.The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, bounces back above 108.00. The broader outlook for the US Dollar remains firm as Federal Reserve (Fed) officials see fewer interest rate cuts in 2025.
Economic Indicator
RBA Meeting Minutes
The minutes of the Reserve Bank of Australia meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee. Generally speaking, if the RBA is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the AUD. Read more. Next release: Tue Dec 24, 2024 00:30 Frequency: WeeklyConsensus: -Previous: -Source: Reserve Bank of Australia Why it matters to traders?
The Reserve Bank of Australia (RBA) publishes the minutes of its monetary policy meeting two weeks after the interest rate decision is announced. It provides a detailed record of the discussions held between the RBA’s board members on monetary policy and economic conditions that influenced their decision on adjusting interest rates and/or bond buys, significantly impacting the AUD. The minutes also reveal considerations on international economic developments and the exchange rate value.
12:38 Silver Price Forecast: XAG/USD extends recovery near $30 despite Fed supports fewer rate cuts
Silver price (XAG/USD) extends Friday’s recovery move to near $29.90 in Monday’s European session.
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Core PCE inflation, the Federal Reserve’s (Fed) preferred inflation gauge, rose steadily by 2.8% but slower than estimates of 2.9%. The month-on-month headline and core PCE inflation grew marginally by 0.1%, raising uncertainty over whether the Fed will follow a shallow rate-cut path in 2025, as projected in the Fed’s dot plot from the December policy meeting.
The recent Fed dot plot showed that officials collectively see Federal Fund rates heading to 3.9% by the end of 2025.
Silver prices advanced on Monday even though US Treasury yields remain higher as Federal Reserve (Fed) policymakers support fewer interest rate cuts next year. 10-year US Treasury yields moved higher to near 4.54%. Generally, higher yields on interest-bearing assets weigh on non-yielding assets, such as Silver, as they result in higher opportunity costs for them. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, ticked higher to near 108.00.
On Friday, a string of Fed officials backed a shallow policy-easing approach amid a slowdown in the disinflation trend, better labor market conditions than previously anticipated, and uncertainty over President-elect Donald Trump's incoming policies.
Silver technical analysis
Silver price recovers to test the breakdown of the upward-sloping trendline near $30.00, which is plotted from the February 29 low of $22.30 on a daily timeframe. The white metal wobbles around the 200-day Exponential Moving Average (EMA), suggesting that the longer-term outlook is uncertain.
The 14-day Relative Strength Index (RSI) rebounds to near 40.00. A fresh bearish momentum would trigger if it fails to break above that level.
Looking down, the September low of $27.75 would act as key support for the Silver price. On the upside, the 50-day EMA around $30.90 would be the barrier.
Silver daily chartSilver FAQs Why do people invest in Silver?
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets. Which factors influence Silver prices?
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices. How does industrial demand affect Silver prices?
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices. How do Silver prices react to Gold’s moves?
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
12:30 Belgium Consumer Price Index (YoY) down to 3.16% in December from previous 3.2%
Belgium Consumer Price Index (YoY) down to 3.16% in December from previous 3.2%
12:30 Belgium Consumer Price Index (MoM) up to 0.4% in December from previous 0.17%
Belgium Consumer Price Index (MoM) up to 0.4% in December from previous 0.17%
11:57 Pound Sterling gains as investors shrug off increased BoE dovish bets
The Pound Sterling (GBP) moves higher against its major peers on Monday as investors largely ignore a mild increase in Bank of England’s (BoE) dovish bets for the next year.
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BoE dovish bets accelerated after three out of nine Monetary Policy Committee (MPC) members proposed reducing interest rates by 25 bps, more than the one projected by market participants. Investors considered the 6-3 vote split as a dovish buildup for the next year, which weighed heavily on the Pound Sterling.
Market expectations for 53 bps reduction in interest rates in 2025 suggest that there will be at least two 25-basis-points rate cuts. Still, speculation for the number of interest rate cuts by the UK central bank is similar to that of the Federal Reserve (Fed) and fewer than those expected from the European Central Bank (ECB), making the Pound Sterling an attractive bet in the broader term.
On the contrary, analysts at Deutsche Bank expect the BoE to announce four interest-rate cuts next year, one coming in the first half and the rest in the second half.
Meanwhile, data released on Monday downwardly revised the UK growth rate for the third quarter of the year, raising concerns over the United Kingdom’s (UK) economic outlook. The Office for National Statistics (ONS) reported that the economy remained stagnant in the third quarter, against the 0.4% growth in the April-June period and less than the 0.1% expansion previously estimated.
Daily digest market movers: Pound Sterling trades higher The Pound Sterling consolidates around 1.2580 against the US Dollar (USD) in Monday’s London session. The GBP/USD pair ticks slightly up even as the US Dollar rebounds slightly. The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, recovers to near 108.00. The Greenback discovers buyer’s interest as its broader outlook is upbeat amid firm expectations that the Federal Reserve (Fed) will follow a moderate policy-easing approach next year. In the latest dot plot, the Fed signaled only two interest rate cuts in 2025 against the four cuts projected in September. For January’s policy meeting, traders are pricing in that the central bank will leave interest rates unchanged in the range of 4.25%-4.50%, according to the CME FedWatch tool. The latest commentaries by Fed officials have shown that stubborn inflation, better labor market conditions than previously anticipated, and uncertainty over the impact of President-elect Donald Trump's incoming policies on the economy forced them to guide fewer interest rate cuts for 2025. Cleveland Fed President Beth Hammack, the only official who dissented against the rate-cut decision in the policy meeting on Wednesday, said on Friday: “I prefer to hold policy steady until we see further evidence that inflation is resuming its path to our 2% objective.” This week, thin trading volume due to holidays in Forex markets on Wednesday and Thursday on account of Christmas Day and Boxing Day, respectively, could keep the pair’s price action more muted. On the economic front, investors will focus on the United States (US) Durable Goods Orders data for November, which will be released on Tuesday. Orders are estimated to have declined by 0.4% after expanding by 0.3% in October.
Technical Analysis: Pound Sterling consolidates but death cross shows bearish biasThe Pound Sterling broadly consolidates against the US Dollar after a decisive break below the upward-sloping trendline around 1.2600, which is plotted from the October 2023 low of 1.2035.
A death cross, represented by the 50-day and 200-day Exponential Moving Averages (EMAs) near 1.2790, suggests a strong bearish trend in the long run.
The 14-day Relative Strength Index (RSI) rebounds above 40.00. A fresh downside momentum could trigger if the oscillator fails to sustain above that level.
Looking down, the pair is expected to find a cushion near the April 22 low around 1.2300. On the upside, the December 17 high at 1.2730 will act as key resistance.
Pound Sterling FAQs What is the Pound Sterling?
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE). How do the decisions of the Bank of England impact on the Pound Sterling?
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects. How does economic data influence the value of the Pound?
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall. How does the Trade Balance impact the Pound?
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
11:30 Silver price today: Silver rises, according to FXStreet data
Silver prices (XAG/USD) rose on Monday, according to FXStreet data.
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Silver prices (XAG/USD) rose on Monday, according to FXStreet data. Silver trades at $29.77 per troy ounce, up 0.78% from the $29.54 it cost on Friday.
Silver prices have increased by 25.11% since the beginning of the year. Unit measure Silver Price Today in USD Troy Ounce 29.77 1 Gram 0.96
The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 88.36 on Monday, down from 88.79 on Friday. Silver FAQs Why do people invest in Silver? Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets. Which factors influence Silver prices? Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices. How does industrial demand affect Silver prices? Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices. How do Silver prices react to Gold’s moves? Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver. (An automation tool was used in creating this post.)
The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 88.36 on Monday, down from 88.79 on Friday. Silver FAQs Why do people invest in Silver? Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets. Which factors influence Silver prices? Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices. How does industrial demand affect Silver prices? Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices. How do Silver prices react to Gold’s moves? Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver. (An automation tool was used in creating this post.)
11:26 USD/CAD trades with positive bias amid modest USD strength, remains below 1.4400
The USD/CAD pair attracts some dip-buyers at the start of a new week and for now, seems to have stalled its corrective slide from the highest level since March 2020 touched last Thursday.
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The US Dollar (USD) regains some positive traction after Friday's pullback from a two-year top amid the Federal Reserve's (Fed) hawkish shift, signaling that it would slow the pace of rate cuts in 2025. The outlook remains supportive of elevated US Treasury bond yields and turns out to be a key factor acting as a tailwind for the buck. The Canadian Dollar (CAD), on the other hand, continues to be undermined by domestic political development and the Bank of Canada's (BoC) dovish stance.
In fact, the Canadian central bank projected lower growth in the final quarter of this year and added that the possibility of new tariffs on Canadian exports to the US has made the economic outlook more unclear. Adding to this, Statistics Canada reported on Friday that Retail Sales in October were marginally lower than expected and were likely flat in November. That said, an uptick in Crude Oil prices lends some support to the commodity-linked Loonie and might cap the USD/CAD pair.
Traders now look forward to the release of the Conference Board's US Consumer Confidence Index, which, along with the US bond yields, might influence the USD. Apart from this, Oil price dynamics might contribute to producing short-term trading opportunities around the USD/CAD pair. Nevertheless, the fundamental backdrop seems tilted in favor of the USD bulls and supports prospects for an extension of a well-established uptrend witnessed over the past two months or so.
Canadian Dollar FAQs What key factors drive the Canadian Dollar?
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar. How do the decisions of the Bank of Canada impact the Canadian Dollar?
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive. How does the price of Oil impact the Canadian Dollar?
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD. How does inflation data impact the value of the Canadian Dollar?
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar. How does economic data influence the value of the Canadian Dollar?
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
11:04 Italy Trade Balance non-EU up to €5.908B in November from previous €5.709B
Italy Trade Balance non-EU up to €5.908B in November from previous €5.709B
11:02 EUR/JPY edges lower to near 163.00 following ECB Lagarde interview
EUR/JPY extends its losses following an interview of European Central Bank (ECB) President Christine Lagarde published by the Financial Times on Monday.
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Christine Lagarde, President of the European Central Bank (ECB), emphasized that the central bank is nearing its goal of sustainably bringing inflation down to the medium-term target of 2%. However, Lagarde stressed the importance of continued vigilance, particularly concerning inflation in the services sector.
Earlier in December, Lagarde indicated that the ECB would consider further interest rate cuts if inflation showed continued progress toward the 2% target. She noted that aggressive measures to curb economic growth were no longer deemed necessary under such conditions. This shift suggests that the ECB is gradually moving toward a more accommodative monetary policy stance as inflationary pressures ease.
Additionally, ECB Governing Council member Boris Vujcic stated on Saturday that the central bank plans to continue lowering borrowing costs in 2025, according to Bloomberg. “The direction is clear—it’s a continuation of the path from 2024, with further reductions in interest rates,” he said.
In Japan, strong National Consumer Price Index (CPI) data released on Friday left the door open for a potential interest rate hike by the Bank of Japan (BoJ) in January or March. Inflation reached a three-month high of 2.9% year-over-year in November, up from 2.3% in October. Additionally, the annual core inflation rate rose to 2.7%, exceeding market expectations of 2.6%.
