Sample Category Title

Germany’s Ifo Business Climate Index declined to 85.7 in November, down from 86.5 in October, reflecting growing pessimism across key sectors of Europe’s largest economy. Current Assessment Index dropped from 85.7 to 84.3, indicating weaker confidence in present conditions. Expectations Index edged slightly lower from 87.3 to 87.2, suggesting limited optimism for the months ahead.

Sector-specific data painted a grim picture. Manufacturing sentiment worsened, dropping from -20.6 to -21.9, and the services sector also reversed, declining from 0.1 to -3.6. Construction sentiment weakened significantly, falling from -25.7 to -28.5. Trade was the only sector to show some improvement, rising from -29.4 to -26.6, though it remains firmly in negative territory.

Ifo President Clemens Fuest characterized the situation as increasingly bleak, remarking that sentiment among German companies has turned "gloomier" and that the economy is "floundering."

Full German Ifo release here.

Gold price started a fresh increase above the $2,600 resistance level. WTI Crude oil prices climbed higher above $70.00 and might extend gains.

Important Takeaways for Gold and WTI Crude Oil Prices Analysis Today

• Gold price started a steady increase from the $2,535 zone against the US Dollar.
• A connecting bullish trend line is forming with support near $2,645 on the hourly chart of gold at FXOpen.
• WTI Crude oil prices extended gains above the $68.50 and $70.00 resistance levels.
• There is a key bullish trend line forming with support at $70.30 on the hourly chart of XTI/USD at FXOpen.

Gold Price Technical Analysis

On the hourly chart of Gold at FXOpen, the price formed a base near the $2,535 zone. The price started a steady increase above the $2,600 and $2,605 resistance levels.

There was a decent move above the 50-hour simple moving average and $2,675. The bulls pushed the price above the $2,700 resistance zone. Finally, the bears appeared near $2,720. A high was formed near $2,720 and the price is now consolidating gains.

The price dipped a few points below the 23.6% Fib retracement level of the upward move from the $2,536 swing low to the $2,720 high. The RSI is now below 50 and the price is now approaching a connecting bullish trend line with support near $2,645.

If there is a downside break below the $2,645 support, the price might decline further. In the stated case, the price might drop toward the $2,605 support or the 61.8% Fib retracement level of the upward move from the $2,536 swing low to the $2,720 high. The next major support sits at $2,585.

Immediate resistance is near the $2,710 level. The next major resistance is near the $2,720 level. An upside break above the $2,720 resistance could send Gold price toward $2,740. Any more gains may perhaps set the pace for an increase toward the $2,750 level.

Oil Price Technical Analysis

On the hourly chart of WTI Crude Oil at FXOpen, the price started a major upward move from $66.50 against the US Dollar. The price gained bullish momentum after it broke the $68.50 resistance and the 50-hour simple moving average.

The bulls pushed the price above the $70.00 and $70.30 resistance levels. The recent high was formed at $71.36 and the price started a downside correction. There was a minor move below the 23.6% Fib retracement level of the upward move from the $69.19 swing low to the $71.36 high.

The RSI is still above the 50 level and there is a key bullish trend line forming with support at $70.30. Immediate support on the downside is near the trend line zone.

The next major support on the WTI crude oil chart is near the $70.00 zone or the 61.8% Fib retracement level of the upward move from the $69.19 swing low to the $71.36 high, below which the price could test the $69.20 zone.

If there is a downside break, the price might decline toward $68.50. Any more losses may perhaps open the doors for a move toward the $66.50 support zone.

If the price climbs higher again, it could face resistance near $71.35. The next major resistance is near the $72.20 level. Any more gains might send the price toward the $74.50 level.

