Sample Category Title

Daily Pivots: (S1) 1.7670; (P) 1.7721; (R1) 1.7762; More...

Intraday bias in EUR/AUD remains neutral with focus on 55 D EMA (now at 1.7725). Sustained break there would argue that fall from 1.8160 has completed, and bring stronger rise back to 1.7976 resistance next. Rejection by 55 D EMA will keep near term outlook bearish. Below 1.7477 will target 1.7245 support and possibly below. Overall, price actions from 1.8554 are seen as a corrective pattern that would still extend.

In the bigger picture, as long as 55 W EMA (now at 1.7465) holds, price actions from 1.8554 could still be a correction to rise from 1.5963 only. However, sustained break of the EMA will argue that it's already correcting the whole up trend from 1.4281 (2022 low). In this case, deeper decline would be seen to 38.2% retracement of 1.4281 to 1.8554 at 1.6922.

Daily Pivots: (S1) 0.9330; (P) 0.9349; (R1) 0.9361; More....

Intraday bias in EUR/CHF stays neutral at this point and more consolidations could be seen. On the upside, break of 0.9394 will resume the rebound from 0.9178 to 0.9452 structural resistance. Decisive break there will carry larger bullish implications. However, firm break of 0.9311 support will argue that the rebound has completed, and turn bias back to the downside for retesting 0.9178 low.

In the bigger picture, EUR/CHF has breached long term falling channel resistance as the rebound from 0.9278 extends. Considering bullish convergence condition in W MACD, sustained trading above 55 W EMA (now at 0.9316) will indicate medium term bottoming at 0.9178, and suggests that it's already in larger scale rebound. Further break of 0.9452 resistance will bring stronger medium term rally towards 0.9928 resistance next. Nevertheless, rejection by 55 W EMA will retain bearishness for another fall through 0.9278 at a later stage.

Markets

The jury is still out on the Fed’s next plans after payrolls failed to tilt the balance one way or the other. Markets initially erred on the dovish side, but the case wasn’t compelling enough to fully endorse Q1 rate cut bets (currently 25% probability for January; 55% for March). The US 2-yr yield tested the end of November low at 3.45% but a break lower didn’t occur. Intraday rebound action higher pulled EUR/USD back from first 1.18+ levels since mid-September to close virtually unchanged at 1.1750. The US yield curve eventually bull flattened with yields ending 1.4 bps (2-yr) to 3.3 bps (30-yr) lower. Calm returned on US stock markets with key indices closing 0.6% lower (Dow) to 0.25% higher (Nasdaq).

Better November payrolls (+64k) failed to make up for a weak October report (-105k; mainly DOGE-impact on government). The US unemployment rate increased from 4.4% in September (BLS unable to conduct October household survey) to a 4-yr high of 4.6% in November (vs 4.5% consensus). Since June (4.1%) it has been one-way traffic higher with alarm bells ringing. Filling the blank October unemployment rate number (eg 4.5%) brings you dangerously close to the 0.50% threshold of the SAHM rule. When the 3-month moving average of the unemployment rate exceeds the lowest 3-month moving average of the past year (currently 4.06%) by that amount, the rule indicates a high likelihood of being in the early stage of a recession. Last year, it prompted the Fed into a bigger-than-usual 50 bps rate cut at the start of its cutting cycle. Risks of a breach at the next payrolls release early January are high both because of current elevated levels and because the lowest 3-month moving average of the past year will rise to 4.1% with the Dec2024 point dropping out of the equation. We stick with the view that markets currently underestimate the probability of a continuation of the Fed’s normalization cycle early next year. October US retail sales and December PMI surveys supported the intraday market rebound. The former because of strength, the latter because of prices spiking higher. Sales in the retail control group increased by 0.8% M/M (vs 0.4% consensus). The composite PMI set a 6-month low (53 from 54.2) with details showing a second consecutive month of waning momentum. Signs of weakness were broad-based, with a near stalling of inflows of work into the vast services economy accompanied by the first fall in factory orders for a year. A key concern is rising costs, with inflation jumping sharply to its highest since November 2022, which fed through to one of the steepest increases in selling charges for the past three years.

Significantly lower November UK CPI numbers cement the case for more BoE rate cuts and push EUR/GBP from 0.8750 to 0.8780 in a first reaction this morning.

News & Views

The National Bank of Hungary yesterday kept its policy rate unchanged at 6.5%. However, its assessment clearly turned less hawkish, reopening the debate on potential rate cuts next year. The central bank took notice of recent declines both in headline (3.8%) and core (4.1%) inflation in November. This disinflation process was supported by a decrease in global commodity and food prices and the pass-through of a stronger forint into purchase prices. The MNB also saw more moderate monthly repricings in recent months compared to the first half of the year. Corporate inflation expectations were subdued in November, but consumer inflation expectations were seen as remaining stagnant. In its new forecasts, inflation was downwardly revised both for this year (4.4% from 4.6%) and next year (3.2% from 3.8%). Inflation is expected to average 3.3% in 2027, but is seen reaching the 3% level in H2 of that year. The growth path was slightly downwardly revised to 0.5% this year, 2.4% next year and 3.1% in 2027. MNB still sees positive real rates as necessary. Maintaining tight monetary conditions is warranted, but the MNB shifts to a data-dependent approach. The 2-y HUF swap rate dropped 10 bps to 6.15%. The forint declined to EUR/HUF 386.