However, traders remain cautious about the BoJ's intentions to hike rates further following the central bank’s decision to keep its policy rate for the third consecutive meeting, keeping the short-term rate target within the range of 0.15%-0.25%, in line with market expectations. Traders are eagerly anticipating the release of the BoJ’s Meeting Minutes, scheduled for Tuesday.
Interest rates FAQs What are interest rates?
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation. How do interest rates impact currencies?
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money. How do interest rates influence the price of Gold?
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold. What is the Fed Funds rate?
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
10:15 NZD/USD Price Forecast: Remains subdued near 0.5650, descending channel’s lower boundary
The NZD/USD pair edges lower to near 0.5650 during the European hours on Monday.
.fxs-major-currency-prices-wrapper{border:1px solid #dddedf;background:#fff;margin-bottom:32px;width:100%;float:left}.fxs-major-currency-prices-title{color:#1b1c23;font-size:16px;font-style:italic;font-weight:700;line-height:22.4px;text-transform:uppercase;background:#f3f3f8;padding:8px 16px;margin:0}.fxs-major-currency-prices-content{color:#49494f;font-weight:300;padding:0;font-size:14.72px;line-height:20px;margin:8px 16px}table.fxs-major-currency-prices-currency-prices-table{width:100%;text-align:center;border-collapse:collapse;font-size:1rem}table.fxs-major-currency-prices-currency-prices-table th{background-color:#f2f2f2}table.fxs-major-currency-prices-currency-prices-table td{color:#fff}table.fxs-major-currency-prices-currency-prices-table td.green{background-color:#9cd6cd}table.fxs-major-currency-prices-currency-prices-table td.red{background-color:#faafb5}table.fxs-major-currency-prices-currency-prices-table td.blue-grey{background-color:#888a93}.fxs-major-currency-prices-currency-prices-legend{font-size:11px;margin:8px;color:#49494f}@media (min-width:680px){.fxs-major-currency-prices-content{font-size:16px;line-height:21.6px}.fxs-major-currency-prices-title{font-size:19.2px;line-height:27.2px}}.fxs-major-currency-prices-currency-price td.dark-green{background-color:#39ad9a}.fxs-major-currency-prices-currency-price td.light-green{background-color:#9cd6cd}.fxs-major-currency-prices-currency-price td.gray{background-color:#888a93}.fxs-major-currency-prices-currency-price td.light-red{background-color:#faafb5}.fxs-major-currency-prices-currency-price td.strong-red{background-color:#f55e6a}NZD/USD continues to trade within a descending channel pattern, reflecting an ongoing bearish bias.An upward correction is indicated as the 14-day RSI is positioned below the 30 mark.The pair could test the descending channel’s lower boundary at 0.5630 level.The NZD/USD pair edges lower to near 0.5650 during the European hours on Monday. The technical analysis of the daily chart suggests an ongoing bearish bias as the pair is confined within a descending channel pattern.
Additionally, the NZD/USD pair remains below the nine- and 14-day Exponential Moving Averages (EMAs), signaling weak short-term price momentum, which could mean that the price is likely to continue experiencing downward pressure.
Furthermore, the 14-day Relative Strength Index (RSI) remains below the 30 level, reflecting an oversold condition, potentially triggering an upward correction.
Regarding its support, the NZD/USD could test the lower boundary of the descending channel at 0.5630 level, followed by the 26-month low of 0.5607 level, which was recorded on December 19.
On the upside, NZD/USD may find initial resistance at the nine-day EMA at 0.5708 level, followed by the 14-day EMA at 0.5743 level. A break above this level could improve the short-term price momentum and support the pair to test the descending channel’s upper boundary at the 0.5800 level.
NZD/USD: Daily ChartNew Zealand Dollar PRICE Today
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the weakest against the US Dollar. USD EUR GBP JPY CAD AUD NZD CHF USD 0.17% 0.05% 0.20% 0.12% -0.08% 0.02% 0.22% EUR -0.17% -0.15% -0.03% -0.08% -0.18% -0.17% 0.04% GBP -0.05% 0.15% 0.08% 0.07% -0.03% -0.01% 0.19% JPY -0.20% 0.03% -0.08% -0.03% -0.19% -0.13% 0.02% CAD -0.12% 0.08% -0.07% 0.03% -0.14% -0.09% 0.11% AUD 0.08% 0.18% 0.03% 0.19% 0.14% 0.00% 0.22% NZD -0.02% 0.17% 0.01% 0.13% 0.09% -0.01% 0.16% CHF -0.22% -0.04% -0.19% -0.02% -0.11% -0.22% -0.16%
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
10:00 Spain Gross Domestic Product (YoY) came in at 3.3% below forecasts (3.4%) in 3Q
Spain Gross Domestic Product (YoY) came in at 3.3% below forecasts (3.4%) in 3Q
10:00 Spain Gross Domestic Product (QoQ) in line with forecasts (0.8%) in 3Q
Spain Gross Domestic Product (QoQ) in line with forecasts (0.8%) in 3Q
09:51 EUR/USD consolidates ahead of holiday-shortened week as Fed supports shallow rate-cut cycle
EUR/USD trades quietly at the start of the week around 1.0440 in Monday’s European session.
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The US Dollar (USD) steadies on Monday after a sharp sell-off on Friday that was triggered by slower-than-expected growth in the United States (US) Personal Consumption Expenditure Price Index (PCE). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, wobbles below 108.00.
Core PCE inflation, which is the Federal Reserve’s (Fed) preferred inflation gauge, rose steadily by 2.8% but slower than estimates of 2.9%. Month-on-month, headline, and core PCE inflation grew marginally by 0.1%, which raised some uncertainty over whether the Fed will follow a shallow rate-cut path in 2025.
Fed policymakers see the central bank delivering fewer interest rate cuts next year amid a slowdown in the disinflation process and the uncertainty over the impact on the economy of incoming immigration, trade, and tax policies by President-elect Donald Trump.
Cleveland Fed President Beth Hammack, the only official who voted for leaving interest rates unchanged in the policy meeting last Wednesday, said on Friday that she prefers to hold interest rates steady "until the Fed gets further evidence that inflation is resuming its path to its 2% objective,” Reuters reported.
On Friday, Chicago Fed President Austan Goolsbee told in an interview with CNBC that the uncertainty over Trump’s policies after taking office compelled him to project fewer interest rate cuts for 2025 while he had previously anticipated a 100-basis points (bps) interest rate reduction.
Monday’s economic calendar is light. On Tuesday, investors will focus on the US Durable Goods Orders data for November. Economists expect orders to have declined by 0.4% after a 0.3% increase in October.
Daily digest market movers: EUR/USD holds onto recovery move EUR/USD holds recovery from the four-week low of 1.0350 to near 1.0440 on Monday. The major currency pair bounced back due to the Euro’s (EUR) outperformance in the past few trading sessions even as market participants remain confident that the European Central Bank (ECB) will continue pushing interest rates lower. The ECB has cut its Deposit Facility rate by 100 bps this year and is expected to deliver another 100-bps interest rate reduction next year amid deepening Eurozone economic risks and inflation remaining under control. Almost all ECB policymakers have agreed to market expectations for a consistent reduction in interest rates until it reaches 2%, which they see as a neutral rate to avoid risks of inflation undershooting the bank’s target of 2%. ECB President Christine Lagarde said she remains confident about further progress in disinflation in an interview with the Financial Times (FT) published Monday. “We're getting very close to that stage when we can declare that we have sustainably brought inflation to our medium-term 2%”, Lagarde said.
Technical Analysis: EUR/USD stays above 1.0350EUR/USD holds the key support of 1.0350. However, the outlook of the major currency pair remains strongly bearish as all short-to-long-term Exponential Moving Averages (EMAs) are declining.
The 14-day Relative Strength Index (RSI) bounces back to near 40.00. A fresh downside momentum could trigger if the oscillator fails to sustain above that level.
Looking down, the asset could decline to near the round-level support of 1.0200 after breaking below the two-year low of 1.0330. Conversely, the 20-day EMA near 1.0500 will be the key barrier for the Euro bulls.
Euro FAQs What is the Euro?
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%). What is the ECB and how does it impact the Euro?
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde. How does inflation data impact the value of the Euro?
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money. How does economic data influence the value of the Euro?
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy. How does the Trade Balance impact the Euro?
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
09:34 EUR/GBP holds above 0.8300 on BoE dovish bets
The EUR/GBP cross extends the rally to around 0.8305 during the early European session on Monday.
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The Bank of England's (BoE) split vote decision to leave interest rates unchanged at 4.75% last week and a dovish hold dragged the GBP lower against the shared currency. BoE policymakers highlighted external risks, including uncertainty over geopolitical tensions and potential Donald Trump tariff threats. "With the heightened uncertainty in the economy, we can't commit to when or by how much we will cut rates in the coming year,” said BoE Governor Andrew Bailey.
On the Euro front, the European Central Bank (ECB) President Christine Lagarde said the Eurozone was getting "very close" to reaching the ECB's medium-term inflation target, per the Financial Times on Monday. Lagarde further stated that the central bank would cut interest rates further if inflation continued to ease towards its 2% goal, as curbing growth was no longer necessary.
ECB policymakers have become worried about growing economic risks due to weak demand and US President-elect Donald Trump's potential tariff threats. The ECB will hold its first rate-setting meeting of 2025 on January 30. Investors envisage a slightly more aggressive path of the ECB easing cycle next year, which might weigh on the Euro against the GBP. Pound Sterling FAQs What is the Pound Sterling? The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE). How do the decisions of the Bank of England impact on the Pound Sterling? The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects. How does economic data influence the value of the Pound? Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall. How does the Trade Balance impact the Pound? Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
The Bank of England's (BoE) split vote decision to leave interest rates unchanged at 4.75% last week and a dovish hold dragged the GBP lower against the shared currency. BoE policymakers highlighted external risks, including uncertainty over geopolitical tensions and potential Donald Trump tariff threats. "With the heightened uncertainty in the economy, we can't commit to when or by how much we will cut rates in the coming year,” said BoE Governor Andrew Bailey.
On the Euro front, the European Central Bank (ECB) President Christine Lagarde said the Eurozone was getting "very close" to reaching the ECB's medium-term inflation target, per the Financial Times on Monday. Lagarde further stated that the central bank would cut interest rates further if inflation continued to ease towards its 2% goal, as curbing growth was no longer necessary.
ECB policymakers have become worried about growing economic risks due to weak demand and US President-elect Donald Trump's potential tariff threats. The ECB will hold its first rate-setting meeting of 2025 on January 30. Investors envisage a slightly more aggressive path of the ECB easing cycle next year, which might weigh on the Euro against the GBP. Pound Sterling FAQs What is the Pound Sterling? The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE). How do the decisions of the Bank of England impact on the Pound Sterling? The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects. How does economic data influence the value of the Pound? Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall. How does the Trade Balance impact the Pound? Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
09:33 Forex Today: Mood remains upbeat to start holiday-shortened week
Here is what you need to know on Monday, December 23: Improving risk mood caused the US Dollar (USD) to lose interest heading into the weekend.