Start trading commodity CFDs with tight spreads. Open your trading account now or learn more about trading commodity CFDs with FXOpen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Markets

The PMI’s on Friday again highlighted the divergence in growth and confidence between the US and EMU. The glimmers of hope some optimists saw in the October EMU PMI reading where brutally rejected by the November update. The composite PMI tumbled back in contraction territory (48.1 from 50.0). Even more worrisome, services which until now still provided some counterweight against an ailing manufacturing sector, this time also dropped below the 50-boom-or-bust level (49.2 from 51.6). Germany and in particular France, were the main reason of the decline, but growth in the rest of the EMU is slowing as well. At the same time, rising wage costs caused input and output prices rising again, indicating Europa is heading for a stagflationary environment. The contrast with the US could hardly be bigger. The US composite PMI rose more than expected to an healthy 55.3 from 54.1, with survives taking the lead (57.0). In manufacturing, a mild contraction continues (48.8). Even more striking, in this context, the pace of US output price inflation slowed to the slowest since May 2000. In a sharp bull steepening move, German yields tumbled between 11.7 bps (2-y) and 4.4 bps (30-y). Markets now again see a 50-50% chance between a 25 bps and 50 bps ECB rate cut at the December 12 meeting. The reaction of US interest rate markets to the US PMI’s was much more modest. The US 2-y yield added 2.4 bps. The 30-y declined 1.4 bps. With markets discounting only 60% of a 25 bps Fed cut at the December Fed meeting and less than 75bps additional easing toward the end of next year, investors apparently don’t feel the need to a more hawkish positioning yet. The combination of lower EMU yields and a solid US eco performance supported equities on both sides of the Atlantic (Dow +0.97%; Eurostoxx 50 +0.70%). EUR/USD briefly spiked below the 1.035 mark immediately after the EMU data, but closed the day at 1.042. Sterling showed a similar intraday pattern, but EUR/GBP soon returned north of 0.83, as the US PMI (composite 49.9) also missed expectations by a big margin.

This morning, sentiment on Asian markets (ex China) is constructive. Markets apparently draw some comfort from Scott Bessent being Donald Trump’s candidate to become Treasury Secretary. Markets hope he will hold a market-friendly but also a measured policy, supporting financial and macro-economic stability. US Treasuries are rebounding, with yields declining between 4.5 (2-y) and 7 bps (10-30-y). The correction (in US yields) and a constructive risk sentiment also triggers some profit taking on recent USD rally. DXY drops below the 107 barrier (compared to a test of 108 on Friday). EUR/USD also tries to fight back (1.048). Especially, for EUR/USD, we don’t anticipate a genuine turnaround, but some consolidation might be on the cards. The eco calendar contains the IFO business confidence. We also keep a close eye at ECB comments after last Friday’s PMI’s. Later this week EMU CPI data (Thursday, Friday) are important to further shape expectations on the pace of ECB easing in December.

News & Views

Nationalist candidate Calin Georgescu unexpectedly won the first round of Romanian presidential elections, securing around 22% of the vote. He’s slightly ahead of Prime Minister Ciolacu who gained around 20%. Both men advance to a run-off vote on December 8. This set-up still favors Ciolacu for the ceremonial win, although the president is commander-in-chief of the military and the country’s representative at NATO and EU Summits. Georgescu has questioned military support for Ukraine, called for an end to the war, cast doubt on the benefit of Romania’s NATO-membership and labeled Russian president Putin one of the world’s few true leaders. The outcome of the presidential ballot makes way for possible surprises at general elections (December 1) triggered by a collapse of the coalition government (Social Democrats of PM Ciolacu and Liberal Party) after three years in charge.

People close to the Italian government indicated that this year’s budget deficit could be 3.9% or 4% of GDP instead of the 3.8% target. The debt ratio might be up to two percentage points above the 134.8% tabled in September. The key concern is the 1% growth forecast Rome uses is significantly above the 0.7%-0.8% taking into account by the Bank of Italy, the IMF or the EC. That’s also why the impact on debt ratio is larger than on the deficit. Italian officials estimate that every tenth of a percentage point deviation in growth equates to around €2bn in additional issuance.

Daily Pivots: (S1) 192.90; (P) 193.85; (R1) 194.86; More...

Intraday bias in GBP/JPY remains on the downside for the moment. Current development suggests that corrective rise from 180.00 has completed with three waves up to 199.79. Deeper fall would be seen to 183.70 support. For now, risk will stay on the downside as long as 197.77 resistance holds, in case of recovery.

In the bigger picture, price actions from 208.09 are seen as a correction to whole rally from 123.94 (2020 low). The range of consolidation should be set between 38.2% retracement of 123.94 to 208.09 at 175.94 and 208.09. However, decisive break of 175.94 will argue that deeper correction is underway.

