Forex News

• Gold steadies as December Fed rate-cut bets strengthen following dovish Fed comments.
• Markets await delayed US PPI and Retail Sales data that could shape rate expectations.
• Technically, Gold is trading within a tightening symmetrical triangle on the daily chart, with price action squeezing toward a breakout.

Gold (XAU/USD) holds firm on Tuesday as traders price a greater likelihood of a Federal Reserve (Fed) interest rate cut in December following dovish-leaning remarks from policymakers. At the time of writing, XAU/USD is little changed around $4,135, after climbing to an over one-week high during the Asian session.

The latest leg higher in Gold was primarily driven by mounting rate-cut expectations. However, the metal is struggling to attract follow-through buying, with traders reluctant to take large directional positions ahead of a heavy US economic calendar on Wednesday.

The spotlight will be on the delayed Producer Price Index (PPI) and Retail Sales figures for September, which could influence expectations for a December Fed rate cut.

Elsewhere, markets are also keeping an eye on developments surrounding the ongoing Russia–Ukraine peace talks aimed at ending the conflict. With geopolitical risks still in play and the prospect of a December Fed rate cut on the table, the near-term outlook for Gold remains tilted to the upside.

Market movers: Fed dovish shift lifts December rate cut bets

• Dovish Fed signals in recent days have prompted traders to ramp up rate-cut bets, reversing the earlier hawkish repricing that had emerged from the cautious tone of Fed officials. San Francisco Fed President Mary Daly told the Wall Street Journal on Monday that she supports lowering rates at next month’s meeting, cautioning that the labour market is increasingly vulnerable and poses a greater risk than an inflation flare-up.
• Fed Governor Christopher Waller and New York Fed President John Williams also signalled room for near-term easing. Waller told Fox Business on Monday that his primary concern is the softening labour market, saying inflation is “not a big problem” given recent weakness in employment. Last week, Williams echoed a similar stance, describing policy as “modestly restrictive” and noting there is still scope for another adjustment to guide rates closer to neutral.
• According to the CME FedWatch Tool, markets are now pricing in roughly an 80% chance of a December rate cut. However, division among Fed officials and the fact that key inflation and labour data will come only after the December 9-10 meeting keep the outlook uncertain.
• On the geopolitical front, markets are monitoring US-brokered efforts to advance Russia–Ukraine peace talks. The Financial Times reported on Tuesday that US Army Secretary Dan Driscoll is holding discussions in Abu Dhabi with Ukraine’s military intelligence chief and a Russian delegation. The original 28-point proposal had drawn criticism for favouring Russia, leading negotiators to narrow it to 19 points after what were described as constructive US-Ukrainian talks in Geneva over the weekend.

Technical analysis: Bullish trend intact above key moving averages

From a technical view, Gold is moving inside a tightening symmetrical triangle on the daily chart, with prices squeezing toward the tip of the pattern and hinting at a breakout soon. The pattern reflects consolidation after the strong rally seen this year, and with prices above key moving averages, the overall bias remains bullish.

On the upside, the $4,150 region aligns with the upper boundary of the triangle and acts as immediate resistance. A decisive break above this level would signal a bullish breakout and could accelerate buying pressure in line with the prevailing uptrend, opening the door toward $4,200 and then $4,250.

On the downside, initial support is seen around $4,100, followed by a stronger support zone near $4,050, where the lower edge of the triangle converges with the 21-day Simple Moving Average. A daily close below this area would weaken the structure and shift the near-term outlook toward a more corrective tone.

• USD/JPY edges slightly lower amid renewed Japan intervention caution.
• Concerns over Japan’s fiscal position restrain the currency’s rebound.
• The US Dollar steadies ahead of key US data releases.

USD/JPY trades around 156.50 at the time of writing on Tuesday, down 0.20% on the day, as the Japanese Yen (JPY) fails to attract meaningful buying interest. While the prospect of intervention by Japanese authorities limits downward pressure on the currency, several fundamental factors continue to weigh on the Yen’s broader outlook.

