Forex News

The Japanese Yen (JPY) is up an impressive 0.4% against the US Dollar (USD) and outperforming all of the G10 currencies as we head into the end of the week, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

FinMin threatens intervention

"The bullish reversal is notable, and follows comments from Finance Minister Katayama threatening intervention to offer support for the yen. Fundamental releases have included stronger than expected PMI’s and national CPI data that were in line with expectations around 3.0% y/y."

"Japan’s trade figures for October also revealed unexpectedly robust export growth along with a surprise in imports, suggesting resilience in domestic demand. USD/JPY technicals remain bullish but the RSI has pulled back from overbought levels above 70, offering a potential pause following its impressive rally and test of anticipated resistance around 157.50."

Pound Sterling (GBP) is soft, down a marginal 0.1% against the US Dollar (USD) and a mi performer among the G10 in an environment of persistent USD strength, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

GBP is showing bad news in largely priced

"The UK’s preliminary PMI’s were mixed with a disappointment in services (50.5 vs. 52.0 exp. & 52.3 prev.) and an unexpected recovery in manufacturing (50.2 vs. 49.2 exp. & 49.7 prev.). Retail sales figures for October were unexpectedly weak, and public sector borrowing figures surprised to the upside."

"Sentiment for the UK and GBP remain weak heading into the November 26 budget release however we feel that the balance of risk is tilted to the upside as much of the bad news is already priced in."

• The S&P Global flash PMIs for November are expected to show expansion continued in the month.
• The employment and inflation sub-indices will attract attention in the aftermath of the government shutdown.
• EUR/USD bounced from its recent lows, USD could recover its bullish poise with upbeat data.

S&P Global will release on Friday the November flash Purchasing Managers' Indices (PMIs) for most major economies, including the United States (US). These surveys of top private sector executives provide an early indication of the business sector’s economic health.

Market participants anticipate that the Global Services PMI will print at 54.8, matching the October reading, while Global Manufacturing output is expected to print at 52, slightly below the 52.5 reading of the previous month. Finally, it is worth noting that the Composite PMI printed at 54.6 in October.

The US is coming from the longest government shutdown in its history, which means little macroeconomic data has been released in the last couple of months. Indeed, the country kick-started reporting on Thursday, but offered the September Nonfarm Payrolls (NFP) report, which showed the economy added 119,000 new positions in the month, better than the 50,000 expected. The Unemployment Rate increased to 4.4%, worse than the previous 4.3%, although the Participation Rate increased from 62.3% to 62.4%, partially offsetting the uptick in the unemployment rate. As a result, markets turned optimistic, with the US Dollar (USD) under mild near-term selling pressure.

Still, the market’s hunger for economic-related data ahead of the Federal Reserve (Fed) December monetary policy meeting could see the S&P Global PMIs having a wider-than-usual impact on the US Dollar (USD).

S&P Global separately reports manufacturing activity and services activity through the Manufacturing PMI and the Services PMI. Additionally, they present a weighted combination of the two, the Composite PMI. Generally speaking, a reading of 50 or more indicates expansion, while below the threshold, the indexes indicate contraction.

The report has two versions, a preliminary estimate and a final revision, which comes around two weeks later. These preliminary versions or flash estimates tend to have a broader impact on the US Dollar.

What can we expect from the next S&P Global PMI report?

The anticipated figures, while below the previous ones on the manufacturing sector, still indicate healthy economic progress in the world’s largest economy.

With that in mind, figures in line with expectations will be viewed as positive news, particularly in relation to the Manufacturing PMI. Upbeat numbers could boost the market’s optimism and temporarily weigh on the USD demand, but had no material impact on the upcoming Federal Reserve monetary policy decision, unless the figures are extremely disappointing, an unlikely scenario.

Beyond the headline readings, the reports include sub-indices on employment and inflation, closely watched by market players. In this particular case, the figures could have a more relevant impact than the headline figure, as inflation and employment levels are at the centre of the Fed’s decision. Much worse-than-anticipated data should result in renewed speculation of a Fed cut in December, resulting in a weaker USD across the FX board.

When will the November flash US S&P Global PMIs will be released and how could they affect EUR/USD?

The S&P Global Manufacturing, Services, and Composite PMIs reports will be released at 14:45 GMT on Friday, and as previously noted, are expected to show that US business activity continued to expand in November.

