• AUD/USD -0.2% in Asia as offshore yuan hits a more-than-one year low

• CNY slumps towards 7.3000,lowest since Nov 2023 despite PBOC's firm yuan fix

• Trump's weekend comments on USD, robust U.S. economy weigh on currencies

• AUD downside limited as Fed's Waller says he is inclined to cut rates in Dec

• Odds of Dec 25 bps cut rise to 75%, from 66% late on Fri on CME's FedWatch

• Australia public spending splurge carries economy in Q3, adds 0.7ppt to GDP

• Offsets a drag from inventories and a disappointing trade performance

• Citi Australia revises up estimate for Q3 GDP to 0.7% from 0.2% previously

• Q3 GDP data on Wed; support 0.6435-45, 0.6400-10, resistance 0.6500, 0.6530

• Asia range 0.6455-0.6481

• For more click on FXBUZ

Synopsis:

SocGen expects non-farm payrolls to increase by 185,000 in November, with unemployment rising to 4.2%. Wage growth is projected at 0.3% m/m, reflecting a return to moderate gains after October's stronger increase.

Key Points:

• Payrolls and Job Trends:

  • Non-farm payrolls are forecast to rise by 185,000, bringing the three-month average gain to 140,000 per month.
  • Boeing strike resolution is expected to add 40,000 workers back to payrolls.
  • Hurricane-related job losses continue to weigh, with unemployment insurance claims remaining elevated.

• Unemployment Rate:

  • Unemployment is expected to rise to 4.2% from October’s 4.1%, largely due to moderate employment gains.
  • October's unemployment rate was narrowly recorded at 4.145%, making an upward rounding likely.

• Wage Growth:

  • Wages are projected to grow 0.3% m/m, aligning with a 3.7%-3.9% annualized trend.
  • The expected gain follows October’s stronger 0.4% m/m increase, reflecting a mean-reversion pattern.

Conclusion:

SocGen projects moderate labor market gains for November, highlighted by rebounding payrolls and steady wage growth. The anticipated slight rise in unemployment reflects underlying trends, with the overall labor market remaining resilient amidst external disruptions.

