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Daily Pivots: (S1) 0.8861; (P) 0.8890; (R1) 0.8932; More…

Intraday bias in USD/CHF is turned neutral first with current recovery. Some consolidations would be seen first but outlook will stay bullish as long as 0.8773 support holds. On the upside, sustained break of 61.8% retracement of 0.9223 to 0.8374 at 0.8899 will pave the way to 0.9223 high.

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.

Daily Pivots: (S1) 1.2623; (P) 1.2674; (R1) 1.2719; More...

No change in GBP/USD's outlook and intraday bias stays on the downside. CUrrent fall from 1.3433 should target 100% projection of 1.3433 to 1.2842 to 1.3047 at 1.2456. On the upside, above 1.2768 minor resistance will turn intraday bias neutral first. But outlook will stay bearish as long as 13047 resistance holds, in case of recovery.

In the bigger picture, considering mildly bearish divergence condition in D MACD, a medium term top is likely in place at 1.3433 already. Price actions from there are seen as correction to whole up trend from 1.0351 (2022 low). Deeper decline would be seen 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) 1.0490; (P) 1.0536; (R1) 1.0576; More...

Intraday bias in EUR/USD stays neutral for consolidations above 1.0495 temporary low. But outlook will remain bearish as long as 1.0760 support turned resistance holds. On the downside, firm break of 100% projection of 1.1213 to 1.0760 from 1.0936 at 1.0483 will target 1.0404 key fibonacci level next.

In the bigger picture, price actions from 1.1274 (2023 high) are seen as a consolidation pattern to up trend from 0.9534 (2022 low), with fall from 1.1213 as the third leg. Downside should be contained by 50% retracement of 0.9534 (2022 low) to 1.1274 at 1.0404, to bring up trend resumption at a later stage.

Dollar is trading slightly lower as the market enters the final US session of the week, with mixed US retail sales data failing to provide fresh momentum for the greenback. The currency appears to be taking a breather as the initial impact of the "Trump Trade" begins to fade. Meanwhile, the likelihood of another rate cut next month has diminished, with futures markets pricing in around a 60% chance. This growing uncertainty adds to the Dollar's lack of immediate direction. In the absence of new political developments, the greenback may enter a consolidation phase until early December when significant economic data releases are expected to provide new catalysts.

Despite the current softness, Dollar remains the strongest performer for the week, followed by Canadian Dollar and Euro. Japanese Yen has moved up slightly but remains the second weakest currency. British Pound has fallen to the position of the worst performer following weaker-than-expected UK GDP data released today. Australian Dollar is the third weakest, with New Zealand Dollar not far behind. Swiss Franc is trading in the middle range.

In Europe, at the time of writing, FTSE is down -0.12%. DAX is down -0.30%. CAC is down -0.36%. UK 10-year yield is down -0.0017 at 4.486. Germany 10-year yield is up 0.011 at 2.353. Earlier in Asia, Nikkei rose 0.28%. Hong Kong HSI fell -0.05%. China Shanghai SSE fell -1.45%. Singapore Strait Times rose 0.17%. Japan 10-year JGB yield rose 0.0121 to 1.075.

US retail sales rises 0.4% mom in Oct, ex-auto sales up 0.1% mom

US retails sales rose 0.4% mom to USD 718.9B in October, above expectation of 0.3% mom. However, ex-auto sales rose 0.1% mom to US 528.5B, below expectation of 0.2% mom. Ex-gasoline sales rose 0.4% mom to USD 667.1B. Ex-auto & gasoline sales rose 0.1% mom to 621.6B.

Total sales for the August through October period were up 2.3% yoy from the same period a year ago.

Fed's Collins: December rate cut not guaranteed

Boston Fed President Susan Collins signaled in a WSJ interview that a rate cut in December is "certainly on the table. However, it remains far from being a "done deal".

She emphasized the importance of upcoming economic data in shaping the Fed’s decision-making process, noting, “There’s more data that we will see between now and December, and we’ll have to continue to weigh what makes sense.”

Collins underlined her pragmatic approach, explaining, “I don’t see an argument for maintaining restrictive policy when there is not evidence of new price pressures.”

However, she also acknowledged that the inflationary dynamics that have persisted over the past year are "perhaps unevenly and gradually resolving over time."