Recent remarks from Japanese Finance Minister Satsuki Katayama, who warned that the government would take “appropriate action” against excessive market volatility, reinforced market vigilance. Comments from Takuji Aida, a member of a key government panel, also explicitly raised the possibility of intervening to counter the negative economic impact of a weak JPY. This increasingly forceful rhetoric is helping to slow USD/JPY’s rise in the near term.

However, concerns over Japan’s fiscal situation remain a major drag. The approval of a massive ¥21.3 trillion stimulus package, the largest since the COVID-19 era, has intensified doubts about the sustainability of public debt, pushing super-long Japanese government bond yields to record highs.

Meanwhile, the contraction of Japan’s economy in the third quarter increases the likelihood that the Bank of Japan (BoJ) delays further policy tightening, even as Governor Kazuo Ueda kept the door open for a December rate hike and highlighted that Japanese Yen weakness continues to fuel inflationary pressures. Inflation has remained above the 2% target for more than three years.

In the United States (US), the US Dollar (USD) edges slightly lower as markets continue to price in further monetary easing in December. Federal Reserve (Fed) Governor Christopher Waller strengthened the case for a rate cut next month, noting that labor market conditions appear weak enough to justify further easing. His comments follow those of New York Fed President John Williams, who recently described the current policy stance as only “modestly restrictive”. Markets now assign more than an 80% chance to a rate cut at the December meeting.

While this shift in expectations limits the US Dollar’s ability to extend its recent rally, the broader backdrop still favors USD/JPY upside, particularly if the BoJ remains cautious and rate differentials continue to support the Greenback.

Investors now turn their attention to the upcoming releases of the Producer Price Index (PPI), Retail Sales, and additional US housing and manufacturing indicators. These data points could revive volatility in USD/JPY and help shape the pair’s direction ahead of the next Federal Reserve communications.

September Copper data showed a 57,000-ton deficit, but seasonally adjusted figures point to a slight surplus, suggesting the market remains well supplied despite recent price rallies, Commerzbank's Head of FX and Commodity Research Thu Lan Nguyen notes.

Caution advised ahead of confirmed supply deficit

"The International Copper Study Group (ICSG) reported a supply deficit of 57,000 tons for the month of September. However, on a seasonally adjusted basis, this translates to a supply surplus of 17,000 tons, which is almost unchanged from the previous month. For the first three quarters of the year, the total supply surplus amounted to 94,000 tons."

"This indicates that the Copper market remains well supplied overall. However, it is worth noting that last year, the surplus at this point was as high as 310,000 tons. Therefore, the supply situation has indeed deteriorated."

"The market seems to have already extrapolated this trend into the future, anticipating a shift to a supply deficit, which is why Copper prices have surged significantly in recent months. Until the ICSG's data explicitly confirms such a shift, we would advise caution in expecting another sharp price increase — at least in the short term."

The price of Gold rose to $4,155 per troy ounce this morning. Since Friday afternoon, the price has risen by more than $100. The price increase was triggered by rising expectations of an interest rate cut at the Fed's next meeting in two weeks, Commerzbank's commodity analyst Carsten Fritsch notes.

Safe-haven demand supported by Ukraine war uncertainty

"Fed Funds Futures are now pricing in a 25 basis point interest rate cut by the US Federal Reserve with a probability of around 75%. Last Thursday, this had been only 30%. On Friday, the influential NY Fed President Williams expressed openness to an interest rate cut in December. Fed Governor Miran also expressed his willingness to vote for a 25 basis point cut in order to achieve a majority in the FOMC for such a move. The close ally of US President Trump was the only one to vote for 50 basis points at the last two meetings. Accordingly, the market now sees a greater probability of an interest rate cut."

"Developments over the past few days show that there is still a lot of movement possible in interest rate expectations until the Fed meeting on December 9/10, with corresponding effects on the Gold price. Another factor influencing the price of Gold is likely to be the ongoing negotiations to end the war in Ukraine. This could affect demand for Gold as a safe haven. Yesterday, the price temporarily fell in early trading due to hopes of an end to the war. Emerging doubts about this may have contributed to the price increase since then. We are therefore likely to see a few more volatile days ahead for Gold."

