EURUSD
- EUR/USD Price: The EUR/USD pair continues its downtrend, nearing 1.0600 on Tuesday, influenced by a robust US Dollar driven by Trump’s policy expectations and strong US market sentiment, marked by the Dollar Index (DXY) surpassing 105.00.
- ECB and Fed Policies: Market expectations that the ECB may introduce deeper rate cuts than the Fed are putting downward pressure on the Euro, as investors anticipate a more dovish stance in the Eurozone compared to the US.
- Political Uncertainty in Germany: Chancellor Olaf Scholz’s openness to moving the confidence vote sooner suggests the potential for early elections in Germany. This political instability could further dampen the Euro as markets await a clearer direction on Germany’s political landscape.
- Upcoming ZEW Survey: Investors are turning their attention to the upcoming ZEW Economic Sentiment Survey for additional insights into Germany’s economic outlook, with this indicator likely to impact near-term Euro movements.
- US Inflation Data: The upcoming US inflation report on Wednesday could provide essential cues on future Fed policy, with any surprising inflation trend potentially accelerating the EUR/USD’s current bearish trend.
| SMA (20) | Falling |
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| RSI (14) | Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement: The EUR/USD faces downward pressure, driven by a robust US Dollar and expectations of dovish ECB policies, along with German political uncertainties. Upcoming data releases from the ZEW Survey and US inflation will be critical in defining the pair’s next movements.
GBPUSD
- GBP/USD Price: GBP/USD moves closer to the 1.2800 level as disappointing UK labour data weakens investor confidence in the British Pound. The unemployment rate rose to 4.3% against expectations of 4.1%, underscoring economic challenges for the UK.
- Jobless Claims: The October jobless claims increased by 26.7K, surpassing September’s revised 10.1K but missing the anticipated 30.5K figure. This increase in claims points to softening labour market conditions, intensifying downside pressure on GBP.
- UK Wage Growth: Average Earnings (excluding Bonus) rose by 4.8% YoY in September, slightly exceeding expectations of a 4.7% increase, showing some wage resilience. However, the slowdown from August’s 4.9% suggests limited wage growth momentum amid a weak labour market.
- BoE Rate Cut: A reminder, the BoE cut the bank rate on Thursday by 25 bps to 4.75%, with eight out of nine policymakers voting in favour. This decision matches market expectations and signals a cautious approach amid inflationary pressures and mixed economic indicators.
- Fed Commentary: Comments from Minneapolis Fed President Neel Kashkari on the resilience of the US economy in tackling inflation provide support to the USD, adding to GBP/USD’s downward trajectory as GBP weakens against a strong USD backdrop.
| SMA (20) | Falling |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement: The GBP/USD is under significant pressure due to weak UK labour data and a dovish BoE rate cut, contrasting with USD strength fuelled by US economic resilience. Downside risk remains prevalent as markets await further economic data and potential Fed policy signals.
GOLD
- Gold New Lows: Gold prices have declined to a fresh one-month low amid sustained buying interest in the US Dollar, putting downward pressure on XAU/USD. This reflects investors’ preference for the USD in anticipation of potential economic growth under new fiscal policies.
- Expectations Support USD: Investors are optimistic about Trump’s expansionary economic policies, which could increase inflation, effectively reducing the Fed’s ability to ease monetary policy. This expectation strengthens the USD and limits demand for Gold as a hedge.
- Trade War Concerns: Trump’s pre-election proposal of a 10% tariff on imports globally raises fears of a trade war escalation, which offers some support to Gold as a safe- haven asset. The lingering trade uncertainty tempers some of the USD-driven selloffs in XAU/USD.
- Fed Commentary: Minneapolis Fed President Neel Kashkari emphasized the need for clearer signs of inflation reaching the 2% target before further rate cuts. This cautious Fed stance impacts gold demand, as investors focus on stronger inflation targets rather than easing.
- Upcoming US Data: Traders are eyeing the upcoming US consumer inflation data, which will be crucial for determining Gold’s direction. Fed speakers are also in focus, as they may offer additional insights into the Fed’s policy stance in response to inflation trends.
Closing statement: XAU/USD faces near-term downside risks as USD strength persists on expansionary policy expectations. Trade war concerns provide limited support, but gold's trajectory will likely hinge on upcoming US inflation data and the Fed’s inflationary outlook.
CRUDE OIL
- WTI Slips: West Texas Intermediate (WTI) prices are slightly lower, hovering around $68.00, with sentiment cooling post-Trump's election, which continues to impact oil demand expectations and investor positioning.
- Potential Tariffs: Trump’s proposed tariffs, including a 10-20% blanket tariff on imports and additional tariffs on many Chinese goods, could impact global trade dynamics and fuel inflation concerns. This tariff policy is expected to indirectly impact oil demand, adding downside pressure on prices.
- Strong DXY: The rising US Dollar Index (DXY), reaching multi-month highs near 105.70, weighs on WTI by making oil more expensive for holders of other currencies. The firmer USD is keeping crude oil prices suppressed amid a cautious risk environment.
- China’s Economic Stimulus: China’s latest stimulus package underperformed market expectations, casting doubt on growth in the world’s largest oil importer. Alongside slow-moving consumer prices, China’s stimulus measures appear insufficient to support a substantial rebound in oil demand.
- OPEC Report: Traders are largely discounting the release of the monthly OPEC report, as OPEC has already opted to extend its production cap for an additional month. The report is anticipated to bring minimal new information to the market, keeping WTI traders focused on external factors like tariffs and USD strength.
| SMA (20) | Slightly Falling |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: WTI remains under pressure amid a strong USD and uncertain global trade prospects, with limited upside potential until more supportive fundamentals or substantial demand signals emerge, especially from China.
DAX
- DAX Rallies: The DAX index rose by 1.21% on Monday, reversing prior losses. Strong corporate earnings, particularly from select firms, helped counteract market worries over potential US tariffs and weak demand signals from China, supporting investor sentiment.
- Market Movers: Continental AG surged by 10.62% following positive earnings, while Rheinmetall AG advanced by 3.48% as interest in military stocks rose. Defense sector stocks are benefiting from expectations of increased EU defense spending in response to geopolitical shifts following Trump’s victory.
- Weak Chinese Demand: China’s inflation figures pointed to softening domestic demand, sparking concerns for German exporters facing Trump’s proposed tariffs. Chinese deflationary pressures, compounded by German firms’ vulnerability to trade tariffs, are weighing on outlooks for export-driven sectors.
- German Inflation: Germany’s consumer price index (CPI) rose 2.0% year-on-year in October, with a monthly increase of 0.4%. Moderate inflation growth could sustain domestic consumption but may complicate monetary policy adjustments amid broader economic uncertainties.
- ZEW Economic Sentiment: The ZEW Economic Sentiment Index, due for release today, is forecasted to dip from 13.1 to 12.8 in November. A weaker sentiment index may signal caution among investors and potentially influence the DAX’s short-term movement, especially if economic outlooks falter.