Ahead of the release, the USD is shedding ground against most major rivals amid a risk-on environment following the September NFP report.

Valeria Bednarik, FXStreet Chief Analyst, notes: “The EUR/USD pair bounced modestly from near the 1.1500 level posted early on Thursday, as risk appetite undermines demand for the Greenback in the near-term. On a weekly basis, however, the pair remains on the bearish side.”

Bednarik adds: “Technical readings in the daily chart suggest EUR/USD could extend its slide. A bearish 20 Simple Moving Average (SMA) is currently providing dynamic resistance at around 1.1570, while extending its slide below a flat 100 SMA, usually a sign of mounting selling pressure. At the same time, the Momentum indicator heads nowhere around its midline, in line with the recent absence of directional strength. Support lies at 1.1470 ahead of the 1.1400 region, where the pair met buyers in July. Gains beyond the aforementioned 1.1570 expose the 1.1630 price zone, with additional gains unlikely in the current scenario.”

The Euro (EUR) is soft, down a marginal 0.1% as it drifts back toward Thursday’s low just above 1.15, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

PMI’s offer mixed read

"The latest preliminary PMI’s for November offered a mixed read on the euro area’s economy, with a modest disappointment in manufacturing (49.7 vs. 50.1 exp. & 50 prev.) alongside an upside surprise in services (53.1 vs. 52.8 exp. & 53 prev.). The readings remain modest on either side of 50, but remain a net positive on balance given the relatively larger share of services in the euro zone economy."

"Yield spreads are offering the EUR renewed support following their latest push to the upper end of their recent range, largely reflecting lower US yields as rate expectations in the euro area remain steady. Finally, comments from ECB President Lagarde have been uncharacteristically candid as she suggested that Europe’s export-driven growth model was ‘based on a disappearing world’ and that governments needed to act with a greater sense of urgency as they seek to deliver growth."

"The EUR continues to trade defensively and its tentative attempt at stabilization is looking increasingly fragile. Immediate support is expected around Thursday’s low just above 1.15 and additional support would be expected around the early November low in the mid/upper-1.14s followed by the early August low around 1.14. We are cautiously neutral while acknowledging the risk of further weakness. We look to a near-term range bound between 1.1480 and 1.1580."

The Canadian Dollar (CAD) is little changed on the day, with spot holding gains towards the 1.41 area yesterday amid the US equity market sell-off, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

CAD remains well below fair value

"Weak risk sentiment accounts for the CAD’s weak performance, it would appear. US/Canada short-term swap spreads have narrowed sharply (nearly 20bps) since the start of the month, but that has not helped the CAD at all and it finds itself trading well below our estimated fair value (1.3929). Spot is likely to remain a slave to external sentiment in the absence of a stronger, domestic catalyst."

"Spot is consolidating on the day but the pattern of trade on the short-term charts suggests a pause in the uptrend rather than a stabilization or reversal at this stage. USD gains through 1.4080 tilt risks towards a retest of the mid-1.41 zone. Support is 1.4050/60 ahead of 1.3970/80."

The US Dollar (USD) remains amid firm weak risk appetite but the JPY is outperforming on the session, reflecting a ratcheting up of intervention rhetoric as Finance Minister Katayama warned of 'appropriate action' being taken against disorderly FX moves. Core majors are steady to slightly softer and holding ranges for the most part while peripheral and less liquid currencies (ZAR, TWD, NOK) are reflecting the biggest losses on the day, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

USD holds near recent highs on weak risk appetite

"FX volatility is a little firmer but remains low relative to the spike in equity (VIX) volatility. This week’s big event risks for markets have come and gone without resolving major uncertainties for investors. The NFP data yesterday provided something for FOMC rate hawks and doves on the face of it. But the report’s undertone was outright weak. While investors remain somewhat skeptical about Fed easing risks next month, the outcome remains, we think, finely balanced."

"Note that updated weekly jobless claims data yesterday also revealed a new four-year high for the continuing claims series. Meanwhile, Nvidia’s earnings and bullish outlook did nothing to assuage concerns about tech sector stretch and the stock is lower again in overnight trade). The poster child for market concerns is perhaps Oracle Corp after its recent borrowing binge; 5Y CDS continue to widen sharply, reflecting a low, but nonnegligible risk of default (cumulatively 8% over five years)."

