• EUR net spec short increases to 57,489 contracts by Tuesday from short of 56,009 the previous week

• JPY net spec position shifts to long of 2,334 contracts vs previous short of 22,633

• GBP net spec long diminishes to 19,326 contracts vs 21,634 previously

• AUD net spec long dips to 21,401 vs previous long of 31,776

• MXN long rises to 4,184 from previous 3,458 contracts

• CAD short increases to 159,346 from short of 154,002 the week before

• GBP (-0.2%) rebound peters out at crucial hurdles. Range = 1.2721-1.2811

• First test of 200-week/day MA at 1.2814-22 keeps a lid on GBP

• U.S. payrolls supports a Fed Dec cut (85%)

• Minimal room for further dovish repricing is a headwind for GBP/USD

• Eyes on U.S. CPI as Fed officials open door to Jan skip

• Fed's Hammack "Fed at or near time to slow pace of rate cuts"

• Support sits at 1.27, 1.2665 (Aug low) and 1.25

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• USD/JPY forms a doji near the 149.98 cloud top after trading 149.38-150.69 EBS range on Friday

• Pair tested lower amid sliding Trsy 2-year yields after the US jobs report showed an uptick in unemployment

• Yen futures volume spike was largest since Nov. 1, though below Oct. levels

• Lower Trsy yields, oil weigh on pair though lacks downard momentum as vols and skews ease

• Support is near 149.10 ahead of 100-DMA and weekly cloud bottom at 148.75-76

• Resistance is at 55-DMA of 150.65, the Feb. 13 and Oct. 21 highs at 150.88, Nov. 6 low of 151.30 and 200-DMA at 151.99

• Crosses are mostly lower with AUD/JPY down 1% and testing its lower Bollinger

• Data next week includes US CPI and Japan Q4 Tankan, corp prices

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Synopsis:

MUFG anticipates the EUR could see near-term strength in December due to limited fresh catalysts for further weakness, though seasonal patterns suggest potential reversal early in 2025.

Key Points:

• Recent EUR/USD Decline:

  • EUR/USD has dropped roughly 8 big figures since trading near 1.1200 pre-US election, driven by Trump’s victory and anticipated trade and fiscal policies.
  • Markets now await new triggers for another leg lower.

• Seasonal Dynamics:

  • Historically, the EUR has shown a tendency to strengthen in December, only to reverse gains between January and March.
  • MUFG’s quantitative analysis, however, finds this December outperformance lacks statistical significance.

• Potential Catalysts for EUR Weakness:

  • The ECB signals or implements a larger 50bps rate cut.
  • The Fed skips a rate cut this month, maintaining current policy rates.
  • President-elect Trump escalates rhetoric on EU trade tariffs.

Conclusion:

While EUR/USD may stabilize or strengthen slightly in December due to stretched short positioning and lack of immediate bearish triggers, MUFG expects this to be temporary. Renewed weakness is likely between January and March, driven by further monetary divergence and potential trade tensions.

Sterling enjoyed a brief jump after the U.S. payrolls report showed a rise in the unemployment rate that supported the case for a rate cut at the Fed’s final policy meeting of the year, but lack of follow-through gains underpinned the view that alternatives to the dollar are lacking.

Add to that the fact that Fed officials appear to be setting the stage for a possible rate pause in Q1 and the environment remains conducive to dollar strength.

Consequently, with GBP/USD stalling ahead of resistance at the 200-day moving average at 1.2821, focus is once again the 1.27 handle.

UK news flow remains light and with little uncertainty over the Bank of England’s policy outlook in the short run as officials stick to the gradual easing script, the dollar side of the equation should continue to drive the action.

For now, range trading appears to be the name of the game and thus it may take until the release of the latest U.S. CPI report to provide a clearer sense of direction.

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Synopsis:

Morgan Stanley shares a tactically bullish stance on the USD, citing strong US data and trade policy risks. The EUR faces headwinds from weak domestic growth and tariff-related risks, while the GBP benefits from fiscal-driven growth and high rate differentials.

Key Points:

• USD:

  • View: Bullish.
  • Rationale: Strong US data and potential repricing of trade policy risks support continued strength in the USD.
  • Skew: Bullish.

