Daily Global Analysis By zForex

[Z Forex]

USD/JPY Analysis by zForex Research Team - 11.15.2024​

Yen Weakens on Q3 Low Growth​

The Japanese yen weakened past 156 per dollar on Friday, its lowest in nearly four months, after Japan's Q3 GDP grew just 0.2%, down from 0.5% in Q2. Annual growth slowed to 0.9% from 2.2%. Uncertainty about the Bank of Japan's policy direction, combined with a stronger US dollar, kept pressure on the yen. The BoJ still expects to raise rates to 1% by mid-2025, despite mixed economic data and political instability.

For USD/JPY, support levels are at 154.50 (200-day moving average), 153.40, and 152.30, while resistance is at 156.50, 157.30, and 158.50.

 

[Z Forex]

Weekly Analysis by zForex Research Team - 11-15 November​

Dollar Strengthens on Election Hopes, Euro and Pound Weaken​

The dollar index closed higher with expectations of inflationary policies under Trump’s presidency.

The euro weakened due to political uncertainty, below-target inflation, and Trump’s victory. The pound also declined following the rate cut but recovered slightly.

Non-yielding assets suffered losses as Trump’s election raised hopes for higher interest rates. Concerns about US-China tensions pressured silver prices, given China’s role as the largest importer.

US 10-year Treasury yields initially surged but retreated, while 2-year yields closed higher for the week.

RBA Interest Rate Decision (Nov)​

The Reserve Bank of Australia (RBA) kept its cash rate at 4.35% during its November meeting, maintaining borrowing costs for the eighth consecutive time, as expected. While headline inflation has dropped and is projected to stay low, core inflation remains high, prompting caution about inflationary pressures. The RBA noted monetary policy will remain restrictive until inflation is confidently on track toward the target. Signs of increased Q3 household spending were observed, but a slower rebound could lead to weak growth and labor market issues. The interest rate on Exchange Settlement balances stayed at 4.25%.

S&P Global Services PMI (Oct)​

US service providers saw solid business growth as Q4 began, with new orders maintaining September’s pace despite weaker international demand. Business activity expectations rose from a 23-month low, but companies reduced staffing slightly amid future demand uncertainty. The S&P Global US Services PMI Business Activity Index indicated strong growth in October, slightly down to 55.0 from 55.2 in September, marking 21 consecutive months of expansion. New orders increased for the sixth month, though export growth was slower due to subdued demand.

ISM Non-Manufacturing PMI (Oct)​

In October, the Services PMI reached 56%, up by 1.1% from September’s 54.9%. This marks the eighth occasion this year that the composite index has remained in expansion territory.

BoE Interest Rate Decision (Nov)​

The Bank of England cut its Bank Rate by 25bps to 4.75% in its November 2024 meeting, the second cut since August. Eight of nine MPC members supported the move, exceeding the expected seven votes, with Catherine Mann dissenting.

Initial Jobless Claims​

For the week ending November 2, seasonally adjusted initial unemployment claims rose to 221,000, up 3,000 from the prior week’s revised 218,000. The 4-week moving average fell by 9,750 to 227,250, compared to the revised 236,500 from the prior week, which was adjusted up by 500 to 237,000.

Fed Interest Rate Decision​

At its November 2024 meeting, the Federal Reserve cut the funds’ target range by 25bps to 4.5%-4.75%, following a 50bps cut in September, as expected. Policymakers reiterated their data-driven approach for future rate adjustments. Chair Jerome Powell stated that the Fed will decide on a meeting-by-meeting basis and may pause rate cuts in December, depending on incoming data. He noted that Trump’s election victory would not impact the Fed’s near-term policy and emphasized that the Fed does not speculate on future government actions.

Currencies​

The euro ended the week lower against the US dollar due to concerns over the Eurozone’s economic outlook following Trump’s election win and German political instability. The Japanese yen was flat against the dollar as BoJ minutes showed consensus for rate hikes, though strong wage data and global uncertainties cast doubt on this. The pound fell after the BoE’s expected 25bps rate cut, supported by 8 of 9 members, and expectations of a 0.5 percentage point inflation rise from the Labour Party’s budget. The Chinese yuan weakened amid concerns over Trump’s return, prompting a 10 trillion yuan stimulus package. The Australian dollar remained flat, with hawkish RBA signals and expected Chinese stimulus balancing the impact of Trump’s election.

