Forex News

• USD/CAD trades on a flat note around 1.4060 in Friday’s early European session. 
• The delayed US Nonfarm Payrolls (NFP) data will be in the spotlight later on Thursday. 
• Lower crude oil prices could drag the Canadian Dollar lower. 

The USD/CAD pair holds steady near 1.4060 during the early European session on Thursday. Traders brace for the upcoming US Nonfarm Payrolls (NFP) data to provide clues about the potential for an interest-rate cut next month. Meanwhile, lower crude oil prices could weigh on the commodity-linked Canadian Dollar (CAD) against the Greenback. 

The US Bureau of Labor Statistics (BLS) will release the September employment report on Thursday, which was delayed by the 43-day government shutdown. Economists expect to see 50,000 jobs added in the US economy in September, while the Unemployment Rate is projected to stay unchanged at 4.3%. 

A weaker-than-expected jobs report could signal an economic slowdown, prompting the Federal Reserve (Fed) to cut interest rates. This, in turn, could undermine the Greenback in the near term. The CME FedWatch tool suggests that financial markets are now pricing in a 33% possibility that the US central bank will cut its benchmark overnight borrowing rate by 25 basis points (bps) at its December meeting, down from the 63% chance that markets priced a week ago. 

Meanwhile, crude oil prices edge lower after a report of a US proposal to end the Russian war in Ukraine, which could weigh on the commodity-linked Loonie and act as a tailwind for the pair. It’s worth noting that Canada is the largest oil exporter to the US, and lower crude oil prices tend to have a negative impact on the CAD value.

• The Indian Rupee opens lower to near 88.80 against the US Dollar ahead of the US NFP data for September.
• Many FOMC members opposed another rate cut in December.
• The RBI is expected to cut the Repo Rate further this year.

The Indian Rupee (INR) opens on a negative note against the US Dollar (USD) on Thursday. The USD/INR pair jumps to near 88.80 as the US Dollar (USD) outperforms its peers, following the release of the Federal Open Market Committee (FOMC) minutes of the October policy meeting on Wednesday. In the policy meeting, the Fed decided to cut interest rates by 25 basis points (bps) to 3.75%-4.00%.

At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, revisits an over five-month high of around 100.40.

The FOMC minutes showed that few policymakers would have been satisfied even if interest rates were held steady, as the outright rate cut for the second time in a row could stall progress in inflation returning to the central bank’s 2% target.

Over the December policy meeting, officials were divided about reducing interest rates again, citing that further monetary expansion could boost inflation expectations and dampen households’ trust in the central bank’s commitment to bring inflation lower to the 2% target in a timely manner.

Remarks from many Fed officials pointing to a pause in the monetary expansion cycle have resulted in a further reduction in bets supporting an interest rate cut in December. According to the CME FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points (bps) to 3.50%-3.75% in the December meeting has diminished to 32.8% from 50.1% seen a day before the FOMC minutes release.

Daily digest market movers: RBI may cut interest rates again this year

• A strong opening by the USD/INR pair on Thursday is also driven by weakness in the Indian Rupee. The Indian currency has come under pressure as investors turn anxious over the delay in the announcement of a trade deal between the United States (US) and India.
• Top negotiators from both nations have been expressing that they are close to reaching a deal; however, an absence of a concrete announcement has kept investors on edge.
• Meanwhile, growing acceptance among financial market participants that the Reserve Bank of India (RBI) will cut interest rates in its December policy meeting is also keeping the Indian Rupee under pressure.
• RBI dovish bets have accelerated due to cooling inflationary pressures.  In October, the retail inflation decelerated at a faster-than-expected pace to 0.25% on an annualized basis, driven by soft food prices and tax cuts in consumer goods announced in the third quarter of the year. This was the second straight month when the inflation data came below the RBI’s tolerance range of 2%-6%.
• Going forward, investors will focus on India’s flash HSBC Purchasing Managers’ Index (PMI) data for November, which will be released on Friday.
• In Thursday’s session, the major trigger for the USD/INR pair will be the US Nonfarm Payrolls (NFP) data for September, which will be published at 13:30 GMT. Investors will pay close attention to the official employment data as it will influence market expectations for the Fed’s monetary policy outlook.
• Economists expect US employers to have created 50K fresh jobs, higher than 22K in August. The Unemployment Rate is seen unchanged at 4.3%. Average Hourly Earnings, a key measure of wage growth, is expected to have grown steadily by 0.3% and 3.7% on a monthly as well as annual basis.

