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• Last policy decisions of 2024 to shape market mood
• RBA, BoC, SNB and ECB are on the agenda
• US CPI report to be crucial too as Fed undecided

RBA to hold rates, but will it turn less hawkish?

The Reserve Bank of Australia will kick off the central bank bonanza next week, announcing its decision on Tuesday. Unlike its major peers, the RBA has not yet embarked on a rate-cutting cycle as policymakers remain wary about inflation despite the recent decline.

Governor Michelle Bullock said underlying inflation is still “too high” in recent remarks and doesn’t expect for it to return to target sustainably until 2026. Unless that outlook changes, the RBA isn’t about to ditch its ‘higher for longer’ stance anytime soon, and investors don’t see a rate cut before April 2025.

Even April was considered a bit optimistic prior to the GDP data that showed Australia’s economy grew by slightly less than forecast in the third quarter. The soft reading undermines Bullock’s claim about the level of excess demand in the economy. Monthly CPI was also weaker than expected in October, and further downside surprises could see the timing of the first rate reduction being brought forward again.

This may prompt Bullock and other board members to sound a little more upbeat about inflation as they keep rates at 4.35%. A dovish lean could push the Australian dollar below the four-month lows brushed on the back of the GDP print.

Aussie traders will also be keeping an eye on the November employment report due on Thursday, as well as CPI and PPI figures out of China on Monday, and November trade figures on Tuesday.

Whilst the Chinese data will be important in gauging the health of the world’s second largest economy, a bigger market mover might be any new announcement on stimulus, as political leaders meet next week to set out Beijing’s economic plan for 2025.

Will the BoC cut by 50 bps again?

In sharp contrast to the RBA, the Bank of Canada has been taking the lead in the global race to cut rates. The BoC has slashed rates four times this year, the last being a hefty 50 basis points. But investors are split if another double cut is likely in December.

Both headline and underlying measures of inflation ticked up in October, and the jobs market is rebounding after a soft patch. On the other hand, growth remains subdued and businesses are downbeat about the outlook, especially now that US president-elect Donald Trump is threatening tariffs of 25% on all Canadian imports.

Another consideration for the BoC is the widening yield spread with the US, as the Fed has not been as aggressive and may even go on pause soon. With the Canadian dollar already down more than 6% this year, policymakers may not want to risk lowering rates significantly below US ones.

Hence, Wednesday’s decision of whether to cut by 25 bps or 50 bps will likely be a very close call, and the risks to the loonie are symmetrical.

Dollar awaits CPI data as Fed meeting looms   

The December policy decision is also proving to be a bit of a dilemma for the Federal Reserve. Judging by the latest rhetoric, most Fed officials appear to be in favour of a 25-bps reduction at the December 17-18 meeting but are not ready to commit just yet.

The CPI report for November out on Wednesday will be the last major piece of the jigsaw for policymakers ahead of the meeting, so a strong market reaction is almost guaranteed.

The headline rate of CPI is expected to edge up from 2.6% to 2.7% y/y, while core CPI is projected to stay unchanged at 3.3% y/y. Barring any upside surprises, the Fed will probably be inclined to lower rates and keep the January meeting as an option for pausing.

The producer price index will follow on Thursday.

The US dollar is consolidating after hitting two-year highs in November. Any unwelcome acceleration in the month-on-month rates could recharge the bulls to drive the dollar index to fresh highs.

SNB set for first cut under dovish new Chairman

The Swiss National Bank has trimmed rates three times since March when it became the first of the major central banks to ease policy. It’s widely expected to cut again in December, which will be new Chairman Martin Schlegel’s first decision since taking over from Thomas Jordan in October.

However, the size of the cut is less certain, and the choice between 25 bps or 50 bps was looking like a coin toss until the October CPI data came along. Switzerland’s annual CPI rate increased by 0.7%, falling short of the 0.8% expected. The odds for a 50-bps cut subsequently rose to more than 60%.

Dovish remarks by Schlegel have further boosted the chances for a larger reduction, after he repeatedly floated the idea of reintroducing negative interest rates if necessary.

Should the SNB opt for a 50-bps cut on Thursday, the Swiss franc could resume its downfall against the US dollar. However, if policymakers stick with a 25-bps increment, the franc could extend its latest recovery.

ECB unlikely to go big in December

Soon after the SNB announces its policy settings, the European Central Bank is expected to hit the headlines with its rate decision. A rate cut is almost certain, with economists predicting a 25-bps reduction. However, some investors think that a 50-bps cut is on the cards, although the odds have fallen in recent days to about 15%.