• Off 0.1% at the base of a 1.0484-1.0501 range, French politics caps

• Weak Eurozone PMIs and German strikes weigh on EUR sentiment

• There is no tier-one EZ data today, so events in France and the USD lead

• Charts - neutral daily momentum studies as 21-day Bollinger bands contract

• 5, 10 & 21-DMAs crest, weekly moving averages fall - a bearish setup

• 1.0590 21 DMA and 1.0610 recent range top are key resistance - should hold

• Last week's 1.0425 base and the November 1.0331 low are initial supports

• 1.0470 726 mln and 1.0500 1.443BLN close major strikes for December 3rd

For more click on FXBUZ

• Off 0.1% in a tight 1.2642-1.2660 range - quiet after early FX Matching flow

• UK retailers report weak November sales - Black Friday counted in December

• BOE Governor Andrew Bailey gives a pre-recorded interview at an FT event

• There is no other significant UK data today, so risk and the USD lead GBP

• Charts - positive daily momentum studies, 21-day Bollinger bands contract

• 5, 10 & 21-day moving averages coil - signals display a neutral setup

• Last Wednesday's 1.2569 low, then the 1.2475 Nov trend low initial supports

• Well tested 1.2720 21 DMA then 1.2841, 0.382% Sep/Nov fall first resistance

For more click on FXBUZ

• AUD/USD drifts slightly lower in Asia as USD maintains a firm tone

• Robust U.S. economy, Trump's weekend comments on USD undermine

• CNH heads towards 7.3000, EUR soft on French politics, weigh on AUD

• Downside limited as Fed's Waller says he is inclined to cut rates in Dec

• Odds of Dec 25 bps cut rise to 75%, from 66% late on Fri on CME's FedWatch

• Australia's net exports impact on Q3 GDP at 0.1% vs 0.3% expected

• Q3 current account widens to A$ -14.1 bln vs a$ -10 bln expected

• Data softer than expected but taken in stride; Q3 GDP data on Wed

• Support 0.6440-50, resistance 0.6500-05, 0.6525-30; Asia range 0.6467-0.6478

• For more click on FXBUZ

• Steady after closing down 0.65% with the USD up 0.55% - EUR/GBP -0.1%

• UK retailers report weak November retail sales - Black Friday in December

• UK manufacturing PMI sank to a 9-month low as orders dry up, costs rise

• BOE Governor Andrew Bailey gives a pre-recorded interview at an FT event

• Charts - positive daily momentum studies, 21-day Bollinger bands contract

• 5, 10 & 21-day moving averages coil - signals show a neutral setup

• Last Wednesday's 1.2569 low, then the 1.2475 Nov trend low initial supports

• Well tested 1.2720 21 DMA then 1.2841, 0.382% Sep/Nov fall first resistance

• A close outside the broad 1.2475/1.2841 range should be directional

  For more click on FXBUZ

• Little reason to buy EUR/USD on the fundamentals, as charts turn bearish

• Steady after closing down 0.75% with the U.S. dollar up 0.55%, EUR/JPY -0.8%

• The potential collapse of the French government weighed on sentiment

• PMI showed the Euro zone Nov factory activity fell sharply; outlook gloomy

• Nine Volkswagen plants on strike as worker rift with management deepens

• Charts - neutral daily momentum studies as 21-day Bollinger bands contract

• 5, 10 & 21-DMAs crest, weekly moving averages fall - a bearish setup

• 1.0591 21 DMA and 1.0610 recent range top are key resistance - should hold

• Last week's 1.0425 base and the November 1.0331 low are initial supports

• 1.0470 726 mln and 1.0500 1.443BLN close major strikes for December 3rd

  For more click on FXBUZ

Synopsis:

President-elect Trump's vocal support for the US dollar complicates the possibility of FX intervention to weaken it, even as the administration prepares to leverage US economic clout to secure favorable trade outcomes.

Key Points:

• Weekend Remarks on the Dollar:

  • Trump warned BRICS nations against developing a currency to challenge the USD, threatening 100% tariffs against those pursuing such goals.
  • Despite his rhetoric, BRICS nations have tempered discussions about their own currency, and imposing such tariffs might prove difficult, particularly against China’s CIPS payment system, which promotes renminbi use in cross-border transactions.

• Implications for Dollar Policy:

  • Trump’s celebration of the "mighty U.S. Dollar" underscores his administration’s preference for a strong USD, which may limit its willingness to pursue policies—such as FX intervention—that could weaken the currency.
  • The dollar’s strength reflects the administration’s strategy to leverage US domestic demand and tariffs to negotiate better deals, aligning with broader policy goals.

• Challenges to Weakening the Dollar:

  • While some speculate the administration might favor a weaker dollar for trade competitiveness, Trump’s overt praise for the USD makes it politically challenging to justify selling dollars in the FX market.

Conclusion:

Trump’s endorsement of the dollar’s strength suggests that FX intervention to weaken it is unlikely in the near term, reinforcing the administration’s strategy of using economic leverage to address trade imbalances and policy objectives. However, this stance may limit flexibility in addressing USD strength if it becomes a headwind for US exporters.

• AUD/USD opens 0.55% lower Tue; broadly stronger USD and a weak yuan weigh

• Undermined by robust U.S. economy, Trump's warning to BRICS nations on USD

• CNH drops 0.5%, EUR down 0.75% on French political uncertainty

• AUD downside limited as Fed's Waller says he is inclined to cut rates in Dec

• Odds of Dec 25 bps cut rise to 76%, from 66% late on Fri on CME's FedWatch

• Australia's Q3 current account and net exports contribution to GDP due Tue

• Support 0.6440-50, resistance 0.6500-05, 0.6525-30; Mon range 0.6443-0.6527

• For more click on FXBUZ

• USD/JPY moves back above cloud top at 149.56 as Treasury 2-years yields firm and curve inverts

• Atlanta Fed President Bostic said he was open minded on whether to cut interest rates again in December, jobs data important

• Bank's GDPNow model estimate for GDP growth is 3.2 percent, up from 2.7 percent on November 27.