Technical Analysis: USD/INR attracts bids near 20-day EMA

The USD/INR pair jumps to near 88.80 at open on Thursday. The pair snaps a four-day losing streak after attracting bids below the 20-day Exponential Moving Average (EMA), which trades around 88.70.

The 14-day Relative Strength Index (RSI) rebounds towards 60.00. A decisive break by the RSI above that level would trigger a bullish momentum.

Looking down, the August 21 low of 87.07 will act as key support for the pair. On the upside, the all-time high of 89.12 will be a key barrier.

Bank of Japan (BoJ) board member Junko Koeda said on Thursday that overseas uncertainty remains, so the officials want to scrutinize how this would affect domestic firms' wage-setting behavior.

Key quotes

Must scrutinise underlying economic and price developments in making decisions, on whether the BoJ should swiftly proceed with policy normalisation.

Overseas uncertainty remains, so want to scrutinise how this would affect domestic firms' wage setting behaviour.

Want to closely watch how FX volatility could affect prices.

Must proceed with monetary policy normalisation with appropriate pace.

No comment on specific long term rate level.

Market reaction  

As of writing, the USD/JPY pair is up 0.38% on the day at 157.55.

• The Australian Dollar remains stronger after PBoC left its Loan Prime Rates unchanged in November.
• RBA Assistant Governor Sarah Hunter said that “sustained above-trend growth could fuel inflationary pressures.”
• The US Dollar gains ground ahead of the September Nonfarm Payrolls release.

The Australian Dollar (AUD) holds ground against the US Dollar (USD) on Thursday following the People’s Bank of China (PBoC) interest rate decision. China's central bank decided to leave its Loan Prime Rates (LPRs) unchanged in November. The one-year and five-year LPRs were at 3.00% and 3.50%, respectively. As China and Australia are close trading partners, China’s policy rates can affect the AUD.

RBA Assistant Governor Sarah Hunter said on Thursday that “sustained above-trend growth could fuel inflationary pressures.” Hunter noted that monthly inflation data can be volatile and that the central bank won’t react to a single month of figures. She added that the RBA is closely assessing labor-market conditions to gauge supply capacity and is examining how the effects of monetary policy may be changing over time.

The AUD finds support as expectations grow for a cautious stance from the Reserve Bank of Australia (RBA). Minutes from the RBA’s November meeting indicated the central bank may keep rates unchanged for an extended period if economic data continues to outperform. Steady Q3 wage growth, last week’s strong jobs figures, and persistently high inflation have all strengthened the view that the easing cycle has likely ended.

ASX 30-Day Interbank Cash Rate Futures show that as of November 18, the December 2025 contract traded at 96.41, implying an 8% probability of a rate cut to 3.35% from 3.60% at the upcoming RBA Board meeting.

