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Daily Pivots: (S1) 1.6316; (P) 1.6422; (R1) 1.6492; More...

Intraday bias in EUR/AUD remains neutral first, and further rally is expected as long as 1.6305 resistance turned support holds. Above 1.6559 will resume the rise from 1.5963 to 1.6598 key resistance. Decisive break there will confirm that whole fall from 1.7180 has complete with three waves down to 1.5963, and target a test on 1.7180 next.

In the bigger picture, EUR/AUD is still holding on to 1.5996 key support despite brief breach. Larger up trend from 1.4281 (2022 low) is still in favor to resume through 1.7180 at a later stage. Nevertheless, sustained break of 1.5995 will indicate that such up trend has completed. Deeper decline would be seen to 61.8% retracement of 1.4281 to 1.7180 at 1.5388, even as a correction.

Daily Pivots: (S1) 0.9262; (P) 0.9282; (R1) 0.9296; More....

No change in EUR/CHF's outlook and intraday bias stays mildly on the downside. Recovery from 0.9204 could have completed after repeated rejection by falling 55 4H EMA. Deeper fall would be seen to retest 0.9204 low. Firm break of 0.9204/9 will indicate larger down trend resumption. Nevertheless, break of 0.9321 resistance will turn bias back to the upside to resume the rebound from 0.9204 instead, and that would be an early sign of bullish reversal for the near term.

In the bigger picture, outlook will now stay bearish as long as 0.9444 resistance holds. Decisive break of 0.9209 low will resume long term down trend to 61.8% projection of 0.9772 to 0.9209 from 0.9444 at 0.9096 next.

• GBPUSD remains in negative area
• But holds beyond the downtrend line
• RSI and MACD give some optimistic views

GBPUSD is experiencing a new bullish attempt to remain above the short-term descending trend line, but the 200-day simple moving average (SMA) at 1.2815 appears to be a tough obstacle for traders.

If the market overcomes the aforementioned barrier, then immediate resistance would come from the inside swing lows at 1.2840.  Should the price move above the 50-day SMA at 1.2870, it could spark optimism among the bulls. The 1.3045 and the 1.3100 resistance levels may endorse the bullish retracement in the short-term view.

On the other hand, a drop below the downtrend line again would endorse the negative structure, testing the 20-day SMA at 1.2670 before meeting the previous low near 1.2610.

The technical oscillators show some optimism for further increases. The RSI is battling with the neutral threshold of 50, while the MACD remains well above its trigger line below the zero level.

All in all, GBPUSD is still in bearish territory, especially after the failed attempt to surpass the 200-day SMA.

Daily Pivots: (S1) 1.0526; (P) 1.0560; (R1) 1.0589; More...

Intraday bias in EUR/USD remains neutral for the moment. Rebound from 1.0330 short term bottom could still extend higher. But outlook will remain bearish as long as 55 D EMA (now at 1.0711) holds. On the downside, break of 1.0471 minor support will turn bias to the downside for retesting 1.0330 low. Firm break of 1.0330 will resumed the decline from 1.1213, and sustained trading below 1.0404 key fibonacci level will carry larger bearish implication.

In the bigger picture, focus stays on 50% retracement of 0.9534 (2022 low) to 1.1274 at 1.0404. Strong rebound from this level will keep price actions from 1.1273 (2023 high) as a medium term consolidation pattern only. However, sustained break of 1.0404 will raise the chance that whole up trend from 0.9534 has reversed. That would pave the way to 61.8% retracement at 1.0199 first. Firm break there will target 0.9534 low again.

Daily Pivots: (S1) 1.2712; (P) 1.2756; (R1) 1.2794; More...

Intraday bias in GBP/USD remains neutral for the moment. Rebound from 1.2486 short term bottom could still extend higher. But outlook will stay bearish as long as 55 D EMA (now at 1.2839) holds. On the downside, below 1.2615 minor support will bring retest of 1.2486 first. Firm break there will target 1.2298 cluster support zone. However, sustained break of 55 D EMA will argue that the near term trend has reversed, and targets 1.3047 resistance for confirmation.

In the bigger picture, price actions from 1.3433 medium term are seen as correcting whole up trend from 1.0351 (2022 low). Deeper decline could be seen to 38.2% retracement of 1.0351 to 1.3433 at 1.2256, which is close to 1.2298 structural support. But strong support is expected there to bring rebound to extend the corrective pattern.

Daily Pivots: (S1) 150.16; (P) 150.76; (R1) 151.82; More...

