Forex News

The Australian labour market report for October, published this morning, contained some positive surprises, Commerzbank's FX analyst Michael Pfister notes.

Economy is cooling while inflation remains high

"Job creation was more than twice what was expected, with over 40,000 new jobs being created, which contributed to a stronger-than-expected decline in the unemployment rate. This offset the unpleasant surprise from the previous month, when the rate unexpectedly rose sharply. An interest rate cut in December is now highly unlikely, particularly given that inflation figures have also recently come in higher than expected."

"This is positive news for the Australian Dollar (AUD), which appreciated slightly against the US Dollar (USD) this morning. However, it should be noted that difficult months are still likely to follow. A positive labor market report should not distract from the fact that the economy is cooling while inflation remains high. This unfavorable combination will limit the Aussie's upside potential in the coming months."

• Gold attracts follow-through buyers on Thursday amid a supportive fundamental backdrop.
• Economic concerns and Fed rate cut bets undermine the USD, benefiting the precious metal.
• The optimism led by the reopening of the US government does little to cap the commodity.

Gold (XAU/USD) is seen prolonging its uptrend for the third straight day and scaling fresh three-week highs through the first half of the European session on Thursday. Investors seem convinced that the delayed US macro data will show some weakness in the economy amid a prolonged US government shutdown and prompt the US Federal Reserve (Fed) to lower borrowing costs further in December. This further acts as a tailwind for the non-yielding yellow metal.

Moreover, the prevalent US Dollar (USD) selling bias turns out to be another factor underpinning the Gold price. The XAU/USD bulls, meanwhile, seem rather unaffected by the optimism led by a positive development to reopen the US federal government, which remains supportive of a positive risk tone and tends to undermine the safe-haven commodity. This, along with acceptance above the $4,200 mark, suggests that the path of least resistance for the bullion is to the upside.

Daily Digest Market Movers: Gold bulls not ready to give up as dovish Fed bets continue to weigh on USD

• The US Senate passed the funding bill to end the longest-running government shutdown, which boosts investors' confidence and remains supportive of a generally positive risk tone. This, in turn, might hold back the XAU/USD bulls from placing fresh bets, especially after the recent strong rise to an over three-week high, touched on Wednesday.
• The reopening of the US government shifts market focus back to the deteriorating fiscal outlook and concerns about weakening economic momentum. Economists estimate that the prolonged government closure might have already shaved approximately 1.5 to 2.0% off quarterly GDP growth. This, in turn, keeps the US Dollar bulls on the defensive.
• Moreover, data from workforce analytics company Revelio Labs released last week showed that 9,100 jobs were lost in October and government payrolls fell by 22,200 positions last month. Furthermore, the Chicago Federal Reserve estimated that the unemployment rate edged up last month, pointing to signs of a deteriorating labor market.
• Adding to this, investors remain tilted towards a more dovish Fed and have been pricing in around a 60% chance of another 25-basis-point interest rate cut at the December FOMC policy meeting. This, in turn, is seen acting as a headwind for the Greenback and offering some support to the non-yielding Gold heading into the European session on Thursday.
• Atlanta Fed President Raphael Bostic said on Wednesday that real-time indicators signal the job market in a curious state of balance, and I do not view a severe labor market downturn as the most likely near-term outcome. I see little to suggest price pressures and moving policy lower risks feeding the inflation beast, Bostic added further.
• Traders will continue to scrutinize speeches from a slew of influential FOMC members for more cues about the Fed's future rate-cut path. The outlook, in turn, will play a key role in driving demand for the Greenback. Nevertheless, the fundamental backdrop suggests that the path of least resistance for the XAU/USD pair is to the upside.

Gold approaches $4,250-4,255 intermediate barrier; bullish potential seems intact

From a technical perspective, the XAU/USD pair now seems to have found acceptance above the 61.8% Fibonacci retracement level of the recent corrective decline from the all-time peak, touched in October, and the $4,200 round figure. This, along with positive oscillators on daily/4-hour charts, validates the constructive outlook for the Gold price. Hence, a subsequent strength towards the $4,250-$4,255 region, en route to the $4,285 zone and the $4,300 mark, looks like a distinct possibility.

