• FX option strikes expire 10-am New York/15 GMT - Wednesday December 6

• EUR/USD: 1.0770-80 (1BLN), 1.0800 (3.2BLN), 1.0850 (610M), 1.0900 (1BLN)

• GBP/USD: 1.2500 (568M), 1.2570 (495M), 1.2590-1.2600 (406M), 1.2750 (210M)

• NZD/USD: 0.6100-10 (2.3BLN). AUD/USD: 0.6450 (1.7BLN), 0.6770 (590M)

• USD/CAD: 1.3600 (1BLN), 1.3640 (500M)

• USD/JPY: 146.65 (525M), 146.90 (328M), 147.20-25 (1.2BLN)

• 147.50 (533M), 148.00 (634M)

For more click on FXBUZ

• AUD/USD opened 1.0% lower and was worst performing currency as USD firmed

• Global growth and China fears weighed as did dovish turn in RBA expectations

• After opening @ 0.6551, the AUD/USD tracked higher as Asian equities rallied

• The Nikkei rose 1.7%, the Aus ASX rose 1.5% and the AXJ index gained 0.50%

• AUD and NZD soared against all major currencies on short covering

• The market brushed off weaker than expected Aus Q3 GDP nAZN1FUHIJ

• AUD/USD traded to 0.6591 and is 0.585/90 into the afternoon

• It is close to filling in the gap from 0.6605 created after RBA decision

• The 0.6605 level is also where the 10-day MA is located today

• A break above 0.6610 would likely see another round of short-covering

• Support is at the 21-day MA at 0.6533 and 50% of Oct-Dec rise at 0.6529

• For more click on FXBUZ

Synopsis:

RBC provides a preview of the upcoming US Non-Farm Payroll (NFP) report for November, set to be released on December 8. The bank forecasts a job gain with specific attention to the impact of recent labor strikes.

Key Points:

• Forecasted Job Gain: RBC predicts a job gain of 185k for the November payroll report.
• Impact of Labor Strikes: The forecast includes the caveat that part of this month's job strength is due to the return of workers from labor strikes. Notably, the end of the UAW strike at the end of October and the conclusion of the nearly four-month SAG-AFTRA strike on November 9 contribute to an expected payroll boost of around 40k.
• Striking Workers in Household Survey: Striking workers are not counted as unemployed in the household survey, so their return to work does not influence the unemployment figures from the previous month.
• Expected Rise in Unemployment Rate: RBC anticipates an increase in the unemployment rate to 4.0%, marking the first time it reaches this level since January 2022.

Conclusion:

RBC's forecast for the US November NFP report highlights a moderate job gain influenced by the resolution of major labor strikes. While the return of striking workers is expected to boost the payroll figures, the unemployment rate is predicted to tick up, reaching a level not seen since early 2022. This outlook provides insights into the current labor market dynamics in the US, balancing the effects of strike resolutions with broader employment trends.

• EUR/USD opened -0.37% at 1.0796 after USD broadly gained and EZ yields eased nL8N3D01HC

• EUR/USD consolidated in a narrow 1.0788/98 range in Asia

• All of the action was in the local currencies led by AUD and NZD

• EUR/USD has stopped trending higher and will likely probe lower

• Support is at the 100-day MA at 1.0770 and 50% or Oct/Dec rise at 1.0732

• Resistance is at the 21-day MA at 1.0854 with sellers ahead of 1.0850

• EUR/USD weakness despite dovish turn in Fed expectations a worry for bulls

• Preice action may be whippy before a new trend is established

• For more click on FXBUZ

• AUD/USD up over 0.50% with high so far at 0.6589

• Short covering in AUD/USD and NZD/USD as risk assets perk up in Asia

• Market shrugging off weaker than expected Aus GDP nL4N3D04EZ

• Nikkei up over 1.5%, Australia ASX +1.35% and AXJ index up 0.50%

• AUD was worst performing currency Tuesday - falling 1% against USD and JPY

• AUD/USD resistance @ 10-day MA @ 0.6605 - where it gapped down from post RBA

• Break above 0.6605 would put all shorts taken after RBA decision underwater

• For more click on FXBUZ

• Aus Q3 GDP +0.2% Q/Q (+0.4% exp) and +2.1% Y/Y (+1.8% exp)