• Stays bearish on lower USD/JPY highs though finds support near its 149.05 100-DMA, with weekly cloud bottom at 148.75

• Needs to top 200-DMA at 152 to turn bullish

• Yen crosses are broadly lower, EUR/JPY turns oversold as European growth worries encourages shorts

• Japan Nov. PMI data, Fed Powell comments are due Wednesday
  

• For more click on FXBUZ

EUR/USD sank on Monday on growing concerns about stagnant euro zone growth and a possible government collapse in France.

France's far-right leader Marine Le Pen said her National Rally party would vote for all no-confidence votes after Prime Minister Michel Barnier said he would try to ram a social security bill through parliament without a vote.

Euro zone manufacturing activity fell sharply in November, dashing hopes of an imminent recovery and Italy car sales were down 10.82% year-on-year in November.

The yen outperformed amid haven-linked demand while the dollar was lifted by data showing manufacturing activity improved in November.

Atlanta Federal Reserve President Raphael Bostic said he has an open mind about whether to cut interest rates again at the Fed's December meeting, with upcoming data on jobs important in shaping the decision.

Israeli Prime Minister Benjamin Netanyahu said Israel would respond "strongly" after the Iran-backed Lebanese armed group Hezbollah carried out a strike on a military position.

The pound was lower after a gauge of British manufacturing activity pointed to the sharpest contraction in nine months.

The loonie was mixed after a report that Canadian manufacturing activity increased at the fastest pace in 21 months while concerns potential U.S. tariffs could hamper China growth weighed on the Australian and New Zealand dollars.

Treasury 2-year yields rose 4 basis points as the curve flattened.
The 2s-10s curve was down about 2 basis points to -1.2bp.

The S&P 500 rose 0.20% fueled by gains in tech shares.

Oil was little changed on the session with gains capped by concerns that the U.S. Federal Reserve will not cut rates in December.

Gold slid 0.70% amid a stronger dollar and copper was little changed after falling to its lowest level in over two weeks.

Heading toward the close: EUR/USD -0.84%, USD/JPY +0.01%, GBP/USD -0.75%, AUD/USD -0.74%, DXY +0.71%, EUR/JPY -0.88%, GBP/JPY -0.81%, AUD/JPY -0.85%.

For more click on FXBUZ

Synopsis:

ANZ observes that extended positioning and seasonal trends may drive a temporary pullback in AUD/NZD, though structural factors are likely to limit the downside.

Key Points:

• NZD/USD Resilience Post-RBNZ Cut:

  • Despite a 50bp rate cut by the RBNZ, NZD/USD managed a modest rally, potentially due to:
    • Position unwinding from expectations of a 75bp cut.
    • Elevated short positioning in the NZD, with CFTC non-commercial shorts at their highest since 2019.

• AUD/NZD Positioning Imbalance:

  • AUD/USD shows significant net long CFTC positioning, nearing levels last seen in December 2017.
  • AUD/NZD risk reversals suggest a crowded trade, comparable to early June 2023 after the RBNZ ended its easing cycle.

• Seasonal and Short-Term Risks:

  • Seasonal factors combined with extended positioning are creating conditions for a near-term AUD/NZD decline.
  • ANZ sees 1.08 as a likely floor, as the divergence in monetary policy and economic fundamentals supports AUD relative to NZD.

Conclusion:

While short-term dynamics may pull AUD/NZD lower due to stretched positioning and seasonal trends, ANZ expects the pair to remain supported above 1.08, given the stronger policy and economic backdrop for the AUD.

• GBP/USD elicits support by 1.2613-16 after following EUR/USD south

• 1.2613/16 = Nov 25/26 high. EUR/USD losses due to French political news

• Pre-weekend cable high was 1.2746 - before Trump's "mighty" USD guidance

• Dollar also benefits from ISM mfg index beat, upward revision to US mfg PMI

• There are large 1.2600 option expiries later this week (Wednesday-Thursday)

• 1.2663 (early NY low) is now a GBP/USD resistance level, with 1.2700 beyond

Synopsis:

Credit Agricole highlights that many Trump-related positives, such as potential tariffs and growth-supportive policies, are already reflected in the USD. Attention now shifts to upcoming US economic data, particularly Friday’s non-farm payrolls, and Fed Chair Powell's midweek appearance.