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Here is what you need to know on Monday, December 23:
Improving risk mood caused the US Dollar (USD) to lose interest heading into the weekend. At the beginning of the week, US stock index futures trade in positive territory and the USD Index struggles to gain traction. Chicago Fed National Activity Index for November and Conference Board's Consumer Confidence Index for December will be featured in the US economic docket on Monday.
US Dollar PRICE Last 7 days
The table below shows the percentage change of US Dollar (USD) against listed major currencies last 7 days. US Dollar was the strongest against the Japanese Yen. USD EUR GBP JPY CAD AUD NZD CHF USD 0.69% 0.43% 1.97% 0.98% 1.69% 1.95% 0.06% EUR -0.69% -0.20% 1.39% 0.37% 1.16% 1.33% -0.56% GBP -0.43% 0.20% 1.48% 0.56% 1.37% 1.51% -0.38% JPY -1.97% -1.39% -1.48% -0.99% -0.28% -0.00% -1.81% CAD -0.98% -0.37% -0.56% 0.99% 0.75% 0.95% -0.94% AUD -1.69% -1.16% -1.37% 0.28% -0.75% 0.16% -1.73% NZD -1.95% -1.33% -1.51% 0.00% -0.95% -0.16% -1.89% CHF -0.06% 0.56% 0.38% 1.81% 0.94% 1.73% 1.89%
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Softer-than-forecast inflation data from the US and the aversion of the US government shutdown attracted risk flows in the American session on Friday. The US Bureau of Economic Analysis reported that the core Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's (Fed) preferred gauge of inflation, rose 0.1% on a monthly basis in November. This reading followed the 0.3% increase recorded in October and came in below the market expectation of 0.2%. Meanwhile, Congress approved a stopgap spending bill late Friday, avoiding a shutdown. Wall Street's main indexes gained about 1% on Friday and the USD Index lost more than 0.5%, erasing a portion of the Fed-inspired rally.
After falling sharply and touching a multi-week low below 1.0350, EUR/USD recovered on Friday but ended the week in negative territory. The pair fluctuates in a narrow channel above 1.0400 in the European morning on Monday.GBP/USD slumped to its weakest level since May below 1.2500 early Friday but staged a decisive rebound in the second half of the day. The pair stays relatively quiet to begin the new week and trades above 1.2550. The UK's Office for National Statistics announced on Monday that the annualized Gross Domestic Product (GDP) growth for the third quarter got revised to 0.9% from the 1% reported in the initial estimate.USD/JPY gained nearly 2% in the previous week and climbed to its highest level since July near 158.00. Following a sharp correction on Friday, the pair stays in a consolidation phase below 157.00 in the European morning on Monday.Gold recovered on Friday and rose more than 1% on the day as the US Treasury bond yields turned south. XAU/USD continues to stretch higher to begin the week and was last seen trading at around $2,630.
Risk sentiment FAQs What do the terms"risk-on" and "risk-off" mean when referring to sentiment in financial markets?
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest. What are the key assets to track to understand risk sentiment dynamics?
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit. Which currencies strengthen when sentiment is "risk-on"?
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity. Which currencies strengthen when sentiment is "risk-off"?
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
09:32 AUD/JPY hovers around 98.00 as traders await Meeting Minutes from both central banks
AUD/JPY retraces its recent losses from the previous session, trading around 98.00 during the early European hours on Monday.
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Moreover, the National Australia Bank (NAB) maintained its forecast for the first RBA rate cut at the May 2025 meeting, though they acknowledged February as a possibility. NAB's report indicates that the Q4 trimmed mean inflation is projected at 0.6% quarter-on-quarter, with a gradual easing expected, reaching 2.7% by late 2025.
Strong National Consumer Price Index (CPI) data from Japan released on Friday left the door open for a potential interest rate hike by the Bank of Japan (BoJ) in January or March. Inflation reached a three-month high of 2.9% year-over-year in November, up from 2.3% in October. Additionally, the annual core inflation rate rose to 2.7%, exceeding market expectations of 2.6%.
However, traders remain skeptical about the BoJ's intentions to hike rates further following the central bank’s decision to keep its policy rate for the third consecutive meeting, keeping the short-term rate target within the range of 0.15%-0.25%, in line with market expectations.
Traders are eagerly anticipating the release of the Meeting Minutes from both the Reserve Bank of Australia (RBA) and the Bank of Japan (BOJ), scheduled for Tuesday.
Central banks FAQs What does a central bank do?
Central Banks have a key mandate which is making sure that there is price stability in a country or region. Economies are constantly facing inflation or deflation when prices for certain goods and services are fluctuating. Constant rising prices for the same goods means inflation, constant lowered prices for the same goods means deflation. It is the task of the central bank to keep the demand in line by tweaking its policy rate. For the biggest central banks like the US Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BoE), the mandate is to keep inflation close to 2%. What does a central bank do when inflation undershoots or overshoots its projected target?
A central bank has one important tool at its disposal to get inflation higher or lower, and that is by tweaking its benchmark policy rate, commonly known as interest rate. On pre-communicated moments, the central bank will issue a statement with its policy rate and provide additional reasoning on why it is either remaining or changing (cutting or hiking) it. Local banks will adjust their savings and lending rates accordingly, which in turn will make it either harder or easier for people to earn on their savings or for companies to take out loans and make investments in their businesses. When the central bank hikes interest rates substantially, this is called monetary tightening. When it is cutting its benchmark rate, it is called monetary easing. Who decides on monetary policy and interest rates?
A central bank is often politically independent. Members of the central bank policy board are passing through a series of panels and hearings before being appointed to a policy board seat. Each member in that board often has a certain conviction on how the central bank should control inflation and the subsequent monetary policy. Members that want a very loose monetary policy, with low rates and cheap lending, to boost the economy substantially while being content to see inflation slightly above 2%, are called ‘doves’. Members that rather want to see higher rates to reward savings and want to keep a lit on inflation at all time are called ‘hawks’ and will not rest until inflation is at or just below 2%. Is there a president or head of a central bank?
Normally, there is a chairman or president who leads each meeting, needs to create a consensus between the hawks or doves and has his or her final say when it would come down to a vote split to avoid a 50-50 tie on whether the current policy should be adjusted. The chairman will deliver speeches which often can be followed live, where the current monetary stance and outlook is being communicated. A central bank will try to push forward its monetary policy without triggering violent swings in rates, equities, or its currency. All members of the central bank will channel their stance toward the markets in advance of a policy meeting event. A few days before a policy meeting takes place until the new policy has been communicated, members are forbidden to talk publicly. This is called the blackout period.
09:02 Germany Import Price Index (MoM) registered at 0.9% above expectations (0.3%) in November
Germany Import Price Index (MoM) registered at 0.9% above expectations (0.3%) in November
09:01 Germany Import Price Index (YoY) rose from previous -0.8% to 0.6% in November
Germany Import Price Index (YoY) rose from previous -0.8% to 0.6% in November
09:01 United Kingdom Current Account came in at £-18.099B, above forecasts (£-24.1B) in 3Q
United Kingdom Current Account came in at £-18.099B, above forecasts (£-24.1B) in 3Q
09:01 United Kingdom Gross Domestic Product (QoQ) registered at 0%, below expectations (0.1%) in 3Q
United Kingdom Gross Domestic Product (QoQ) registered at 0%, below expectations (0.1%) in 3Q
09:01 United Kingdom Gross Domestic Product (YoY) came in at 0.9%, below expectations (1%) in 3Q
United Kingdom Gross Domestic Product (YoY) came in at 0.9%, below expectations (1%) in 3Q
09:00 United Kingdom Total Business Investment (QoQ) above forecasts (1.2%) in 3Q: Actual (1.9%)
United Kingdom Total Business Investment (QoQ) above forecasts (1.2%) in 3Q: Actual (1.9%)
09:00 United Kingdom Total Business Investment (YoY) above forecasts (4.5%) in 3Q: Actual (5.8%)
United Kingdom Total Business Investment (YoY) above forecasts (4.5%) in 3Q: Actual (5.8%)
09:00 United Kingdom Current Account came in at £-18.1B, above forecasts (£-24.1B) in 3Q
United Kingdom Current Account came in at £-18.1B, above forecasts (£-24.1B) in 3Q
07:57 USD/CHF holds positive ground above 0.8900 on Fed's hawkish approach
The USD/CHF pair gains traction to around 0.8935, snapping the two-day losing streak during the early European session on Monday.
.fxs-faq-module-wrapper{border:1px solid #dddedf;background:#fff;margin-bottom:32px;width:100%;float:left;font-family:Roboto,sans-serif}.fxs-faq-module-title{color:#1b1c23;font-size:16px;font-style:italic;font-weight:700;line-height:22.4px;text-transform:uppercase;background:#f3f3f8;padding:8px 16px;margin:0}.fxs-faq-module-container{padding:16px;width:100%;box-sizing:border-box;display:flex;flex-direction:column;gap:12px}.fxs-faq-module-section{padding-bottom:16px;border-bottom:1px solid #ececf1;margin-bottom:0}.fxs-faq-module-section:last-child{border:none;margin-bottom:0}.fxs-faq-module-container input[type=checkbox]{display:none}.fxs-faq-module-header{padding:4px 0;background-color:#fff;border:none;position:relative;cursor:pointer;margin:0}.fxs-faq-module-header label{display:block;cursor:pointer}.fxs-faq-module-header label span{display:block;width:calc(100% - 50px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{content:"";position:absolute;top:50%;right:16px;width:8px;height:2px;background-color:#49494f;transition:all .2s ease-in-out;transition-delay:0}.fxs-faq-module-header label:after{transform:rotate(45deg) translateX(-4px)}.fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(4px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{transition:transform .3s ease-in-out}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:after{transform:rotate(45deg) translateX(4px)}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(-4px)}.fxs-faq-module-content{max-height:0;overflow:hidden;transition:all .3s ease-in-out;color:#49494f;font-weight:300;padding:0;font-size:14.72px;line-height:20px;margin:0}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-content{max-height:1000px;margin-top:8px}@media (min-width:680px){.fxs-faq-module-title{font-size:19.2px;line-height:27.2px}.fxs-faq-module-header{font-size:19.2px;line-height:25.92px}.fxs-faq-module-content{font-size:16px;line-height:21.6px}}USD/CHF trades in positive territory near 0.8935 in Monday’s early European session. The hawkish Fed rate cut underpins the US Dollar. The rising geopolitical risks could boost the safe-haven flows, capping the downside for the CHF. The USD/CHF pair gains traction to around 0.8935, snapping the two-day losing streak during the early European session on Monday. The hawkish rate cut by the US Federal Reserve (Fed) provides some support to the Greenback. Traders await the US December Consumer Confidence and Chicago Fed National Activity Index reports, which are due later on Monday.
The Fed cut the interest rates by a quarter point last week and pencilled in only two rate cuts in 2025, down from its original forecast of four. The hawkish signals from the US central bank, which appear newly concerned about persistent inflation in the months ahead, could lift the Greenback against the Swiss Franc (CHF).
On the other hand, the Swiss National Bank (SNB) cut its key interest rate by 50 basis points (bps) at its December meeting, exceeding expectations of a smaller reduction amid weaker-than-expected inflation in Switzerland and rising uncertainty about the global economy. A more aggressive rate cut from the SNB than the Fed could undermine the CHF and act as a tailwind for USD/CHF.
