Forex News

• The New Zealand Dollar trims gains against the USD and eases below 0.5670.
• The Kiwi rallied across the board following the RBNZ's "hawkish cut".
• US Durable Goods Orders and Initial Jobless Claims might add pressure on the USD later today.
   

The New Zealand Dollar is trading higher against its US counterpart on Wednesday, boosted by a “hawkish cut” by the Reserve Bank of New Zealand RBNZ) and heightened hopes that the US Federal Reserve will cut rates in December. The pair’s rally, however, met resistance at the 0.5690 area before pulling back to levels sub-0.5670.,

The RBNZ cut its OCR rate by 25 basis points to a three-year low of 2.25%, as widely expected on Wednesday, but signalled the end of the easing cycle, as New Zealand’s economy starts to show signs of recovery. 

The central bank’s monetary policy statement stated that further rate cuts will depend on the evolution of the medium-term inflation and on the economic prospects. The bank also projected the cash rate to be at 2.20% in the first quarter of 2026 and at 2.65% in adt the end of 2027

Fed cut hopes are weighing on the USD

The Kiwi dollar rallied across the board, following the monetary policy decision, appreciating a maximum of 1.4% against the US Dollar, before trimming some gains during the European trading session.

The Greenback, in turn, remains on the defensive, following a batch of downbeat US macroeconomic releases. September’s delayed US Retail Sales report disappointed, while producer prices remained steady, and consumer confidence deteriorated, with households wary about the higher prices and the worsening job prospects.

Wednesday’s figures add to evidence that the US economy is going through a soft patch and make a case for further Fed rate cuts in December. Later today, the US Durable Goods Orders, an advanced indicator of manufacturing activity, is expected to show a slowdown in September, while jobless claims are expected to rise. Not the best news for the US Dollar.

Gold prices rose in India on Wednesday, according to data compiled by FXStreet.

The price for Gold stood at 11,941.90 Indian Rupees (INR) per gram, up compared with the INR 11,859.32 it cost on Tuesday.

The price for Gold increased to INR 139,285.40 per tola from INR 138,322.10 per tola a day earlier.

FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.

(An automation tool was used in creating this post.)

Gold is breaking historical norms. Outperformance versus the US Dollar (USD) matches a record set last year, and the 2025 range in Gold is the largest since 1980. Stabilising investor flow and technical measures indicate a positioning correction has completed, Deutsche Bank's Research Analyst Michael Hsueh report.

Central bank demand keeps Gold strong

"Third quarter supply-demand data supports a continued central bank bid. The positive structural picture shows inelastic demand from central banks and ETF investment diverting supply from the jewellery market. Also, overall growth in demand outpaces supply. These factors argue for an upgrade to our 2026 forecast towards $4,450/oz from $4,000/oz previously, and a yearly range from $3,950-4,950/oz in 2026. A high of $4,950/oz would be a premium of 14% over current Dec'26 GC futures."

"Consecutive years of undersupply enables Silver, Platinum, and Palladium to participate more fully in Gold's strength. Elevated lease rates indicate physical scarcity which affects industrial users, many of whom prefer to lease than own. We expect supply-demand to remain in deficit for Silver and Platinum next year, while Palladium is balanced."

"Gold often exhibits a positive correlation to risk, so a deeper equity market correction would be damaging, as would our House view for less Fed easing than the market expects in 2026 (-50 bps vs -93 bps). A negotiated end to the Russia-Ukraine conflict would be a temporary negative. In the bigger picture, reserve managers could slow their pace of buying, and dramatic increases in real Gold prices are often followed by significant corrections."

The UK Budget is largely priced into markets, with increased fiscal spending and taxes likely to shift the fiscal/monetary mix in a sterling-negative direction, limiting any lasting gains for GBP despite potential short-term relief, Société Générale's FX analyst Kit Juckes reports.

Short-term GBP bounce possible, but temporary

"Nearly everything that can be said ahead of the UK budget has been said in the press. The fundamental issue for the FX market however, is the balance between fiscal and monetary policy. The so-called ‘Truss Affair’ has given the UK’s fiscal watchdog, the OBR, considerable power over fiscal policy, because this (Labour) government doesn’t have any previously earned fiscal credibility with markets."

"That in turn, means that the Chancellor is faced with the task of meeting election promises, satisfying the various cliques within the Labor Party, and delivering a Budget with a tight enough fiscal stance to meet her self-imposed fiscal rules, restore some headroom for spending and appease the OBR. The result is a budget with increased fiscal spending and increased taxation that overall, will open the door to easier monetary policy and a shift in the fiscal/monetary policy mix that is sterling negative."

"All of this is clear enough that much of what is coming in the Budget is priced into asset prices and unless the Budget scares the infamous ‘Bond Vigilantes’ there’s a chance that the pound will react positively in the short term. Any bounce however will be temporary as UK rates (at 4%) have more room to fall that Eurozone ones (2%). Currency, markets price around 10bp of ECB easing by the middle of next year, 60bp of Fed easing, and 50bp of BOE easing. 25bp cuts by the Fed and BOE in December will help the EUR against both GBP ad USD if they inspire the markets to price-in more easing than is currently expected in 2026."