Daily Pivots: (S1) 159.94; (P) 161.21; (R1) 162.53; More....

Intraday bias in EUR/JPY remains on the downside for the moment. Current development suggests that corrective rebound from 154.40 has completed with three waves up to 166.67. Deeper fall would be seen to 155.14 support next. For now, risk will stay on the downside as long as 163.19 support turned resistance holds, in case of recovery

In the bigger picture, price actions from 175.41 are seen as correction to rally from 114.42 (2020 low). The range of consolidation should have been set between 38.2% retracement of 114.42 to 175.41 at 152.11 and 175.41 high. However, decisive break of 152.11 would argue that deeper correction is underway.

Daily Pivots: (S1) 0.8272; (P) 0.8310; (R1) 0.8351; More...

Range trading continues in EUR/GBP and intraday bias remains neutral. Outlook stays bearish with 0.8446 resistance intact. On the downside, decisive break of 0.8259 will resume larger down trend to 0.8201 key support.

In the bigger picture, down trend from 0.9267 (2022 high) is in progress. Next target is 0.8201 (2022 low), but strong support should be seen there to bring rebound. However, outlook will remain bearish as long as 0.8624 resistance holds even in case of strong rebound. Decisive break of 0.8201 will indicate long term bearish reversal.

Daily Pivots: (S1) 1.5948; (P) 1.6041; (R1) 1.6117; More...

Intraday bias in EUR/AUD is turned neutral first with current recovery and some consolidations would be seen. Outlook will stay bearish as long as 1.6161 support turned resistance holds. On the downside, decisive break break of 1.5996 key support will carry larger bearish implications. Next near term target will be 100% projection of 1.6598 to 1.6161 from 1.6359 at 1.5922, and then 161.8% projection at 1.5652.

In the bigger picture, immediate focus is now on 1.5996 key support level. Sustained break there will argue that whole up trend from 1.4281 (2022 low) is already reversing. Deeper decline would be seen to 61.8% retracement of 1.4281 to 1.7180 at 1.5388, even as a correction. Nevertheless, strong rebound from current level, followed by break of 1.6359 resistance, will keep medium term outlook neutral at worst.

Daily Pivots: (S1) 0.9241; (P) 0.9283; (R1) 0.9359; More....

Intraday bias in EUR/CHF remains neutral first and more consolidations would be see first. Outlook will stay bearish as long as 0.9364 resistance holds. On the downside, below 0.9294 minor support will bring retest of 0.9204/9 support zone. Decisive break there will indicate larger down trend resumption.

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

Last week was marked by an improved sentiment in the US, but not so much in Europe. The US equities had a strong week: the S&P 500 rallied 1.68% over the week, Nasdaq 100 gained 1.87% - and that despite Nvidia that finally closed the week flat as the earnings disappointment kicked in with a small delay and costed the company a more than 3% retreat on Friday. The Dow Jones rallied nearly 2%, while the small caps rallied jumped nearly 4.5% on further rush to Trump trades. SPDR’s energy and financial ETFs hit a record high, the US dollar index rallied to the highest levels in two years and of course, Bitcoin – the ultimate Trump trade - flirted with the $100’000 psychological mark and consolidated gains slightly below that level during the weekend.

In Europe, things looked much less encouraging. First of all, the Stoxx 600 index tipped a toe below the 500 mark at the start of the week, and even though Friday ended on a positive note, the move was driven by a ‘bad news is good news’ type of motivation.
European equities are cheap, but...

The data released Friday looked all but encouraging. Growth in Germany slowed in the Q3 and the yearly figure printed a faster contraction of 0.3%, versus the expectation of a stable contraction near -0.2%. The PMI figures came in lower than expected: the flashing red French numbers – especially the unexpectedly fast deterioration in the French services sector - pushed the Eurozone services, and composite PMI into the contraction zone. Obviously, the bad set of data boosted the expectation that the European Central Bank (ECB) could opt for a 50bp rate cut in December rather than a moderate 25bp cut in an attempt to catch a falling knife. Today, the European companies trade with a 40% discount on their S&P500 peers in terms of PE valuations. But the ECB alone could hardly give the European businesses a strong basis to thrive in the long term. Europe needs much more than monetary support to get back on its feet.