SNB chairman Martin Schlegel left the door open for further interest rate cuts next year but said it was now less likely the Swiss central bank could take rates below 0%. "We will continue to monitor the situation closely and will adjust our monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term,” added Schlegel.
Meanwhile, the escalating geopolitical tensions in the Middle East could boost the safe-haven currency like the CHF. Israeli strikes across the Gaza Strip overnight and early Sunday killed at least 50 Palestinians, including at one family's home and at a school building, according to Palestinian medical officials. The Houthis released a statement, claiming responsibility for the attack, saying they had aimed a hypersonic ballistic missile at a military target. Swiss Franc FAQs What key factors drive the Swiss Franc? The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone. Why is the Swiss Franc considered a safe-haven currency? The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in. How do decisions of the Swiss National Bank impact the Swiss Franc? The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF. How does economic data influence the value of the Swiss Franc? Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate. How does the Eurozone monetary policy affect the Swiss Franc? As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
The Fed cut the interest rates by a quarter point last week and pencilled in only two rate cuts in 2025, down from its original forecast of four. The hawkish signals from the US central bank, which appear newly concerned about persistent inflation in the months ahead, could lift the Greenback against the Swiss Franc (CHF).
On the other hand, the Swiss National Bank (SNB) cut its key interest rate by 50 basis points (bps) at its December meeting, exceeding expectations of a smaller reduction amid weaker-than-expected inflation in Switzerland and rising uncertainty about the global economy. A more aggressive rate cut from the SNB than the Fed could undermine the CHF and act as a tailwind for USD/CHF.
SNB chairman Martin Schlegel left the door open for further interest rate cuts next year but said it was now less likely the Swiss central bank could take rates below 0%. "We will continue to monitor the situation closely and will adjust our monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term,” added Schlegel.
Meanwhile, the escalating geopolitical tensions in the Middle East could boost the safe-haven currency like the CHF. Israeli strikes across the Gaza Strip overnight and early Sunday killed at least 50 Palestinians, including at one family's home and at a school building, according to Palestinian medical officials. The Houthis released a statement, claiming responsibility for the attack, saying they had aimed a hypersonic ballistic missile at a military target. Swiss Franc FAQs What key factors drive the Swiss Franc? The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone. Why is the Swiss Franc considered a safe-haven currency? The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in. How do decisions of the Swiss National Bank impact the Swiss Franc? The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF. How does economic data influence the value of the Swiss Franc? Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate. How does the Eurozone monetary policy affect the Swiss Franc? As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
07:34 EUR/USD Price Analysis: Tests nine-day EMA near 1.0450, improved RSI supports upside
EUR/USD extends its gains for the third consecutive day, trading around 1.0440 during the Asian hours on Monday.
.fxs-major-currency-prices-wrapper{border:1px solid #dddedf;background:#fff;margin-bottom:32px;width:100%;float:left}.fxs-major-currency-prices-title{color:#1b1c23;font-size:16px;font-style:italic;font-weight:700;line-height:22.4px;text-transform:uppercase;background:#f3f3f8;padding:8px 16px;margin:0}.fxs-major-currency-prices-content{color:#49494f;font-weight:300;padding:0;font-size:14.72px;line-height:20px;margin:8px 16px}table.fxs-major-currency-prices-currency-prices-table{width:100%;text-align:center;border-collapse:collapse;font-size:1rem}table.fxs-major-currency-prices-currency-prices-table th{background-color:#f2f2f2}table.fxs-major-currency-prices-currency-prices-table td{color:#fff}table.fxs-major-currency-prices-currency-prices-table td.green{background-color:#9cd6cd}table.fxs-major-currency-prices-currency-prices-table td.red{background-color:#faafb5}table.fxs-major-currency-prices-currency-prices-table td.blue-grey{background-color:#888a93}.fxs-major-currency-prices-currency-prices-legend{font-size:11px;margin:8px;color:#49494f}@media (min-width:680px){.fxs-major-currency-prices-content{font-size:16px;line-height:21.6px}.fxs-major-currency-prices-title{font-size:19.2px;line-height:27.2px}}.fxs-major-currency-prices-currency-price td.dark-green{background-color:#39ad9a}.fxs-major-currency-prices-currency-price td.light-green{background-color:#9cd6cd}.fxs-major-currency-prices-currency-price td.gray{background-color:#888a93}.fxs-major-currency-prices-currency-price td.light-red{background-color:#faafb5}.fxs-major-currency-prices-currency-price td.strong-red{background-color:#f55e6a}EUR/USD faces challenges due to the persistent bearish bias.Further improvement in the 14-day RSI would indicate a weakening bearish bias.The nine-day EMA at the 1.0449 level acts as an immediate barrier.EUR/USD extends its gains for the third consecutive day, trading around 1.0440 during the Asian hours on Monday. A review of the daily chart shows an ongoing bearish bias as the pair is confined within a descending channel pattern.
The 14-day Relative Strength Index (RSI), a key momentum indicator, is positioned below the 50 level, confirming the persistent bearish sentiment for the EUR/USD pair. However, further improvement would suggest a weakening bearish bias.
Additionally, the nine-day Exponential Moving Average (EMA) is below the 14-day EMA, suggesting the short-term price momentum is weaker, which could mean that the price is likely to continue experiencing downward pressure.
On the downside, the two-year low at 1.0332, which was recorded on November 22, acts as immediate support for the EUR/USD pair. A successful break below this level could reinforce the bearish bias and put downward pressure on the pair to navigate the area around the lower boundary of the descending channel at the 1.0090 level.
In terms of resistance, the EUR/USD pair tests an immediate barrier at the nine-day Exponential Moving Average (EMA) of the 1.0449 level, followed by the 14-day EMA at the 1.0470 level. A breakthrough above these EMAs could lead the pair to approach its six-week high of 1.0630 level.
EUR/USD: Daily ChartEuro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen. USD EUR GBP JPY CAD AUD NZD CHF USD -0.08% -0.09% 0.16% -0.08% -0.13% -0.06% 0.10% EUR 0.08% -0.04% 0.18% -0.02% 0.02% 0.03% 0.16% GBP 0.09% 0.04% 0.16% 0.02% 0.06% 0.06% 0.20% JPY -0.16% -0.18% -0.16% -0.18% -0.21% -0.19% -0.07% CAD 0.08% 0.02% -0.02% 0.18% -0.00% 0.01% 0.17% AUD 0.13% -0.02% -0.06% 0.21% 0.00% -0.02% 0.14% NZD 0.06% -0.03% -0.06% 0.19% -0.01% 0.02% 0.12% CHF -0.10% -0.16% -0.20% 0.07% -0.17% -0.14% -0.12%
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
07:24 Lagarde speech: Still believe that we should be very vigilant about services
In an interview with the Financial Times (FT) on Monday, European Central Bank (ECB) President Christine Lagarde said that she “still believes that we should be very vigilant about services.” .
In an interview with the Financial Times (FT) on Monday, European Central Bank (ECB) President Christine Lagarde said that she “still believes that we should be very vigilant about services.”
07:07 Gold price holds comfortably above $2,600 mark; lacks bullish conviction
Gold price (XAU/USD) struggles to capitalize on last week's modest recovery from a one-month trough and oscillates in a range around the $2,625 region during the Asian session on Monday.
.fxs-faq-module-wrapper{border:1px solid #dddedf;background:#fff;margin-bottom:32px;width:100%;float:left;font-family:Roboto,sans-serif}.fxs-faq-module-title{color:#1b1c23;font-size:16px;font-style:italic;font-weight:700;line-height:22.4px;text-transform:uppercase;background:#f3f3f8;padding:8px 16px;margin:0}.fxs-faq-module-container{padding:16px;width:100%;box-sizing:border-box;display:flex;flex-direction:column;gap:12px}.fxs-faq-module-section{padding-bottom:16px;border-bottom:1px solid #ececf1;margin-bottom:0}.fxs-faq-module-section:last-child{border:none;margin-bottom:0}.fxs-faq-module-container input[type=checkbox]{display:none}.fxs-faq-module-header{padding:4px 0;background-color:#fff;border:none;position:relative;cursor:pointer;margin:0}.fxs-faq-module-header label{display:block;cursor:pointer}.fxs-faq-module-header label span{display:block;width:calc(100% - 50px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{content:"";position:absolute;top:50%;right:16px;width:8px;height:2px;background-color:#49494f;transition:all .2s ease-in-out;transition-delay:0}.fxs-faq-module-header label:after{transform:rotate(45deg) translateX(-4px)}.fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(4px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{transition:transform .3s ease-in-out}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:after{transform:rotate(45deg) translateX(4px)}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(-4px)}.fxs-faq-module-content{max-height:0;overflow:hidden;transition:all .3s ease-in-out;color:#49494f;font-weight:300;padding:0;font-size:14.72px;line-height:20px;margin:0}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-content{max-height:1000px;margin-top:8px}@media (min-width:680px){.fxs-faq-module-title{font-size:19.2px;line-height:27.2px}.fxs-faq-module-header{font-size:19.2px;line-height:25.92px}.fxs-faq-module-content{font-size:16px;line-height:21.6px}}Gold price oscillates in a range at the start of a new week amid mixed fundamental cues.Geopolitical risks continue to underpin the XAU/USD amid subdued US Dollar price action.The Fed’s hawkish stance backs elevated US bond yields and caps the pair’s gains.Gold price (XAU/USD) struggles to capitalize on last week's modest recovery from a one-month trough and oscillates in a range around the $2,625 region during the Asian session on Monday. The US Dollar (USD) bulls remain on the defensive below a two-year high touched on Friday and turn out to be a key factor acting as a tailwind for the commodity. Apart from this, geopolitical risks stemming from the protracted Russia-Ukraine war and tensions in the Middle East further lend support to the safe-haven precious metal.
Meanwhile, the Federal Reserve's (Fed) hawkish signal, that it would slow the pace of rate cuts in 2025, remains supportive of elevated US Treasury bond yields. This, along with a generally positive tone around the equity markets, seems to cap gains for the non-yielding yellow metal. Hence, it will be prudent to wait for strong follow-through buying before positioning for any further appreciating move. Traders now look forward to the release of the Conference Board's Consumer Confidence Index for short-term impetus.
Gold price struggles to lure buyers amid Fed’s hawkish signal and elevated US bond yields The US Dollar pulled back from a two-year high on Friday following the release of the US Personal Consumption Expenditure (PCE) Price Index, which pointed to signs of inflation moderation. The US Bureau of Economic Analysis (BEA) reported that inflation in the US, as measured by the change in the PCE Price Index, edged higher to 2.4% on a yearly basis in November from 2.3% previous. Meanwhile, the core PCE Price Index, which excludes volatile food and energy prices, rose 2.8% during the reported period, matching October's reading but arriving below the expectation of 2.9%. Furthermore, Personal Income decelerated sharply from 0.7% in October and grew 0.3% last month, while Consumer Spending rose 0.4% after a downwardly revised reading of 0.3% in October. Russian President Vladimir Putin has pledged retaliation after Ukraine staged a major drone attack on the city of Kazan, which damaged residential buildings and shut down the airport. Israeli forces bombed the so-called “safe zone” in southern Gaza, causing tents to go up in flames and killing at least seven Palestinians, taking the death toll over the past day to at least 50. The Federal Reserve last week signaled that it would slow the pace of rate cuts in 2025, lifting the benchmark US Treasury bond yield to its highest level in more than six months last week. Monday's US economic docket features the release of the Conference Board's Consumer Confidence Index and might provide some impetus later during the early North American session.
