Credit Agricole CIB Research maintains a bearish bias on EUR and GBP in the near-term. CACIB is short GBP/USD in spot targeting a move towards 1.10.

"We think that the ECB will have a somewhat more difficult task convincing investors that it is able to hike rates aggressively into restrictive territory in view of the Eurozone recession and the prospect for more energy price-induced growth weakness in 2023. Similarly, we think that the BoE will underwhelm the hawkish market expectations next week," CACIB notes. 

"The recent consolidation of EUR/USD and GBP/USD could further reduce the need for aggressive policy rate hikes in Europe. Potential data disappointments from the Eurozone and UK next week could further add to the gloom. We maintain a negative stance on both the EUR and GBP going into next week," CACIB adds.

• USD/CAD is up 0.4% after the U.S. hot PPI-induced a peak at 1.3690

• That high again saw sellers into the 61.8% of Oct-Nov drop there

• This is the fourth straight session with highs by that Fibo

• Bounce in Treasury yields post-PPI nL1N32Z10K and risk dip lift

• Prices also possibly boosted by Keystone pipeline closure nL1N32Z10K

• BoC only seen having 13bp of rate hikes left vs 114bp from the Fed

• By end of 2023, BoC rate's priced at 4.1% vs 4.5% for Fed funds

• Trends is up unless while above Tues's low and on-close pivot pt at 1.3558

• The 76.4% Fibo and Nov high by 1.3800 are hurdles pre-2022's 1.3975 peak

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MUFG Research expects a pick-up in volatility next week on 5 central banks hikes and the US CPI report.

"It is highly likely we will get a slowdown in pace from the Fed with a 50bp hike. We expect 50bp rate hikes from the ECB and BoE as well – all announcing their decisions next Thursday. Norges meets on Thursday also and have already stepped down to 25bp moves and we expect another 25bp hike...

The SNB also meets next Thursday and given the SNB only meets every quarter there is a greater risk that we do not get a slowdown in pace and another 75bp rate hike is possible. But a stepdown to a 50bp hike seems more likely given the inflation data is much lower in Switzerland than elsewhere," MUFG notes.

"Next week offers obvious potential for a pick-up in volatility as we approach year-end but assuming we do get a major CPI shock next week, market pricing seems reasonable based on what we expect from the major central banks next week," MUFG adds.

Danske Research discusses EUR/USD outlook around next week's ECB December policy meeting. 

"For EUR/USD, the ECB meeting will conclude a busy week that also includes US CPI and the FOMC meeting. Overall, we do not expect a ‘hawkish 50bp hike’ will leave a big impact on EUR/USD, but it depends on the momentum heading into the meeting," Danske notes.

"The market may feed off a hawkish ECB, if US CPI inflation drops again and the Fed comes across as dovish and sends EUR/USD to new highs. Vice versa, higher US CPI inflation may turn around momentum in EUR/USD, send it back down and leave the ECB meeting less relevant," Danske adds.