The Czech government yesterday approved a plan to reduce electricity bills both for companies and households. From January on, some levies will be transferred to the government. Industry minister Havlicek expects the shift to lower electricity prices by 10%. The move is expected to come at a cost for the budget of CZK17bn, but it is expected to put further downward pressure on inflation. The Czech 2-y swap rate eased 4 bps yesterday. The koruna hardly reacted with EUR/CZK closing the day near 24.32.

Daily Pivots: (S1) 1.3729; (P) 1.3755; (R1) 1.3779; More...

USD/CAD recovered after brief dip to 1.3729 and intraday bias is turned neutral. On the downside, Sustained trading below 61.8% retracement of 1.3538 to 1.4139 at 1.3768 will argue that whole fall form 1.4791 might be ready to resume. Retest of 1.3538 low should be seen next. However, firm break of 1.3870 resistance will confirms short term bottoming, and turn bias back to the upside for stronger rebound.

In the bigger picture, current development suggests that price actions from 1.4791 is developing into a deeper, larger scale correction. In the less bearish case, it's just correcting the rise from 1.2005 (2021 low). But even so, break of 1.3538 will pave the way to 61.8% projection of 1.4791 to 1.3538 from 1.4139 at 1.3365. This will remain the favored case as long as 1.4139 resistance holds, in case of rebound.

Daily Pivots: (S1) 0.6613; (P) 0.6637; (R1) 0.6656; More...

Intraday bias in AUD/USD remains neutral first as consolidations from 0.6685 extends. On the upside, firm break of 0.6706 will confirm resumption of whole rise from 0.5913. Next target is 61.8% projection of 0.5913 to 0.6706 from 0.6420 at 0.6910. However, break of 55 D EMA (now at 0.6560) will extend the corrective pattern from 0.6706 with another falling leg, and target 0.6420 support.

In the bigger picture, the break of multi-year falling trend line resistance suggests that rise from 0.5913 is possibly reversing whole down trend from 08006 (2021 high). Decisive break of 38.2% retracement of 0.8006 to 0.5913 at 0.6713 will solidify this case, and bring further rally to 61.8% retracement at 0.7206. On the downside, however, firm break of 0.6420 support will suggest rejection by 0.6713 and retain medium term bearishness.

Daily Pivots: (S1) 154.30; (P) 154.82; (R1) 155.24; More...

Intraday bias in USD/JPY stays neutral for the moment as corrective pattern from 157.88 is extending. On the downside, break of 154.33 will target 55 D EMA (now at 153.66) and possibly below. On the upside, above 156.94 will bring retest of 157.88. Firm break there will resume whole rally from 139.87 to 158.85 key structural resistance.

In the bigger picture, corrective pattern from 161.94 (2024 high) could have completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94 high. Decisive break of 158.85 structural resistance will solidify this bullish case and target 161.94 for confirmation. On the downside, break of 150.90 resistance turned support will dampen this bullish view and extend the corrective range pattern with another falling leg.

Daily Pivots: (S1) 0.7928; (P) 0.7950; (R1) 0.7973; More…

Intraday bias in USD/CHF stays neutral at this point. Overall, corrective pattern from 0.7828 is still extending. On the upside, break of 0.7990 support turned resistance will bring stronger rebound towards 0.8084. On the downside, below 0.7923 will target 0.7877 support.

In the bigger picture, outlook will stay bearish as long as 0.8332 support turned resistance holds (2023 low). Long term down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382.

Daily Pivots: (S1) 1.1723; (P) 1.1737; (R1) 1.1753; More….

Intraday bias in EUR/USD is turned neutral again with current retreat and some consolidations would be seen. On the upside, above 1.1803 will resume the rally from 1.1467 to retest 1.1917 high. Decisive break there will resume larger up trend. ON the downside, however, firm break of 55 D EMA (now at 1.1633) will turn bias back to the downside for 1.1467 support, to extend the corrective pattern form 1.19717 with another falling leg.

In the bigger picture, as long as 55 W EMA (now at 1.1373) holds, up trend from 0.9534 (2022 low) is still in favor to continue. Decisive break of 1.2 key psychological level will carry larger bullish implication. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep long term outlook bearish.

Daily Pivots: (S1) 1.3366; (P) 1.3411; (R1) 1.3467; More...

Intraday bias in GBP/USD is turned neutral again with current retreat. On the upside, above 1.3455 will resume the rebound from 1.3008. Firm break of 1.3470 resistance will pave the way to retest 1.3787 high. However, sustained break of 55 D EMA (now at 1.3293) will argue that the rebound has completed. Deeper fall would be seen back to 1.3008 support to resume the whole corrective pattern from 1.3787 high.