First, the strictissime regulatory environment in Europe makes it extremely difficult for the European companies to innovate, and that’s something that the ECB can not solve with lower rates.

Second, the luxury goods companies contribute to around 8-10% of the European market capitalization during strong market periods. In France, the luxury stuff makers stand for more than 25% of the CAC 40's market cap, making it one of the most heavily weighted sectors in this index – and this percentage is around 10-12% for MSCI Europe. These companies need a strong demand from EM markets, especially from China. The fact that the Chinese economy is not doing great and the fact that the European policymakers are doing everything in their power to escalate trade tensions with China – by imposing their companies big tariffs – are not encouraging.

The same is true for the zone’s carmakers. Having missed the EV turn, and the escalating tensions with China are not having a good impact on the German carmakers, the industry is facing a massive crisis – the biggest since WW2.

ECB Chief Christine Lagarde said at last Friday’s European Banking Congress that ‘since last year, Europe’s declining innovation position has come more clearly to light,’ and that ‘technology gap between the US and Europe is now unmistakable.’ Her comments echoed Mario Draghi’s call for a 800bn euro innovation fund that the European companies should finance together with supra-sovereign bonds to compete better with the US peers.

So yes, the lower company valuations in Europe and the growing valuation gap with the US companies attract some investors with the prospects of lower ECB rates. Yet, the European economic tissue needs more than just the ECB cuts to get back on its feet. It needs deregulation and international cooperation. And it’s not on the menu du jour.

In Europe, Swiss and UK names are expected to perform better. Swiss, because of the country’s neutral and defensive nature, and stable economic and political environment. And FTSE 100 because its financial, energy and commodity focus is interesting in a period of easing monetary policies, and the big dividends that its big companies pay out are interesting for hedging against a potential uptick in global inflation that could jeopardize the easing monetary policy plans to some extent.

In the FX

The US dollar’s surge last week, combined to the weakness of the European data, sent the EURUSD to a dark hole. The pair tanked to 1.0330 and rebounded strongly after hitting that dip, and consolidating near the 1.0480 level at the time of writing. I expect some consolidation and dip buying near the current levels for tactical longs.
Week ahead

This week will be a holiday-shortened one in the USdue to Thanksgiving, with most news and data packed into the first three days. Highlights include the FOMC minutes on Tuesday, followed by growth, PCE, and jobs data on Wednesday. Meanwhile, European countries will begin releasing their preliminary November inflation figures from Thursday. The fresh CPI figures will either solidify expectations of a 50bp ECB rate cut in December or challenge them, potentially giving the euro a boost. But as mentioned last week, further EUR/USD selloffs may present good buying opportunities below the 1.05 level.

In focus today

Today, in Germany we receive the Ifo growth indicator for November. After the decline in German PMIs on Friday, the stage is set for a decrease in Ifo as well. Consensus suggests a decrease to 86 in November compared to 86.5 in October, still suggesting a German economy in weak condition.

ECB's Chief Economist Lane will speak in the afternoon.

This week we look out for FOMC minutes from the November meeting on Tuesday. Markets will look for clues about the policy rate path as markets are divided about whether the Fed will cut rates in December as well. On Wednesday, the Reserve Bank of New Zealand will announce its rate decision, where we expect a 50bp rate cut. We also have PCE data out of the US. On Thursday, we get regional inflation data out of the euro area and on Friday we will get the full euro area flash CPI print. Likewise, Friday we will receive Swedish GDP, Norwegian unemployment and retail sales and Tokyo CPI out of Japan.

Economic and market news

What happened overnight

In China, the Peoples Bank of China injected around USD 124bn into the banking system as one-year policy loans. The measure is intended to help dealing with the liquidity pressure in China's banking system towards the year-end. China has in the past months been stepping up efforts to reduce debt risks and stimulate the struggling economy.

What happened Friday

In the US, PMIs came out strong, where especially services activity growth remains robust (57,0; Oct. 55,0). Notably, services output prices index declines to the lowest level since May 2020. Solid growth and modest price pressures are exactly what the Fed likes to see. Manufacturing new orders data support the diverging picture between the US and rest of the world. Domestic new orders index recovers modestly to 47.9 (from 46.8), but new export orders index collapses to 43.9 (from 49.1).