This has helped the euro to stabilize a little against the US dollar as ECB policymakers, including President Lagarde, have been careful not to pre-commit to a particular rate path amid a pickup in inflation in the euro area.

Nevertheless, a weak economy and renewed political uncertainty in both France and Germany have some traders betting that the ECB will have to be a lot more aggressive with its policy easing in the coming months.

However, it’s unlikely that the ECB will change its stance just yet and if it cuts rates by 25 bps as forecast on Thursday, the euro may not move much unless there is some unexpectedly dovish language by Lagarde in her post-meeting press briefing on Thursday that spurs a fresh selloff.

Pound rebounds ahead of UK data

Across the channel, the uncertainty over the UK economic outlook has also risen, mainly on the back of the Labour government’s budget. The tax and spend budget has been widely perceived as boosting inflation, limiting the scope for the Bank of England to cut interest rates. And whilst it does include measures that could lift growth, in the immediate term, the British economy appears to have stagnated.

GDP numbers for October will therefore be closely watched on Friday for signs that growth is coming out of the doldrums.

Although sterling has recouped a decent portion of its recent losses against the greenback, stronger-than-expected growth data could help it extend the gains.

Elsewhere, the yen might be sensitive to any revisions to Japan’s Q3 GDP print on Monday and any surprises in Friday’s quarterly Tankan business survey amid ongoing speculation about whether or not the Bank of Japan will hike rates at its December meeting.

Hello fellow traders. In this technical article we’re going to take a look at the Elliott Wave charts charts of Bitcoin BTCUSD published in members area of the website. Our members know BTCUSD is showing impulsive bullish sequences in the cycle from the 50186 low. Recently, it made a clear three-wave correction. The pull back completed as Elliott Wave Double Three pattern and made rally toward new highs as expected. In this discussion, we’ll break down the Elliott Wave pattern and forecast.

Elliott Wave Double Three Pattern

Double three is the common pattern in the market , also known as 7 swing structure. It’s a reliable pattern which is giving us good trading entries with clearly defined invalidation levels.
The picture below presents what Elliott Wave Double Three pattern looks like. It has (W),(X),(Y) labeling and 3,3,3 inner structure, which means all of these 3 legs are corrective sequences. Each (W) and (Y) are made of 3 swings , they’re having A,B,C structure in lower degree, or alternatively they can have W,X,Y labeling.

BTCUSD Elliott Wave 1 Hour Chart 12.03.2024

BTCUSD is giving us pull back against the 90818 low. The structure of this pullback is still incomplete at the moment, showing 5 swings down from the peak. The first leg, shows a clear 3-wave structure a,b,c red, followed by a 3-wave bounce in (x) blue. Wave (y) blue should also form a 3 waves pattern. We miss another swing down to complete clear 7 swings pattern in ((ii)) pull back. We advise against selling $BTCUSD and instead favor the long side. While the price stays above 4 red low: 90818, we expect to see further rally toward new highs.

BTCUSD Elliott Wave 1 Hour Chart 12.03.2024

Bitcoin found buyers as expected. The crypto completed Double Three pattern and reacted strongly. Eventually we got a break toward new highs. Now, intraday pull backs should ideally keep finding buyers as far as 90759 pivot holds.

Markets

In the absence of important eco data and no new market moving political developments (in France or elsewhere), European market enjoyed a brief pauze after recent swings. European traders simply joined the countdown to the US payrolls which, alongside the November CPI data scheduled for next week, were supposed to provide last key input for the Fed December 18 policy meeting. After last months’ near-stagnation, mainly driven by hurricanes and strikes, US job growth rebounded by a close-to-expectations 227k. However, data from the previous two months also were upwardly revised by a net 56k. Goods producing sectors added 34k. Private services jobs grew 160k. Wage growth also was slightly stronger than expected with average hourly earnings at 0.4% M/M and 4.0% Y/Y. However evidence from the separate consumer survey was far less inspiring. With a 193k decline in the workforce, a 355k decline in employment, a rise in the unemployment rate from 4.1% to 4.2% and a decline in the participation rate from 62.6% to 62.5%.

Markets apparently focused more on the content of the consumer survey and see the rise in the unemployment rate as supporting the case for an additional 25 bps rate cut at the December meeting. US yields in a ‘logical’ steepening move decline between 6.5 bps (2-y) and 2.5 bps (30-y). Money markets raised the expectations for a 25 bps December Fed cut to almost 90%, from about 70% yesterday evening. German/EMU yields fell prey to modest spill-over effects from what happened in US and switched small gains for small losses. German yields currently decline between 3.0 bps (2-y) and 2.5 bps (10-y). EUR/USD briefly jumped well north of to the 1.06 (top near 1.0630) but were almost immediately undone with the pair currently again trading near unchanged levels (1.0585 area). The yen again outperforms with USD/JPY breaking further below the 150 mark (149.5). Equities apparently feel OK with the ‘confirmation’ that there is room for gradual further Fed easing. The S&P (+0.35%) is touching a new all-time record. The EuroStoxx 50 also enjoys the (relative political) calm, adding 0.45%.