• The tick sup to 1.1530 against the US Dollar, but remains capped below 1.1550.
• German GDP confirms that the economy stalled in the third quarter.
• On Monday, Fed's Waller boosted hopes of further monetary easing in December.

EUR/USD posts mild gains on Tuesday's European session, but remains trapped below 1.1550, changing hands at 1.1530 at the time of writing. German GDP data has not been particularly supportive, but the US Dollar has been trading lower during most of the European session, with all eyes on the release of the delayed US Retail Sales and Producer Prices Index (PPI) data, due later today.

Data released earlier on Tuesday revealed that Germany's Gross Domestic Product (GDP) has confirmed the preliminary estimations of a stalled economic growth in the third quarter, following a 0.3% contraction in the second.

On Monday, Fed Governor Christopher Waller seconded last week's comments from the New York Fed President John Williams and called for a quarter-point interest rate cut next month. Waller affirmed that the available data points to a weakening labour market while inflation is expected to ease.

These comments boosted market expectations that the central bank will ease its monetary policy further in December, although investors know that the decision will be a coin toss amid the wide divergence among policymakers.

Furthermore, US President Donald Trump posted on social media on Monday that relations with China are "extremely strong" after a phone call with Chinese President Xi Jinping. Trump called Japanese Prime Minister Sanae Takaichi shortly afterwards, in an attempt to ease the geopolitical frictions between the two Asian countries.

Some European Central Bank (ECB) speakers will take the stage later in the day, although the main focus will be in the US, with September's Producer Prices Index (PPI), and Retail Sales figures, and November's Consumer Confidence data on tap.

The Euro wavers in range with Fed expectations grabbing the focus

• The common currency is consolidating near the 1.1500 level as Eurozone data fails to cheer investors, with investors awaiting the release of delayed US macroeconomic figures for a better picture of the Fed's monetary policy path.
• Figures from Germany released on Tuesday confirmed that the region's leading economy remains gripped, with the GDP showing a 0% growth in Q3, following a 0.3% contraction in Q2. Year-on-year, the German economy ticked up to a 0.3% growth from 0.2% in the second quarter.
• On Monday, the German IFO Business Climate eased to 88.1 in November, from 88.4 in October, against market expectations of a slight improvement to 88.5. The Index measuring the current economic situation improved to 85.6 from 85.3, but the economic expectations deteriorated by a whole point, to 90.6 in November from 91.6 in October.
• The US Dollar Index has pulled back to the lower boundary of the last few days' trading range amid dovish comments from Fed officials and higher hopes of a Fed interest rate cut next month. Data from the CME Group's Fedwatch Tool shows that the odds for a 25 basis points interest rate cut on December 10 have risen beyond 80%, from about 40% last week.
• In the US, later on Tuesday, September's US PPI is expected to have picked up to 0.3% in the month, from a 0.1% decline in August. The yearly inflation is seen accelerating to 2.7% from 2.6% in the previous month. The Core PPI, however, is seen easing to a 2.7% yearly rate from August's 2.8%.
• At the same time, US Retail Sales are expected to have grown at a 0.4% in September, down from 0.6% in August. Excluding automobiles, sales of all other products are seen slowing down to 0.4% from the previous month's 0.7% growth.

Technical Analysis: EUR/USD remains capped below 1.1550 resistance

The EUR/USD pair keeps languishing near two-week lows at the 1.1500 area, with upside attempts capped below 1.1550, although the broader bearish trend is still in play. The 4-hour Relative Strength Index (RSI) failed to consolidate above the 50 level on Monday. The Moving Average Convergence Divergence (MACD) has crossed above the signal line, but remains at levels below zero, underscoring the fragility of the rebound from Friday's lows.

Resistance at the 1.1550 level has capped bulls in the last three trading days, which leaves the pair in no man's land above 1.1500. The pair should break that level to confirm a bullish reaction and aim for the November 18 and 19 highs, near 1.1600, and the top of a descending channel from the mid-October highs, which is now around 1.1625.

