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Daily Pivots: (S1) 0.7946; (P) 0.7955; (R1) 0.7970; More…

No change in USD/CHF's outlook and intraday bias stays neutral. Corrective pattern from 0.7828 is still extending. On the downside, below 0.7923 will target 0.7877 support. On the upside, though, break of 0.7990 support turned resistance will bring stronger rebound towards 0.8084.

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) 155.47; (P) 155.80; (R1) 156.15; More...

USD/JPY is extending the corrective pattern from 157.88 and intraday bias remains neutral. 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) 1.3752; (P) 1.3773; (R1) 1.3793; More...

USD/CAD continues to lose downside momentum as seen in 4H MACD, but there is no clear sign of bottoming yet. Further decline remains in favor, and 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. On the upside, however, break of 1.3870 resistance will indicate 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.

Canadian Dollar is little changed in early US trade, reflecting a broadly balanced market backdrop. The latest inflation figures offered reassurance rather than surprise, keeping the Loonie anchored as investors focus on broader risk and geopolitical developments.

Canada’s CPI remained steady at 2.2% close to BoC's 2% target. The absence of renewed price acceleration is welcome, strengthening the case that policy easing is essentially complete and that rates are appropriately calibrated.

While core inflation measures remain elevated, their gradual cooling trend supports expectations that underlying pressures are easing. If tariff impacts continue to settle and inflation softens further, the environment could allow growth to firm modestly in early 2026 without forcing the BoC back into action.

Meanwhile, Risk sentiment firmed slightly in Europe after Asian markets were rattled by weak China data. Markets reacted to a major diplomatic shift after Ukrainian President Volodymyr Zelenskyy signaled willingness to abandon Ukraine’s NATO ambitions in exchange for alternative security guarantees, a development that weighed heavily on European defense stocks.

Beyond defense, however, equity markets proved resilient. European indexes are posting mild gains. US stocks also opened higher, led by recovery in technology shares. Still, with US non-farm payrolls due tomorrow, investors appear reluctant to extend positions aggressively.

Across FX, Yen continues to lead despite giving back part of its earlier rally, followed by Sterling and Euro. Kiwi underperforms, with Aussie and Swiss Franc also lagging. Dollar and Loonie sit near the center of the board, consistent with a mixed risk tone rather than a clear directional move.

In Europe, at the time of writing, FTSE is up 0.95%. DAX is up 0.34%. CAC is up 0.97%. UK 10-year yield is down -0.036 at 4.499. Germany 10-year yield is down -0.017 at 2.845. Earlier in Asia, Nikkei fell -1.31%. Hong Kong HSI fell -1.34%. China Shanghai SSE fell -0.55%. Singapore Strait Times rose 0.06%. Japan 10-year JGB yield rose 0.004 to 1.959.

Canada CPI unchanged at 2.2% in November, services inflation cools

Canada’s inflation data came in softer than expected in November. Headline CPI was unchanged at 2.2% yoy, undershooting expectations for an uptick to 2.4% and suggesting inflation remains comfortably contained near target.

The moderation was led by services inflation, which slowed to 2.8% yoy from 3.2% in October. That deceleration more than offset firmer goods prices, where grocery inflation accelerated sharply to 4.7% from 3.4%, the strongest pace since December 2023.

Gasoline prices also fell at a slower annual pace, declining -7.8% yoy compared with a -9.4% drop previously. Stripping out gasoline, CPI rose 2.6% year over year for a third consecutive month, pointing to stability rather than renewed inflation momentum.

Core measures reinforced that message. CPI Median slowed to 2.8% from 3.0%, while CPI Trim eased to 2.8% from 2.9%, both coming in below expectations. CPI Common edged up slightly to 2.8%, matching forecasts.

Eurozone industrial production rises 0.8% mom in October, beats expectations on broad-based gains

Eurozone industrial production delivered a modest upside surprise in October, rising 0.8% mom and beating expectations for a 0.7% increase.