Commodities​

Precious metals had a tough week, ending lower. Trump’s re-election drove expectations of inflationary policies, raising 10-year Treasury yields and the dollar index, which pressured non-yielding metals. Concerns over strained US-China relations and potential impacts on China’s economy, the largest importer of silver, also weighed on silver prices.

Equities​

The S&P 500 and Dow Jones rose nearly 5%, while the Nasdaq gained similarly, surpassing its July peak. The rally was fueled by the election conclusion easing political uncertainty and expectations of expansionary policies under a potential Trump administration, along with hopes for reduced geopolitical tensions. Nvidia led the rally with a 9% surge to a new high, followed by Google and Netflix, both up 5%. Apple, Microsoft, and Meta each rose about 3%.

 

[Z Forex]

Weekly Analysis by zForex Research Team - 18-22 November​

Dollar Rises on Inflation Expectations, Euro Hits Yearly Low ​

Global financial markets last week saw a strong rally in the U.S. dollar, weak performance in metals, and gains in Treasury yields. The dollar's surge, driven by inflationary expectations and geopolitical developments, weighed heavily on other currencies and commodities.

Key Points​

Currencies:

• DXY gained nearly 2%, marking seven straight weeks of growth, approaching the 107 level.
• The Euro hit its lowest level against the dollar in a year amid U.S. inflationary policy expectations.
• The pound declined to a 13-week low, pressured by weak growth data and dollar strength.
• The Japanese yen fell to a four-month low, with GDP growth for two consecutive quarters having a minimal market impact.

Commodities:

• Gold and silver experienced notable pullbacks, with silver showing relative resilience.
• The gold-to-silver ratio reached 83.80.
• Crude oil prices dropped approximately $2 for the week.

Fixed Income:

• U.S. 10-year and 2-year Treasury yields rose by 3% and 2%, respectively, driven by the "Trump trade" effect.

Macro Analysis​

Global economic data for October highlights a mix of improving inflation metrics and slower economic growth across key regions, with energy costs playing a significant role in driving headline inflation trends.

German CPI​

Inflation rose to 2.0% in October from 1.6% in September, its highest in three months, driven by higher services inflation (4.0% vs. 3.8%) and food prices (2.3% vs. 1.6%). Core inflation increased to 2.9%. Energy costs fell 5.5%, slowing from a 7.6% drop in September. EU-harmonized CPI accelerated to 2.4% YoY and rose 0.4% MoM.

U.S. PPI​

Producer prices rose 0.2% MoM in October and 2.4% YoY. Core PPI (excluding food, energy, and trade) rose 0.3% in October, up from 0.1% in September, and 3.5% YoY.

U.S. CPI​

Inflation climbed to 2.6% in October from 2.4% in September, its first increase in seven months. Energy costs fell 4.9%, slowing from a 6.8% drop, while shelter inflation remained at 4.9%. Core inflation held steady at 3.3%. Monthly CPI rose 0.2%.

UK GDP​

The economy grew 0.1% QoQ in Q3, down from 0.5% in Q2. Yearly growth improved to 1% from 0.7%. Services rose 0.1%, construction grew 0.8%, but production contracted by 0.2%. Net trade contributed positively, with exports down 0.2% and imports falling 1.5%

Eurozone GDP:​

GDP grew 0.4% QoQ in Q3, its best in two years, with Germany’s 0.2% growth avoiding recession. Spain rose 0.8%, France 0.4%, and Ireland rebounded by 2%. Yearly growth reached 0.9%.

U.S. Retail Sales​

Retail sales rose 0.4% MoM in October, following a 0.8% increase in September. Gains were led by electronics (+2.3%), autos (+1.9%), and food services (+0.7%). Declines were noted in miscellaneous stores (-1.6%) and furniture (-1.3%).