Gold price technical setup warrants caution before positioning for additional near-term gainsFrom a technical perspective, acceptance above the 23.6% Fibonacci retracement level of the recent pullback from a one-month peak favors bullish traders. That said, negative oscillators on daily/4-hour charts warrant some caution before positioning for any further appreciating move. Hence, any subsequent move up might still be seen as a selling opportunity and seems limited.
Meanwhile, the 38.2% Fibo. level, around the $2,637 area, now seems to act as an immediate hurdle ahead of the $2,643-$2,647 congestion zone, which coincides with the downward sloping 200-period Simple Moving Average (SMA) on the 4-hour chart. The latter should act as a key pivotal point, which if cleared decisively, should pave the way for a further appreciating move.
On the flip side, the $2,616-$2,615 region that is deemed as a pullback area, or the 23.6% Fibo. level could offer immediate support. This is followed by the $2,600 round-figure mark, below which the Gold price could retest the monthly swing low, around the $2,583 zone touched last week. Some follow-through selling will be seen as a fresh trigger for bears and set the stage for deeper losses in the near term.
Gold FAQs Why do people invest in Gold?
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government. Who buys the most Gold?
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves. How is Gold correlated with other assets?
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal. What does the price of Gold depend on?
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
07:00 Singapore Consumer Price Index (YoY) registered at 1.6, below expectations (1.8) in November
Singapore Consumer Price Index (YoY) registered at 1.6, below expectations (1.8) in November
06:56 Silver Price Forecast: XAG/USD retains negative bias below $30.00
The Silver price (XAG/USD) extends the recovery to near $29.60 during the early Asian session on Monday, bolstered by the softer-than-expected US November Personal Consumption Expenditures (PCE) Price Index inflation data.
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According to the daily chart, the bearish outlook of the Silver price remains in play as the price holds below the key 100-day Exponential Moving Average (EMA). Additionally, the downward momentum is reinforced by the 14-day Relative Strength Index (RSI), which stands below the midline around 39.20, suggesting that further downside cannot be ruled out.
The potential support level for XAG/USD emerges in the $29.10-$29.00 zone, representing the lower limit of the Bollinger Band and psychological level. A breach of this level could expose $27.70, the low of September 9. The additional downside filter to watch is $26.45, the low of August 8.
On the upside, the crucial upside barrier for the precious metal is seen at the $30.00 level. Sustained trading above the mentioned level could pave the way to $30.60, the 100-day EMA. Further north, the next hurdle is located at $32.17, the upper boundary of the Bollinger Band. Silver price (XAG/USD) daily chartSilver FAQs Why do people invest in Silver? Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets. Which factors influence Silver prices? Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices. How does industrial demand affect Silver prices? Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices. How do Silver prices react to Gold’s moves? Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
According to the daily chart, the bearish outlook of the Silver price remains in play as the price holds below the key 100-day Exponential Moving Average (EMA). Additionally, the downward momentum is reinforced by the 14-day Relative Strength Index (RSI), which stands below the midline around 39.20, suggesting that further downside cannot be ruled out.
The potential support level for XAG/USD emerges in the $29.10-$29.00 zone, representing the lower limit of the Bollinger Band and psychological level. A breach of this level could expose $27.70, the low of September 9. The additional downside filter to watch is $26.45, the low of August 8.
On the upside, the crucial upside barrier for the precious metal is seen at the $30.00 level. Sustained trading above the mentioned level could pave the way to $30.60, the 100-day EMA. Further north, the next hurdle is located at $32.17, the upper boundary of the Bollinger Band. Silver price (XAG/USD) daily chartSilver FAQs Why do people invest in Silver? Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets. Which factors influence Silver prices? Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices. How does industrial demand affect Silver prices? Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices. How do Silver prices react to Gold’s moves? Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
06:22 USD/CAD extends losing streak to near 1.4350 due to improved Oil prices
USD/CAD continues to lose ground for the third successive session, trading around 1.4360 during the Asian hours on Monday.
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In the political arena, Canadian Prime Minister Justin Trudeau has no plans to resign over the Christmas holidays, according to the Globe & Mail. Trudeau currently leads a minority government, and all opposition parties have pledged to introduce a no-confidence motion that would trigger an election when Parliament reconvenes in six weeks.
In the United States, President-elect Donald Trump has announced several key appointments to his administration. Scott Bessent will lead the Treasury, Howard Lutnick will become Commerce Secretary, and Kevin Hassett will head the National Economic Council. Additionally, Andrew Ferguson has been appointed to chair the Federal Trade Commission, while Jacob Helberg, a senior advisor to Palantir CEO Alex Karp, has been nominated as Secretary of State for Economic Growth, Energy, and Environment, as reported by Business Insider.
The US Dollar (USD) received downward pressure after lower-than-expected Personal Consumption Expenditures Price Index (PCE) data from the United States (US) was released on Friday. The inflation report showed that core PCE inflation year-over-year, the Fed’s preferred inflation measure, rose steadily by 2.8% in November, slower than estimates of 2.9%. The monthly core inflation grew moderately by 0.1%, against estimates of 0.2% and the prior release of 0.3%.
Canadian Dollar FAQs What key factors drive the Canadian Dollar?
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar. How do the decisions of the Bank of Canada impact the Canadian Dollar?
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive. How does the price of Oil impact the Canadian Dollar?
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD. How does inflation data impact the value of the Canadian Dollar?
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar. How does economic data influence the value of the Canadian Dollar?
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
05:45 WTI trades with mild positive bias around $69.70-$69.75 area, lacks bullish conviction
West Texas Intermediate (WTI) US Crude Oil prices edge higher for the second straight day on Monday and move away from over a one-week low, around the $68.40-$68.35 region touched on Friday.
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A weekend editorial from a media outlet affiliated with China's Ministry of Housing and Urban-Rural Development hinted at further measures to support the recovery of the property market. This helps ease worries about a slowdown in demand, which, along with concerns about supply disruptions stemming from tighter sanctions on Russia and Iran, acts as a tailwind for Crude Oil prices.
Meanwhile, the US Dollar (USD) remains below a two-week high touched on Friday in the wake of the Personal Consumption Expenditure (PCE) Price Index report for November, which pointed to signs of inflation moderation. A softer buck tends to benefit USD-denominated commodities and turns out to be another factor supporting Crude Oil prices, though any meaningful gains seem elusive.
The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, recently decided to postpone planned supply increases by three months until April and extend the full unwinding of cuts by a year until the end of 2026. Furthermore, the International Energy Agency highlighted increasing supply from non-OPEC+ nations, which, in turn, might cap Crude Oil prices.
Hence, it will be prudent to wait for strong follow-through buying before positioning for any further intraday appreciating move. Trades now look forward to the release of the Conference Board's Consumer Confidence Index, which might influence the USD price dynamics and provide some impetus to Crude Oil prices.
WTI Oil FAQs What is WTI Oil?
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media. What factors drive the price of WTI Oil?
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa. How does inventory data impact the price of WTI Oil
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency. How does OPEC influence the price of WTI Oil?
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
05:03 NZD/USD moves above 0.5650 due to rising odds of Fed keeping rates unchanged in January
NZD/USD extends its gains for the second consecutive day, trading around 0.5660 during the Asian session on Monday.
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The inflation report showed that core PCE inflation year-over-year, the Fed’s preferred inflation measure, rose steadily by 2.8% in November, slower than estimates of 2.9%. The monthly core inflation grew moderately by 0.1%, against estimates of 0.2% and the prior release of 0.3%.
Moderate growth in US inflation reinforced the market expectations that the Federal Reserve (Fed) will adopt a slower pace of additional cuts in 2025. According to the CME FedWatch tool, markets now anticipate a more than 90% probability that the Federal Reserve (Fed) will keep interest rates unchanged in January, maintaining the current range of 4.25%–4.50%.
The upside potential for the New Zealand Dollar (NZD) could be limited, as weaker-than-expected GDP data for Q3 has pushed New Zealand into its deepest recession since the initial COVID-19 slump in 2020. This has increased expectations for more aggressive monetary policy easing by the Reserve Bank of New Zealand (RBNZ). Markets have fully priced in a substantial 50 basis point rate cut at the RBNZ’s February meeting.
New Zealand's GDP contracted by 1.0% quarter-over-quarter in Q3, slightly improving from the revised 1.1% contraction in Q2 but worse than the anticipated 0.4% decline. On an annual basis, GDP shrank by 1.5% in Q3, a sharper decline compared to the previous 0.5% contraction and well below the expected 0.4% drop.
New Zealand Dollar FAQs What key factors drive the New Zealand Dollar?
The New Zealand Dollar (NZD), also known as the Kiwi, is a well-known traded currency among investors. Its value is broadly determined by the health of the New Zealand economy and the country’s central bank policy. Still, there are some unique particularities that also can make NZD move. The performance of the Chinese economy tends to move the Kiwi because China is New Zealand’s biggest trading partner. Bad news for the Chinese economy likely means less New Zealand exports to the country, hitting the economy and thus its currency. Another factor moving NZD is dairy prices as the dairy industry is New Zealand’s main export. High dairy prices boost export income, contributing positively to the economy and thus to the NZD. How do decisions of the RBNZ impact the New Zealand Dollar?
The Reserve Bank of New Zealand (RBNZ) aims to achieve and maintain an inflation rate between 1% and 3% over the medium term, with a focus to keep it near the 2% mid-point. To this end, the bank sets an appropriate level of interest rates. When inflation is too high, the RBNZ will increase interest rates to cool the economy, but the move will also make bond yields higher, increasing investors’ appeal to invest in the country and thus boosting NZD. On the contrary, lower interest rates tend to weaken NZD. The so-called rate differential, or how rates in New Zealand are or are expected to be compared to the ones set by the US Federal Reserve, can also play a key role in moving the NZD/USD pair. How does economic data influence the value of the New Zealand Dollar?
Macroeconomic data releases in New Zealand are key to assess the state of the economy and can impact the New Zealand Dollar’s (NZD) valuation. A strong economy, based on high economic growth, low unemployment and high confidence is good for NZD. High economic growth attracts foreign investment and may encourage the Reserve Bank of New Zealand to increase interest rates, if this economic strength comes together with elevated inflation. Conversely, if economic data is weak, NZD is likely to depreciate. How does broader risk sentiment impact the New Zealand Dollar?
The New Zealand Dollar (NZD) tends to strengthen during risk-on periods, or when investors perceive that broader market risks are low and are optimistic about growth. This tends to lead to a more favorable outlook for commodities and so-called ‘commodity currencies’ such as the Kiwi. Conversely, NZD tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
05:01 Japanese Yen bulls remain on the sidelines; seems vulnerable against USD
The Japanese Yen (JPY) kicks off the new week on a softer note and remains within striking distance of a five-month low touched against its American counterpart on Friday.