US Dollar surges due to declining Fed rate cut bets

• The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is remaining stronger and trading around 100.20 at the time of writing. Traders await the release of the US September Nonfarm Payrolls (NFP) later on Thursday, to gain fresh impetus on Fed policy outlook.
• The Greenback gained more than 0.5% in the previous session as markets scaled back expectations for another Federal Reserve (Fed) rate cut in December following latest Federal Open Market Committee (FOMC) Meeting Minutes.
• FOMC Minutes for October 28-29 meeting indicated that Fed officials are divided and cautious about the path forward for interest rates. Most participants indicated further rate cuts would likely be appropriate over time, but several indicated they did not necessarily view a reduction in December as appropriate.
• The CME FedWatch Tool suggests that financial markets are now pricing in a 33% chance that the Fed will cut its benchmark overnight borrowing rate by 25 basis points (bps) at its December meeting, down from 63% probability that markets priced a week ago.
• Richmond Fed President Thomas Barkin said on Tuesday that the labor market appears more balanced, with firms reporting improved worker availability and recent layoffs signalling the need for caution. Barkin noted inflation doesn’t seem to be rising, but it’s also unclear whether it will return to the Fed’s 2% target. He highlighted that, without more decisive data, it remains difficult to reach a broad policy consensus.
• US President Donald Trump said in an Oval Office interview on Tuesday that he “would love” to remove Fed Chair Jerome Powell immediately. Trump added that he already has a preferred candidate in mind for the position, noting that there are “some surprising names” under consideration, though the administration may ultimately choose a more traditional option.
• Federal Reserve Vice Chair Philip Jefferson noted Monday that risks to the labor market now outweigh upside risks to inflation, while stressing that the Fed should proceed “slowly” with any additional rate reductions.
• US Department of Labor's (DOL) released data on Tuesday showed that there were 232,000 Initial Jobless Claims in the week ended October 18. Continuing Claims came in at 1.957 million, up slightly from 1.926 million in the prior week. For initial claims, weekly data for the previous three weeks weren’t made available. Meanwhile, an Automatic Data Processing (ADP) report showed that employers cut 2,500 jobs a week on average during the four weeks ending November 1.
• National Economic Council Director Kevin Hassett cautioned that some October data may “never materialize,” as several agencies were unable to gather information during the shutdown. Initial private-sector reports suggest a cooling labor market and wavering consumer confidence, with persistent concerns about inflation.
• Australia’s seasonally adjusted Wage Price Index rose 0.8% quarter-on-quarter in Q3, unchanged from the previous period and in line with forecasts. Annually, wages increased 3.4%, also matching both the previous quarter’s pace and market expectations.
• The Reserve Bank of Australia published the Minutes of its November monetary policy meeting on Tuesday, indicating that board members signalled a more balanced policy stance, adding that it could keep the cash rate unchanged for longer if incoming data proves stronger than expected.

Australian Dollar trades near 0.6500 after rebounding from lower rectangle boundary

The AUD/USD pair is trading around 0.6480 on Thursday. The daily chart analysis indicates that the pair is moving sideways within a rectangular range, signalling a period of price consolidation. Meanwhile, the price remains below the nine-day Exponential Moving Average (EMA), highlighting that the short-term price momentum is weaker.

On the downside, the AUD/USD pair finds immediate support at the lower boundary of the rectangle around 0.6470, followed by the five-month low of 0.6414, which was recorded on August 21.

The initial barrier lies at the psychological level of 0.6500, followed by the nine-day EMA of 0.6503. A break above this confluence resistance zone would improve the short-term price momentum and lead the pair to reach the rectangle’s upper boundary near 0.6630.

• GBP/JPY hit a 16-month high of 205.52 as traders expect PM Takaichi to announce a stimulus package.
• Reuters poll suggests most economists expect the BoJ to lift rates to 0.75% at the December meeting.
• The Pound Sterling could struggle as cooling price pressures strengthened BoE rate cut bets in December.

GBP/JPY extends its winning streak for the fourth consecutive session, reaching 205.52, the highest since July 2024, during the Asian hours on Thursday. The currency cross gains ground as the Japanese Yen (JPY) declines on the potential for Japan’s Prime Minister Sanae Takaichi to unveil a stimulus package exceeding JPY 20 trillion.

Members of the ruling Liberal Democratic Party (LDP) also proposed a supplementary budget exceeding JPY 25 trillion to support the plan, well above last year’s JPY 13.9 trillion extra budget. The massive spending plan raised market caution amid concerns about Japan’s fiscal health.

However, the upside of the GBP/JPY cross could be restrained as the JPY may receive support on the Reuters poll, indicating the Bank of Japan (BoJ) appears poised to raise interest rates to 0.75% from 0.50% at its December 18–19 meeting. Forecasts remain closely balanced, 53% of respondents anticipate a December hike, and all economists who offered a longer-term view expect rates to reach at least 0.75% by the end of Q1 2026.