Key Points:

• Trump's Conflicting Trade Policy Signals:

  • Trump reiterated plans to impose tariffs against countries attempting to replace the USD as a reserve currency.
  • This creates mixed signals: aiming for a weaker USD to cut trade deficits while seeking to maintain strong global demand for the currency.

• Market Focus on Economic Data:

  • With Trump-related USD gains largely priced in, the focus is shifting to key economic indicators like the November jobs report.
  • Analysts caution that industrial strikes and adverse weather may have introduced noise into payroll data, reducing its influence on the Fed's December rate decision.

• Fed Chair Powell's Appearance:

  • Powell's Wednesday remarks could provide additional insights into Fed policy, with markets eager to gauge the central bank’s stance amidst tariff and fiscal policy shifts.

Conclusion:

While Trump’s trade and fiscal policies have bolstered the USD, further gains may hinge on the quality of US economic data and clarity on Fed policy. Market participants should monitor Powell's comments and jobs data for cues on USD direction heading into year-end.

• USD/CAD (+0.5%) extends rebound following firmer U.S. ISM mfg. PMI

• Hold of Trump tariff level (1.3982) makes clear that risks are on the upside

• Near-term focus on 1.41. Highest YTD daily close = 1.4095

• Closing break above will open the door to a test of the swing high at 1.4178

• Oil prices continue to languish around recent lows. WTI-sub $70/bbl

• USD/CNH range break paves way for USD strength. Resistance = 7.30

For more click on FXBUZ

Synopsis:

Goldman Sachs anticipates President-elect Trump’s proposed tariff hikes—expected to be double the size of the previous round—combined with tax cuts, to significantly bolster the USD in 2025, despite initial market volatility.

Key Points:

• Aggressive Tariff Strategy:

  • President Trump’s proposals target China, Mexico, and Canada, signaling his preference for tariffs as a unilateral and impactful policy tool.
  • Goldman Sachs economists project tariff increases to be roughly double the scale of previous measures, implemented rapidly in 2025, with the risk of further escalations.

• Tax Cuts Supporting USD Strength:

  • Alongside tariff hikes, Trump’s tax policies are expected to stimulate short-term economic growth, further reinforcing Dollar strength over the coming year.

• Broader Policy Packages Expected:

  • Initial tariff announcements may evolve into comprehensive measures, including additional taxes and investigations, increasing the market's sensitivity to these developments.
  • The resulting policy mix could deepen the Dollar’s upward momentum.

• Sustained Market Impact:

  • While initial market reactions to tariff announcements have been short-lived, Goldman Sachs expects subsequent policy implementations to generate prolonged impacts, making it harder for markets to shake off the effects.

Conclusion:

Goldman Sachs underscores that Trump’s aggressive economic policies—doubling tariff hikes and implementing tax cuts—will likely provide robust support for the USD in 2025. The evolving nature of these policies points to continued Dollar strength, as the broader market absorbs their implications.

• Huge FX option strikes near 1.0500 helped underpin/contain EUR/USD last week

• There's more this coming week, albeit lesser amounts, but they're growing

• There's almost 1-billion euros expiring 1.0490-1.0500 on Monday nL2N3N3056

• Tuesday has 1.1 billion euros at 1.0500, Wednesday on 1.6 billion at 1.0525

• Thursday has 2.5 billion between 1.0475-1.0505 and Friday 1.6 billion 1.0500

• There are plenty more toward 1.0400 and up toward 1.0600 later this week

• EUR/USD weakens but options not pricing a rapid decline nL2N3N307M

For more click on FXBUZ

The FX option volatility risk premium for the Dec.
19 Bank of Japan policy announcement is increasing and should warn JPY traders to expect a significant FX reaction to the decision.

Volatility is a key yet unknown parameter of an FX option premium, so dealers use implied volatility as a substitute.
Any disparity between implied and actual/realised volatility makes it a tradable asset.

