Forex News

The Euro (USD) trades flat near the midpoint of its intraday range, supported by stronger-than-expected German and French industrial data. Technical indicators point to bullish momentum, hinting at a possible advance toward 1.18 and beyond, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

German factory orders lift Euro briefly

"The EUR is trading virtually flat on the session and just below the midpoint of the intraday range so far. The EUR caught a mild bid earlier in Europe on the back of stronger than expected German Factory Orders and French IP data but gains stalled in the upper 1.16s. Eurozone GDP was also revised marginally higher to 0.3% Q/Q in Q3."

"The EUR retains a firm technical undertone but gains are failing to make any advance beyond the recent peaks in the upper 1.16s. Strengthening bull momentum on the short-term oscillators suggests a push higher, and perhaps an advance towards 1.18+, remains possible."

The US Dollar (USD) is adding marginally to net losses on the week into Friday trade but the broader tone of price action is perhaps tending towards consolidation in DXY losses, with the index edging back to the 99 area, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Markets eye Fed ahead of expected rate cut

"News and developments in overnight trade are limited, however, and overall movement in FX reflects this. Markets are perhaps starting to consolidate ahead of the Fed. Even though Fed policymakers won’t have the delayed NFP data at hand when they sit down to deliberate on rates at Wednesday’s FOMC, this week’s private sector data for Nov confirm the continued slowdown in the US labour market."

"Yesterday’s ADP reported a 32k fall in private non-farm payrolls while the Revelio PLS series came in with a 9k drop in hiring. The data may not tally closely with official NFP data on a month-by-month basis but the trend is clear and should help deliver the now widely expected 25bps cut. More uncertainty revolves around the policy outlook heading into 2026. This morning’s delayed September Personal Income/Spending and PCE data are expected to show a moderate rise in spending and income. Core PCE is expected to edge slightly lower to 2.8%."

"Preliminary U. Michigan Sentiment data is forecast to improve marginally (to 52) but remain close to record low levels. While daily price action suggests a pause in the DXY losses, the dollar has not done enough to reverse negative technical drivers and a second weekly decline in the index keeps the broader focus on the downside (we target the mid97 range still). Seasonal trends are broadly dollar negative in December."

• The Unemployment Rate in Canada eased to 6.5% last month.
• USD/CAD deflates to fresh lows near 1.3900, flirting with its 200-day SMA.

Statistics Canada reported on Friday that the unemployment rate edged lower to 6.5% in November, much lower than what markets were expecting.

Employment unexpectedly increased by 53.6K jobs, adding to the big 66.6K jump registered in October. In addition, the participation rate nudged down from 65.3% to 65.1%, and wages are still growing at a 4.0% annual pace, unchanged from the month before.

Market reaction

The Canadian Dollar (CAD) maintains its positive bias following the publication of the jobs report on Friday, dragging USD/CAD to the 1.3900 region, levels last visited in late September.

This section below was published as a preview of the Canadian labour market report at 07:00 GMT.

• The Canadian Unemployment Rate is seen edging higher in November.
• Extra cooling of the labour market could reinforce additional rate cuts.
• The Canadian Dollar maintains its recovery in place so far this week.

Statistics Canada will release its Labour Force Survey on Friday, and markets are bracing for a weak print. The Unemployment Rate is expected to tick higher to 7% in November, while the Employment Change is forecast to come in flat after a nice gain in October.

A weaker report could strengthen the case for the Bank of Canada (BoC) to continue its easing cycle next week after cutting its policy rate by 25 basis points to 2.25% at its October 29 gathering, following the September rate reduction.

The Bank of Canada cut its benchmark rate by 25 basis points to 2.25% in late October; no surprises there. In addition, policymakers said they think rates are now roughly where they need to be to keep inflation near target while still giving the economy a bit of support as it works through the fallout from the US-driven trade war.

Markets do not expect the central bank to lower interest rates next week, while implied rates suggest a marginal tightening by the end of 2026.

What can we expect from the next Canadian Unemployment Rate print?

Consensus among market participants projects a slight rise in Canada’s Unemployment Rate to 7% last month, up from October’s 6.9%. Additionally, investors forecast the economy will add no jobs in November, reversing October’s 66.6K increase. It is worth recalling that Average Hourly Wages rose at an annualised 4% in October, pointing to sticky wage inflation.