In the euro area, PMI declined to 48.1 from 50.0 in October indicating the economy has slipped into contractionary territory in the final quarter of the year. Consensus was looking for unchanged PMIs. The decline was due to both services PMI that fell to 49.2 from 51.6 and manufacturing that fell to 45.2 from 46.0. The PMIs today have increased our concerns over the near-term growth outlook for the euro area economy. GDP growth in the final quarter of the year will likely be around 0.0% q/q. The outlook for the first quarters of next year has also turned worse. However, we continue to expect growth to pick up during next year as we look for significant easing by the ECB and as real wage growth is set to increase private consumption since the labour market remain strong.

ECB's Villeroy spoke about monetary policy and said the ECB is not behind the curve and that he expects that the euro area is achieving a soft economic landing after being questioned about the very weak November PMIs. However, he said that they are closely monitoring the risk of undershooting inflation and thereby maintaining a too strict monetary policy. ECB's Nagel spoke about monetary policy as well saying that despite the weak PMIs he will wait for the December ECB economic projection before he is ready to take a stance on the December rate decision. He noted however that more rate cuts are coming in 2025. We expect ECB to deliver a 25bp rate cut at the December meeting.

In the UK, we also got weak PMI figures. Composite at 49.9 (cons: 51.7, prior: 51.8), service at 50.0 (cons: 52.0, prior: 52.0) and manufacturing 48.6. The survey notes a rise in input costs, concerns about the business outlook, a drop in business activity with easing in output price inflation. Note, as previously flagged, there is likely some effect from the Autumn statement (UK fiscal budget) on souring sentiment. While the BoE is set to stay on hold in December, we think this argues for a step up in easing pace in 2025, in line with our forecast. We expect the Bank Rate to end the year at 3.25% in 2025.

In Sweden, Riksbank governor Erik Theddéen spoke at a Danske Bank event. He made it clear that he did not intend to send any new monetary policy signals. However, it was interesting to hear him saying that the Riksbank is not keen on negative interest rates and QE again. Instead, they want to see a better policy mix with, and support from, fiscal policy.

Equities: Global equities were higher on Friday, albeit with a significant sectoral divergence between the US and Europe. This was primarily due to very different outcome of flash PMIs, particularly in the services sector, which drove yields lower in Europe and higher in the US, led by the short end of the curve. Not surprisingly, the most noticeable differences were within the banking sector. In Europe, banks were lower, ranking at the bottom of the performance table, whereas in the US banks were higher and outperformed the S&P 500 index by more than 1 percentage point. Despite the disappointing macroeconomic data out of Europe on Friday the week still ended on a high note, with US yields dominating within styles and lifting the value preferences among investors. Both on Friday and over the last week, small caps performed exceptionally well, with the Russell 2000 up by 4.5% last week. In the US on Friday, Dow +0.97%, S&P 500 +0.4%, Nasdaq +0.2%, and Russell 2000 +1.8%. Asian markets were also solidly in the green this morning, with Chinese stocks bucking the trend. Both European and US futures are showing solid gains this morning.

FI: There was a significant decline in both European and US bond yields on Friday as well as a decent bullish steepening of the yield curves on the back of the weak European PMI data. Given the weak eurozone economy, the divergence between US and Europe continued as seen both the EURUSD as well as 10Y Treasury-Bund spread that has widened from 150bp in mid-September to 210bp-215bp. This morning, we have seen that markets have responded positively to the confirmation of Scott Bessent as new US Treasury secretary as US government bond yields declined in Asian Trading hours. He is seen as a more conventional choice who is expected to give some stability to US economy and focus on reigning in fiscal spending.

FX: The last week in FX markets has been characterised by continued USD performance on the one side and heavy European FX underperformance on the other. Not least the CEEs have been under pressure delivering even larger weekly spot losses than the single currency despite poor PMIs adding pressure on the EUR heading into the weekend. The CAD and AUD continue to do well which might also explain why the NOK has done surprisingly well despite the Norwegian currency's usual closer price action to European FX. CHF, SEK and GBP are all found among the underperformers in Majors' space but are still among those European currencies that have suffered the smallest losses vs the greenback. Finally, the JPY has stabilised after the US rates induced setback post the US election.