Forex News

Copper started the week at a new record high of almost $11,800 per ton, up 33% on the start of the year. China impressed with good export figures: exports were almost 6% higher than last year, giving China its third-largest monthly trade surplus ever. In addition, new statements from the Politburo fuelled hopes of supportive economic measures in China, the most important sales market, Commerzbank's commodity analyst Barbara Lambrecht notes.

China’s export strength boosts commodity optimism

"The Copper-specific figures offered little support: on the one hand, Copper ore imports recovered somewhat after weak October figures. They were almost 13% higher than in the previous year and almost 8% higher in the first eleven months than in the same period of the previous year."

"It must be acknowledged, however, that China's refined Copper production in the period up to October was 12.5% higher than in the same period last year, growing even more strongly than imports of Copper ores, which in turn explains the shortage of raw materials at smelters. On the other hand, imports of Copper and Copper products were disappointing: imports slipped below 430 thousand tons in November, reaching their lowest level since February."

"In the first eleven months, they were 4.5% below the previous year. The weak imports dampen optimism somewhat, as China is the world's largest importer of refined Copper, despite a significant increase in production in recent years: according to the Australian Department of Industry, Science and Resources, the country accounted for 42% of global imports in 2024"

The Japanese Yen (JPY) is slightly weaker against the US Dollar (USD), underperforming its G10 peers as markets await PPI data. Technical indicators suggest USD/JPY may moderate from recent overbought levels, with 155 acting as key near-term support, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

USD/JPY eases from overbought technicals

"The JPY is soft, down a fractional 0.1% vs. the USD while underperforming all of the G10 currencies in overall quiet trade. Fundamental releases have been limited and near-term risk lies with the release of PPI data at 6:50pm ET."

"Yield spreads are steady at their recent (JPY-supportive) lows and risk reversals also appear to have flattened out at levels that are pricing a remarkably small premium for protection against JPY strength."

"USD/JPY technicals have softened from bullish, overbought levels and are suggestive of a moderation toward more neutral readings. We continue to highlight the importance of the 155 level for near-term support."

According to a report by the Bank for International Settlements (BIS), the rise in Gold prices since the beginning of September has been amplified by speculative purchases by retail investors, thereby decoupling Gold from typical patterns of behavior such as that of a safe haven. Instead, the rise in the price of Gold has been in line with risky asset classes such as equities, Commerzbank's commodity analyst Carsten Fritsch notes.

Gold rally driven by institutional and retail buying

"Initially, institutional investors bought Gold because of what perceived as excessively high stock market valuations. Retail investors then jumped on the bandwagon, turning Gold itself into a speculative investment. The BIS refers to the strong buying interest in Gold ETFs. According to the BIS report, Gold and equities have shown 'explosive behavior' in recent quarters simultaneously, which has not occurred in the last 50 years."

"The report therefore warns of a sharp and rapid correction and draws a comparison with 1980. However, we see significant differences here. At that time, the decline in the price of Gold was triggered by a massive increase in US key interest rates, which is not expected this time around. Rather, the Fed is likely to lower interest rates further tomorrow and in the coming year."

"It is also noteworthy that CFTC data on market positioning does not indicate any significant speculative influence on the rise in Gold prices to record levels in October. According to this data, speculative net long positions at the end of October were even lower than at the beginning of September. We therefore consider the risk of a sharp price correction to be low. Due to the US government shutdown in October, no more recent data on market positioning is available yet."

The Pound Sterling (GBP) remains steady in the lower/mid-1.33s, with sentiment-driven consolidation following the post-budget rally, while traders await Friday’s UK trade and industrial production data and weigh the BoE’s policy outlook for 2026, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Limited fundamental risk ahead of BoE data

"The pound is steady, extending its tight consolidation in the lower/ mid-1.33s. The GBP appears to be lacking a fresh catalyst in the aftermath of the post-budget relief rally, with a move that appears to have been completely driven by sentiment (as reflected by a 0.9 reading on the rolling 21 day correlation between the GBP and its 3M risk reversal)."

"Fundamental risk events are limited ahead of Friday’s trade and industrial production releases, and comments from the BoE remain relatively dovish signaling no material change in the outlook for lower policy rates."

"Markets are fully pricing a 25bpt cut at the next BoE meeting on December 18 however the outlook for 2026 appears less certain as policymakers assess the need for additional easing."

• EUR/GBP trades slightly firmer on Tuesday, as quiet market conditions keep the cross range-bound.
• Traders maintain a cautious stance with ECB and BoE meetings in focus.
• Technical structure stays constructive above the 100-day SMA at 0.8713, but the 0.8750-0.8755 resistance zone limits upside traction.

The Euro (EUR) holds steady against the British Pound (GBP) on Tuesday, with EUR/GBP oscillating within its familiar range as traders remain on the sidelines amid a lack of fresh catalysts, with attention gradually shifting toward next week’s monetary policy meetings from the European Central Bank (ECB) and the Bank of England (BoE).

At the time of writing, EUR/GBP is trading around 0.8738, edging modestly higher after hitting a daily low of 0.8720 earlier in the day.

From a technical perspective, the daily chart shows price action stabilising above the 100-day Simple Moving Average (SMA) near 0.8713, reinforcing a mild upward bias.