The gains in the Eurozone were broad-based across sectors. Output of energy rose 1.1% mom, capital goods increased 0.5%, and intermediate goods edged up 0.3%. Consumer-related categories were firmer, with durable consumer goods jumping 2.0% and non-durable goods rising 1.2%, suggesting some resilience in downstream demand.

Across the wider EU, industrial production increased 0.3% mom, masking sharp country-level divergences. Ireland (4.0%), Luxembourg (3.6%), and Croatia (3.1%)posted the strongest gains, while Sweden (-6.5%), Belgium (-3.4%), and Denmark (-3.2%) recorded steep declines.

SECO upgrades 2026 GDP forecast, downgrades inflation

Swiss economic prospects have improved modestly, with the Federal Government Expert Group on Business Cycles revising up its 2026 growth forecast. GDP adjusted for sporting events is now seen expanding 1.1%, up from 0.9% projected in October, bringing the outlook broadly back in line with June forecasts when US tariffs stood at 10%. The reduction in US tariffs has improved conditions for exposed sectors and eased pressure on foreign trade.

Foreign demand is expected to provide a positive, though still "moderate", contribution next year. Domestic demand, however, remains the "main driver of growth", supported by resilient consumption and a gradual pickup in investment as capacity utilization improves. SECO expects investment activity to strengthen slightly as firms respond to firmer underlying demand.

Low inflation remains a key support. Consumer prices are forecast to rise just 0.2% in both 2025 and 2026 (down from 0.5%0, helping preserve real incomes and underpin solid private consumption.

Looking further ahead, growth is expected to normalize at 1.7% in 2027 as global conditions improve, though the outlook assumes tariffs remain at current levels and uncertainty around trade policy remains elevated.

Japan Tankan: Manufacturing sentiment improves as firms absorb tariff impact

Japan’s Q4 Tankan survey delivered a broadly supportive signal for the economy, reinforcing expectations that the BoJ will proceed with rate normalization. The large manufacturing index rose from 14 to 15, in line with expectations, marking a third consecutive quarterly improvement and the strongest reading since December 2021. The result suggests manufacturers have so far weathered the impact from higher U.S. tariffs better than feared.

Sentiment among non-manufacturers was less impressive, with the index unchanged at 34, falling short of expectations for a modest uptick. Even so, the divergence does not point to a meaningful deterioration in overall conditions, as services confidence remains elevated relative to historical norms.

Capital spending intentions added to the constructive tone. Large firms now plan to increase investment by 12.6% in the current fiscal year ending March 2026, slightly above market expectations of 12.0%.

The survey also indicated firms expect inflation to average 2.4% across one-, three-, and five-year horizons, suggesting expectations are stabilizing around the BoJ’s 2% target.

With tariff uncertainty easing and manufacturing sentiment holding firm, the survey supports the dominant market view that BoJ is positioned to raise rates in December, even as the pace of tightening beyond that remains gradual.

China data disappoints as consumption and investment weaken further

China’s November activity data delivered a broadly weaker-than-expected picture. Industrial production rose 4.8% yoy, missing expectations for 5.0% growth and marking the weakest pace since August 2024.

The sharper disappointment came from consumption. Retail sales rose just 1.3% yoy, far below expectations of 2.9% and slowing markedly from October’s 2.9% pace. It was also the weakest reading since December 2022.

Investment conditions also deteriorated. Year-to-date fixed asset investment fell -2.6%, deeper than expected -2.3% and the sharpest contraction since the pandemic in 2020. The drag from property intensified, with real estate investment down -15.9% in the first eleven months of the year, extending the slump seen earlier and reinforcing the view that the property sector remains a central constraint on China’s recovery.