"While the DXY is a little firmer today, the index remains below the peaks that marked the highs for the dollar in August and earlier this month. Short-term price action in the DXY suggest a firm rejection of the low 100 zone yesterday but the index is reluctant to reverse at this point."

• Gold trims intraday losses as Fed’s Williams signals room for a near-term rate cut.
• Mixed US labour data reinforces expectations that policymakers may remain cautious next month.
• Soft physical demand signals from China and weaker Swiss exports add to the broader market narrative.

Gold (XAU/USD) pares some of its intraday losses on Friday after fresh comments from Federal Reserve (Fed) officials revive near-term rate-cut expectations. New York Fed President John Williams said he still sees room for a near-term cut, helping the metal recover from an earlier slide.

At the time of writing, XAU/USD is trading around $4,067, after bouncing from an intraday low near $4,022, though it remains vulnerable as the metal continues to oscillate within the range established earlier this week.

Markets had been dialing back expectations for a December rate cut, with most Fed officials striking a noticeably cautious tone in recent weeks. Policymakers have repeatedly warned that inflation remains sticky and that the labour market, while cooling, is still resilient enough to justify a more patient approach.

Against this backdrop, markets now see a 70% chance of a December rate cut, a sharp jump from around 31% earlier in the day. Lower interest rates typically boost demand for non-yielding assets such as Gold.

Market movers: Traders weigh mixed labour data and cautious signals from the Fed

• Fed President John Williams struck a cautious note on the monetary policy outlook, acknowledging that progress on inflation has stalled, even though he still expects price growth to return to the 2% target by 2027. He noted that economic growth has slowed and the labour market has gradually cooled, with downside risks to employment increasing. Williams also said that recent tariffs have added to price pressures but are not expected to generate persistent inflation. He reiterated that monetary policy remains modestly restrictive.
• Philadelphia Fed President Anna Paulson said on Thursday she is approaching the December policy decision cautiously. She described the September labour market report as “encouraging on balance” but noted she remains more concerned about employment than inflation at the margin. Paulson added that the rate cuts delivered so far have been appropriate, though each one “raises the bar” for further easing. With upside risks to inflation and downside risks to employment, she said monetary policy must “walk a fine line.”
• September Nonfarm Payrolls (NFP) rose by 119,000, well above the 50,000 forecast. Markets also focused on the sizeable downward revision to August, which was changed to a 4,000 decline from the previously reported 22,000 gain. The Unemployment Rate climbed to 4.4%, up from 4.3% in August, exceeding expectations for 4.3% and marking its highest level since October 2021.
• This was the first official US employment report in weeks following delays caused by the government shutdown. It is also the last payroll release before the Fed’s December 9-10 meeting, following the Bureau of Labor Statistics' (BLS) confirmation on Wednesday that the October data will be published together with the November report on December 16.
• The US economic calendar features the S&P Global flash PMIs for November later on Friday, followed by the University of Michigan Consumer Sentiment Index. Attention will also turn to a heavy Fed speakers’ lineup, including New York Fed President John Williams, Fed Governor Michael Barr, Fed Vice Chair Philip Jefferson, and Dallas Fed President Lorie Logan.
• According to a Reuters report, Swiss Gold exports fell 11% in October, with shipments to China plunging 93% to just 2.1 tons, the lowest since February. Chinese dealers were offering discounts of $48–$60 per ounce in early October, signalling weak physical demand in the world’s largest consumer market. Exports to the UK also dropped sharply, sliding 69% from the previous month.

Technical analysis: XAU/USD struggles under 50-SMA as RSI stays below midline

On the 4-hour chart, XAU/USD remains under pressure, trading below the 50-period Simple Moving Averages (SMAs), keeping the near-term tone tilted toward sellers. The 50-period SMA around $4,105.62 has begun to roll over, signalling weakening bullish momentum, while it still sits just above the gently rising 100-period SMA near $4,058.39.

Price rebounded from the lower boundary of a broad symmetrical triangle, with the ascending trendline containing price action throughout November. A sustained break below this trendline could open the door toward the $4,000 psychological level, followed by the October 28 low near $3,886.

On the upside, the $4,100-$4,150 region remains a firm ceiling, with bulls struggling to secure a breakout above it. Momentum remains soft, with the Relative Strength Index (14) at 42.46, holding below the 50 midline and indicating a lack of bullish impulse.

(This story was corrected on November 21 at 13:53 to reflect that Fed President Anna Paulson spoke on Thursday, not Friday.)