Currencies​

• Dollar Index (DXY): Climbed nearly 2%, testing 107, its seventh consecutive weekly gain, supported by Trump-related inflation expectations.
• Euro: Fell to a one-year low against the dollar amid broad USD strength.
• Pound: Declined to a 13-week low on weak GDP data and USD gains.
• Japanese Yen: Dropped to a four-month low despite consecutive GDP growth quarters.
• Chinese Yuan: Hit a three-month low, despite improving retail sales and unemployment.
• Canadian Dollar: Reached its lowest since 2020, pressured by falling oil prices and trade concerns, though strong PMI data provided slight relief.
• Australian Dollar: Declined on lower commodity prices and Chinese demand concerns, with RBA's steady rate comments offering little support.

Commodities​

• Gold and Silver: Gold posted its worst week since 2021, pressured by a stronger dollar and Trump-driven rate concerns. Silver outperformed gold, narrowing the gold-to-silver ratio.
• Crude Oil: Fell to $68.50 as the IEA forecasted an oil surplus for 2024, citing weaker demand and higher production. U.S. crude inventories rose by 2.1 million barrels.

Equities:​

• U.S. Stocks: Dow fell 0.8%, S&P 500 and Nasdaq dropped 1.5%. Broadcom (-6%) and Amgen (-8%) led declines, while Netflix (+7%) and Tesla (+7%) posted gains.

 

[Z Forex]

Daily Analysis by zForex Research Team - 11.18.2024​

Dollar Near Two-Year Highs, UK CPI in Focus ​

The US Dollar Index hovers near two-year highs at 106.6, pressuring EUR/USD at 1.0540 as hawkish Fed expectations weigh on the euro and pound.

The yen weakened to 155 after hints of gradual BoJ rate hikes, while crude oil and gold saw mixed performances amid shifting market dynamics. Gold rebounded to $2,600, supported by geopolitical tensions and Fed uncertainty. The GBP/USD at 1.2630 awaits UK CPI data, which may shape its trajectory. Silver recovered to $30.60, driven by China's economic outlook and US PMI expectations.

 

[Z Forex]

Gold Analysis by zForex Research Team - 11.18.2024​

Gold Finds Support, Fed Uncertainty Persists​

Gold prices surged to nearly $2,600 per ounce on Monday, recovering from their largest weekly decline since 2021, as the rally in the US dollar paused. Recent US data showed a strong rise in retail sales for October, highlighting the economy's resilience. Comments from several Federal Reserve officials last week added uncertainty over the timing and magnitude of potential rate cuts. However, markets are still pricing at roughly a 65% probability of a 25bps rate cut in December. Investors are now focused on upcoming remarks from other Fed officials this week, looking for clearer signals on the future path of US interest rates. Meanwhile, geopolitical tensions, particularly in the Middle East and the ongoing conflict between Ukraine and Russia, could fuel safe-haven demand, providing additional support for gold.

The first support level for gold is at $2,575, followed by $2,545 and $2,520 while $2,605 serves as a key resistance level, with $2,635 and $2,665 as the next levels to monitor if this resistance is surpassed.

 

[Z Forex]

GBP/USD Analysis by zForex Research Team - 11.18.2024​

UK Inflation Data Key for GBP/USD Direction​

The GBP/USD is trading around 1.2630 following last week's sharp decline. This week, UK CPI data will be released, and its outcome is expected to play a key role in determining the pair's direction. The market anticipates one more rate cut from the Bank of England in December. Meanwhile, expectations of a Trump election win are seen as supportive of the US Dollar Index due to his inflationary policies. This has contributed to the weakening of the pound. However, UK inflation data, along with upcoming economic reports from the US, will be crucial in shaping the market's outlook.

Key support levels for the GBP/USD pair are at 1.2595, 1.2520, and 1.2475. On the upside, resistance levels to watch are at 1.2680, 1.2740, and 1.2820.

 

[Z Forex]

Daily Analysis by zForex Research Team - 11.19.2024​

Market Awaits Upcoming EUR CPI Data ​

On Tuesday, precious metals and oil started the day with an increase due to geopolitical tensions.

In the dollar market, however, we see that after a significant rally, the pairs are beginning to rise again as profit-taking continues. In the Eurozone, we will see whether the rise in the EUR/USD pair continues with the release of the upcoming CPI data today.