According to analysts at TD Securities: “The November jobs report will provide the main risk for events this week, with TD and the market looking for the labour market to give back some recent strength as the unemployment rate edges higher to 7.0%.”

When is the Canada Unemployment Rate released, and how could it affect USD/CAD?

All eyes in Canada will be on Friday’s GDP release, due at 13:30 GMT. A stronger print could give the Canadian Dollar (CAD) a quick lift, but don’t expect fireworks.

USD/CAD has been on a steady decline almost entirely to the tune of the US Dollar (USD) lately, and that story is still all about the timing of further easing by the Federal Reserve (Fed).

Pablo Piovano, Senior Analyst at FXStreet, points out that the CAD has clawed back a bit of ground since its lows late in the previous month, nudging USD/CAD back below the key 1.4000 support. He also notes that the technical setup still leans toward further losses if spot manages to clear its key 200-day SMA at 1.3913.

From here, Piovano says a return of bullish momentum could send USD/CAD up to test the November high at 1.4140 (November 5), and if that breaks, the next target would be the April peak at 1.4414 (April 1).

On the flip side, he highlights initial support at the December floor of 1.3925 (December 4), followed by that key 200-day SMA. A clean break lower would put the October base at 1.3887 (October 29) on the radar, ahead of the September trough at 1.3726 (September 17) and the July valley at 1.3556 (July 3).

“Momentum favours extra declines,” he adds, noting that the Relative Strength Index (RSI) is hovering near 40 and the Average Directional Index (ADX) around 21 suggests the underlying trend appears to be gathering traction.

• EUR/JPY rebounds from early lows as the Yen fails to gain traction despite stronger BoJ hike expectations.
• Euro supported by Eurozone GDP and employment data showing steady improvement in Q3.
• Markets await key Japanese data on Monday, including labor earnings and the final third-quarter GDP estimate.

EUR/JPY recovers from early lows on Friday as the Japanese Yen struggles to benefit from growing expectations of a Bank of Japan (BoJ) rate hike. At the time of writing, the pair is hovering near 180.77, rebounding after slipping to an intraday low of 180.10, though price action remains largely confined within the familiar range established since mid-November.

The Euro also finds support from the latest Eurozone growth figures released by Eurostat. Gross Domestic Product (GDP) for the third quarter rose 0.3% QoQ, compared with a 0.2% forecast and a 0.2% reading for Q2. On an annual basis, GDP increased 1.4% YoY, in line with expectations.

The accompanying details pointed to a broad-based improvement with household consumption rising 0.2%, government spending up 0.7%, and investment increasing 0.9%, while exports rose 0.7% and imports advanced 1.3%.

Labour figures were also encouraging, with Eurozone employment rising 0.2% QoQ, above the 0.1% expected and the 0.1% recorded in Q2. On a yearly basis, employment grew 0.6%, consistent with forecasts.

On the Japanese side, the Yen struggles to capitalize on firmer expectations that the BoJ may lift rates at its December 18-19 meeting. Hawkish remarks from the BoJ Governor Kazuo Ueda earlier this week revived speculation of an imminent policy adjustment.

Bloomberg reported earlier in the day that Bank of Japan officials are ready to raise interest rates at this month’s meeting, according to people familiar with the matter, provided there is no major shock to the economy or financial markets. The report added that policymakers also plan to indicate they are prepared to continue increasing rates if the economic outlook evolves as expected, while remaining cautious about how far rates may ultimately rise.

Looking ahead, attention turns to a fresh round of Japanese data due on Monday, including labor earnings, the current account, and the final estimate of third-quarter GDP. These releases will help shape expectations for the BoJ’s policy path as the December meeting approaches.

• December’s preliminary Michigan Consumer Sentiment Index is forecast to have picked up to 52 from a three-year low of 51.0 in November
• A stalled labour market and higher price pressures are likely to weigh on consumers’ confidence.
• UoM Consumer Sentiment’s pick up is unlikely to provide significant support to an ailing US Dollar

The United States (US) will see the release of the preliminary estimate of December’s University of Michigan's (UoM) Consumer Sentiment Index on Friday. The report is expected to reflect a moderate improvement in consumers’ confidence, with the UoM Consumer Sentiment Index forecast to bounce to 52 after reaching a three-year low of 51 last month.