Intraday bias in USD/JPY stays neutral and further decline is in favor as long as 151.94 resistance holds. On the downside, below 148.64 will strengthen the case that rise from 139.57 has already completed at 156.754. Deeper fall should then be seen to 61.8% retracement of 139.57 to 156.74 at 146.12 next. Nevertheless, firm break of 151.94 resistance will revive near term bullishness and bring retest of 156.74 high.

In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low). The range of medium term consolidation should be set between 38.2% retracement of 102.58 to 161.94 at 139.26 and 161.94. Nevertheless, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

Daily Pivots: (S1) 0.8763; (P) 0.8784; (R1) 0.8808; More…

Outlook in USD/CHF remains unchanged for now. Corrective fall from 0.8956 could have completed at 0.8735 after hitting 55 D EMA. Further rally is in favor to retest 0.8956 high first. However, considering head and shoulder top pattern, firm break of the EMA will argue that whole rise from 0.8401 might have completed, and bring deeper decline to 61.8% retracement of 0.8401 to 0.8956 at 0.8613 next.

In the bigger picture, price actions from 0.8332 (2023 low) are currently seen as a medium term corrective pattern, with rise from 0.8374 as the third leg. Overall outlook will continue to stay bearish as long as 0.9223 resistance holds. Break of 0.8332 low is in favor at a later stage when the consolidation completes.

Daily Pivots: (S1) 1.4118; (P) 1.4147; (R1) 1.4200; More...

USD/CAD's breach of 1.4177 resistance suggests that larger up trend is resuming. Intraday bias is back on the upside for further rally to 1.4391 projection level. On the downside, below 1.4092 minor support will delay the bullish case, and bring more consolidations first, before staging another rally.

In the bigger picture, up trend from 1.2005 (2021) is in progress. Next target is 61.8% projection of 1.2401 to 1.3976 from 1.3418 at 1.4391. Now, medium term outlook will remain bullish as long as 1.3418 support holds, even in case of deep pullback.

Markets

The Chinese Politburo’s directive changed risk sentiment at the start of European trading from slightly risk-off because of developments in Syria to mildly risk-on given the firm commitment to support the ailing economy. Extraordinary countercyclical fiscal measures will be complemented by a “moderately loose” monetary policy stance (“prudent” since 2011) with a firm commitment to stabilize both the stock market and the property sector. The Chinese annual Central Economic Work conference starts on Wednesday and could offer more clues on targeted measures to boost growth. Risk sentiment deteriorated into the European close as US stock markets corrected especially in the tech/AI-sector. EUR/USD hovered up and down 1.0550 without clear direction. US Treasuries underperformed German Bunds without specific driver. The NY Fed consumer survey (see below) might have played in the run-up to tomorrow’s November CPI print. Daily changes on the US yield curve ranged between +2.1 bps (2-yr) and + 5.1 bps (7-yr). The German yield curve bear steepened with yields rising up to 3.2 bps (30-yr). The very long end of the European curve shows some early signs of fatigue following an astonishing rally since the end of October.

Today’s agenda is again very thin with only NFIB small business optimism and the start of the US Treasury’s mid-month refinancing operation ($58bn 3-yr Note). Tomorrow’s $39bn 10-yr Note and Thursday’s $22bn 30-yr Bond auction will draw more attention in light of the uncertain spending agenda by US president-elect next year. We expect more sentiment-driven trading today going into US CPI and the ECB meeting later this week. Especially European bonds could be prone for some technical correction at the longer end of the curve. The euro’s rebound potential is blocked around EUR/USD 1.06 by a likely dovish ECB outcome.

News & Views

The NY Fed’s November consumer inflation survey showed expectations rising slightly (+0.1 ppt) at the short-, medium- and longer-term horizons. One-year-ahead inflation expectations increased to 3%, the three-year-ahead gauge increased to 2.6% and the five-year-ahead one to 2.9%. Uncertainty around future outcomes picked up as well. Polled about the labour market, US consumers anticipate their earnings to grow by 3% (+0.2 ppts), extending the narrow 2.7-3% range in place since the start of the year. Expectations of the unemployment rate being higher one year from now rose to 35%, remaining well below the trailing 12-month average of 37%. On the topic of household finances, US families think their income will gain by 3.1%, the mid of the 2.9-3.3% range since January 2023. They believe spending will grow less quickly than in October but at a pace still above pre-pandemic levels (4.7%). The US consumer is optimistic on its financial situation one year ahead from now. The share of households expecting it to be better rose to the highest level since February 2020.