 

[Z Forex]

USD/JPY Analysis by zForex Research Team - 11.19.2024​

Japanese Yen Gains on Speculation of Possible Intervention​

The Japanese yen strengthened to around 154 per dollar on Tuesday, recovering from four-month lows, as authorities issued warnings against excessive forex moves. Finance Minister Katsunobu Kato emphasized the government would monitor exchange rates and take action if needed. MUFG also suggested Japan could accelerate interest rate hikes due to persistent inflation. However, BOJ Governor Kazuo Ueda said any rate increases would be gradual, without giving a specific timeline. The yen has dropped over 10% since September, impacted by uncertainty over BOJ policy and a stronger dollar driven by expectations of fewer Fed rate cuts.

In the USD/JPY pair, the first support level is at 153.80. If this level is broken, the next support levels to monitor are 152.50 and 151.80. On the upside, resistance levels are at 156.10, 157.50, and 158.00, respectively.

 

[Z Forex]

Gold Analysis by zForex Research Team - 11.19.2024​

Gold Rises on Weaker US Dollar​

Gold surged above $2,620 per ounce on Tuesday, reaching its highest point in a week, primarily due to a weakening US dollar. Market focus has now shifted to remarks from Federal Reserve officials, as investors seek more insight into the central bank’s stance on monetary easing. Expectations for a rate cut of 0.25% at the Fed’s December meeting have fallen to just below 59%, a decrease from 62% the previous day and over 65% a week earlier, according to CME FedWatch. Investors are also closely tracking President-elect Donald Trump’s cabinet picks. Additionally, growing geopolitical uncertainties are driving increased demand for safe-haven assets like gold, as tensions continue to rise in the Middle East and between Russia and Ukraine.

The first support level for gold is at $2,575, followed by $2,545 and $2,525 while $2,635 serves as a key resistance level, with $2,691 and $2,711 as the next levels to monitor if this resistance is surpassed.

 

[Z Forex]

Daily Analysis by zForex Research Team - 11.20.2024​

Russia-Ukraine Developments Test Market Strength ​

Metals continued their upward movement on Wednesday with increasing tensions between Russia and Ukraine.

The dollar, which rallied following Trump's victory, declined due to profit-taking but has since rebounded from the 106 level and is rising again. On the UK side, today’s upcoming CPI data will be crucial in determining the direction of GBP/USD. Meanwhile, in the US, data remains subdued as the week progresses.

 

[Z Forex]

EUR/USD Analysis by zForex Research Team - 11.20.2024​

EUR/USD Attempts Breaking Above 1.06$​

The EUR/USD pair has struggled to gain momentum, trading below the $1.06 mark and at risk of further declines. The strength of the US dollar has been the dominant factor in foreign exchange markets in recent weeks, outweighing geopolitical concerns. This has put downward pressure on all major currency pairs, driven by rising inflation fears following Trump's victory and the Federal Reserve's indication that it will slow its rate cuts.

Euro faces challenges from political instability in Europe, weakening economic data from the Eurozone, and potential escalations in the Russia-Ukraine conflict. While US data is light this week, global PMIs on Friday could increase volatility.

The dollar index maintained its recent drop, settling around 106.2 on Wednesday, as the initial surge in demand for safe-haven currencies, triggered by the intensifying Russia-Ukraine conflict, began to fade.

EUR/USD resistance levels are 1.0600, 1.0650, and 1.0700, with support at 1.0550, 1.0500, and 1.0450.

 

[Z Forex]

GBP/USD Analysis by zForex Research Team - 11.20.2024​

UK Inflation Data Key for GBP/USD Direction​

GBP/USD fluctuated just below the 1.2700 mark, as traders of the pair braced for a significant release of UK economic data, highlighted by the Consumer Price Index (CPI) inflation figures for October. With US economic data taking a backseat on the same day, attention in the pair shifted to the UK reports, which could influence the Bank of England's (BoE) stance on potential rate cuts for the remainder of the year. In its Monetary Policy Report released on Tuesday, the BoE adopted a cautious tone, stating that interest rates remain "moderately restrictive." As a result, market participants are now pricing in less than a 20% probability of an additional rate cut by the BoE this year.

Key support levels for the GBP/USD pair are at 1.2595, 1.2520, and 1.2475. On the upside, resistance levels to watch are at 1.2700, 1.2740, and 1.2820.