November’s data also revealed a sharp deterioration in consumers’ views about the current economic conditions, with the index dropping to 51.1 from 58.6 in October. The Economic Expectations Index, on the other hand, improved slightly to 51 from 50.3 in October.

The Consumer Sentiment Index is a monthly survey conducted by the UoM that compiles data on US consumers’ views on their personal finances, business conditions, and purchasing plans. The report is disclosed together with the UoM Consumer Expectations Index and the UoM Consumer Inflation Expectations.

Two weeks later, the University of Michigan will release the final Consumer Sentiment Index report.

Household consumption accounts for about two-thirds of the US Gross Domestic Product (GDP). In that sense, the UoM Consumer Sentiment Index is regarded as an accurate forward-looking indicator for US economic trends, and its release tends to have a significant impact on US Dollar (USD) crosses.

December’s release will be the first after a record-long US shutdown, and investors will be eager to see the impact of the government’s reopening, even though the market consensus does not show any relevant improvement.

A stalled labour market and higher prices are likely to remain the biggest concerns for US consumers, keeping the Michigan Consumer Sentiment near historic lows. The 52 expected level would be an improvement from the 51 seen in November, but it marks a nearly 30% decline from the 74 reading seen in December last year.

November’s official report pointed to the increasing prices and lower income as the main reasons for the deterioration in sentiment: “Consumers remain frustrated about the persistence of high prices and weakening incomes. This month, current personal finances and buying conditions for durables both plunged more than 10%, whereas expectations for the future improved modestly,” says the report.

Regarding prices, the moderating inflationary trends have not eased consumers’ frustration: “Despite these improvements in the future trajectory of inflation, consumers continue to report that their personal finances now are weighed down by the present state of high prices.”

When will the UoM Consumer Sentiment Index be released, and how could it affect US Dollar?

The University of Michigan will release its Consumer Sentiment Index, together with the Consumer Inflation Expectations survey, on Friday at 15:00 GMT. The market expects a slight improvement in consumer sentiment, although most likely insufficient to provide a significant impulse to an ailing US Dollar.

The Greenback has been the worst-performing G8 currency in November. Dovish comments from Federal Reserve (Fed) officials, coupled with a batch of weak macroeconomic indicators, namely Retail Sales and Manufacturing activity, have revived fears about the momentum of the US economy and prompted investors to ramp up bets of a Fed interest rate cut in December.

Beyond that, news that White House economic advisor Kevin Hassett is the best positioned to replace  Fed Chairman Jerome Powell at the end of his term in May, is fuelling hopes of further monetary policy easing in 2026. 

With the rest of the world’s major central banks at the end of their easing cycles, the monetary policy divergence with the US Federal Reserve is crushing the US Dollar.

According to Guillermo Alcala, FX Analyst at FXStreet, the US Dollar Index (DXY) has broken an important support area at 99.00: “The pair has confirmed a double top at the 100.35 area, after breaching the pattern’s neckline, near 99.00, which is holding bulls at the time of writing. Failure to return above that level would increase bearish pressure towards the October 28 low at 98.57 and the October 17 low near 98.00. The double top’s measured target is near the October 1 and 2 lows, around 97.50.”

To the upside, Alcalá sees resistances at 99.55 and in the 100.00 area: “Upside attempts are likely to be challenged at the November 30 and December 2 highs near 99.55 and the 100.00 psychological level, ahead of the five-month highs, in the area of 100.35 (November 5 and 21 highs).”

• The Euro pulls down from daily highs at 1.1675 against the US Dollar.
• Eurozone economy and employment creation accelerated in Q3.
• In the US, all eyes will be on September's PCE Price Index release.

EUR/USD has given away previous gains during Friday's European session and is practically flat in the daily chart, trading at 1.1647 at the time of writing. Downside attempts, however, remain contained as investors brace for a quarter-point interest rate cut by the Federal Reserve next week, while the focus now shifts to the US Personal Consumption Expenditures (PCE) Price Index report, due later on the day.

Data released earlier on Friday revealed that the Eurozone GDP grew at a 0.3% rate in Q3, above the 0.2% growth reported in the previous estimation and also above the 0.1% expansion seen in the previous quarter. The yearly GDP has been left unrevised, at 1.4%, down from the previous quarter's 1.5%.