News & Views

Hungary’s Orban has threatened vetoing the European Union’s next long-term budget if the European Commission does not distribute the some €20bn EU funds it is withholding over concerns related to the rule of law. The Hungarian president said that “the funds we don’t receive in 2025 and 2026 we’ll have to receive in 2027 and 2028” or he will torpedo the seven-year budget that outlines EU spending from 2028. Not having access to these resources was among the reasons for rating agency Moody’s to cut the outlook for Hungary’s credit rating last week. Hungary is marching towards parliamentary elections in 2026 and Orban’s party is trailing the pro-EU opposition party Tisza. Copy pasting the 2022 script with huge spending is given overstretched public finances a no-go. Sticking to the budget, Hungary’s AKK released its 2025 financing plan today. Gross bond issuance amounts to HUF 12.838bn. HUF 4123bn is needed to plug the cash deficit with the remaining part consisting of maturities (HUF 8043 bn) and switches and buybacks. Funding relies more heavily on the HUF institutional market next year, with HUF 3992 bn planned in HGB auction issuance. The AKK plans to issue HUF 200 bn in green bonds. It keeps the 30% upper bound on the share of FX debt for 2025. An international FX bond with a volume of up to €2.5bn is planned for the first half. This will include a €1bn green Eurobond and Chinese yuan-denominated panda bonds. The forint today again underperformed other regional currencies, probably on the ongoing rift between PM Orban and the EU.

Canadian employment grew 50.5k in November, double the 25k expected and picking up from the 14.5k in October. Employment gains were concentrated in full-time work (+54k). The bulk comes on the account of the public sector (45k), offsetting the meaning of the headline beat. The unemployment rate rose to the highest level since September 2021 (6.6%) though came together with an uptick in the participation rate to 65.1%. The employment rate steadied after falling for six months at 60.6%. The hourly wage rate missed the bar sharply, 3.9% vs 4.7% expected and down from 4.9%. The Canadian dollar loses ground against the US dollar, which just suffered a minor setback from the US Payrolls as well. USD/CAD trades around 1.409. The market-implied probability for a back-to-back 50 bps rate cut at the December 11 Bank of Canada meeting rose to 80% after the report.

Daily Pivots: (S1) 1.0533; (P) 1.0562; (R1) 1.0615; More...

EUR/USD breached 1.0609 resistance briefly but quickly retreated. Intraday bias remains neutral first. On the upside, firm break of 1.0609 resistance will resume the rebound from 1.0330 to 55 D EMA (now at 1.0729). But strong resistance could be seen there to limit upside. On the downside, break of 1.0330 will resume the fall from 1.1213. Also, sustained trading below 1.0404 key fibonacci level will carry larger bearish implication.

In the bigger picture, immediate focus is now 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) 1.2742; (R1) 1.2790; More...

GBP/USD's rebound from 1.2486 continues today and intraday bias stays on the upside for 55 D EMA (now at 1.2849). Strong resistance is expected there to limit upside, and bring resumption of whole fall from 1.3433. On the downside, below 1.2615 minor support will bring retest of 1.2486 low first. 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, a medium term top should be in place at 1.3433, and price actions from there are correcting whole up trend from 1.0351 (2022 low). Deeper decline is now expected as long as 55 D EMA (now at 1.2849) holds, to 38.2% retracement of 1.0351 to 1.3433 at 1.2256, which is close to 1.2298 structural support. Strong support should be seen there to bring rebound.

Daily Pivots: (S1) 149.59; (P) 150.18; (R1) 150.71; More...

USD/JPY dips mildly but stays in range above 148.64 and intraday bias remains neutral. On the downside, break of 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.

The U.S. economy added 227k jobs in November, in line with the consensus forecast calling for a gain of 218k. Payroll figures for the two prior months were revised higher by 56k.

Private payrolls rose 194k, with the largest gains seen in health care & social assistance (+72.3k), leisure & hospitality (+53k), professional & business services (+26k) and manufacturing (+22k). The gain in manufacturing were largely payback from the month prior following the resolution of the Boeing strike. The public sector added 33k new positions last month.

In the household survey, civilian employment (-355k) fell by considerably more than the labor force (-193k), which pushed the unemployment rate up to 4.2%. The labor force participation rate fell 0.1 percentage points to 62.5% - a six-month low.