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Adding to this, a generally positive tone around the equity markets is seen denting demand for the safe-haven JPY. Meanwhile, strong inflation data released from Japan on Friday left the door open for a potential BoJ rate hike in January or March. This, along with subdued the US Dollar (USD) price action, fails to assist the USD/JPY pair to capitalize on its Asian session uptick to the 156.70 area in the absence of any relevant fundamental catalyst.
Japanese Yen lacks bullish conviction amid BoJ rate hike uncertainty The Bank of Japan last week decided to keep the short-term rate target unchanged at the end of the December policy meeting and offered few clues on how soon it could push up borrowing costs. Japanese government bond yields dropped to the lowest in a month on Friday in reaction to BoJ Governor Kazuo Ueda's dovish signals and a very cautious tone on further monetary policy tightening. The benchmark 10-year US government bond yield rose to its highest level in more than six months last week and the resultant widening of the US-Japan yield differential undermines the Japanese Yen. A government report showed on Friday that Japan's National Consumer Price Index (CPI) rose more than expected in November, which bodes well with further BoJ interest rate hikes in early 2025. The US Dollar retreated from a two-year high on Friday after the Personal Consumption Expenditure (PCE) Price Index pointed to signs of inflation moderation and lingering challenges for the economy. According to a report published by the US Bureau of Economic Analysis (BEA), the PCE Price Index edged higher to 2.4% on a yearly basis in November from 2.3% in the previous month. The core gauge, which excludes volatile food and energy prices, rose 2.8% during the reported period, matching October's reading but arriving below the market expectation of 2.9%. Additional details of the report revealed that Personal Income grew 0.3% in November, which marked a sharp deceleration relative to the outsized 0.7% increase recorded in October. Meanwhile, Consumer Spending, which accounts for more than two-thirds of US economic activity, climbed 0.4% last month after a downwardly revised reading of 0.3% in October. Investors now look forward to the release of the Conference Board's US Consumer Confidence Index for short-term trading opportunities on the first day of a holiday-shortened week.
USD/JPY setup suggests that the path of least resistance remains to the upsideFrom a technical perspective, Friday's low, around the 156.00-155.95 area, now seems to protect the immediate downside. Any further decline might be seen as a buying opportunity near the 155.50 horizontal zone. This next relevant support is pegged near the 155.00 psychological mark, which if broken decisively, might shift the near-term bias in favor of bearish traders and make the USD/JPY pair vulnerable to weaken further.
On the other end, the 157.00 round figure now seems to act as an immediate hurdle ahead of the 157.40-157.45 region and the multi-month peak, around the 157.90 area touched on Friday. Some follow-through buying beyond the 158.00 mark will be seen as a fresh trigger for bullish traders amid positive oscillators on the daily chart. The USD/JPY pair might then climb to the 158.45 intermediate hurdle before aiming to reclaim the 159.00 mark.
Japanese Yen FAQs What key factors drive the Japanese Yen?
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors. How do the decisions of the Bank of Japan impact the Japanese Yen?
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen. How does the differential between Japanese and US bond yields impact the Japanese Yen?
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential. How does broader risk sentiment impact the Japanese Yen?
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
04:47 USD/INR drifts higher amid bullish US Dollar demand
The Indian Rupee (INR) remains weak on Monday after reaching an all-time low in the previous session.
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On the other hand, the Reserve Bank of India (RBI) could step into the foreign exchange market by selling the USD. This might help limit the INR’s losses for the time being. Looking ahead, the US December Consumer Confidence and Chicago Fed National Activity Index are due later on Monday. On Tuesday, Durable Goods Orders will be released. Indian Rupee seems vulnerable amid hawkish Fed expectations India's foreign exchange reserves fell in nine out of the past 10 weeks, hitting a multi-month low. The reserves had been falling ever since reserves touched an all-time high of USD 704.89 billion in September, and now last week the forex stood at USD 654.857 billion, according to the RBI data. "Higher trade deficit along with slow growth figures puts rupee on test with outflows from domestic equity markets. For USD/INR, positionally 84.70 now acts as a good base while the door remains open for 85.50 levels," said Kunal Sodhani, vice president at Shinhan Bank India. The Commerce Department reported on Friday that the US Personal Consumption Expenditures (PCE) Price Index advanced 2.4% YoY in November after rising 2.3% in October. The reading came in softer than the expectations of 2.5%. The US Core PCE, excluding the volatile food and energy components, climbed 2.8% YoY in November after advancing by the same margin in October, but below the 2.9% expected. USD/INR retains longer-term bullish bias The Indian Rupee trades on a weaker note on the day. The strong uptrend of the USD/INR pair remains intact as the pair holds above the key 100-day Exponential Moving Average (EMA) on the daily timeframe. The path of least resistance is to the upside as the pair, with the 14-day Relative Strength Index (RSI) standing above the midline near 65.40.
Bullish candlesticks that could take USD/INR could take to the ascending channel at 85.20. Extended gains could see a rally to 85.50.
On the flip side, the lower boundary of the channel at 84.88 acts as an initial support level for the pair. A breach of this level could pave the way to 84.19, the 100-day EMA.Indian Rupee FAQs What are the key factors driving the Indian Rupee? The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee. How do the decisions of the Reserve Bank of India impact the Indian Rupee? The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference. What macroeconomic factors influence the value of the Indian Rupee? Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee. How does inflation impact the Indian Rupee? Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
On the other hand, the Reserve Bank of India (RBI) could step into the foreign exchange market by selling the USD. This might help limit the INR’s losses for the time being. Looking ahead, the US December Consumer Confidence and Chicago Fed National Activity Index are due later on Monday. On Tuesday, Durable Goods Orders will be released. Indian Rupee seems vulnerable amid hawkish Fed expectations India's foreign exchange reserves fell in nine out of the past 10 weeks, hitting a multi-month low. The reserves had been falling ever since reserves touched an all-time high of USD 704.89 billion in September, and now last week the forex stood at USD 654.857 billion, according to the RBI data. "Higher trade deficit along with slow growth figures puts rupee on test with outflows from domestic equity markets. For USD/INR, positionally 84.70 now acts as a good base while the door remains open for 85.50 levels," said Kunal Sodhani, vice president at Shinhan Bank India. The Commerce Department reported on Friday that the US Personal Consumption Expenditures (PCE) Price Index advanced 2.4% YoY in November after rising 2.3% in October. The reading came in softer than the expectations of 2.5%. The US Core PCE, excluding the volatile food and energy components, climbed 2.8% YoY in November after advancing by the same margin in October, but below the 2.9% expected. USD/INR retains longer-term bullish bias The Indian Rupee trades on a weaker note on the day. The strong uptrend of the USD/INR pair remains intact as the pair holds above the key 100-day Exponential Moving Average (EMA) on the daily timeframe. The path of least resistance is to the upside as the pair, with the 14-day Relative Strength Index (RSI) standing above the midline near 65.40.
Bullish candlesticks that could take USD/INR could take to the ascending channel at 85.20. Extended gains could see a rally to 85.50.
On the flip side, the lower boundary of the channel at 84.88 acts as an initial support level for the pair. A breach of this level could pave the way to 84.19, the 100-day EMA.Indian Rupee FAQs What are the key factors driving the Indian Rupee? The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee. How do the decisions of the Reserve Bank of India impact the Indian Rupee? The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference. What macroeconomic factors influence the value of the Indian Rupee? Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee. How does inflation impact the Indian Rupee? Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
04:35 Australian Dollar appreciates as US Dollar remains subdued after a softer inflation report
The Australian Dollar (AUD) steadies following two days of gains on Monday as the US Dollar (USD) remains subdued following the Personal Consumption Expenditures Price Index (PCE) data from the United States (US) released on Friday.
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.fxs-faq-module-wrapper{border:1px solid #dddedf;background:#fff;margin-bottom:32px;width:100%;float:left;font-family:Roboto,sans-serif}.fxs-faq-module-title{color:#1b1c23;font-size:16px;font-style:italic;font-weight:700;line-height:22.4px;text-transform:uppercase;background:#f3f3f8;padding:8px 16px;margin:0}.fxs-faq-module-container{padding:16px;width:100%;box-sizing:border-box;display:flex;flex-direction:column;gap:12px}.fxs-faq-module-section{padding-bottom:16px;border-bottom:1px solid #ececf1;margin-bottom:0}.fxs-faq-module-section:last-child{border:none;margin-bottom:0}.fxs-faq-module-container input[type=checkbox]{display:none}.fxs-faq-module-header{padding:4px 0;background-color:#fff;border:none;position:relative;cursor:pointer;margin:0}.fxs-faq-module-header label{display:block;cursor:pointer}.fxs-faq-module-header label span{display:block;width:calc(100% - 50px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{content:"";position:absolute;top:50%;right:16px;width:8px;height:2px;background-color:#49494f;transition:all .2s ease-in-out;transition-delay:0}.fxs-faq-module-header label:after{transform:rotate(45deg) translateX(-4px)}.fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(4px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{transition:transform .3s ease-in-out}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:after{transform:rotate(45deg) translateX(4px)}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(-4px)}.fxs-faq-module-content{max-height:0;overflow:hidden;transition:all .3s ease-in-out;color:#49494f;font-weight:300;padding:0;font-size:14.72px;line-height:20px;margin:0}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-content{max-height:1000px;margin-top:8px}@media (min-width:680px){.fxs-faq-module-title{font-size:19.2px;line-height:27.2px}.fxs-faq-module-header{font-size:19.2px;line-height:25.92px}.fxs-faq-module-content{font-size:16px;line-height:21.6px}}The Australian Dollar appreciates as US PCE data reinforced the likelihood of Fed adopting a gradual policy easing in 2025.The AUD receives downward pressure as the RBA may begin rate cuts in February.CME FedWatch tool suggests a more than 90% probability of the Fed keeping rates unchanged in January.The Australian Dollar (AUD) steadies following two days of gains on Monday as the US Dollar (USD) remains subdued following the Personal Consumption Expenditures Price Index (PCE) data from the United States (US) released on Friday.
US inflation data for November has strengthened market expectations that the Federal Reserve (Fed) will adopt a slower pace of rate cuts in 2025. According to the CME FedWatch tool, markets now anticipate a more than 90% probability that the Federal Reserve (Fed) will keep interest rates unchanged in January, maintaining the current range of 4.25%–4.50%.
The Reserve Bank of Australia (RBA) is expected to begin cutting its cash rate as early as February, amid mounting signs of an economic slowdown. Traders are preparing for the upcoming release of the Reserve Bank of Australia's (RBA) meeting minutes due on Tuesday, following its decision to hold interest rates steady at 4.35% for the ninth consecutive meeting.