• USD/CAD fell & briefly pierced the 55-DMA & neared the Dec. 6 low

• 1.35695 hit, downside momentum fade however and the pair turned positive

• Rally ensued despite higher oil CLv1 & equities ESv1, USD/CNH drop

• USD/CAD buoyed even as US rates EDM3 trade lower on the session

• Pair trades +0.18% in early NY and technicals lean bullish

• Consolidation of recent gains is ongoing, daily & monthly RSIs rising

• USD/CAD bears need break of support near 1.3560, 10-DMA to take some control

• For more click on FXBUZ

• AUD/USD fell toward the 10-DMA in Europe's am, 0.6754 hit, buyers emerged

• Softer US rates EDM3 & general US$ weakness help drive risk-on trading

• Equities ESv1, commodities DCIOc2 gain while USD/CNH trades lower

• AUD/USD opens NY near 0.6785, is up +0.24% ahead of Nov. US PPI report

• Techs lean bullish; RSIs rising, pair above rising 10- & 21-DMAs

• Potential H & S top on daily chart, monthly doji may be warnings for longs

• Dec. U. Of Michigan is an additional data risk during NY trading

• For more click on FXBUZ

• Optimism the driver and this underpinning the Aussie early Friday

• Risk sentiment and frothy commodities helping AUD/USD to a 4-day high

• Offers just above 0.6800 capped the bull run and now softer Europe midday

• China is easing its zero-COVID policy: officials eye increased growth

• U.S. PPI data also in the Friday mix and next week's U.S. CPI data

• AUD/USD support runs in at 0.6738, 10-day moving average

• Initial resistance 0.6800, session high: Dec. 5 0.6851 high next level

  For more click on FXBUZ

• EUR/USD boosted 1.0444-1.0587 EBS Wednesday-Friday

• Rally falling shy Monday's 1.0595 peak

• EUR/USD one month vol has dropped to 9.40 - 5 vol drop from Sep peak

• Option traders see quieter times ahead

• EUR/USD traders now widely betting on a rise might book profits

• The big EUR/USD rise since Sep is also a minor correction of the trend

• 1.0606 is target for min tech correction 2021-22 drop

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• Sterling stringing together a series of higher highs but ranges are tight

• The longer-term bull trend resumes above 1.2345, Dec. 5 high

• Daily momentum readings are picking up but the RSI is near over bought

• Potential for a tight weekly Doji will ring alarm bells for longs

• Weekly positive momentum is still increasing: conflicting signals given

• Will be looking for stronger reversal signals next week

  For more click on FXBUZ

• EUR/USD failed to close under 1.0453 Fibo, 38.2% of the 1.0223-1.0595 rise

• That failure keeps the bias on the upside, Monday's 1.0595 high vulnerable

• Last week the market closed above the 1.0512 Fibo = bullish

• 1.0512 Fibo: 50% retrace of 1.1495 to 0.9528 (Feb to Sept) EBS drop

• Will be a bull trap if spot closes back below 1.0512 at the end of this week

• EUR/USD Trader TGM2334. Previous update nL1N32Y0GM

• Where USD ends this week could be key to direction nL1N32Y0O9

UniCredit summarizes its bias on USD, EUR, GBP, JPY, and CHF for 2023.

"FX market picture: US interest rates, global risk sentiment and volatility are set to continue to play a key role in the global FX outlook and the USD’s dynamics in 2023 and 2024. Volatility is set to remain high amid large intraday swings," UniCredit notes.

"➢ USD: lower, but a complete reversal of its strength is unlikely

➢ EUR: higher but not much more beyond 1.12 against the USD

➢ JPY: USD-JPY back towards 130; possible BoJ’s monetary policy back to zero; EUR-JPY towards 150

➢ GBP: GBP-USD higher but limited upside beyond 1.20; EUR-GBP to re-test 0.90

➢ CHF: back towards 1.05 against the EUR," UniCredit adds. 

• +0.3% near the top of a 0.6763-0.6800 range - busy from late morning on D3

• Commodities firmer, Nikkei +1.35%, AsiaxJP +1%, ASX 200 +0.5% - risk on

• U.S. dollar and risk appetite will continue to lead AUD/USD into the weekend

• Charts; momentum studies, 5, 10 & 21 day moving averages conflict

• 21 day Bollinger bands edge higher - uptrend stalled, but remains in place

• Key levels are 0.6590 38.2% Oct-Dec rise and 0.6851 Dec high

• Fed, ECB and BoE rates, Aus jobs and RBA Lowe speech event risk next week

  For more click on FXBUZ

• Trades up 0.3% with USD -0.3% and risk bid - Nikkei +1.35%, AsiaxJP +1%%

• Sterling quiet - USD sold late morning - GBP top of a 1.2227-1.2276 D3 range

• Cash use slips to 15% of UK purchases in 2021, and 8% of retail sales

• Substantial card transaction fees need to be regulated - BRC nL8N32Y4BN

• Charts; neutral daily momentum studies, 10 & 21 day moving averages climb

• 21 day Bollinger bands rise - positive setup while 1.2030 21 DMA holds

• 1.2152 10 DMA held again - a base on the close for this move and key support

• 1.2271 Asian high then this week's 1.2345 trend high are initial resistance

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• +0.45% with the U.S. dollar off 0.3%, with risk appetite resilient in Asia