Benchmark 1-month implied volatility highlighted the Bank of Japan event risk premium when its expiry first included the outcome from Nov.
19, increasing from 10.35 to 11.3.
There has been more demand and premium for post-BoJ expiry implied volatility as the uncertainty increases amid growing expectations of a rate hike, which has already boosted JPY strength.

Short-duration options, like overnight expiries, provide an early indication of market sentiment over key events.
While current overnight options don't yet cover the BoJ meeting, forward-looking volatility projections suggest USD/JPY implied volatility for overnight expiries could spike to around 32.0 once the BoJ decision is factored in - more than double typical daily levels.

In premium/break-even terms, 32.0 implied volatility is 201 JPY pips in either direction for a simple vanilla straddle option.
That exceeds the prices seen for the Oct.
31 BoJ when implied volatility was 22.5 and on Sept.
20 when it reached 26.0, highlighting the market's heightened expectations for the upcoming decision.

For more click on FXBUZ

• AUD/USD hugs 0.6500 after easing following Saturday's FX guidance from Trump

• Trump warns BRICS nations against replacing "the mighty U.S. dollar"

• There is a large 0.6500 option expiry on Wednesday; A$1.1 billion strike

• 0.6527 was Black Friday high (0.6434 was last week's low, courtesy of Trump)

• Australia October retail sales up 0.6% MM vs 0.4% forecast nL2N3N300K

• Strong early Monday rebound and potential bullish resumption

• Adjustment of the Nov. 26 spike to 1.4178 year's high has run its course

• Underlying bull trend off the Sept. 25 1.3420 low reinstating itself

• Positive momentum and rising RSI confirming the bounce already

• We lean bullish and will monitor any pullbacks

• Longer-term bull run intact while price above 1.3980 trend support

• USD/CAD Trading Page TGM2345

  For more click on FXBUZ

• EUR/USD is at risk of a bigger slump, due to a recent "bull trap"

• Spot has failed to maintain last week's break above the 1.0563 Fibo

• 1.0563 Fibo is a 38.2% retrace of the 1.0937 to 1.0332 November (EBS) drop

• A "bull trap" is set when a mkt breaks above a tech level but then reverses

• 14-day momentum remains negative, highlighting the continued downside risk

• We remain short at 1.0500 in anticipation for eventual losses

• EUR/USD Trader TGM2334. Previous update nL2N3N009W

• Cable fell to 1.2682 in Asia following FX guidance from Trump on Saturday

• Trump warns BRICS nations against replacing "the mighty US dollar"

• 1.2746 was pre-weekend GBP/USD high (after rally from Friday's 1.2672 low)

• Pound last week notched its biggest weekly rise since mid-September

• 1.2475 was 28-week low for cable 10 days ago (on Nov 22, after weak UK data)

• UK PM Starmer to set out detailed policy targets this week nL2N3N2024

• AUD/USD -0.2% as USD strengthens broadly on political uncertainty in France

• Trump's warning to BRICS nations against replacing USD weighs on currencies

• CNH -0.4%, EUR-0.5% on Europe politics, JPY -0.6% on p/taking after Fri drop

• Failure to overcome 0.6530 resistance also weighs on AUD; support 0.6470-75

• Downside limited as lower U.S. yields and hawkish RBA underpin

• Positive news on China's economy, higher iron ore prices support

• Australia Oct retail sales beat forecast, positive for consumption growth

• Q3 business inventories fall 0.9%, may weigh on Q3 GDP data due Wed

• Monday range 0.6491-0.6527

• For more click on FXBUZ

• Trades -0.45% near the base of a 1.0520-1.0586 EBS range with the USD +0.4%

• France - Le Pen told PM Barnier to negotiate or face a no-confidence vote

• Volkswagen workers to go on warning strikes across Germany also capped EUR

• Charts - positive daily momentum studies as 21-day Bollinger bands contract

• 5, 10 & 21-day moving averages coil - the Oct/Nov downtrend has stalled

• 1.0610 recent range top and the 21-DMA are key resistance - should hold

• A close above 1.0610 would be a positive signal, with a tight stop

• Last week's 1.0425 base and the November 1.0331 low are initial supports

• 1.0550 827 mln and 1.06 847 mln close major strikes for December 2nd

For more click on FXBUZ