Average hourly earnings (AHE) rose 0.4% month-on-month (m/m), matching October's gain. On a twelve-month basis, AHE were up 4.0% (unchanged from October). Aggregate hours worked rose sharply, up 0.4% m/m.

Key Implications

This morning's release provided further evidence that October's soft employment report was more to do with temporary effects stemming from hurricanes and labor disputes, and not a sudden deterioration in the labor market. Not only did job creation regain its vigor in November, but revisions to prior months were also a tad higher, and aggregate hours worked grew at the fastest pace in eight months.

Smoothing through the recent volatility, job gains have averaged 173k over the past three-months, or only a modest stepdown from the 186K averaged over the prior twelve-month period. But this likely overstates the degree of "strength" in the job market. A broader sweep of the data suggests that the labor market has already come back into better balance, and is no longer a meaningful source of inflationary pressure. Moreover, the fact that the labor force has contracted in each of the past two-months suggests that job seekers are starting to internalize the fact that jobs are becoming harder to come by – a further indication that the labor market is cooling. This should give policymakers the assurance they need to cut by another quarter-point later this month. But with inflation progress showing early signs of stalling and some of the incoming administration's policy proposals (including the potential for tax cuts and tariffs) viewed as inflationary, the Fed is likely to proceed more cautiously with easing its policy rate in 2025

The Canadian labour market gained 50.5k positions in November. Most of them were full-time jobs, which rose 54.2k, while part-time employment fell 3.6k.

The unemployment rate rose 0.3 percentage points to 6.8% as more people joined the labour force (+138k). The labour force participation rate rebounded 0.3 percentage points to 65.1% after two months of decline.

Employment by sector showed gains in trade (+39k), construction (+18k), and professional, scientific and technical services (+17k). Declines were seen in manufacturing (-29k) and transportation and warehousing (-19k).

Lastly, despite so many new jobs, total hours worked fell 0.2% month-on-month due to labour disputes. Wages were up 4.1% year-on-year (from 4.9% in October).

Key Implications

Today's jobs report had a lot of moving parts. Yes, the unemployment rate rose significantly, but this was due to a massive increase in the labour force rather than outright job losses. Remember that Statcan has cautioned people on using its jobs report population figures, which don't match recent demographic data (also means caution of labour force figures). So, we should be taking this with a heavy hand of salt. Rather, we focus on the trend, where employment growth has held up well, with cyclically sensitive sectors driving gains over the last few months.

The Bank of Canada will make an interest rate announcement next Wednesday and markets are still on the fence as to whether the bank will cut by 50 or 25 bps. Recall that the BoC accelerated its rate cutting cycle with a 50 beeper in October as weak growth and an inflation undershoot raised fears that it was behind the curve. But since then, economic data have shown more resilience, with consumer spending, the real estate market, and price pressures rebounding. Even with the messiness of today's employment report, the economy continues to add jobs, reinforcing our view that the labour market is on solid foundations. We think this should be enough to convince the central bank to revert to a 25 bp cut next week, but it will remain a close call for the central bank.

Daily Pivots: (S1) 0.8758; (P) 0.8806; (R1) 0.8832; More…

USD/CHF's fall from 0.8956 short term top extends lower in early US session and touched 55 D EMA (now at 0.8737. Strong support could be seen from current level, and firm break of 0.8796 resistance will turn bias back to the upside for rebound. 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. Rise from 0.8374 is seen 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.

Dollar came under pressure against European currencies following release of US non-farm payroll report, despite the data being robust overall. In contrast, the greenback held firm against Yen and Aussie, while advancing against Loonie, with the latter pressured by surprisingly large increase in Canada’s unemployment rate, signaling sharp loosening in its labor market.

The NFP report showed job growth exceeding the average of the prior 12 months, while earnings growth beat expectations, underscoring resilience in the U.S. labor market. The slight uptick in the unemployment rate, while a minor blemish, didn’t significantly alter market sentiment. Overall, the data is not strong enough to deter Fed from delivering another 25bps rate cut at its December meeting. Market sentiment has shifted decisively, with Fed funds futures now pricing in more than 90% chance of a cut, up sharply from 71% just a day earlier.

Reactions in other markets to NFP report have been relatively subdued, with stock futures posting modest gains. US 10-year Treasury yield dipped slightly but lacked the momentum to decisively break through 4.15% level yet. With much of the immediate reaction to the payroll data absorbed, market activity might taper off as traders square positions ahead of next week.