On the flip side, any meaningful slide below the Asian session low, around the $4,180 region, might now be seen as a buying opportunity. This, in turn, should help limit the downside for the Gold price near the $4,100-$4,095 zone. The latter should act as a key pivotal point, which, if broken, might prompt some technical selling and drag the commodity to the $4,075 region, or the 38.2% Fibo. retracement level, en route to the $4,025 area. Some follow-through selling, leading to a further fall below the $4,000 psychological mark, might shift the near-term bias in favor of bearish traders and pave the way for deeper losses.

Near-term, EUR/USD continues to test 1.160, though we see a sustained move higher as premature without softer US data, with range-bound trading likely to persist, ING's FX analyst Francesco Pesole notes.

More range-bound trading in the near-term

"We ran the following survey for our audience: where do you see EUR/USD ending 2026? 40% of the 105 respondents chose 1.20-1.25, which is in line with our call (1.22), 36% selected a stable 1.15-1.20 range and 18% expected depreciation to 1.10-1.15."

"Only 2% and 4%, respectively, selected appreciation beyond 1.25 or depreciation below 1.10. These figures are broadly in line with consensus, which sees EUR/USD at 1.21 at the end of 2026, whilst also confirming that general expectations are for capped volatility in EUR/USD next year."

"Back to current matters, EUR/USD has been attempting a break above 1.160, and while we are bullish on the pair into year-end, we admit a decisive move higher may be a bit premature. Undervaluation has been trimmed to 0.5% in our short-term fair value model estimates, and the dollar is expensive to sell from a carry perspective. In our view, some soft US data is needed before 1.170 becomes a realistic short-term target for EUR/USD. For now, we expect more range-bound trading."

Aluminium continues to rally this week on the LME with prices trading above $2,900/t this morning. Aluminium has gained more than 13% this year. It is the third-strongest performer on the LME after Copper and tin this year, ING's commodity experts Ewa Manthey and Warren Patterson note.

Copper-Aluminium price ratio is nearing record levels

"The metal is supported by tightening supply expectations in China and a broader risk-on tone following the easing of US-China tensions. The recent trade truce between the two economies has reduced a key downside risk to our outlook for industrial metals."

"On the supply side, China’s Aluminium output is close to its self-imposed 45 million tonne capacity cap. China’s Aluminium capacity cap was introduced in 2017 to curb oversupply and reduce emissions. The global Aluminium market looks largely balanced for next year, assuming the cap holds. This is also weighing on exports, keeping markets ex-China tight."

"Outside of China, there have been few recent European or US restart announcements, largely due to difficulties in securing long-term power contracts at competitive prices. However, Indonesian exports are rising fast and may pressure prices next year. Aluminium prices have also drawn support from the broader rally in Copper, with Copper recently hitting a record high. The Copper-Aluminium price ratio is nearing record levels, signalling further potential for substitution from Copper to Aluminium."

US Dollar (USD) traded mixed overnight with softness seen vs. major FX while USD traded modestly firmer vs. most Asian FX including Japanese Yen (JPY). Dollar Index (DXY) was last at 99.32 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Two-way trades likely to persist

"The senate-approved funding measure has garnered enough votes (222-209) to pass in the House and was sent to Trump, which he has just signed. This brings an end to the longest US government shutdown on record. White House has also confirmed that October jobs and CPI data may never be released, ending earlier speculation about jobs data coming as soon as in days."

"Mild bullish momentum on daily chart faded but RSI rose. 2-way trades likely to persist. Resistance at 100 levels (200 DMA), 100.6 (76.4% fibo). Support at 99.10/30 levels (21DMA, 50% fibo retracement of May high to Sep low), and 98.30/50 levels (50, 100 DMAs, 38.2% fibo)."

NYMEX WTI continues to edge lower in the early trading session today after falling by more than 4% to settle around $58.5/bbl yesterday. The decline was largely driven by OPEC’s revised surplus expectations for the global Oil market, along with a bearish inventory report from the API. Meanwhile, West Texas Intermediate’s prompt time-spread flipped to contango for the first time since February, a fresh sign of rising oversupply from both outside and within the OPEC+ alliance, ING's commodity experts Ewa Manthey and Warren Patterson note.