In the bigger picture, current development suggests that fall from 1.3787 is merely a corrective move, and larger rise from 1.0351 (2022 low) is still in progress. Firm break of 1.3787 will target 1.4248 (2021 high) key structural resistance. This will remain the favored case as long as target 38.2% retracement of 1.0351 to 1.3787 at 1.2474 holds, in case of another fall.

Sterling weakened further today after UK inflation data surprised further to the downside, reinforcing expectations that price pressures are easing faster than previously thought. The softer CPI print extended losses in Sterling following a weak run of domestic data this week.

After inflation peaked at a lower-than-expected 3.8% earlier in the year, disinflation trend now appears to be accelerating. November’s data suggests that inflation is converging toward target more quickly. Alongside weaker UK labor market figures released yesterday, this week’s data all but seals the case for a BoE rate cut tomorrow. Market focus has already shifted beyond the decision itself toward how long the easing cycle could extend into next year.

On current information, policy easing is set to continue next year. The debate is not really about whether the BoE will cut again, but when. February and March are both plausible. Though February stands out given the availability of fresh economic projections, a factor that gains weight in light of this week’s data.

Elsewhere, Dollar staged a notable rebound as the sharp post-NFP selloff faded. After an initial surge, market-implied odds of a March Fed rate cut have slipped back to around 51%, reflecting a partial reassessment rather than a full reversal.

One interpretation is that while October’s sharp contraction in payrolls was clearly alarming, investors are holding out hope for a more sustainable rebound in hiring. Temporary drags from the government shutdown have cleared, while the one-year US–China tariff truce has reduced uncertainty around trade and pricing.

Looking ahead, the December, January, and February US employment reports, alongside inflation data, will be critical in shaping expectations for the March FOMC meeting. With such a heavy data pipeline, it is premature to place strong bets on further Fed easing. At least, that's likely what the majority of traders think.

For now, the currency markets lack a strong directional bias. Yen leads for the week, followed by Dollar and Loonie, while Kiwi and Aussie lag. Sterling and Euro are stuck in the middle.

In Asia, Nikkei rose 0.26%. Hong Kong HSI is up 0.76%. China Shanghai SSE rose 1.19%. Singapore Strait Times is down -0.15%. Japan 10-year JGB yield rose 0.017 to 1.973. Overnight, DOW fell -0.62%. S&P 500 fell -0.24%. NASDAQ rose 0.23%. 10-year yield fell -0.033 to 4.149.

UK CPI undershoots at 3.2% as disinflation broadens in November

UK inflation eased more than expected in November, reinforcing signs that price pressures are moderating. Headline CPI slowed from 3.6% yoy to 3.2%, undershooting expectations of 3.5% and marking a second consecutive monthly decline. On a month-on-month basis, CPI fell -0.2% mom, adding to the disinflationary signal.

Underlying inflation also cooled. Core CPI (excluding energy, food, alcohol and tobacco) slowed from 3.4% yoy to 3.2%, below forecasts of 3.4%, suggesting easing price pressures beyond volatile components.

The moderation was driven mainly by goods, where inflation eased from 2.6% yoy to 2.1% Services inflation edged slightly lower from 4.5% to 4.4%.

Japan posts first trade surplus in five months, US-bound shipments rebound

Japan’s trade data for November delivered a positive surprise, with exports rising 6.1% yoy to JPY 9.72 trillion, beating expectations of 4.8% yoy, and marking the third consecutive month of growth. The strength helped Japan record a JPY 322.2 billion trade surplus, the first in five months.

Exports to the US were a key driver, climbing 8.8% yoy. Auto shipments to the US rose 1.5%, marking the first increase since March and suggesting the drag from higher US tariffs is beginning to ease.

By contrast, exports to mainland China fell -2.4% yoy, weighed down by a sharp -5.9% decline in foodstuff shipments. That weakness came against a backdrop of renewed political tension, after Prime Minister Sanae Takaichi warned that a Chinese attempt to seize Taiwan could prompt Japanese military intervention, followed by Beijing restricting imports of Japanese seafood. Offsetting some of that drag, exports to Hong Kong surged 11.4%.

On the import side, growth was more subdued. Imports rose just 1.3% yoy to JPY 9.39 trillion, undershooting expectations of 2.5%.

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.3366; (P) 1.3411; (R1) 1.3467; More...

Intraday bias in GBP/USD is turned neutral again with current retreat. On the upside, above 1.3455 will resume the rebound from 1.3008. Firm break of 1.3470 resistance will pave the way to retest 1.3787 high. However, sustained break of 55 D EMA (now at 1.3293) will argue that the rebound has completed. Deeper fall would be seen back to 1.3008 support to resume the whole corrective pattern from 1.3787 high.

In the bigger picture, current development suggests that fall from 1.3787 is merely a corrective move, and larger rise from 1.0351 (2022 low) is still in progress. Firm break of 1.3787 will target 1.4248 (2021 high) key structural resistance. This will remain the favored case as long as target 38.2% retracement of 1.0351 to 1.3787 at 1.2474 holds, in case of another fall.