On the downside, below the 1.1500 psychological level, bears would gain confidence to retest the November 5 lows, near 1.1470, and the bottom of the descending channel from early October highs, now around 1.1425.

Even with potential US sanctions easing, Russian Oil output is unlikely to surge, as OPEC+ production limits and near-capacity operations constrain any significant increase, Commerzbank's commodity analyst Carsten Fritsch notes.

OPEC+ caps hinder significant output gains

"However, even if US sanctions were eased, a significant increase in Russian Oil supply would not be expected, as Russia is bound by OPEC+ production targets. It is conceivable that Russian Oil production could close the current gap to the agreed OPEC+ production volume."

"According to the latest figures from the IEA, this would mean an increase of 200,000 barrels per day, while OPEC and S&P Global Commodity Insights estimates put the increase at around 100,000 barrels per day."

"As Russia is likely already producing close to its capacity limit, a significant increase in production is hardly possible if OPEC+ decides to further raise production targets next year. According to IEA estimates, Russia's production capacity is already below the agreed production level."

New diplomatic efforts to end the war in Ukraine have been putting pressure on Oil prices since the end of last week, Commerzbank's commodity analyst Carsten Fritsch notes.

US-Ukraine agreement sparks market uncertainty

"Over the weekend, the US and Ukraine reached an agreement in Geneva on a plan to end the war, which differs in some respects from the 28-point plan previously negotiated with Russia. The details are not yet known. It is also unclear whether Russia will agree to this plan. The Kremlin has already rejected a separate proposal from the EU, sowing doubts about a solution and causing Oil prices to rise again yesterday."

"If a peace agreement is reached, the Oil sanctions against Russia could also be lifted. This would particularly affect the US sanctions against the two largest Russian Oil companies, which came into force last Thursday. As a result of these sanctions, refineries in India and China announced that they would no longer purchase Russian Oil, leading to a decline in Russian Oil exports and an increase in crude Oil from Russia stored in tankers at sea. This Oil would then become available again."

"In addition, the mutual attacks by Russia and Ukraine on energy infrastructure would probably come to an end. The attacks on refineries have also led to a noticeable disruption in Russian Oil supplies, particularly for Oil products. The sharp decline in the gasOil crack spread, which has fallen by USD 10 per barrel since last Thursday's high, is likely to be largely due to hopes that the war in Ukraine could soon come to an end."

• The New Zealand Dollar remains depressed around 0.5600 against the US Dollar.
• Investors are keeping away from the Kiwi ahead of the RBNZ monetary policy decision.
• Increasing hopes of further Fed easing are weighing on the US Dollar on Tuesday.
   

The New Zealand Dollar is hesitating around the 0.5600 level for the second consecutive day on Tuesday. The long wicks on the daily candles highlight an indecisive market with investors wary of betting on the Kiwi ahead of the RBNZ decision and the US Dollar pulling back against its main peers.

The Reserve Bank of New Zealand will release its monetary policy decision during Wednesday’s Asian session, and is widely expected to trim its OCR rate by 25 basis points to 2.25%. 

The main focus of the event will be on assessing whether the central bank is contemplating further monetary easing in early 2026 to support an ailing economic growth. This would put additional pressure on the New Zealand Dollar, while a hawkish cut, with the RBNZ Governour suggesting that the central bank might have reached its terminal rate, would give NZD bulls some confidence.

US consumption, producer inflation data lie ahead

The US Dollar, on the contrary, remains moderately weak on Tuesday as recent comments by Fed officials called for further monetary easing in the coming months. Bets of a December rate cut have been ramped up to levels beyond 80% from 40% last month, but the market remains volatile in the absence of key fundamental data. Later today,

US Retail Sales are expected to show that consumer spending moderated in September, yet is still growing at a healthy 0.4% pace, following a 0.6% rise in August. 

At the same time, the US Producer Prices Index is expected to have ticked up to a 2.7% year-on-year growth in September from 2.6% in August, although the core PPI is seen easing to a 2.7% yearly growth from the previous month’s 2.8% reading.