European Commission forecasts modest recovery and faster disinflation for Eurozone

The European Commission maintains its projection for Eurozone GDP growth at 0.8% in 2024, unchanged from its Spring forecast. However, it has slightly downgraded the 2025 growth projection to 1.3% from the previous 1.4% in Spring forecast, introducing a new projection of 1.6% growth in 2026. For the EU as a whole, GDP is expected to grow by 0.9% in 2024, 1.5% in 2025, and 1.6% in 2026.

Inflation is anticipated to decline significantly. In Eurozone, headline inflation is projected to more than halve from 5.4% in 2023 to 2.4% in 2024, slightly lower than the previous estimate of 2.5%. It is expected to ease further to 2.1% in 2025 and 1.9% in 2026. The EU is forecasted to see an even sharper disinflation, with headline inflation falling from 6.4% in 2023 to 2.6% in 2024, continuing to decrease to 2.4% in 2025 and 2.0% in 2026.

Executive Vice-President Valdis Dombrovskis highlighted that the EU economy is steadily recovering, with growth expected to gain momentum next year. Factors contributing to this acceleration include rising consumption driven by increased purchasing power, sustained record-low unemployment, and anticipated improvements in investment levels.

European Commissioner for Economy Paolo Gentiloni noted that as inflation continues to ease and private consumption and investment growth pick up, supported by unemployment at record lows, growth is set to gradually accelerate over the next two years.

UK GDP shrinks -0.1% mom in Sep; Q3 growth slows sharply to 0.1% qoq

UK economy contracted by -0.1% mom in September, falling short of market expectations for 0.2% mom growth. The contraction was driven largely by declines in manufacturing output and information and communication services, with monthly services output showing no growth. Meanwhile, production sector experienced a notable -0.5% drop, primarily due to a sharp decline in manufacturing. Construction output offered a slight silver lining, rising by 0.1%.

For Q3, GDP grew by a marginal 0.1% qoq, marking a steep slowdown from Q2’s 0.5% qoq growth and missing forecasts of 0.2% qoq. The services sector, which accounts for the largest share of economic activity, expanded by just 0.1%, while construction demonstrated resilience with a 0.8% increase. However, the production sector contracted by -0.2%, reflecting persistent weaknesses in the industrial base.

Japan's real GDP growth slows to 0.9% annualized, robust consumption but weak investment

Japan's economy expanded by 0.2% qoq in Q3 2024, aligning with market expectations but indicating a slowdown from the previous quarter's momentum. On an annualized basis, GDP grew by 0.9%, surpassing the anticipated 0.7%, yet decelerating from a downwardly revised 2.2% growth in Q2.

The second straight quarter of expansion was largely propelled by robust private consumption, which accounts for over half of the nation's GDP. Private consumption increased by 0.9% qoq, up from revised 0.7% in the prior quarter, driven by solid demand for automobiles and the influence of wage increases. Despite persistent high inflation, consumers are channeling funds into spending as a result of wage gains.

However, the economy faces challenges as capital investment declined by -0.2% qoq after previous growth, reflecting the impact of a global economic slowdown on sectors like chipmaking equipment. Exports inched up by 0.4% qoq, indicating some resilience in external demand. In contrast, imports surged by 2.1% qoq, which negatively affected GDP by subtracting 0.4 percentage points from growth.

China's industrial growth and investment lag, while retail sales outperform in Oct

China’s economic data for October showed a mixed performance, with retail sales surpassing expectations while industrial production and fixed asset investment slightly underperformed.

Industrial production grew by 5.3% yoy, just shy of the expected 5.4% yoy and holding steady from the prior month. Fixed asset investment also slowed, increasing by 3.4% ytd yoy compared to the forecasted 3.5%.

Real estate investment continued to struggle, declining by -10.3% from the previous year’s level over the January-October period, marking the sharpest annualized contraction since August 2021. This steeper drop reflects ongoing pressures in China’s real estate sector.

In contrast, retail sales surged 4.8% yoy, beating expectations of 3.8% yoy and accelerating from September’s 3.2% yoy. This stronger retail activity was largely driven by a week-long national holiday and an early start to the Singles' Day shopping festival, which boosted consumer spending.