The Reserve Bank of Australia’s rate status quo was accompanied by some dovish twists. It took note of the recently published Q3 GDP growth figures which were - outside of the pandemic period - the slowest since the early 1990s. Data in general since the November policy meeting has been “on balance softer than expected”. The RBA said underlying inflation remains too high (3.5% in the September quarter). It referred to the November forecasts which penciled in a return to the 2.5% midpoint target not before 2026. While recent data are still consistent with these projections, the RBA said it is gaining some confidence that inflation is moving sustainably towards target. Policy is working as intended and some of the upside risks are easing. The level of aggregate demand is still above supply capacity but that gap is easing. The combination of these additions to the statement led to the removal of the sentence “This reinforces the need to remain vigilant to upside risks to inflation and the Board is not ruling anything in or out”. The clear dovish accents didn’t go by unnoticed. Australian swap yields tumble more than 10 bps at the front end of the curve with bets for a February rate cut rising. The Aussie dollar wipes out yesterday’s China-driven gains to trade back to the recent lows around AUD/USD 0.64. RBA governor Bullock in the press conference tried to offer some counterweight. She expected the current market repositioning but does not endorse it.

Sentiment in Chinese equities reversed suddenly to a significantly more bullish state after the Politburo – which is the highest-decision making bodies within the Communist Party – pledged to embrace a ‘moderately loose’ monetary policy in 2025. This is a meaningful dovish shift from the ‘prudent’ stance of the past 14 years, hinting that further interest and reserve rate cuts are on the menu of next year. As a result, the Chinese 10-year bond yield slipped to a record high, and the Chinese equities jumped more than 3% at the open. Now, all eyes are on the Central Economic Work Conference, where the Chinese officials will discuss behind closed doors and ideally complement the monetary support with juicy fiscal support.

Time to buy? It’s tempting to buy Chinese assets at significant discount. Alibaba, for example, jumped more than 7% on stimulus news yesterday in New York trading, but – or if you prefer ‘and’ – the company is down by 70% since its 2020 peak. Its PE ratio is just around 12 right now, compared to Amazon that trades more than 46 times its earnings. But it will take at least a few good economic reports to convince long-term investors that what’s been put in place is bearing fruit. After all, 2024 was marked by stimulus hints that led to a market rally, but resulted in disappointing stimulus measures and a selloff.
The best defense is a good offense

Chinese companies reportedly cut off key supplies to the US and Europe necessary to build unmanned aerial vehicles for example, and the country opened a probe into Nvidia accusing the company for breaking their antimonopoly laws in the acquisition of Mellanox Technologies back in 2020. The latter could cost Nvidia as much as 10% of its prior year revenue of around $60bn – a massive $6bn fine. Nvidia shares took the hit yesterday: they fell 2.6%. Good news is, the percentage of Nvidia revenues that come from China has more than halved compared to pre-chip war levels. Being left in the crossfire is never good news, but the impact of the additional events decreases as the company gradually steps out of a market that’s once been so promising and lucrative.

FX and commodities

Gold is up after a few stagnant weeks on news that the People’s Bank of China (PBoC) resumed buying gold after a 6-month pause – certainly to back a looser monetary policy and maybe to decrease exposure to US treasuries. The price of an ounce is testing the 50-DMA offers right now, near $2700 level, with potential to extend gains on the back of strong global political, geopolitical and economic uncertainties.

Crude oil, on the other hand, remained capped into the $69pb level at yesterday’s rally fueled by Syrian uncertainty and hopes of Chinese stimulus. The bulls' inability to capitalize on this mix of geopolitical tension and economic optimism underscores the prevailing strength of the bearish tide in the oil market. A further selloff to $65/67ob range is plausible.

Iron ore extended its advance to a 2-month high on Chinese stimulus hope but reversed early gains, while the AUDUSD couldn’t benefit from the Chinese news as the Reserve Bank of Australia (RBA) kept its policy rate unchanged at today’s meeting as expected, but sounded more dovish than expected. The officials, there, said that they are gaining some confidence that inflation pressures are easing. As a result, the AUD bulls may be losing an important ally but the RBA’s hawkish stance so far did little to limit the Aussie’s selloff. China’s ability to boost growth is more influent than what the RBA does.

Elsewhere, the US dollar extended gains yesterday, driven higher by flight to safety, but the greenback is softer this morning. The EURUSD saw support near 1.0530 on Monday, the USDJPY is preparing to test the 50-DMA to the upside – near 151 level and Cable is flirting with the 1.28 offers. While the Bank of England’s (BoE) more cautious stance due to the government’s pledge to extend spending looks supportive, the negative impact of the tax rises are being felt before the positive impact of spending on the economy. The latter could convince the BoE to adopt a more supportive policy and cap sterling’s upside potential against the greenback. But the pound should remain bid against the euro, aiming a further advance toward the 82 cents level as the US tariffs are expected to hit the EU economies more than they are expected to hit the UK’s.