• AsiaxJP stocks +0.95%, Nikkei +1.2%, E-mini S&P +0.05%, 10yr USD -1bp 3.472%

• Move higher has turned the daily signals from neutral to positive

• Charts; momentum studies conflict, 5, 10 & 21 day moving averages climb

• 21 day Bollinger bands edge higher - uptrend is back in play

• Key levels are 0.6590 38.2% Oct-Dec rise and 0.6851 Dec high

  For more click on FXBUZ

• -0.1% after closing up 0.25%, with the U.S. dollar down 0.3%

• UK to lay out financial reforms to 'turbocharge' growth nL8N32Y2VL

• Hope is that the measures halt the slide of business to EU centres

• Charts; neutral daily momentum studies, 10 & 21 day moving averages climb

• 21 day Bollinger bands rise - positive setup while 1.2029 21 DMA holds

• 1.2152 10 DMA again held - a base on the close for this move, key support

• 1.2247 NY high then this week's 1.2345 trend high are initial resistance

• Sterling struggles above 1.2300- real progress needed or charts will reverse

For more click on FXBUZ

• Steady after closing up 0.5%, with the U.S. dollar lower and Wall Street bid

• No single factor driving markets, ahead of Fed, ECB, BoE rate decisions

• All 3 central banks expected to hike 50bp - focus will be on the outlooks

• Choppy consolidation this week expected to extend into the decisions

• Charts; neutral momentum studies, 5, 10 & 21 day moving averages climb

• 21 day Bollinger bands edge higher - positive setup returns

• Close below 1.04.08 21 DMA, and 1.0615 late June range high key levels

• 1.0535-50 777 mlm and 1.0600 1.308 BLN the close strikes for December 9

For more click on FXBUZ

Credit Suisse adopts a cautious bias on USD/JPY in the near-term.

"Our caution applies to USDJPY, which came close to our current range low expectation at 133.10 last Friday but has since bounced to close to our USDJPY 138.00 year-end target. The speed of the moves and reversals combined with extreme data sensitivity make this a treacherous environment," CS notes. 

"We see low odds of the 19-20 December BOJ meeting being a relevant factor for USDJPY, and continue to expect wider USD direction linked to Fed policy to dominate price action," CS adds. 