• EUR:

  • View: Neutral with a bearish skew.
  • Rationale: Weak domestic growth, tariff-related risk premium, and declining rates compared to peers weigh on the EUR.
  • Skew: Bearish.

• GBP:

  • View: Neutral with a bullish skew.
  • Rationale: Fiscal-driven growth and persistent inflation keep the BoE on a gradual easing path. High front-end rate differentials remain supportive for GBP.
  • Skew: Bullish.

Conclusion:

Morgan Stanley expects the USD to maintain its upward momentum due to robust data and trade policy repricing. The EUR faces challenges from growth and rate differentials, while the GBP is poised for gains supported by fiscal resilience and attractive rate differentials.

The latest jobs data out of Canada should embolden the well-owned bearish Canadian dollar trade.

The headline employment increase beat expectations at 50.5k, but a sizeable increase in Canada's unemployment rate to 6.8% from 6.5% cements the case for another 50bp rate cut (now a 70% chance), opening the door for USD/CAD to retest recent highs just under 1.42.

Since the beginning of the year, the unemployment rate has risen from 5.7% to 6.8%, a level last seen in September 2021.
The speed of the move will be somewhat alarming for BoC policymakers, particularly with Canada being among the more sensitive economies to high interest rates.

As a result, downside momentum in the Loonie is likely to gather pace in the lead up to next week’s BoC policy decision.

Elsewhere, with the threat of tariffs from President-elect Donald Trump, rebounds in CAD are likely to be short and shallow as we head towards the Jan.
20 presidential inauguration.

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Synopsis:

ANZ recommends two medium-term trades for 2025 based on growth differentials, monetary policy divergence, and trade sensitivity. They expect EUR/GBP to weaken as the eurozone lags the UK in growth and the ECB eases more aggressively. Similarly, GBP/NZD is forecast to rise, supported by stronger UK growth compared to New Zealand.

Key Points:

• Sell EUR/GBP on Rallies Above 0.84:

  • Target: 0.80 by year-end 2025.
  • Growth Differential: UK GDP is forecast at 1.5% y/y versus 1.3% y/y for the euro area in 2025.
  • Monetary Policy: The BoE is expected to end 2025 with rates at 3.5%, while the ECB is forecast at 1.5%, making the trade carry positive.
  • Trade Sensitivity: The UK is less exposed to tariffs than the eurozone, with 60% of UK exports in services as of September.

• Buy GBP/NZD Below 2.13:

  • Target: Exits around 2.16–2.18.
  • Recent Performance: GBP/NZD appreciated from 2.00 to a high of 2.19 in 2024.
  • Growth Differential: UK GDP is forecast at 1.5% y/y versus 0.8% y/y for New Zealand in 2025.
  • Monetary Policy: Both the BoE and RBNZ are expected to end 2025 with rates at 3.5%, but the UK’s stronger growth favors GBP.

Conclusion:

ANZ expects EUR/GBP to decline amid weaker eurozone growth and a more aggressive ECB easing cycle, while GBP/NZD is poised for gains as UK growth outpaces New Zealand. These trades align with structural and macroeconomic dynamics, offering medium-term opportunities for 2025.

The Swiss franc could see solid demand in December, as usual.
USD/CHF has fallen in 17 of the past 24 Decembers, notably the December 2008 drop of 12%, according to EBS prices.

While USD/CHF's trend in December points to a market that has a tendency to fall, seasonal trends should not be considered in isolation, but when combined with other factors, they can be a useful tool.

Last month USD/CHF gains faltered well ahead of the 0.9023 Fibo, a 76.4% retrace of the 0.9223 to 0.8375 (2024) drop, and spot has been weak in November so far.
Fourteen-month is negative, reinforcing the underlying bearish market structure.

A head and shoulders reversal pattern has formed on the daily chart, with USD/CHF's Thursday close under the neckline near 0.8800, adding to the downside risk.
There is scope for spot to drop towards the 0.8600 level which is near the head and shoulders measured objective, especially if there is a bout of risk aversion.
The Swiss franc usually serves as refuge during market worries.