NZ BNZ manufacturing falls to 45.8, further contraction but new orders show signs of recovery

New Zealand’s BusinessNZ Performance of Manufacturing Index dropped from 47.0 to 45.8 in, marking its lowest point since July and extending the sector's contraction for a 20th straight month. The reading underscores continued struggles in the manufacturing sector, despite recent RBNZ rate cuts.

A breakdown of the report reveals broad weakness across production and employment indicators, with production slipping from 47.9 to 44.5, and employment declining from 46.8 to 45.8. Deliveries also fell to 44.6 from 45.6, and finished stocks modestly increased to 47.4. However, new orders provided a rare bright spot, rising from 47.9 to 49.0, the highest level since May 2023.

Encouragingly, the proportion of negative comments from respondents fell to 53.5% in October, a marked improvement from the previous months, where negative sentiment had peaked at 76.3% in June.

BNZ’s Senior Economist Doug Steel noted, “Despite lower interest rates, the manufacturing sector continues to face significant headwinds. Recent business surveys show a sharp contrast between improved expectations for activity and weak current conditions.”

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0490; (P) 1.0536; (R1) 1.0576; More...

Intraday bias in EUR/USD stays neutral for consolidations above 1.0495 temporary low. But outlook will remain bearish as long as 1.0760 support turned resistance holds. On the downside, firm break of 100% projection of 1.1213 to 1.0760 from 1.0936 at 1.0483 will target 1.0404 key fibonacci level next.

In the bigger picture, price actions from 1.1274 (2023 high) are seen as a consolidation pattern to up trend from 0.9534 (2022 low), with fall from 1.1213 as the third leg. Downside should be contained by 50% retracement of 0.9534 (2022 low) to 1.1274 at 1.0404, to bring up trend resumption at a later stage.

US retails sales rose 0.4% mom to USD 718.9B in October, above expectation of 0.3% mom. However, ex-auto sales rose 0.1% mom to US 528.5B, below expectation of 0.2% mom. Ex-gasoline sales rose 0.4% mom to USD 667.1B. Ex-auto & gasoline sales rose 0.1% mom to 621.6B.

Total sales for the August through October period were up 2.3% yoy from the same period a year ago.

Full US retail sales release here.

Boston Fed President Susan Collins signaled in a WSJ interview that a rate cut in December is "certainly on the table. However, it remains far from being a "done deal".

She emphasized the importance of upcoming economic data in shaping the Fed’s decision-making process, noting, “There’s more data that we will see between now and December, and we’ll have to continue to weigh what makes sense.”

Collins underlined her pragmatic approach, explaining, “I don’t see an argument for maintaining restrictive policy when there is not evidence of new price pressures.”

However, she also acknowledged that the inflationary dynamics that have persisted over the past year are "perhaps unevenly and gradually resolving over time."

The European Commission maintains its projection for Eurozone GDP growth at 0.8% in 2024, unchanged from its Spring forecast. However, it has slightly downgraded the 2025 growth projection to 1.3% from the previous 1.4% in Spring forecast, introducing a new projection of 1.6% growth in 2026. For the EU as a whole, GDP is expected to grow by 0.9% in 2024, 1.5% in 2025, and 1.6% in 2026.

Inflation is anticipated to decline significantly. In Eurozone, headline inflation is projected to more than halve from 5.4% in 2023 to 2.4% in 2024, slightly lower than the previous estimate of 2.5%. It is expected to ease further to 2.1% in 2025 and 1.9% in 2026. The EU is forecasted to see an even sharper disinflation, with headline inflation falling from 6.4% in 2023 to 2.6% in 2024, continuing to decrease to 2.4% in 2025 and 2.0% in 2026.

Executive Vice-President Valdis Dombrovskis highlighted that the EU economy is steadily recovering, with growth expected to gain momentum next year. Factors contributing to this acceleration include rising consumption driven by increased purchasing power, sustained record-low unemployment, and anticipated improvements in investment levels.

European Commissioner for Economy Paolo Gentiloni noted that as inflation continues to ease and private consumption and investment growth pick up, supported by unemployment at record lows, growth is set to gradually accelerate over the next two years.

Full European Economic Forecast release here.

• WTI oil futures continue to flatline near a critical support area
• Bullish trend reversal is a long way above 77.80

WTI oil futures kept their footing above the 67.00-68.00 support region for the third time since the current sideways trajectory began in September. This base has been a strong source of buying in 2021 and 2023 too. Hence, as long as it holds, there’s hope for a bounce back.