RBNZ's Breman sees OCR holding at 2.25% if outlook unfolds as expected

RBNZ Governor Anna Breman signaled in media interviews today that the bar for further near-term easing remains high. While the forward path published in the November Monetary Policy Statement allows for a small probability of another rate cut, Breman stressed "if economic conditions evolve as expected the OCR is likely to remain at its current level of 2.25 per cent for some time."

Looking ahead to the next OCR decision in February, Breman said the central bank will continue to assess incoming data, financial conditions, and global developments, with a particular focus on implications for New Zealand’s economic outlook and its medium-term inflation objective.

Breman also reiterated that monetary policy is not on a preset course, highlighting the MPC’s regular meeting schedule as a reflection of that flexibility.

NZ BNZ service falls to 46.9, recovery hopes dented

New Zealand’s services sector slipped deeper into contraction in November, reinforcing signs that domestic demand remains fragile. BusinessNZ Performance of Services Index fell from 48.4 to 46.9, marking the lowest level of activity since May and sitting well below the survey’s long-run average of 52.8. All five sub-indices remained in contraction territory, underlining the broad-based nature of the slowdown.

Activity and sales saw the sharpest deterioration, dropping from 48.4 to 45.8, while employment also weakened from 48.6 to 46.4. New orders edged marginally higher from 49.2 to 49.3, offering little evidence of an imminent turnaround in demand.

BusinessNZ Chief Executive Katherine Rich said the November reading "put to bed" any immediate hope that the sector was moving toward expansion. While the proportion of negative comments eased slightly from recent months, businesses continued to cite a weak economic backdrop, low consumer confidence, high living costs, inflation, interest rates, and reduced spending as the dominant constraints on activity.

USD/CAD Mid-Day Outlook

Daily Pivots: (S1) 1.3752; (P) 1.3773; (R1) 1.3793; More...

USD/CAD continues to lose downside momentum as seen in 4H MACD, but there is no clear sign of bottoming yet. Further decline remains in favor, and 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. On the upside, however, break of 1.3870 resistance will indicate 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.

Headline CPI inflation for November came in at 2.2% year-on-year (y/y), matching October's pace and broadly in line with expectations.

However, inflation at the grocery store heated up in November, with prices up 4.7% y/y, up from 3.4% in October and the fastest pace of increase in nearly two years. November's acceleration was driven by fresh fruit prices (+4.4% y/y), while beef (+17.7% y/y) and coffee (+27.8% y/y) prices continued to be big contributors to grocery inflation.

There was some offset from prices at the pump, which are still down 7.8% from a year ago in November, but were up on the month. Overall goods prices are up 1.5% y/y, but durable goods prices are up a hotter 2.7% y/y. Durable goods inflation has picked up this year, after being in deflation in 2024.

Service inflation took a step down in November to 2.8% y/y (3.2% y/y in October) driven by lower prices for travel tours (8.2% y/y). Traveler accommodation was also down 6.9% y/y, benefiting from a comparison to elevated hotel prices a year ago due to the Taylor Swift concert in Toronto. But it wasn't all special factors, rent inflation also slowed to 4.7% y/y from 5.2% in October amid broad-based slower rent growth across regions.

The Bank of Canada has focused on broader "underlying inflation" recently, but looking at their official core inflation metrics (median and trim), both cooled below 3% or the first time since March, running at 2.8% y/y in November. Zeroing in on trends over the past three months, core inflation is running closer to the Bank of Canada's 2% target, with trim and median inflation running at 2.4% and 2.2%, respectively, on a three-month annualized basis.

Key Implications

November's inflation report underscored why the Bank of Canada has not seemed overly worried about inflation trends in recent months. Underlying inflation is still above the 2% target, but it is getting a lot closer in recent months.

Looking ahead, Canadian inflation is likely to see some choppiness. December's inflation will be boosted by comparisons to last year's GST holiday. But overall, we expect inflation to moderate to the Bank's target over the next year (see recent forecast), as past inflation problem areas, like rents, continue to cool.