• Quarterly slightly worse than expected while the Y/Y better than expected

• AUD/USD not reacting, and was already above 0.6560 before the data

• Move higher was before GDP due to risk-on mood in early Asia

• The Nikkei is up 1.3%, E-minis are up 0.16% and AXJ index up 0.19%

• High so far has been 0.6571 just before the GDP release

• Resistance is at 0.6600/10 where the 10-day MA and pre-RBA level converge

• Support is at the 21-day MA at 0.6533 and 50% of Oct/Dec rise at 0.6529

• For more click on FXBUZ

• Steady after opening -0.35%, as ECB hawk Schnabel ended rate hike calls

• ECB to remain data-driven - ECBWATCH prices a 25pt cut in March 2024

• Yield spreads little changed, 10yr bund -11bp 2.249%, 10yr UST -12bp 4.167%

• Charts - 5, 10 & 21-DMAs conflict, while momentum studies crest/fall

• 21-day Bollinger bands contract - setup suggests further losses

• The close below 1.0799, 38.2% of the October/November rise is bearish

• New York 1.0778-1.0839 range is the initial support and resistance

• 1.0800 3.704 BLN strikes are a likely magnet in Asia

  For more click on FXBUZ

• EUR/USD opens -0.37% after USD moved broadly higher nL1N3D01ZV

• Dovish ECB comments offset fall in US yields nL8N3D01HCnL1N3D01ZC

• EUR/USD traded as low as 1.0778 - just ahead of 100-day MA at 1.0770

• More support is a the 50% retracement of the 1.0449/1.1017 move at 1.0732

• EUR/USD stopped trending higher and risks have shifted to downside

• Resistance is at the 21-day MA at 1.0854 and 10-day MA at 1.0895

• Downside probes likely now there is a perceived top in place at 1.1017

• For more click on FXBUZ

Synopsis:

ING forecasts a major downturn in the EUR/JPY currency pair in 2024, targeting a move towards 146 in Q3 from its current levels around 159. This forecast is based on expected policy changes by the Bank of Japan (BoJ) and the European Central Bank (ECB), as well as broader economic challenges in the Eurozone.

Key Points:

• Historical Rally in EUR/JPY: Since 2020, EUR/JPY has rallied close to 40%, making betting against the rally unwise. The 160 level, previously thought to be a threshold, has not acted as a significant barrier.
• Drivers of Yen Underperformance: The Yen's underperformance has been driven largely by Japan's low interest rates and the BoJ's monetary policy, especially in the context of global inflation concerns.
• ECB's Role in the Rally: The ECB's shift to higher deposit rates, reaching 4.00%, has also played a role in justifying the EUR/JPY rally.
• Anticipated Policy Shift in 2024: ING expects a significant shift in 2024, with the BoJ preparing to move away from its dovish stance. Simultaneously, weaker growth in the Eurozone may shift market focus to the start of the ECB's easing cycle, potentially as early as Q3 2024.
• Eurozone's Economic Challenges: The Eurozone, particularly the German industrial sector, faces challenges such as the end of cheap energy and reliance on globalization. A weaker Euro may be seen as a tool to boost exports and facilitate economic transition.
• Trade-Weighted Euro Value: Despite the low EUR/USD levels, the ECB’s broad, nominal trade-weighted Euro is only slightly off its all-time highs. There's potential for a weaker Euro to aid in competing in global markets.

Conclusion:

ING predicts a significant downturn in EUR/JPY in 2024 due to a combination of policy changes from the BoJ and ECB, along with structural economic challenges in the Eurozone. The expected easing cycle from the ECB and a shift in the BoJ's monetary policy could lead to a substantial decline in EUR/JPY, targeting 146 in Q3. Additionally, the Eurozone's reliance on exports to address economic challenges, particularly in Germany, may contribute to a weaker Euro, influencing the currency pair's trajectory.

• AUD/USD slid 1.0% lower on Tuesday as various factors ganged up on AUD

• USD moved broadly higher - while China sentiment has taken a negative turn nL1N3D01UFnL1N3D00G9nL8N3D02G1

• Based on price action, market was expecting the RBA to be more hawkish

• RBA guidance the same as November, but some were expecting a hawkish tweak

• AUD/USD support around 0.6530 where the 21-day MA converges with 38.2 fibo

• A break below 0.6525 targets 50% of 0.6271/0.6690 move at 0.6480

• Resistance is at the 10-day MA at 0.6602 and 0.6605 where it was before RBA

• Sentiment negative as China and global growth concerns weigh on commodities

• Aus Q3 GDP today with market expecting +0.4% Q/Q and +1.8% Y/Y For more click on FXBUZ

• USD/JPY again unable to close below the up TL from March, Wed at 146.74

• Rebound from 2nd daily TL breach is by Mon's high & 100-DMA at 147.44/34

• Slightly O/S bullish divergence could eye tenkan & cloud base at 147.97-8.09

• But primary trend is down after 2023/22's double-top at 32-yr highs

• Eventual up TL break expected, with 50% Fibo & weekly tenkan eyed at 144.58.