However, the 50-day SMA, which aligns with the former support zone now acting as resistance around 0.8750-0.8755, continues to cap immediate upside and keep the cross largely range-bound.

A decisive break above this barrier would help restore bullish momentum and pave the way for a move toward 0.8865, the year-to-date peak and the strongest level since April 2023.

On the downside, a daily close below the 100-day SMA would expose the next support at 0.8670, followed by the 0.8600 psychological handle.

Momentum indicators remain soft, with the Moving Average Convergence Divergence (MACD) holding below zero while its contracting negative histogram points to easing bearish pressure. The Relative Strength Index (RSI) is at 42, signalling subdued momentum in the near term.

Reuters and Bloomberg have meanwhile published their surveys on OPEC production in November. In both surveys, production by members bound by quotas declined, even though production could have increased by 85,000 barrels per day according to the agreement, Commerzbank's commodity analyst Carsten Fritsch notes.

Saudi Arabia holds production despite higher quota

"Some countries are unable to expand their production as they are already producing at maximum capacity, while others, such as Iraq, had to compensate for previous overproduction with compensatory cuts. It was also noteworthy that Saudi Arabia did not further increase production in November despite a higher production quota. The fact that Saudi Arabia has not fully utilized its production quota could indicate lower demand."

"This has already prompted Saudi Arabia to further reduce its official selling prices. According to the Reuters survey, production in countries subject to quotas was a good 400,000 barrels per day below the agreed level. The Bloomberg survey, on the other hand, shows that the agreed production volume was exceeded by a good 260,000 barrels per day."

"The biggest discrepancies between the two surveys are in Iraq and the United Arab Emirates, whose production is significantly higher according to Bloomberg than according to Reuters."

The Euro (EUR) is entering Tuesday’s NA session flat to the US Dollar (USD) as it extends its tight consolidation for a fourth consecutive session and trades within a remarkably narrow range in the mid-1.16s, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

German trade data mixed as weak imports weigh on demand

"Fundamental releases have been limited to mixed trade figures from Germany, where a stronger trade balance was flattered by unexpected weakness in imports (signaling weaker internal demand). Rate expectations are showing signs of stabilization following their recent upward adjustment, reflecting renewed hawkishness from key policymakers at the ECB."

"The shift in rate expectations has lifted yield spreads and pulled them to fresh highs at levels last (briefly) seen in September 2024. Measures of sentiment are confirming the moves in spot, and the EUR’s correlation to risk reversals is elevated."

"The RSI is steady in the upper 50s, reflecting bullish momentum as the EUR consolidates its recent break above the 50 day MA (1.1607) trend level. The local range has been broken – to the upside – but follow through has been lacking as we await a push to the lower 1.17 area. We see little meaningful resistance ahead of 1.18 and look to a near-term range bound between 1.16 and 1.17."

China boosted crude imports from Saudi Arabia and Iran in November, while Russian volumes declined amid weak demand and newly imposed U.S. sanctions. Independent refiners are turning to discounted Iranian crude after receiving fresh quotas, a shift that may deepen the pressure on Russian supply, Commerzbank's commodity analyst Carsten Fritsch notes.

Iranian Crude flows rise, Russian volumes slip

"According to Kpler, China's Crude Oil imports from Saudi Arabia rose to a five-month high of 1.59 million barrels per day, and those from Iran to a three-month high of 1.35 million barrels per day. In contrast, seaborne imports from Russia fell to 1.19 million barrels per day."

"This is attributed to lower procurement volumes by state-owned refineries, while import quotas on the part of independent refineries were virtually used up. This may therefore be an indication that the US sanctions against Russia's two largest Oil companies, which came into force two and a half weeks ago, are already having a first effect."

"China will publish official data on the origin of imports at the end of next week. According to a Reuters report citing trading sources and analysts, independent refineries have recently been buying Iranian Oil at steep discounts from onshore storage facilities after being granted new import quotas. By contrast, demand for Russian Oil is said to have remained weak."

The Canadian Dollar (CAD) has settled back into a narrow range after drifting a little lower overall yesterday. Market positioning was caught offside by the surprisingly strong Canadian jobs data Friday, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

USD/CAD faces resistance near 1.39

"The move in Canadian yields was perhaps somewhat exaggerated as a result and price action yesterday reflected something of a correction. Yields are likely to settle at a somewhat higher level, however, with the Bank clearly on the sidelines and swaps still pricing in a late 2026 tightening move (our call). We estimate spot fair value at 1.3835 this morning."

"President Trump’s threat to tariff Canadian fertilizer heavily, if necessary, yesterday whilst unveiling aid for US farmers hit by tariffs had no impact on the CAD and rings a bit hollow anyway. Fertilizer prices are already rising sharply, demand is expected to remain elevated and there is little scope for boosting domestic production of substitutes for imports in the near future."

"Spot losses may have achieved about all that the near-term technical pointers suggested was possible with yesterday’s test of the 1.38 area. Short-term price action reflects a bullish outside range signal developed on the intraday chart around yesterday’s intraday low, halting USD losses for now. The USD may gain a little more corrective altitude in the short run but we expect firm resistance at 1.3890/00 and more losses towards the low/mid 1.37s ahead. Broader price signals suggest a momentum reversal in the USD bull trend."