Canada’s inflation data came in softer than expected in November. Headline CPI was unchanged at 2.2% yoy, undershooting expectations for an uptick to 2.4% and suggesting inflation remains comfortably contained near target.

The moderation was led by services inflation, which slowed to 2.8% yoy from 3.2% in October. That deceleration more than offset firmer goods prices, where grocery inflation accelerated sharply to 4.7% from 3.4%, the strongest pace since December 2023.

Gasoline prices also fell at a slower annual pace, declining -7.8% yoy compared with a -9.4% drop previously. Stripping out gasoline, CPI rose 2.6% year over year for a third consecutive month, pointing to stability rather than renewed inflation momentum.

Core measures reinforced that message. CPI Median slowed to 2.8% from 3.0%, while CPI Trim eased to 2.8% from 2.9%, both coming in below expectations. CPI Common edged up slightly to 2.8%, matching forecasts.

Full Canada's CPI release here.

Eurozone industrial production delivered a modest upside surprise in October, rising 0.8% mom and beating expectations for a 0.7% increase.

The gains in the Eurozone were broad-based across sectors. Output of energy rose 1.1% mom, capital goods increased 0.5%, and intermediate goods edged up 0.3%. Consumer-related categories were firmer, with durable consumer goods jumping 2.0% and non-durable goods rising 1.2%, suggesting some resilience in downstream demand.

Across the wider EU, industrial production increased 0.3% mom, masking sharp country-level divergences. Ireland (4.0%), Luxembourg (3.6%), and Croatia (3.1%)posted the strongest gains, while Sweden (-6.5%), Belgium (-3.4%), and Denmark (-3.2%) recorded steep declines.

Full Eurozone industrial production release here.

Swiss economic prospects have improved modestly, with the Federal Government Expert Group on Business Cycles revising up its 2026 growth forecast. GDP adjusted for sporting events is now seen expanding 1.1%, up from 0.9% projected in October, bringing the outlook broadly back in line with June forecasts when US tariffs stood at 10%. The reduction in US tariffs has improved conditions for exposed sectors and eased pressure on foreign trade.

Foreign demand is expected to provide a positive, though still "moderate", contribution next year. Domestic demand, however, remains the "main driver of growth", supported by resilient consumption and a gradual pickup in investment as capacity utilization improves. SECO expects investment activity to strengthen slightly as firms respond to firmer underlying demand.

Low inflation remains a key support. Consumer prices are forecast to rise just 0.2% in both 2025 and 2026 (down from 0.5%0, helping preserve real incomes and underpin solid private consumption.

Looking further ahead, growth is expected to normalize at 1.7% in 2027 as global conditions improve, though the outlook assumes tariffs remain at current levels and uncertainty around trade policy remains elevated.

Will Swiss SECO economic forecasts here.

The Japanese yen strengthened on Monday, approaching 155 per dollar to reach its highest level in over a week. This appreciation reflects heightened investor anticipation ahead of the Bank of Japan's (BoJ) pivotal monetary policy meeting on Friday.

Markets widely expect the central bank to raise its benchmark interest rate by 25 basis points, bringing it to 0.75%. However, the primary focus will be on the forward guidance provided by Governor Kazuo Ueda in his post-meeting commentary. His remarks will be scrutinized for signals regarding the pace and extent of monetary tightening expected throughout 2025.

Analysts now project the BoJ's policy rate could reach 1.0% by July 2026. This hawkish outlook is underpinned by resilient domestic economic data, particularly consumer inflation, which remains stubbornly above the BoJ's historical targets.

Notably, political resistance to tightening appears to be fading. Prime Minister Sanae Takaichi's administration is unlikely to oppose a rate hike, as the prolonged weakness of the yen - partly a consequence of delayed policy normalization - has exacerbated import costs and contributed to inflationary pressures.