For more click on FXBUZ

• NY opened near 1.0820, traded a tight range early then struck 1.0839 on EBS

• US yields US2YT=RR, US$ slid after Oct. JOLTS, Nov. ISM non-mfg PMI data

• Yields remained soft but US$ rallied & DE-US spreads US2DE2=RR widened

• EUR/USD's overnight drop resumed, the pair traded below the 200-DMA

• A 15-session low of 1.0782 was hit on EBS, pair traded down -0.46% late

• Drops in equities ESv1, gold XAU= helped buoy U$ & weigh on EUR/USD

• Techs are bearish; RSIs falling & pair below 10-, 21- & 200-DMAs

• German Oct. industrial orders, EZ Oct retail sales are risks in Europe am

• US Nov. ADP, Oct. int'l trade, Q3 labor costs are risks in NY's morning

• For more click on FXBUZ

Synopsis:

ANZ discusses a trading strategy involving selling USD/CAD around 1.36 in anticipation of the Bank of Canada (BoC) December policy meeting, targeting a move towards 1.34. The strategy considers broader currency trends and economic data.

Key Points:

• CAD Performance vs. NZD and AUD: The Canadian Dollar (CAD) has not capitalized on the recent USD weakness as much as the New Zealand Dollar (NZD) and the Australian Dollar (AUD), partly due to softer Canadian economic data.
• Impact of OPEC Production Cuts: The recent OPEC production cuts, which were stronger than expected, might boost the CAD against the USD.
• Expectation of Weaker US Data: With a focus on likely weaker US data this week, including payrolls and other labor market indicators, ANZ sees a potential gradual decline in USD/CAD to 1.34 by year-end.
• Risk Factor - BoC Meeting: A key risk to this trade strategy is potential weakening around the BoC meeting. However, given the expected weakness in US labor market data, a significant retracement of USD/CAD to 1.37 or higher is considered unlikely.

Conclusion:

ANZ's strategy of selling USD/CAD around 1.36 is based on the expectation of a gradual weakening of the pair towards 1.34, influenced by weaker US economic data and potential positive developments for the CAD, such as OPEC production cuts. While there is a risk related to the upcoming BoC meeting, the overall market trends and economic forecasts suggest limited likelihood of a significant increase in USD/CAD beyond 1.37. This strategy reflects a cautious but opportunistic approach to trading in the context of current economic conditions.

• GBP/USD's consolidation phase resolved with a move lower Tuesday

• Pair broke below the 10-DMA & short-term support in the 1.2590/1.2605 zone

• A 7-session low was struck and daily RSI accelerated its downward move

• Bears likely eye supports near 1.2550, 1.2500, 1.2450 and the 200-DMA

• Signs suggest this downward correction may extend for now

• US weekly & continuing claims, Nov. payroll reports remain key risks

• Downbeat data results may give GBP/USD bulls the life line they need

• For more click on FXBUZ

Synopsis:

Bank of America (BofA) provides a preview for the upcoming Bank of Canada (BoC) policy meeting on December 6 and its implications for the Canadian Dollar (CAD). BofA expects the BoC to maintain its current policy rate, with potential implications for future rate cuts and CAD performance.

Key Points:

• BoC Expected to Hold Rates: BofA anticipates the BoC will maintain the overnight rate at 5.0% in the December meeting.
• Economic Weakness and Inflation Trends: The Canadian economy showed weakness with a GDP contraction in Q3, and while inflation is falling, core inflation remains high. This mixed picture suggests continued caution from the BoC.
• Potential Shift in BoC Language: There is a risk that the BoC might shift from a "hawkish hold" to a "dovish hold" in its language, although BofA believes it might be too early for such a change.
• BoC Rate Cut Cycle in 2024: BofA expects the BoC to start cutting rates in June 2024, with the possibility of an earlier start if inflation moves lower.
• Comparison with US Rate Cuts: Slower growth in Canada might allow for faster rate cuts compared to the US.
• CAD Performance: Amid the broad USD selloff, the CAD is expected to lag behind other G10 high-beta currencies until the Fed begins its rate-cutting cycle.
• Seasonal CAD Trends: December traditionally shows the most bearish trends for CAD against the New Zealand Dollar (NZD) and Scandinavian currencies.