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• Payrolls likely to add volatility into EUR/USD: options could contain

• Option expiries for the New York cut include very large deals

• EUR 12.4 billion between 1.0450 and 1.0655: EUR 1.4 bln 1.0650-55s

• Next week sees large deals from Tuesday through Friday

• Tues EUR 6.36 bln, Wed EUR 3.9 bln, Thurs EUR4.85 bln and EUR 16.4 bln Frid

• The strikes running from 1.0375 through 1.0600

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• EUR/GBP was due a correction following a sharp seven day decline

• Thursday's modest bounce eased some of the over sold condition

• Bearish confirmation on most studies but slow stochs are still stretched

• Early Friday and potential for a bearish resumption

• Wednesday's 0.8270 low the initial support point

• We lean bearish and will look for better entry levels to the short side

• EUR/GBP Trader TGM2343

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• Thurs slide erased all of our long play gains

• USD/CAD hit a 1.4011 low, a pip above our entry level

• Modest early Friday gains keeping the trade alive

• Fourteen day momentum has flipped back to positive and RSI is rising

• Need to see a climb above 1.4083, Dec. 4 high to put bull run back in play

• Weeklies bullish but legacy of last wk's long upper shadow still being felt

• USD/CAD Trading Page TGM2345

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• EUR/USD's mid-Nov failure under 1.0402 Fibo, shows the m-term bias on upside

• 1.0402 Fibo is a 50% retrace of the 0.9528-1.1276 (2022-2023) rise

• However, it failed to sustain last week's break above 1.0563 Fibo: bearish

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

• We remain short at 1.0500 in anticipation for eventual losses to 1.0350

• EUR/USD Trader TGM2334. Previous update nL2N3N6079

• Could EUR/USD rise for the eighth December in a row? nL2N3N60BY

• German Oct industrial output slumped 1% when expected to rise 1.2%

• Outcome was below the -0.9% to +2.2% range of 29 forecasts

• Industrial production was -4.75% yy in Oct - weakest since July

• EUR/USD has bounced 1.0332 to 1.0597 following steep drop from 1.1214

• The rebound has alleviated an oversold situation

• Peak 20-day Bollingers at 1.0654 is likely limit for the recovery

• Trump's big tariff plan could support USD next year nL5N3N40SW

• GBP bull run stalling at the daily kijun line, 1.2761

• We are long from 1.2640 for 1.2810 with a trailing stop at 1.2675

• Target is just ahead of the 200-day moving average, 1.2821

• The 10-day moving average provides support at 1.2680

• key support and potential reversal point at 1.2619, Dec. 2 low

• Long lower weekly candle shadow backs up last week's bullish candle signal

• Friday action corrective but will look for signs of a stronger pullback

• GBP/USD trader TGM2338

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• 0.1% lower in a 1.0566-1.0588 range, as the safe-haven USD weighed

• Russia's Lavrov ready to use any means in the Ukraine conflict

• German IP, trades, EZ revised GDP have a modest impact - US jobs will be key

• France's Macron says he will appoint a new prime minister in the coming days

• Life goes on in France - EZ credit markets will be the barometer for EUR

• ECB to cut rates by 25 bps on Dec 12 - four more cuts expected in 2025

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

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

• The 1.0610 range top since mid-Nov is the pivotal resistance for next week

• This week's 1.0461 base and the November 1.0331 low are initial supports

• 1.0550 946 mln, and 1.0600 1.237 BLN close strikes for December 6th

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• -0.1% in a 1.2742-1.2760 range on Korea - Russia led safe-haven USD strength

• UK employers cut 2025 growth forecasts as tax hikes weigh on economy

• PM Starmer pledges measurable 'milestones' to rebuild UK after rocky start

• Without tier 1 UK data or BoE events, offshore factors led by US jobs lead

• Techs - daily momentum studies climb, 21-day Bollinger bands contract

• 5, 10 & 21-day moving averages coil - neutral daily setup, bearish weeklies

• This week's 1.2619 low, then the 1.2475 November trend low initial supports

• Thursday's 1.2770 top then 1.2841, 0.382% September/November fall resistance

• A close above 1.2841 would be a bullish signal for next week

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• AUD/USD -0.4% as weakness returns on South Korea news & risk aversion hits