Australian Dollar advances as traders expect Fed to adopt a gradual policy easing in 2025 US core PCE inflation year-over-year, the Fed’s preferred inflation measure, rose steadily by 2.8%, slower than estimates of 2.9%. The monthly core inflation grew moderately by 0.1%, against estimates of 0.2% and the prior release of 0.3%. Australia's Private Sector Credit grew by 0.5% month-over-month in November, aligning with expectations. This followed a 0.6% increase in October, which marked the fastest monthly growth in four months. On an annual basis, Private Sector Credit rose by 6.2% in November, the highest growth rate since May 2023, up slightly from 6.1% in October. On Friday, the People’s Bank of China (PBoC) decided to keep its one- and five-year Loan Prime Rates (LPRs) unchanged at 3.10% and 3.60%, respectively, in the fourth quarterly meeting. US Gross Domestic Product (GDP) Annualized reported a 3.1% growth rate in the third quarter, surpassing both market expectations and the previous reading of 2.8%. Additionally, Initial Jobless Claims dropped to 220,000 for the week ending December 13, down from 242,000 in the prior week and below the market forecast of 230,000. National Australia Bank (NAB) maintained its forecast for the first Reserve Bank of Australia rate cut at the May 2025 meeting, though they acknowledged February as a possibility. NAB's report indicates that the Unemployment Rate is expected to peak at 4.3% before easing to 4.2% by 2026 as the economy stabilizes. The Q4 trimmed mean inflation is projected at 0.6% quarter-on-quarter, with a gradual easing expected, reaching 2.7% by late 2025. Reserve Bank of Australia Governor Michele Bullock highlighted the continued strength of the labor market as a key reason the RBA has been slower than other nations to commence its monetary easing cycle.
Australian Dollar hovers near 0.6250, bullish RSI backs a bounce
The AUD/USD pair trades near 0.6250 on Monday, with daily chart analysis indicating a persistent bearish bias as the pair remains within a descending channel pattern. However, the 14-day Relative Strength Index (RSI) hovers above the 30 level, hinting at a potential near-term upward correction.
On the downside, the AUD/USD pair may test the lower boundary of the descending channel, located near the 0.6120 support level.
The AUD/USD pair will likely encounter primary resistance near the nine-day Exponential Moving Average (EMA) at 0.6303, followed by the 14-day EMA at 0.6337. A further hurdle lies at the descending channel’s upper boundary around 0.6380. A decisive breakout above this channel could propel the pair toward the nine-week high of 0.6687.
AUD/USD: Daily ChartAustralian Dollar PRICE Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the US Dollar. USD EUR GBP JPY CAD AUD NZD CHF USD -0.09% -0.14% -0.02% -0.11% -0.14% -0.09% 0.02% EUR 0.09% -0.07% 0.02% -0.04% 0.02% -0.02% 0.09% GBP 0.14% 0.07% 0.06% 0.04% 0.10% 0.07% 0.19% JPY 0.02% -0.02% -0.06% -0.04% -0.06% -0.05% 0.03% CAD 0.11% 0.04% -0.04% 0.04% 0.02% 0.01% 0.13% AUD 0.14% -0.02% -0.10% 0.06% -0.02% -0.04% 0.08% NZD 0.09% 0.02% -0.07% 0.05% -0.01% 0.04% 0.08% CHF -0.02% -0.09% -0.19% -0.03% -0.13% -0.08% -0.08%
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
Australian Dollar FAQs What key factors drive the Australian Dollar?
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD. How do the decisions of the Reserve Bank of Australia impact the Australian Dollar?
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive. How does the health of the Chinese Economy impact the Australian Dollar?
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs. How does the price of Iron Ore impact the Australian Dollar?
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD. How does the Trade Balance impact the Australian Dollar?
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
03:28 Israeli strikes across Gaza kill at least 50 people
Israeli strikes across the Gaza Strip overnight and early Sunday killed at least 50 Palestinians, including at one family's home and a school building, according to Palestinian medical officials.
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Israeli strikes across the Gaza Strip overnight and early Sunday killed at least 50 Palestinians, including at one family's home and a school building, according to Palestinian medical officials.
The Houthis issued a statement, claiming responsibility for the attack, saying they had aimed a hypersonic ballistic missile at a military target. Gold FAQs Why do people invest in Gold? Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government. Who buys the most Gold? Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves. How is Gold correlated with other assets? Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal. What does the price of Gold depend on? The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
The Houthis issued a statement, claiming responsibility for the attack, saying they had aimed a hypersonic ballistic missile at a military target. Gold FAQs Why do people invest in Gold? Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government. Who buys the most Gold? Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves. How is Gold correlated with other assets? Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal. What does the price of Gold depend on? The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
03:15 PBOC sets USD/CNY reference rate at 7.1870 vs. 7.1901 previous
On Monday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.1870, as compared to Friday's fix of 7.1901 and 7.2880 Reuters estimates.
On Monday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.1870, as compared to Friday's fix of 7.1901 and 7.2880 Reuters estimates.
03:07 GBP/USD consolidates in a range around 1.2570 area; upside potential seems limited
The GBP/USD pair kicks off the new week on a subdued note and oscillates in a narrow trading range above mid-1.2500s during the Asian session.
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The US Dollar (USD) pulled back from a two-year high on Friday after the Personal Consumption Expenditure (PCE) Price Index report for November pointed to signs of inflation moderation and lingering challenges for the economy. This keeps the USD bulls on the defensive and offers some support to the GBP/USD pair. That said, the Federal Reserve's (Fed) hawkish shift might continue to act as a tailwind for the safe-haven buck.
The Fed, as was widely anticipated, lowered borrowing costs by 25 basis points (bps) last Wednesday, though signaled a slower pace of rate cuts in 2025. This remains supportive of elevated US Treasury bond yields, which, along with geopolitical risks stemming from the protracted Russia-Ukraine war and tensions in the Middle East, supports prospects for the emergence of some USD dip-buying and might cap the GBP/USD pair.
Apart from this, the Bank of England's (BoE) split vote decision to leave interest rates unchanged last week and a dovish outlook might hold back traders from placing aggressive bullish bets around the British Pound (GBP). In fact, three members of the BoE's MPC voted to reduce rates, while policymakers downgraded their economic forecast for the fourth quarter of 2024. This might further contribute to keeping a lid on the GBP/USD pair.
Market participants now look to the BoE's Quarterly Bulletin for some impetus ahead of the Conference Board's US Consumer Confidence Index later during the early North American session. Nevertheless, the aforementioned fundamental backdrop makes it prudent to wait for strong follow-through buying before confirming that the GBP/USD pair has bottomed out in the near term.
Pound Sterling FAQs What is the Pound Sterling?
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE). How do the decisions of the Bank of England impact on the Pound Sterling?
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects. How does economic data influence the value of the Pound?
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall. How does the Trade Balance impact the Pound?
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
03:06 Gold Price Forecast: XAU/USD flat lines above $2,600 as traders await fresh catalysts
Gold price (XAU/USD) holds steady near $2,625 during the early Asian session on Monday.
.fxs-faq-module-wrapper{border:1px solid #dddedf;background:#fff;margin-bottom:32px;width:100%;float:left;font-family:Roboto,sans-serif}.fxs-faq-module-title{color:#1b1c23;font-size:16px;font-style:italic;font-weight:700;line-height:22.4px;text-transform:uppercase;background:#f3f3f8;padding:8px 16px;margin:0}.fxs-faq-module-container{padding:16px;width:100%;box-sizing:border-box;display:flex;flex-direction:column;gap:12px}.fxs-faq-module-section{padding-bottom:16px;border-bottom:1px solid #ececf1;margin-bottom:0}.fxs-faq-module-section:last-child{border:none;margin-bottom:0}.fxs-faq-module-container input[type=checkbox]{display:none}.fxs-faq-module-header{padding:4px 0;background-color:#fff;border:none;position:relative;cursor:pointer;margin:0}.fxs-faq-module-header label{display:block;cursor:pointer}.fxs-faq-module-header label span{display:block;width:calc(100% - 50px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{content:"";position:absolute;top:50%;right:16px;width:8px;height:2px;background-color:#49494f;transition:all .2s ease-in-out;transition-delay:0}.fxs-faq-module-header label:after{transform:rotate(45deg) translateX(-4px)}.fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(4px)}.fxs-faq-module-header label:after,.fxs-faq-module-header label:before{transition:transform .3s ease-in-out}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:after{transform:rotate(45deg) translateX(4px)}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-header label:before{transform:rotate(-45deg) translateX(-4px)}.fxs-faq-module-content{max-height:0;overflow:hidden;transition:all .3s ease-in-out;color:#49494f;font-weight:300;padding:0;font-size:14.72px;line-height:20px;margin:0}input[type=checkbox]:checked+.fxs-faq-module-section .fxs-faq-module-content{max-height:1000px;margin-top:8px}@media (min-width:680px){.fxs-faq-module-title{font-size:19.2px;line-height:27.2px}.fxs-faq-module-header{font-size:19.2px;line-height:25.92px}.fxs-faq-module-content{font-size:16px;line-height:21.6px}}Gold trades flat around $2,625 in Monday’s early Asian session. More cautious approach to monetary easing next year from the Fed drags the Gold price lower. Softer US PCE inflation data, the upturn in China’s Gold demand and geopolitical risks might the downside for XAU/USD. Gold price (XAU/USD) holds steady near $2,625 during the early Asian session on Monday. The hawkish stance of the Federal Reserve (Fed) might weigh on the yellow metal. However, the softer Greenback after the weaker inflation report could cap its downside.
The Fed lowered interest rates in the December meeting as expected but signaled that it will slow the pace at which borrowing costs fall any further. The Fed's dot plot, a chart that projects the future path of interest rates, indicated a half-percentage point rate cut in 2025, compared with a full percentage cut projected in September. This, in turn, continues to lift the US Dollar (USD) and undermine the USD-denominated Gold as higher real interest rates increase the opportunity cost of gold.
On the other hand, softer-than-expected US inflation data could help limit the precious metal’s losses. The US inflation, as measured by the Personal Consumption Expenditures (PCE) Price Index, rose to 2.4% YoY in November from 2.3% in October. The reading came in below the market consensus of 2.5%. Meanwhile, the Core PCE jumped 2.8% in November, compared to 2.8% In the previous reading, but below the 2.9% expected.
The upturn in Gold demand in China might contribute to the yellow metal’s upside as China is the world’s largest Gold consumer nation. With less than 6 weeks until Chinese New Year, the world's heaviest gold-buying festival overtakes Diwali in India. Additionally, the ongoing geopolitical tensions in the Middle East could boost the safe-haven flows, benefiting the Gold price. Gold FAQs Why do people invest in Gold? Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government. Who buys the most Gold? Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves. How is Gold correlated with other assets? Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal. What does the price of Gold depend on? The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
The Fed lowered interest rates in the December meeting as expected but signaled that it will slow the pace at which borrowing costs fall any further. The Fed's dot plot, a chart that projects the future path of interest rates, indicated a half-percentage point rate cut in 2025, compared with a full percentage cut projected in September. This, in turn, continues to lift the US Dollar (USD) and undermine the USD-denominated Gold as higher real interest rates increase the opportunity cost of gold.
On the other hand, softer-than-expected US inflation data could help limit the precious metal’s losses. The US inflation, as measured by the Personal Consumption Expenditures (PCE) Price Index, rose to 2.4% YoY in November from 2.3% in October. The reading came in below the market consensus of 2.5%. Meanwhile, the Core PCE jumped 2.8% in November, compared to 2.8% In the previous reading, but below the 2.9% expected.