Technical Analysis: USD/JPY

H4 Chart:

On the H4 chart, USD/JPY has completed the first leg of a decline to 154.34, followed by a corrective rebound to 156.93. We now anticipate the development of a new wave of decline targeting 154.73. Following this, the pair is likely to form a consolidation range around this level. A subsequent downward breakout from this range would signal a continuation of the broader downtrend, opening the path towards 152.58. This bearish view is supported by the MACD indicator, whose signal line is positioned below zero and pointing decisively downward.

H1 Chart:

On the H1 chart, the pair is forming a declining wave with an immediate target at 154.82. Upon reaching this level, a corrective upward move towards 155.45 is anticipated. A further extension of this correction to 155.91 cannot be ruled out. However, following this relief rally, we expect the primary downtrend to resume, driving the pair lower towards 153.52. The Stochastic Oscillator aligns with this near-term corrective view, as its signal line has turned up from the 20 level and is rising towards 50, indicating that a temporary bounce is likely before selling pressure reasserts itself.

Conclusion

The yen is firming as markets position for a landmark BoJ rate hike and a shift away from its long-held ultra-loose policy stance. Technically, USD/JPY is exhibiting a clear bearish structure across multiple timeframes. While a short-term corrective bounce is possible, the overall trajectory points towards further weakness, with key downside targets at 154.73 on H4 and 153.52 on H1. Governor Ueda's guidance on Friday will be the ultimate determinant of whether this technical correction evolves into a sustained trend reversal.

Market Overview

The crypto market capitalisation decreased by 0.2% in 24 hours and 2.2% in a week to $3.06 trillion. Overnight, the market managed to withstand the bears’ test of the $3.0T level, a level below which the bulls have not allowed it to settle for the last 10 days. At the same time, the transition from an upward trend to horizontal support is not the best signal for buyers.

The sentiment index has fallen to 16, its lowest level in almost three weeks. This return is another indication of the cyclical weakness of the crypto market. Without an obvious driver, as was the case in April, the market’s current prolonged stay in extreme fear is reminiscent of what we saw at the end of 2021.

Bitcoin slipped below $87.5K in early trading on Monday but is now recovering to levels close to $90K. Selling pressure since the end of last week has broken the upward trend that had been forming since the end of November. Now, the formal baseline scenario is a return to $81K. However, bulls still have some hope for a more protracted consolidation and subsequent growth, rather than an immediate sell-off.

News Background

According to SoSoValue, net inflows into spot BTC ETFs amounted to $286.6 million, the highest in the last seven weeks. Total inflows since the approval of Bitcoin ETFs in January 2024 have increased to $57.90 billion. Net inflows into spot Ethereum ETFs in the US amounted to $208.9 million for the week, bringing the cumulative net inflows since the ETF’s launch in July 2024 to $12.88 billion. Inflows into the recently launched spot Solana ETFs in the US totalled $36 million for the week, continuing for all seven weeks since their launch, amounting to $675 million. Inflows into the spot XRP ETFs, launched on November 14 in the US, have continued for almost a month and exceeded $974 million.

The total capitalisation of the crypto market has fallen by 15% in 30 days, indicating that it is entering a phase of deep correction, according to Binance Research. December is considered less liquid than other months, and market volatility is likely to increase.

Bitcoin is expected to close the year below the psychological mark of $100,000, according to the majority of users on the Kalshi prediction platform, where the chances of exceeding this mark are only 23%.

Large companies, governments, centralised exchanges and investment funds have concentrated 29.8% of the total volume of bitcoins in free circulation, according to Glassnode’s calculations.

The first cryptocurrency should be viewed more as a speculative collectable than a working asset, according to Vanguard. Bitcoin does not have the properties that provide income, compound interest, and cash flow.

International rating agency Moody’s has published a set of criteria for determining the credit rating of fiat-pegged stablecoins. Some experts believe that Tether’s USDT is in the crosshairs. In November, S&P Global downgraded USDT’s stability rating to the fifth-lowest level.