But excluding the recent green bullish doji candlestick and the oversold signals coming from the Stochastic oscillator, there are barely any signs of buying enthusiasm. The simple moving averages (SMAs) are still pointing down, and both the RSI and MACD are hovering in the bearish zone, showing that downward pressure is still very much in play.

If the 67.00 floor collapses, the price may seek shelter near the important 64.00 zone, which triggered September’s bounce and helped the bulls twice in 2023. If that doesn’t hold either, we could see a retest of the 2021 base at 61.50. Another failure there could make things get ugly fast, shifting the spotlight straight to the 56.40-57.30 area.

In the event the price crawls above the 69.00-70.00 range and breaks through the 20- and 50-day SMAs, the 72.00 area could block any increases toward the 74.00-75.00 region. A continuation higher could bode well for the market, though for the short-term picture to start looking bullish again the price must close decisively above the 200-day SMA and then rise sustainably above the 2023 resistance trendline at 77.80.

In short, WTI oil futures are at a critical crossroads at the moment. A slip below 67.00 could spell trouble, while a move above 77.80 could upgrade the outlook back to bullish. 

The XBR/USD chart reveals that Brent crude oil is trading near its lowest levels of the year.

Several factors are pressuring oil prices:

→ China's uncertain demand outlook: As the world's largest crude oil importer, any signs of weakening demand weigh heavily on the market.

→ A strengthening US dollar: Since Brent is priced in USD, a stronger dollar makes oil more expensive for international buyers, dampening demand.

→ Trump's promises to halt wars, including in the Middle East: This reduces geopolitical risk, which traditionally acts as a bullish factor for oil prices.

Technical Analysis of XBR/USD

From a technical perspective, bears appear to maintain control as a key trendline has shifted from acting as support to resistance (as indicated by the arrows on the chart).

Currently, the price oscillates around this trendline, which serves as the median of a channel marked by blue boundaries:

→ The upper boundary has been tested only once.

→ The lower boundary is under consistent pressure. Bulls, however, have managed to keep the price above the psychological $70.00 level.

How long can demand forces sustain Brent above $70? A fresh bearish breakout below this level could occur, testing whether buyers can prevent the market from extending its downtrend, which has persisted since April 2024.

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The Australian dollar is steady after a five-day slide, which saw the currency fall by 3.5% during that period. In the European session, AUD/USD is trading at 0.6471, up 0.28% on the day.

China retail sales beats expectations

China retail sales, a key indicator of domestic consumption, jumped 4.8% y/y in October, up sharply from 3.2% in September and above the market estimate of 3.8%. This was the fastest pace of growth since February. Retail sales received a boost from a week-long holiday an significant government stimulus measures in September to boost the struggling economy. This included a cut in interest rates and easing restrictions on borrowing for purchases of stocks and houses. These measures are unlikely to be sufficient to turn the economy around, and Bejing is under pressure to take further moves, such as additional monetary easing.

Good news in China is music to the ears of Australian exporters, as China is Australia’s largest trading partner. If Chinese demand for Australian goods increases, it should boost the Australian dollar, which has been hammered by the US dollar and has plunged 6.4% since October 1.

The Reserve Bank of Australia has held its cash rate for 4.35% for eight straight meetings and has become an outlier among the major central banks, most of which have cut rates in response to lower inflation. The RBA is under pressure to cut rates as inflation fell in the third quarter to 2.8%, down from 3.8% in Q2, its lowest rate since the first quarter of 2021.

The RBA noted at its November meeting that headline inflation has declined considerably but that underlying inflation remains too high. The RBA holds its final meeting of the year on Dec. 10 and is widely expected to maintain rates. If inflation continues to fall, we can expect a rate cut early in 2025.

The US dollar has looked sharp this week against the major currencies and could add to its gains if today’s retail sales report beats expectations. The markets expect October retail sales to rise to 1.9% y/y, up from 1.7% in September. Monthly, retail sales are expected to inch lower to 0.4% from 0.3%.

AUD/USD Technical

• AUD/USD is testing resistance at 0.6465. The next resistance line is 0.6488
• 0.6431 and 0.6408 are the next support levels