BoJ board member Junko Koeda said in a speech Thursday that supply–demand indicators show the output gap near 0% and that labour markets remain tight amid a growing labour shortage. Koeda stated that “in this situation, I believe the bank must continue to raise the policy interest rate and adjust the degree of monetary accommodation in accordance with improvement in economic activity and prices.” She emphasized that ongoing economic and price trends warrant further policy adjustment.

Additionally, the GBP/JPY cross may edge lower as the Pound Sterling (GBP) could face challenges amid signs of cooling price pressures, which have strengthened expectations for a Bank of England (BoE) rate cut in December. After the UK CPI release, traders raised the probability of a December BoE cut to 85% from 80% before the data.

• The Japanese Yen continues to be undermined by fiscal concerns and BoJ rate hike uncertainty.
• Less dovish Fed expectations remain supportive of the USD uptrend and also support USD/JPY.
• Verbal intervention from Japanese authorities does little to provide any respite to the JPY bulls.

The Japanese Yen (JPY) remains on the back foot against a broadly firmer US Dollar (USD) and touches a fresh low since mid-February during the Asian session on Thursday. Concerns about Japan's ailing fiscal position on the back of Prime Minister Sanae Takaichi's new economic stimulus package continue to weigh on the JPY. Furthermore, data released earlier this week showed that Japan's economy contracted in Q3 for the first time in six quarters, which could put additional pressure on the Bank of Japan (BoJ) to delay raising interest rates and contribute to the JPY's underperformance.

Apart from this, the prevalent risk-on mood is seen as another factor undermining the JPY's safe-haven status. The USD, on the other hand, climbs to its highest level since late May and remains well supported by reduced bets for another interest rate cut by the US Federal Reserve (Fed) in December, which, in turn, lends additional support to the USD/JPY pair. Meanwhile, some verbal intervention from Japanese authorities fails to provide any respite to the JPY. This backs the case for a further JPY slide as traders look to the delayed US Nonfarm Payrolls (NFP) report for a fresh impetus.

Japanese Yen bears retain control amid Takaichi's expansionary fiscal policies and preference for lower interest rates

• Japan's Chief Cabinet Secretary Minoru Kihara said in a statement this Thursday that the recent FX moves are sharp, one-sided and that he is watching FX market move with a high sense of urgency. FX market needs to move stably reflecting fundamentals, Kihara added further.
• This comes after Japan's Finance Minister Satsuki Katayama issued a fresh warning on Wednesday and said that the government was closely monitoring markets with a high sense of urgency. This fuels intervention fears, though it does little to ease the Japanese Yen selling bias.
• Japan's yield curve has steepened sharply as investors priced in a bigger-than-anticipated spending package from the new Prime Minister Sanae Takaichi. Goushi Kataoka – member of a key government panel – said earlier this week that Japan must compile a stimulus of around ¥23 trillion.
• Kataoka added on Wednesday that the Bank of Japan is unlikely to raise interest rates before March, arguing policymakers must first confirm that a major fiscal package is lifting domestic demand. This signals the Takaichi administration's preference for interest rates to stay low.
• Government data released on Monday showed that Japan's economy contracted for the first time in six quarters during the July-September period. This further tempers expectations that the BoJ will hike rates soon and backs the case for a further depreciating move for the JPY.
• A Reuters poll shows a narrow majority of economists expect the BoJ to raise rates to 0.75% in December, with all forecasters seeing at least that level by end-Q1. JPY weakness and imported inflation risks are reinforcing the case as wage growth is expected to remain high.
• The US Dollar moves back closer to its highest level since May, touched earlier this month amid less dovish Federal Reserve expectations. In fact, chances of another rate cut in December fell after the October FOMC meeting minutes showed that members were divided about how to proceed.
• Traders now look forward to the delayed release of the US Nonfarm Payrolls (NFP) report for more cues about the Fed's rate-cut path. This, in turn, will play a key role in influencing the USD and providing some impetus to the USD/JPY pair later during the North American session.