Beyond that, Eurostat's data revealed that employment growth accelerated to 0.2% in the three months to September, from 0.1% in Q2, and beat expectations of a 0.1% growth. Year-on-year, Eurozone employment grew 0.6%, following a 0.5% increase in the previous quarter and market expectations of a steady 0.5% growth. The impact of these figures on the Euro has been marginal.

The focus now shifts to the US PCE Price Index, the last inflation gauge ahead of next week's Fed monetary policy meeting. PCE data is expected to confirm that inflation remains above the Fed's 2% target, although it is unlikely to alter the view that the Fed will ease monetary policy further next week.

Daily Digest Market Movers: US Dollar remains on the defensive amid Fed cutting hopes

• The US Dollar remains the worst performer of the G8 currencies this week. The downbeat ADP Employment Change report seen earlier this week has cemented hopes that the Fed will cut rates next week, while in Europe, manufacturing activity data beat expectations, providing additional support to the Euro.
• On Thursday, Eurozone Retail Sales disappointed with a 0% growth in October, undershooting market expectations of a 0.1% growth. September's data was revised up to a 0.1% rise from the previously estimated 0.1% decline. The Euro pulled back after the release to pick up shortly afterwards.
• US Initial Jobless Claims dropped to 191,000 in the last week of November, their lowest level in three years, from 218,00 in the previous week. The market took these figures with caution, as job seekers might have left their unemployment claims on hold during the Thanksgiving holidays.
• Futures markets are pricing in an 87% chance of a 25 basis points Fed interest rate cut at their December 10 meeting, and between two and three more cuts next year, according to the CME Group's Fedwatch Tool.
• News about the possibility of White House economic adviser Kevin Hassett replacing Jerome Powell as the next Fed chairman is also weighing on the US Dollar. The Financial Times has reported that Bond investors have complained to the US Treasury, concerned that Hassett might carry on an aggressive easing cycle.
• Later on the day, the US PCE Price Index is expected to confirm that inflation remains sticky, with the headline reading accelerating to a 2.8% year-on-year reading, from 2.7% in August, and the core reading growing at a steady 2.9% yearly pace.

Technical Analysis: EUR/USD bulls remain capped below 1.1680

EUR/USD maintains its immediate bullish trend intact, with downside attempts contained above trendline support, now at 1.1630, while the 1.1670-1.1680 area keeps holding bulls. The 4-hour Relative Strength Index (RSI) remains steady above the 50 level, currently at 61, although the Moving Average Convergence Divergence (MACD) indicator has pulled back below the zero level, indicating that the bullish trend is losing steam.

Bulls need to breach Thursday's high at 1.1682 to extend their rally towards the October 17 high, near 1.1730, ahead of the October 1 high, at 1.1778.

A bearish reaction below the mentioned 1.1630 level, on the contrary, might lure bears to retest the weekly lows near 1.1590. Further down, the November 26 and 28 lows in the 1.1550-1.1555 area emerge as the next targets.

Copper prices jumped to a new record of $11,540 per ton as fears mount over potential US import tariffs extending to refined Copper. Market concerns over supply shortages and surging delivery requests threaten further depletion of LME inventories, keeping upward pressure on prices, Commerzbank's Head of FX and Commodity Research Thu Lan Nguyen notes.

US import tariffs on Copper raise supply concerns

"At the beginning of the week, the Copper price made another significant upward leap, reaching a new record high of $11,540 per ton. This time, fears of a short-term supply shortage due to looming new US import tariffs on Copper were the driving force. Over the summer, the US administration surprised the market by initially exempting refined Copper from the 50% tariffs, applying them only to semi-finished Copper products and Copper derivatives."

"Consequently, the Copper price traded on the Comex collapsed, and LME warehouse stocks recovered starting mid-year, as large amounts of metal had been shipped to the US in anticipation of the tariffs. Now, however, there are growing concerns that the tariffs could be extended after all, potentially triggering another drain on LME inventory to Comex. These fears were recently heightened by a surge in requests for metal deliveries."

"Indeed, the US Secretary of Commerce originally proposed that tariffs on refined Copper should also be introduced gradually — but only starting in 2027. Is it possible that the US administration might expedite this process? Certainly. However, the initial aim may have been to allow the domestic Copper industry sufficient time to expand production capacity in order to meet domestic demand. According to USGS data, the current domestic supply coverage rate is only about 50%. Nevertheless, as long as these fears persist and lead to further inventory depletion at the LME, the risk of renewed Copper price surges remains high."