In a recent analysis by UBS, Paul Donovan discusses the implications of the latest US Retail Sales data, which showed slight softness. Donovan emphasizes the importance of understanding the context of these numbers, particularly in light of inflation effects.

Donovan also notes the potential for revisions and the impact of changing consumption patterns. Despite concerns, he suggests that there is no immediate cause for alarm based on credit card data.

Retail sales data prompts cautious outlook

"US September retail sales data were old news, but slightly softer. While it is tempting to blame the accelerating US inflation rate, retail sales are nominal numbers and include inflation effects. Pessimism should be limited, however. The numbers will almost certainly be revised."

"Ongoing shifts in consumption patterns have consequences (Instagrammers showcasing their latest holiday contribute less to retail sales than buyers of new washing machines). Credit card data suggests no reason to panic."

"The data drought of the US government shutdown places excessive emphasis on old data—and also anecdotal data like today’s Federal Reserve Beige Book. This has shown some signs of political bias in the comments. Anecdotes on whether tariff passthrough is speeding up is of interest."

(This story has been created with the assistance of AI.)

• The Euro extends gains to levels near 1.1600 with Fed easing hopes weighing on the US Dollar.
• US Retail Sales disappointed on Tuesday and Producer Price Index remained steady.
• The ECB has warned about elevated risks to financial stability and high public debt.

EUR/USD holds gains on Wednesday, although it remains capped below the 1.1600 line, trading at 1.1575 at the time of writing. European Central Bank's (ECB) concerns about financial risks have dampened investors' appetite for risk, although the higher hopes that the US Federal Reserve (Fed) will cut interest rates in December are keeping the US Dollar upside attempts limited for now.

US economic data released on Tuesday revealed a weaker-than-expected increase in Retail Sales in September, while the Producer Price Index continued to grow at a steady pace. The Consumer Confidence deteriorated, with households wary about higher costs and sluggish job prospects. These figures reinforced market expectations of immediate Fed interest rate cuts, adding pressure on the US Dollar.

Meanwhile, US and Ukrainian representatives continue working on the roadmap for a peace plan. US President Donald Trump affirmed on Tuesday that the original plan has been "fine-tuned with additional input from both sides" and that he will send special envoy Steve Witkoff to meet Russian President Vladimir Putin next week. This news and the positive reaction from Ukrainian President Volodymyr Zelensky have contributed to improving market sentiment and provided additional support to the Euro.

In the economic calendar, the US Durable Goods and Initial Jobless Claims will attract attention during Wednesday's US trading session. Later on, ECB board member Philip Lane, and the president Christine Lagarde are expected to meet the press.

Risk appetite and growing Fed easing hopes are weighing on the US Dollar

• The Euro is dragging support from a weaker US Dollar, as recent US figures boosted expectations of Fed interest rate cuts in December, while hopes of a peace agreement between Russia and Ukraine are contributing to improving market sentiment. Lower US Treasury yields are weighing on the US Dollar Index, which has depreciated about 0.6% over the last three days.
• The Euro retreated from session highs on Wednesday as the European Central Bank Financial Stability Review warned about the "elevated risks to financial stability in Europe" and reminded that the high public debt in some countries could strain bond markets.
• On Tuesday, US Retail Sales data showed that consumption grew 0.2% in September, undershooting expectations of a 0.4% increase, and following a 0.6% growth in August. Excluding automobiles, sales of all other products rose 0.3%, also below the 0.4% consensus, while August's reading was revised down to 0.6% from the previously estimated 0.7% increase.
• The US Producer Prices Index (PPI) grew 0.3% in September after a 0.1% contraction in August. Year-on-year producer inflation remained steady at 2.7%, in line with the market consensus. The core PPI, on the other hand, eased to a 2.6% yearly pace from 2.9% in August, beating expectations of a 2.7% reading.
• The US Conference Board's Consumer Confidence Index fell to a six-month lows of 88.7 in November from an upwardly revised 95.5 reading in October, completing a weakening picture of the US economic outlook and strengthening the case for further Fed monetary policy easing.
• A report by Reuters suggests that Kevin Hassett, the National Economic Council (NEC) Director, emerges as the best positioned to replace Jerome Powell as Fed Chair at the end of his term in May. Hasset has advocated for the need to cut interest rates to support economic growth and is expected to pursue a looser monetary policy. This news has added pressure on the US Dollar.
• On Wednesday, US Durable Goods Orders growth is expected to have slowed down to 0.3% in September, from 2.9% in August. Excluding transportation, orders are seen growing at a 0.2% pace, following a downwardly revised 0.3% in August.
• US Initial Jobless Claims are expected to increase to 225,000 from 220,000 in the week of November 21.