Conclusion:

BofA's preview of the BoC's December policy meeting indicates a likelihood of maintaining the current rate, with careful monitoring of inflation and economic trends. The potential for a shift in language from the BoC towards a more dovish stance, and the expectations for rate cuts in 2024, could impact CAD's performance, especially in comparison to other G10 currencies and in the context of broader USD movements. CAD is likely to underperform against high-beta currencies until the Fed commences its rate-cutting cycle, with specific bearish trends expected against NZD and Scandinavian currencies in December.

• US November ISM non-mfg PMI comes in above estimates, prices paid dropped

• Oct. JOLTS fell sharply, 8.733m vs f/c 9.30m & prior revised down 9.35m

• US yields US2YT=RRUS10YT=RR fell; German-US spread US2DE2=RR tightened

• EUR/USD spiked up, traded 1.0839 on EBS, still down on the session though

• A daily long legged doji candle formed, gives longs some comfort

• EUR/USD remains below the falling 10- & 21-DMAs however

• US weekly claims and Nov. payroll data risks loom, may side line investors

• For more click on FXBUZ

Synopsis:

Credit Agricole recommends selling EUR/USD rallies above 1.10, anticipating a decline towards 1.05 in the coming months. This recommendation is based on a mix of currency drivers, including central bank policies and macroeconomic risks, that are expected to negatively impact the EUR/USD pair in 2024.

Key Points:

• Premature EUR/USD Recovery: Credit Agricole views the recent EUR/USD recovery as premature, likely leading to a phase of underperformance in the coming months, pushing the pair back towards 1.05 within a year.
• ECB and Fed Policy Outlook:
  • EUR/USD is expected to be influenced by the relative policy outlook of the European Central Bank (ECB) and the Federal Reserve (Fed).
  • Both central banks are expected to start rate cuts in Q3 2024, but the ECB is predicted to ease more aggressively than the Fed, potentially by 75 basis points compared to the Fed’s expected 50 basis points.
  • This tightening of the ECB-Fed policy rate spread is likely to drive EUR/USD towards 1.05 by Q4 2024.
• US Recession and Election Risks:
  • Historical patterns suggest that growing risk aversion at the onset of US recessions tends to negatively impact EUR/USD.
  • The potential risk of a Trump presidency and the associated fears of a renewed escalation in global trade wars could further weigh on the EUR.
  • These factors could push EUR/USD back towards 1.05 towards the end of 2024.

Conclusion:

Credit Agricole's analysis leads to a recommendation to sell EUR/USD rallies above 1.10, targeting a move back towards 1.05. The bank's outlook is shaped by the anticipated policy actions of the ECB and Fed, as well as macroeconomic and political risks in the US. These factors collectively suggest a challenging environment for the EUR against the USD in 2024, justifying a bearish stance on the currency pair.

Synopsis:

MUFG analyzes the Australian Dollar's (AUD) performance following the Reserve Bank of Australia's (RBA) December policy update. The update led to scaled-back expectations for future RBA rate hikes, affecting the AUD's valuation.

Key Points:

• RBA Policy Rate Unchanged: The RBA left its policy rate at 4.35% in December, following a 25bps hike in November. This decision was in line with expectations.
• Less Hawkish Policy Statement: The tone of the RBA’s policy statement was less hawkish than anticipated, particularly given recent comments from RBA Governor Bullock and upward revisions to growth and inflation forecasts in November.
• Inflation and Wage Growth Observations: The RBA noted moderation in inflation, particularly in the goods sector, and did not expect significant further increases in wage growth, aligning with their inflation target.
• Data Dependency and Softening Hike Bias: The RBA emphasized its data-dependent approach to policy-making, suggesting a softening bias towards further rate hikes.
• Comparison with Other G10 Central Banks: Contrasting with other G10 central banks, the RBA is expected to be the least active in cutting rates in the upcoming year, with only 25bps of cuts priced in by the end of next year.
• Short-Term Yield Spreads: Despite the policy update, short-term yield spreads have been moving in favor of the AUD since mid-October.