• AUD/USD buoyant in Asia after rallying 0.75% Thu on strong risk appetite

• Boosted by China reopening optimism, tempered Fed rate outlooknB9N32O041

• Rising iron ore and copper prices underpin nL1N32Y0FAnL1N32Y0QV

• Risks associated with easing COVID curbs in China may slow rallynL8N32Y07P

• Caution ahead of US CPI data Tue and Fed rate decision Wed may limit rally

• Resistance 0.6780-85, 0.6805-10, support 0.6745-50, 0.6720-25

• For more click on FXBUZ

• USD/CAD fell 0.5% after a rejection away from Wed's pre-BoC 1.3700 peak

• Thur's 1.3690 high at 61.8% of Oct-Nov drop was roundly rejected

• Haven USD was down broadly as U.S. stocks recovered some recent losses

• BoC's dovish rate hike Wed is now priced as possible pinnacle for rates

• BoC Deputy Governor Sharon Kozicki affirmed data-dependency nBCL8NEI3K

• Tsy-CGB yield spreads remain supportive, but off their Oct-Nov peaks

• Worry for dollar is Fed over-tightens and has to retreat in H2 2023

• Pair is negatively correlated to S&Ps, risk-acceptance

• China reopening hopes weighed against new outbreak risks nL8N32Y07P

• The daily on-close pivot point is Tuesday's 1.3558 low

For more click on FXBUZ

• Sterling rose 0.35%, roughly in line with a broader USD pullback

• A 10-mo high in U.S. continued jobless claims keeps Fed pivot hope alive

• But Tsy yields rebounded Thursday after the recent dive got overdone

• Traders wary of being overly long Treasuries pre-Dec. 13-14 CPI and Fed

• Risk-driven sterling responded more to the rebound in U.S. stocks

• Buyers again found by the 200-DMA, with the 10-DMA convergence propping

• But Dec's 1.2345 recovery peak is a reach before the Fed and BoE meetings

• Bulls need a daily range above 1.2300, by Aug's high, for a breakout

• If Fed shocks with very a hawkish meeting, 1.2900 is key support

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ANZ Research likes short GBP/CHF exposure in spot targeting a move towards 1.11.

"We do not expect the broad November 2022 rally in the GBP to be long lasting given the UK’s weak economic fundamentals: its twin deficits, high inflation and rising interest rates. The Bank of England predicts a two-year recession ahead. While yields and improving risk sentiment have driven recent upside in the GBP, the yield differential with the CHF is expected to continue narrowing," ANZ notes. 

"Further, a key driver of FX is real yields which are more supportive for the CHF. Short GBP/CHF is a defensive, lowbeta trade to hedge any downside from deteriorating economic conditions in the UK and Europe. Consensus expectation of the Swiss central bank’s terminal rate is 1.5%," ANZ adds. 

• EUR/USD fall from the Dec. 5 daily high stalled near the 10-DMA

• Dip buyers emerged Dec. 7 & again Dec. 8, pair now hit 3-session high

• EUR/USD back above 50% Fib 1.1495-0.9528 while daily, monthly RSIs rise

• Psychological 1.0600 in focus as are June 27 & 10 highs (1.0615, 1.0642)

• Stops likely reside above the June 10 high, if run 1.0775/00 is in play

• For more click on FXBUZ

Bank of America Global Research discusses its expectations for next week's FOMC policy meeting.

"We expect the Fed to raise its target range for the federal funds rate by 50bp in December to 4.25-4.5%. Fed communications over the last few weeks have clearly telegraphed this move. The more important question is where the Fed goes next," BofA notes.

"Dots to shift higher again: We expect the median forecast for 2023 to move up by 50bp to 5.125%, consistent with our terminal rate. We think the dot plot will then point to 100bp of cuts each in 2024 and 2025. The macro projections in the SEP should be revised to show lower GDP growth and inflation than in September, and higher unemployment.

"Press conference: no pivot.  We expect Chair Powell to push back against easing in financial conditions and remind investors that a slower pace of hikes does not mean a lower terminal rate, and the Fed's job is far from done," BofA adds.

EUR/USD traded higher Thursday as a rise in U.S. weekly and continuing jobless claims nL1N32Y13E softened the dollar and reinforced confidence among longs as they grow comfortable with the pair trading near trend highs.

EUR/USD's ability to hold near recent highs is likely driven by influences from rates markets.

Eurodollars prices EDZ3 appear to be bottoming on a higher probability of recession that could lead to Fed rate cuts.
U.S. Treasury 3-month/10-year and 2-year/10-year spreads signal the potential for recession as they remain inverted and trade at levels not seen since the early 1980s.

Rates markets also expect the Fed and ECB policies to diverge.
Eurodollars expect Fed cuts in the second half of 2023 while Euribor rates indicate ECB cuts won't be implemented until early 2024 FEIM4.

Interest rate influences are helping EUR/USD hold in the 1.0400-1.0600 zone and keep its consolidation phase, a bullish signal, intact.

U.S.
November PPI and CPI reports will be released ahead of the Fed's Dec.
13-14 meeting.
Downside surprises could indicate disinflation is taking hold, which could lead to a less hawkish Fed and lower dollar.

For more click on FXBUZ