Technical Analysis: EUR/USD under growing bullish pressure near 1.1600

The EUR/USD bulls have taken control after breaching the 1.1550 resistance area and are testing the 1.1600 level, which, so far, remains in place. Technical indicators show an improving momentum. The 4-hour Relative Strength Index (RSI) is nearing oversold levels but not yet there, while the Moving Average Convergence Divergence (MACD) has crossed above the zero line, highlighting an improving bullish momentum.

Bulls remain capped below the mentioned resistance area above 1.1600 (November 18 and 19 highs). Further up, bulls are likely to be challenged at the top of a descending channel from the mid-October highs, which is now around 1.1625, ahead of the October 28 and 29 highs, near 1.1670.

On the downside, the previous resistance at 1.1550 (November 21 and 24 highs) is expected to provide support ahead of the 1.1500 psychological level. A bearish reaction below here would increase pressure towards the November 5 lows, near 1.1470, and the bottom of the descending channel from early October highs, now around 1.1425.

GBP/USD faces heightened downside risks as market-implied volatility and risk reversals signal expectations for a weaker Pound Sterling (GBP) ahead of the UK Budget, with a credible fiscal plan from Chancellor Reeves key to restoring investor confidence, Commerzbank's FX analyst Michael Pfister notes.

Market volatility expected ahead of UK Budget

"Risk reversals clearly showed that most market participants held a similar view, shifting towards more risks for a weaker pound in recent weeks. We are likely to see a further shift towards higher implied volatility and more negative GBP/USD risk reversals in the coming days. Although this shift has already taken place to some extent, last year we only reached the peak shortly after the budget presentation. However, repeated comparisons with the Truss episode, when Liz Truss shocked the financial markets with ill-conceived plans for revenue and spending, are probably inappropriate."

"Just because the risks from a market perspective clearly point towards a weaker pound does not mean that this will necessarily happen. During both the Truss episode and the last budget, the pound did not perform too badly. This year, however, the situation was different. It seems that officials, with their multitude of ideas, some of which were subsequently cancelled, failed to convince pound investors. We suspect this will continue in the coming days. In other words, the risks to the pound perceived by the market are more likely to materialise this year than last year, given that conditions have deteriorated and the government does not appear to have a convincing plan."

"In meetings with clients, we are often asked whether most of the negative arguments have now been priced in and what a positive scenario for the pound might look like. Essentially, Reeves would need to present a convincing plan to balance the budget by the 2029–30 fiscal year without reigniting inflation or stifling growth. Possible starting points that could convince the market would include demonstrating fiscal headroom, avoiding tax increases that drive inflation and implementing as few short-term tax changes as possible that merely postpone problems to future years."

NZD/USD has rebounded sharply from last week’s low, breaking a falling wedge pattern, with the 50-day moving average near 0.5730 now in focus as a potential hurdle for further gains, Société Générale's FX analysts note.

NZD/USD breaks falling wedge, gains upward momentum

"NZD/USD has staged a sharp bounce after forming an interim low near 0.5580 last week. It has broken out from a pattern resembling a falling wedge highlighting resurgence of upward momentum."

"The pair is fast approaching the 50-DMA at 0.5730, which could be a short-term hurdle. It will be interesting to see if the pair can establish beyond this resistance. Cross above the moving average may lead to extension in the phase of rebound."

It’s a big day for the UK and the pound. Chancellor Rachel Reeves is expected to deliver her budget address at 12.30 GMT. The latest reports appear to confirm that the UK's fiscal hole – which we put at £30bn/year after planned giveaways – will be filled through a combination of extending the planned freeze on tax thresholds and a raft of hikes to minor taxes. The outlines of the Budget look well-priced, but what's less clear from the press is how much of the pain will be frontloaded in 2026, ING's FX analyst Francesco Pesole notes.

EUR/GBP volatility moderates pre-budget

"A budget that confirms £10-15bn of upfront tax hikes, which the OBR judges to push down on inflation next year, would be worth a modest dovish BoE repricing and renewed fall in gilt yields. Remember, pretty much whatever happens, the UK's deficit and gilt issuance will fall in 2026, owing to the freeze in tax brackets. But politics remains a major risk. Any sign that political pressure is building on Chancellor Reeves could prompt a renewed sell-off in gilts, if investors begin to price in the possibility of a more pro-borrowing successor."

"From a currency perspective, sterling currently shows no signs of a material fiscal risk premium (calculated via EUR/GBP), and faces two different downside scenarios today. Disinflationary fiscal tightening forces some premium to leave the gilt market, with yields declining, but the dovish repricing in rate expectations causes some moderate GBP depreciation. EUR/GBP rises to 0.880-0.8830. A much worse scenario for GBP where budget announcements don’t convince markets that the fiscal path is sustainable. That could shape into an uncontrolled selloff in gilts and sterling."

"EUR/GBP overnight volatility is at 13.5: high, but below some 2023 peaks and nowhere close to 2022 Mini-Budget 27 levels. The difference between 1-week implied and realised volatility has moderated from just above 3.0 yesterday to 2.2 this morning, therefore below multiple peaks of the past two years."