• Slides to a low of 0.6420 after opening at 0.6455 in Asia

• Undermined by reports of another martial law declaration in South Korea

• Scaled up RBA rate cut expectations continue to weigh; cenbank meets Mon-Tue

• U.S. jobs report Friday, Trump NBC interview Sunday also loom as risk events

• Strong support at 0.6400-05, clear break opens 0.6348-62

• Resistance 0.6450-55, 0.6470-75, 0.6500-05; Asia range 0.6420-0.6455

• For more click on FXBUZ

• AUD/USD down 0.4% as South Korea news sparks risk aversion

• South Korea's main opposition part says lawmakers on high alert

• Many reports of another martial law declaration -YONHAP

• Scaled up RBA rate expectations after weak GDP Wed continue to weigh on Aus

• U.S. jobs report Friday, Trump NBC interview Sunday also risk events

• Strong support at 0.6400-05, clear break opens 0.6348-62

• Resistance 0.6450-55, 0.6470-75, 0.6500-05; Asia range 0.6420-0.6455

• For more click on FXBUZ

• Steady after closing +0.45% with the USD off 0.6% - US payrolls key tonight

• Over half UK firms plan to raise prices, cut jobs after budget - BoE survey

• PM Starmer pledges measurable 'milestones' to rebuild UK after rocky start

• The UK government needs to sell it's policies more effectively

• Techs - daily momentum studies climb, 21-day Bollinger bands contract

• 5, 10 & 21-day moving averages coil - neutral daily setup, bearish weeklies

• This week's 1.2619 low, then the 1.2475 November trend low initial supports

• Thursday's 1.2770 top then 1.2841, 0.382% September/November fall resistance

• A close above 1.2841 would be a bullish signal for next week

For more click on FXBUZ

• Steady after closing up 0.75%, pushing the USD to close 0.6% lower

• French bonds, and stocks took a breather after the government collapse

• Macron to appoint a new prime minister soon - uncertainty reigns

• EUR shorts covered into the often volatile U.S. jobs data

• ECB to cut rates by 25 bps on Dec 12 - four more likely in 2025

• Charts - daily momentum studies climb as 21-day Bolli bands contract

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

• The 1.0610 recent range top is the pivotal resistance for next week

• This week's 1.0461 base and the November 1.0331 low are initial supports

• 1.0550 946 mln, and 1.0600 1.237 BLN close strikes for December 6th

For more click on FXBUZ

Synopsis:

Danske anticipates nonfarm payrolls increasing by 160k in November, reflecting a recovery from October's temporary disruptions but remaining at the lower end of market expectations. Negative seasonality and a cooling labor supply could temper broader employment growth.

Key Points:

• November Nonfarm Payrolls Forecast:

  • Expected increase: +160k, rebounding from October's weak print.
  • The reversal of temporary factors, such as strikes and hurricanes, will contribute to the gains.

• Seasonality Headwinds:

  • Negative seasonal effects are likely to weigh on employment figures in both November and December.

• Labor Supply Factors:

  • An earlier immigration-driven positive labor supply shock appears to be fading.
  • This could signal slower average payroll growth heading into 2025, especially as Trump's policies may further restrict labor supply dynamics.

Conclusion:

Danske expects the jobs report to highlight a moderate recovery in November, driven by the resolution of temporary disruptions. However, structural and seasonal factors, along with potential policy headwinds, point to the risk of weaker employment trends in 2025.

• AUD/USD opens 0.35% higher as USD slips across the board ahead of US NFP Fri

• Boosted by higher-than-expected US jobless claims which rise to 1-month high

• Supported by higher offshore yuan and stable AXJ currencies

• Upside limited on scaled up RBA rate cut expectations after weak GDP on Wed

• 25 bps RBA rate cut fully priced in now for April; Odds of Feb cut at 51%

• Support 0.6425-30, stronger at 0.6400-05, clear break opens 0.6348-62

• Resistance 0.6470-75, 0.6500-05; Friday range 0.6422-0.6454

• For more click on FXBUZ