USD/JPY bulls now ready to give up as fresh breakout through the 157.00 mark comes into play

The daily Relative Strength Index (RSI) is flashing slightly overbought conditions and holding back traders from placing fresh bullish bets around the USD/JPY pair. Hence, it will be prudent to wait for some near-term consolidation or a modest pullback before positioning for any further appreciating move.

Any corrective slide, however, might now find decent support near the 156.65-156.60 region, below which the USD/JPY pair could extend the fall towards the 156.00 mark. The latter should act as a pivotal point, and a sustained weakness below might prompt some technical selling, which should pave the way for deeper losses.

On the flip side, the 157.40-157.45 region could act as an immediate hurdle, above which the USD/JPY pair could accelerate the momentum towards reclaiming the 158.00 round figure. The next relevant resistance is pegged near mid-158.00s before spot prices aim to test the January swing high, around the 159.00 neighborhood.

• EUR/USD falls further to near 1.1500 as the US Dollar strengthens amid receding Fed dovish speculation.
• Many FOMC policymakers believe that further interest rate cuts could boost inflation expectations.
• Investors await US NFP data for September, and Eurozone/US flash private PMI data for November.

The EUR/USD pair extends its losing streak for the fifth trading day on Thursday. The major currency pair slides to near an almost two-week low around 1.1500 during the European trading session. The weakness in the pair is mainly contributed by the strength in the US Dollar (USD), which outperforms its peers amid receding expectations of an interest rate cut by the Federal Reserve (Fed) in its upcoming monetary policy meeting in December.

During the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades firmly near an over five-month high of around 100.30.

According to the CME FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points (bps) to 3.50%-3.75% in the December meeting has diminished to 32.8% from 50.1% seen on Tuesday.

Traders pare Fed dovish bets after the release of the Federal Open Market Committee (FOMC) minutes of the October policy meeting on Wednesday, which showed that many policymakers supported holding interest rates steady in the December meeting, citing that further monetary policy easing could entrench consumer inflation expectations.

For more cues on the monetary policy outlook, investors await the United States (US) Nonfarm Payrolls (NFP) data for September, which will be published at 13:30 GMT. The US NFP data will significantly influence expectations for the Fed’s interest rate outlook as many officials have been warning of downside labour market risks.

Meanwhile, the Euro (EUR) is under pressure as receding Fed dovish expectations have weakened the risk appetite of investors.

Going forward, the Euro will be influenced by the preliminary HCOB Purchasing Managers’ Index (PMI) data for November, which will be released on Friday.

• GBP/USD posts modest gains around 1.3060 in Thursday’s early European session. 
• Markets consider a BoE December rate cut to be likely, with some pricing in a high probability.
• Traders await the upcoming NFP report to provide clues about the potential for an interest-rate cut next month.

The GBP/USD pair trades with mild gains near 1.3060, snapping the four-day losing streak, during the early European session on Thursday. Markets might turn cautious later in the day ahead of the release of the delayed US September Nonfarm Payrolls (NFP) report.  

The UK Consumer Price Index (CPI) inflation fell to 3.6% YoY in October from 3.8% in September, the National Statistics showed on Wednesday. This figure came in line with the market consensus. The inflation data cemented expectations that the Bank of England (BoE) could cut interest rates in December, which could undermine the Cable in the near term. The upcoming government budget on November 26 is also expected to influence the BoE's next move.

The attention will shift to the US labor market data, which is due later on Thursday. The data release was delayed by a 43-day government shutdown that ended last week. The shutdown has complicated the Federal Reserve’s (Fed) assessment of the labor market. 

Economists expect the report to show that the US added about 50,000 new jobs in September. The Average Hourly Earnings is projected to increase by 0.3% MoM in September, while the Unemployment Rate is estimated to stay at 4.3%. If the report shows a weaker-than-expected outcome, this could drag the USD lower and create a tailwind for the major pair. 

The Federal Open Market Committee (FOMC) released its minutes from the October meeting on Wednesday, indicating "strongly differing views" about the appropriate policy decision for the December meeting. The majority of officials supported further rate cuts in general, many participants indicated it might be appropriate to keep interest rates steady for the remainder of the year.