OPEC global Oil demand growth forecasts are unchanged

"In its monthly Oil market report, OPEC left its global Oil demand growth forecasts largely unchanged at 1.3m b/d and 1.4m b/d for this year and 2026 respectively. Supply projections from producers outside the wider OPEC+ alliance are expected to rise by 920k b/d this year and 630k b/d in 2026, largely driven by higher output from the US, Canada, Brazil and Argentina. However, OPEC modified its expectations for the global Oil market balance and now expects a small supply surplus in 2026, following OPEC+ production increases and higher supply from other producers."

"Meanwhile, the release also shows that OPEC increased supply by just 33k b/d month on month to 28.5m b/d in October. However, this was 450k b/d less than the initial increase plan set by production quotas. The monthly output addition by Saudi Arabia, Kuwait, Iraq and Nigeria was partially offset by supply losses from Iran and Libya. The International Energy Agency (IEA) will release its monthly Oil market report later today. API’s numbers show that US crude Oil inventories increased by 1.3m barrels over the last week, while crude stocks in Cushing fell slightly by 43k barrels."

"The Energy Information Administration (EIA) released its latest Short Term Energy Outlook yesterday, raising its US crude Oil production growth estimates for both this year and next. The EIA now expects US crude Oil production to average around 13.59m b/d in 2025, compared to a previous estimate of around 13.53m b/d. For 2026, the EIA expects US Oil supply to average around 13.58m b/d, compared to its previous forecast of 13.51m b/d. On the other hand, the EIA estimates US petroleum consumption to remain flat at around 20.5m b/d this year and in 2026."

After a record 6-week (43-days) government shutdown, on Wed (12 Nov), the US House of Representatives voted 222 to 209 to pass the interim funding bill to reopen the US government, which President Trump signed into law on the same day. The bill drew opposition from most Democrat House policymakers because it did not include their core demand that started the shutdown fight: the renewal of expiring subsidies for the Affordable Care Act (Obamacare) health insurance premiums, UOB Group's Senior Economist Alvin Liew reports.

A record shutdown comes to an end for now

"US Government Shutdown Ends Temporarily: After a record 6-week (43-days) shutdown, the US government reopened with an interim funding bill passed by the House (222–209) and signed by President Trump on 12 Nov. The bill excludes Democrats’ key demand to renew Affordable Care Act subsidies, setting up another potential shutdown after 30 Jan 2026."

"Recovery will not be immediate — delays expected in food aid, payroll processing, environmental permits, and air travel normalization. Key economic data releases (jobs, CPI, GDP) remain uncertain, with October reports possibly never published, leaving policymakers with limited visibility."

"Growth Outlook & Risks: CBO estimated a 1.5ppt hit to 4Q GDP, offset by a 2.2ppt rebound in 1Q 2026. We have revised our US GDP growth projections with 2025 GDP growth lowered to 1.5% (from 1.7%), 2026 raised to 1.7% (from 1.5%). Risk of another prolonged shutdown after 30 Jan could disrupt sectors like aviation and impair next year’s recovery."

• EUR/JPY reached a record high of 179.82 on Thursday after breaking above the upper ascending wedge resistance.
• The 14-day Relative Strength Index holds slightly below the 70 level, strengthening the bullish bias.
• The immediate support lies at the psychological level of 179.00 within the ascending wedge.

EUR/JPY extends its winning streak for the fifth successive session, trading near a fresh all-time high of 179.82 during the European hours on Thursday. The currency cross breaks above the upper resistance of an ascending wedge pattern, signalling strong buying pressure and a bullish breakout.

The 14-day Relative Strength Index (RSI) is positioned slightly below the 70 mark, reinforcing the bullish bias. However, a move above 70 would indicate overbought conditions and raise the likelihood of a near-term downward correction. The EUR/JPY cross suggests a stronger short-term momentum, rising above the nine-day Exponential Moving Average (EMA).

On the upside, the EUR/JPY cross may reach fresh record highs near the psychological level of 180.00, followed by another crucial level of 182.00 amid persisting bullish bias.

The pullback toward the ascending wedge would revive the bearish pattern and prompt the EUR/JPY cross to test the psychological level of 179.00, followed by the nine-day EMA at 178.30. Further declines below the latter would dampen the short-term price momentum and prompt the currency cross to test the descending boundary of the ascending wedge around 176.70, followed by the 50-day EMA at 175.83.