For the week, Swiss Franc is leading as the strongest performer, followed by Sterling and the Euro. Australian Dollar remains the weakest, with Kiwi and Loonie trailing behind. Dollar and Yen are positioned in the middle of the pack.

Technically, EUR/CHF has been repeatedly rejected by falling 55 4H EMA, which keeps near term outlook bearish. A focus now is whether the cross would break through 0.9269 support and lose below before the week ends. If released, that could set up further selloff in Euro, and push EUR/CHF for a retest on 0.9204 low next week.

In Europe, at the time of writing, FTSE is up 0.02%. DAX is up 0.28%. CAC is up 1.46%. UK 10-year yield is down -0.016 at 4.272. Germany 10-year yield is down -0.002 at 2.114. Earlier in Asia, Nikkei fell -0.77%. Hong Kong HSI rose 1.56%. China Shanghai SSE rose 1.05%. Singapore Strait Times fell -0.69%. Japan 10-year JGB yield fell -0.0195 to 1.053.

US NFP grows 227k in Nov, unemployment rate rises to 4.2%

US non-farm payroll employment grew 227k in November, close to expectation of 218k. That's notably higher than the average of 186k monthly growth over the prior 12 months.

Unemployment rate rose from 4.1% to 4.2%, above expectation of 4.1%. Labor force participation rate was at 62.5%, ticked down from 62.6%.

Average hourly earnings rose 0.4% mom, above expectation of 0.3% mom. Over then past 12 months, average hourly earnings rose 4.0% yoy.

Canada's employment grows 51k in Nov, unemployment rate jumps to 6.8%

Canada's employment grew 51k in November, above expectation of 25k. Employment gains were concentrated in full-time work (+54k).

Employment rate was unchanged at 60.6%. Unemployment rate jumped from 6.5% to 6.8%, as more people are looking for work. Labor force participation rate rose 0.3% to 65.1%.

Total hours worked was down slightly by -0.2% mom but up 1.9% yoy. Average hourly wages grew 4.1% yoy, slowed from 4.9% yoy in October.

BoE's Dhingra calls for more policy relief, labels current stance very restrictive

BoE MPC member Swati Dhingra, often viewed as the most dovish voice within the committee, reinforced her call for policy easing during an interview with Bloomberg TV today.

Dhingra highlighted the "very restrictive stance" of current monetary policy, arguing that high interest rates are dampening consumption, investment, and supply capacity. She stressed, “We should be easing policy more” to alleviate the strain on living standards and pave the way for economic normalization.

Dhingra pointed to easing wage pressures and declining service inflation as key indicators supporting a shift towards lower rates.

She advocated for a "gradual" approach to rate cuts, suggesting the Bank Rate should eventually settle between 2.5% and 3.5%, her updated estimate of the “neutral rate.” Notably, she acknowledged that this estimate has risen since BoE’s 2018 estimate of 2%-3%.

Turning to the potential fallout from a global trade war, Dhingra noted its indirect effects could significantly harm productivity and business adaptability. While she believes the direct impact on UK growth and inflation might be "limited," she cautioned that secondary effects, such as supply chain disruptions and reallocation challenges, would be far more damaging.

Japan's nominal wages growth hits multi-decade high, but real gains remain elusive

Japan’s labor market data for October showed nominal wages, or labor cash earnings, rose 2.6% yoy, in line with expectations. Regular pay, or base salary, grew 2.7% yoy, marking the fastest increase since November 1992. Full-time workers saw an even sharper wage rise at 2.8% yoy, the highest increase since comparable records began in 1994. Overtime pay also rebounded, registering a 1.4% yoy growth compared to a -0.9% decrease in the prior month.

However, real wages—adjusted for inflation—was stagnant, showing no change from a year ago. This followed declines of -0.4% and -0.8% yoy in September and August, respectively. The inflation rate used by Japan’s labor ministry for these calculations, excluding owners' equivalent rent, slowed to 2.6%, the lowest in nine months.

On the household front, spending fell -1.3% yoy, better than the forecasted -2.6% yoy decline but still reflecting cautious consumer behavior. Food expenditures, comprising around 30% of total spending, dropped -0.8% yoy. Other categories faced sharper declines, including a -13.7% yoy plunge in clothing and shoes, a -10.7% yoy drop in housing-related expenditures, and a -14.0% yoy decrease in education spending, such as tuition fees.

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.8758; (P) 0.8806; (R1) 0.8832; More…

USD/CHF's fall from 0.8956 short term top extends lower in early US session and touched 55 D EMA (now at 0.8737. Strong support could be seen from current level, and firm break of 0.8796 resistance will turn bias back to the upside for rebound. 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. Rise from 0.8374 is seen 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.