The upturn in Gold demand in China might contribute to the yellow metal’s upside as China is the world’s largest Gold consumer nation. With less than 6 weeks until Chinese New Year, the world's heaviest gold-buying festival overtakes Diwali in India. Additionally, the ongoing geopolitical tensions in the Middle East could boost the safe-haven flows, benefiting the Gold price. Gold FAQs Why do people invest in Gold? Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government. Who buys the most Gold? Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves. How is Gold correlated with other assets? Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal. What does the price of Gold depend on? The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
02:58 EUR/USD rises to near 1.0450 due to rising odds of Fed keeping rates unchanged in January
EUR/USD remains steady following the gains from the previous session, trading around 1.0430 during the Asian hours on Monday.
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The November inflation report showed that core PCE inflation year-over-year, the Fed’s preferred inflation measure, rose steadily by 2.8%, slower than estimates of 2.9%. The monthly core inflation grew moderately by 0.1%, against estimates of 0.2% and the prior release of 0.3%.
Lower-than-expected US inflation data has reinforced the market sentiment that the Federal Reserve (Fed) will adopt a slower pace of additional cuts in 2025. According to the CME FedWatch tool, markets now anticipate a more than 90% probability that the Federal Reserve (Fed) will keep interest rates unchanged in January, maintaining the current range of 4.25%–4.50%.
On Sunday, US President-elect Donald Trump announced key appointments to his administration, according to Business Insider. Scott Bessent has been chosen to lead the Treasury, Howard Lutnick will serve as Commerce Secretary, and Kevin Hassett will head the National Economic Council. Additionally, Andrew Ferguson has been selected to chair the Federal Trade Commission, while Jacob Helberg, a senior advisor to Palantir CEO Alex Karp, has been nominated as Secretary of State for Economic Growth, Energy, and Environment.
In the Eurozone, European Central Bank (ECB) Governing Council member Boris Vujcic stated on Saturday that the central bank plans to continue lowering borrowing costs in 2025, according to Bloomberg. “The direction is clear—it’s a continuation of the path from 2024, with further reductions in interest rates,” he said.
Additionally, the approval of taxation reforms by German lawmakers strengthens the Euro, as Germany is the largest economy in the Eurozone. These reforms will increase disposable income for households, boosting consumer demand and stimulating economic growth.
Euro FAQs What is the Euro?
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%). What is the ECB and how does it impact the Euro?
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde. How does inflation data impact the value of the Euro?
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money. How does economic data influence the value of the Euro?
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy. How does the Trade Balance impact the Euro?
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
02:01 Trump announces his picks for key positions in the administration
US President-elect Donald Trump is announcing his picks for key positions in his administration.
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US President-elect Donald Trump is announcing his picks for key positions in his administration. Trump appoints Scott Bessent to lead the Treasury, Howard Lutnick as Commerce Secretary, and Kevin Hassett to lead the National Economic Council, per the Business Insider.
Trump has tapped his defense attorney, Alina Habba, to join him in the White House as Counsellor to the President.
Trump picked Andrew Ferguson to chair the Federal Trade Commission.
Jacob Helberg, a senior advisor to Palantir CEO Alex Karp, has been tapped as Secretary of State for Economic Growth, Energy, and Environment.
William McGinley was tapped by Trump to serve as counsel to the Department of Government Efficiency.
Trump has tapped Paul Atkins as chairman of the Securities and Exchange Commission. Market reaction At the time of writing, the US Dollar Index (DXY) was down 0.01% on the day to trade at 107.79. US Dollar FAQs What is the US Dollar? The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away. How do the decisions of the Federal Reserve impact the US Dollar? The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback. What is Quantitative Easing and how does it influence the US Dollar? In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar. What is Quantitative Tightening and how does it influence the US Dollar? Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Trump has tapped his defense attorney, Alina Habba, to join him in the White House as Counsellor to the President.
Trump picked Andrew Ferguson to chair the Federal Trade Commission.
Jacob Helberg, a senior advisor to Palantir CEO Alex Karp, has been tapped as Secretary of State for Economic Growth, Energy, and Environment.
William McGinley was tapped by Trump to serve as counsel to the Department of Government Efficiency.
Trump has tapped Paul Atkins as chairman of the Securities and Exchange Commission. Market reaction At the time of writing, the US Dollar Index (DXY) was down 0.01% on the day to trade at 107.79. US Dollar FAQs What is the US Dollar? The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away. How do the decisions of the Federal Reserve impact the US Dollar? The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback. What is Quantitative Easing and how does it influence the US Dollar? In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar. What is Quantitative Tightening and how does it influence the US Dollar? Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
01:45 Trump threatens to regain control of Panama Canal
US President-elect Donald Trump has demanded Panama reduce fees on the Panama Canal or return it to US control, accusing Panama of charging excessive rates to use the Central American passage, per Reuters.
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US President-elect Donald Trump has demanded Panama reduce fees on the Panama Canal or return it to US control, accusing Panama of charging excessive rates to use the Central American passage, per Reuters.
Trump also said he would not allow the canal to fall into the "wrong hands," citing possible Chinese control of the passage. However, Panama's President Mulino said on Sunday that Panama's independence was non-negotiable and that China had no control over the canal's administration. He also defended Panama's passage charges, claiming they were not established "on a whim”. Market reaction At the time of writing, the US Dollar Index (DXY) was unchanged on the day to trade at 107.80. US Dollar FAQs What is the US Dollar? The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away. How do the decisions of the Federal Reserve impact the US Dollar? The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback. What is Quantitative Easing and how does it influence the US Dollar? In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar. What is Quantitative Tightening and how does it influence the US Dollar? Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Trump also said he would not allow the canal to fall into the "wrong hands," citing possible Chinese control of the passage. However, Panama's President Mulino said on Sunday that Panama's independence was non-negotiable and that China had no control over the canal's administration. He also defended Panama's passage charges, claiming they were not established "on a whim”. Market reaction At the time of writing, the US Dollar Index (DXY) was unchanged on the day to trade at 107.80. US Dollar FAQs What is the US Dollar? The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away. How do the decisions of the Federal Reserve impact the US Dollar? The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback. What is Quantitative Easing and how does it influence the US Dollar? In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar. What is Quantitative Tightening and how does it influence the US Dollar? Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
01:27 ECB's Vujcic: Rate cuts will continue next year
The European Central Bank (ECB) Governing Council member Boris Vujcic said on Saturday that the central bank will go on lowering borrowing costs in 2025, per Bloomberg.
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The European Central Bank (ECB) Governing Council member Boris Vujcic said on Saturday that the central bank will go on lowering borrowing costs in 2025, per Bloomberg.
Key quotes
“The direction is clear, it’s the continuation of the direction from 2024, and that is the further reduction of interest rates.”
“That will be determined by data, primarily the inflation rate, will it decelerate, according to our projections, and we will see the impact of the transmission of the monetary policy, and our projections.”
“If there is a trade war, that will be bad for growth in Europe and in the rest of the world,” Vujcic said, adding that trade wars typically fan prices. “We hope we won’t see a trade war, that won’t be good for anyone.” Market reaction At the press time, the EUR/USD pair was up 0.03% on the day to trade at 1.0430. ECB FAQs What is the ECB and how does it influence the Euro? The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde. What is Quantitative Easing (QE) and how does it affect the Euro? In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic. What is Quantitative tightening (QT) and how does it affect the Euro? Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
“That will be determined by data, primarily the inflation rate, will it decelerate, according to our projections, and we will see the impact of the transmission of the monetary policy, and our projections.”
“If there is a trade war, that will be bad for growth in Europe and in the rest of the world,” Vujcic said, adding that trade wars typically fan prices. “We hope we won’t see a trade war, that won’t be good for anyone.” Market reaction At the press time, the EUR/USD pair was up 0.03% on the day to trade at 1.0430. ECB FAQs What is the ECB and how does it influence the Euro? The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde. What is Quantitative Easing (QE) and how does it affect the Euro? In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic. What is Quantitative tightening (QT) and how does it affect the Euro? Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
01:08 AUD/USD holds steady near 0.6250 ahead of RBA Minutes
The AUD/USD pair trades on a flat note around 0.6250 during the early Asian session on Monday.
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The AUD/USD pair trades on a flat note around 0.6250 during the early Asian session on Monday. Traders brace for the Reserve Bank of Australia (RBA) Minutes released on Monday for some insight into the interest rate outlook.
The softer-than-expected US Personal Consumption Expenditures (PCE) Price Index report dragged the US dollar (USD) lower on Friday. Data released by the US Bureau of Economic Analysis (BEA) on Friday showed that headline PCE rose 2.4% YoY in November versus 2.3% prior, below the market consensus of 2.5%.
Meanwhile, the Core PCE, which excludes volatile food and energy prices, climbed 2.8% in the same period, matching October's reading but below the estimation of 2.9%. The core PCE Price Index increased by 0.1% MoM in November. The report comes just two days after the US Federal Reserve (Fed) lowered its benchmark interest rate by 25 basis points (bps) to a target range of 4.25%-4.50%.
On the other hand, the RBA kept the Official Cash Rate (OCR) at 4.35% earlier in December. The rate has not changed since November last year. RBA governor Michele Bullock emphasized the ongoing strength in the jobs market as a reason why the RBA has lagged comparable nations in beginning its monetary easing cycle. However, the rising expectation that the Australian central bank will cut the interest rate in February could weigh on the Aussie. Australian Dollar FAQs What key factors drive the Australian Dollar? One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD. How do the decisions of the Reserve Bank of Australia impact the Australian Dollar? The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive. How does the health of the Chinese Economy impact the Australian Dollar? China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs. How does the price of Iron Ore impact the Australian Dollar? Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD. How does the Trade Balance impact the Australian Dollar? The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
The AUD/USD pair trades on a flat note around 0.6250 during the early Asian session on Monday. Traders brace for the Reserve Bank of Australia (RBA) Minutes released on Monday for some insight into the interest rate outlook.
The softer-than-expected US Personal Consumption Expenditures (PCE) Price Index report dragged the US dollar (USD) lower on Friday. Data released by the US Bureau of Economic Analysis (BEA) on Friday showed that headline PCE rose 2.4% YoY in November versus 2.3% prior, below the market consensus of 2.5%.
Meanwhile, the Core PCE, which excludes volatile food and energy prices, climbed 2.8% in the same period, matching October's reading but below the estimation of 2.9%. The core PCE Price Index increased by 0.1% MoM in November. The report comes just two days after the US Federal Reserve (Fed) lowered its benchmark interest rate by 25 basis points (bps) to a target range of 4.25%-4.50%.
On the other hand, the RBA kept the Official Cash Rate (OCR) at 4.35% earlier in December. The rate has not changed since November last year. RBA governor Michele Bullock emphasized the ongoing strength in the jobs market as a reason why the RBA has lagged comparable nations in beginning its monetary easing cycle. However, the rising expectation that the Australian central bank will cut the interest rate in February could weigh on the Aussie. Australian Dollar FAQs What key factors drive the Australian Dollar? One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD. How do the decisions of the Reserve Bank of Australia impact the Australian Dollar? The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive. How does the health of the Chinese Economy impact the Australian Dollar? China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs. How does the price of Iron Ore impact the Australian Dollar? Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD. How does the Trade Balance impact the Australian Dollar? The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