Conclusion:

The RBA's December policy update, characterized by a less hawkish tone and a data-dependent approach, has led to a scaling back of expectations for further rate hikes. This shift has resulted in the underperformance of the AUD. While the RBA's stance contrasts with more active rate-cutting expectations from other G10 central banks, the AUD has seen some support from favorable short-term yield spreads. However, the evolving economic data and the RBA's cautious approach will continue to influence the AUD's trajectory in the short term.

• AUD/USD traded 0.66215-0.6557 overnight, NY opened near 0.6560, down -0.91%

• Pair slid after RBA delivered what some deemed a less hawkish statement

• US$ bid helped AUD/USD fell below the 10- & 200-DMAs, USD/CNH hit 7.1597

• Equity ESv1, iron-ore DCIOc2 drops helped buoy US$, weighed on AUD/USD

• Daily monthly RSIs are falling, monthly inverted hammer candle formed

• US Nov. ISM non-mfg PMI, O.ct JOLTS are key data risks in NY's morning

• Australia Nov. AIG manufacturing, construction & Q3 GDP risks in Asia

• For more click on FXBUZ

There are short-term risks to sterling as a daily bear trend tries to extend versus the yen but there is also longer-term potential for GBP/JPY to re-visit its highs from 2015.

A leading U.S. bank favours holding a December long play from 185.90 for 192.00 with a 183.50 stop.
A profitable trade would point GBP/JPY towards the June 2015 highs around 195.86.

Much depends on continuing policy divergence between the Bank of England and Bank of Japan.
UK inflationary pressures are likely to keep the BoE on a hawkish standing, which should help underpin the cross.
However, the U.S. Federal Reserve's policy outlook remains uncertain and any hawkish rhetoric could unsettle risk sentiment and send investor flows back to the yen.

Technically, there are signs that GBP/JPY could reverse its recent 188.65-185.04 drop.
Long lower candle shadows on the daily chart suggest sterling supply might be fading.
Weekly price action is holding above the 10-week moving average, today at 184.53.

The monthly up-trend, in place since March 2020, is holding and is drawing support from the 10-month moving average at 179.80.

For more click on FXBUZ

• A total of EUR 7.7 billion of EUR/USD strikes between 1.0800 and 1.0940

• For USD/JPY USD 7.9 billion of deals between 146.00 and 148.10

• EUR/GBP has a sizeable EUR 1.17 billion expiry with an 0.8585 strike

• AUD/USD has a 0.6550 AUD 1.8 billion expiry

• The CAD has USD 1.92 billion of strikes between 1.3505 and 1.3550

For more click on FXBUZ

• EUR/GBP falls to 0.8565 following dovish shift from German ECB hawk Schnabel

• More: nL8N3D01HC. 0.8565 is five pips shy of last Friday's 12-week low

• Friday's low was plumbed after euro fell on dovish steer from BdF chief

• 0.8557 is 76.4% Fibo of 0.8493 (August low) to 0.8765 (November high)

• There is a large 0.8585 option expiry for the 10am ET NY cut nL1N3D00DE

• UK Nov final services PMI due at 0930 GMT; 50.5 f/c (as per flash estimate)

• Sterling bears are winning the battle as rallies are sold into

• The minimum correction off the 1.2039-1.2733 gain is at 1.2569

• The charts were mixed but a late Dec. 1.2313-17 cloud twist is in play

• Cloud twists can appear to attract price

• Recent 1.2604 lows provide initial support

• The 100DMA has crossed under the 200DMA, a strong bearish signal

• Daily momentum readings remain positive but RSI has turned lower

• Increasing bearish risk but a close below 1.2600 could confirm

  For more click on FXBUZ

• EUR/USD closed under the 1.0883 Fibo, on Monday, weakening the outlook

• 1.0883 Fibo is a 23.6% retrace of the 1.0448 to 1.1017 (Oct-Nov) EBS rise

• 14-day momentum has turned negative Monday for the first time since Oct 31

• The cloud twist just below 1.0670, on Dec. 19, could attract spot

• Bears need to force a daily close under 1.0800 Fibo to remain in control

• 1.0800 Fibo is a 38.2% retrace of the same 1.0448 to 1.1017 gain

• EUR/USD Trader TGM2334. Prev update nL1N3CZ0JO