Forex News
- AUD/USD climbs to near two-month high as speculation grows that the RBA may keep policy restrictive for longer.
- Stronger household spending and improved trade data reinforce expectations that the RBA will hold rates steady next week.
- The US Dollar remains under pressure as traders position for a dovish Federal Reserve outlook.
The Australian Dollar extends gains against the US Dollar on Thursday as markets scale back expectations of additional rate cuts by the Reserve Bank of Australia (RBA). At the time of writing, AUD/USD is trading around 0.6622, its strongest level since October 7.
The shift in sentiment comes ahead of the RBA’s interest rate decision on December 9, with investors increasingly convinced that the central bank will maintain its wait-and-see stance. The RBA kept the cash rate unchanged at 3.60% in November and recent domestic indicators have done little to justify further easing.
In fact, Speculation is building that the Reserve Bank of Australia (RBA) may need to revisit the possibility of raising interest rates as inflation remains stubborn and domestic demand continues to show surprising resilience.
According to the Australian Bureau of Statistics, household spending rose 1.3% in October, the strongest monthly increase since January 2024 and a sharp acceleration from September’s 0.3% rise. Spending is now 5.6% higher than a year earlier.
Fresh trade figures released earlier in the day added support to the Aussie. Exports rose 3.4% MoM in October, while imports increased 2.0%, helping the trade surplus widen to AUD 4,385 million from AUD 3,707 million previously.
The Asian session also delivered a notable policy signal from Beijing after China set the yuan midpoint at its strongest level since October 14, 2024. For the Australian Dollar, often traded as a liquid proxy for China’s economic outlook, the move provided an additional tailwind, reinforcing the pair’s upward momentum.
A softer US Dollar is also helping lift AUD/USD, with the Greenback under pressure as markets maintain a dovish outlook for the Federal Reserve heading into next week’s policy meeting. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 98.83, hovering near a one-month low.
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
- GBP/USD rises as traders shrug off stronger jobless claims and continue pricing over 85% odds of Fed easing.
- US labor data remains mixed, with falling jobless claims but rising layoffs reinforcing the sentiment of cooling momentum.
- Sterling steadies after the Autumn Budget as economists say measures won’t impede BoE’s expected December cut.
The Pound Sterling (GBP) rises against the US Dollar (USD) during the North American session on Thursday, even though US jobs data suggests that the labor market remains solid, and the expectations that the Federal Reserve (Fed) will cut rates remain high. At the time of writing, the GBP/USD trades at 1.3367, up 0.12%, its highest level since the end of October.
Sterling edges higher as markets look past solid US jobs data and maintain expectations for a December Fed rate cut
Recently, US economic data revealed that the number of Americans filing for unemployment benefits dipped below economists' estimates for the week ending November 29. Initial Jobless Claims came at 191,000, below estimates of 220,000 and a decrease from last week's upwardly revised figures from 216,000 to 218,000.
Continuing Claims for the week ending November 22 were 1.939 million, down from the previous week’s 1.943 million.
Meanwhile, the Challenger Job report revealed that employers announced 71,321 job cuts in November, up 24% from last year’s figures, but down 53% from the print announced in October.
Consequently, market participants are still seeing an over 85% chance of a rate cut at the Federal Reserve’s December 9-10 meeting, following Wednesday's dismal ADP Employment Change data.
Cable rebounded as markets digested the Autumn Budget. Some economists cited by Reuters stated that the budget measures were unlikely to cause a jump in inflation, allowing the Bank of England (BoE) to resume its easing cycle.
The swaps market is pricing in a 90% chance of a rate cut when the central bank meets later this month.
GBP/USD Price Forecast: Technical outlook
GBP/USD resumed its uptrend with the exchange rate clearing the 100-day SMA at 1.3369, opening the door to challenge 1.3400. A daily close above the latter, and the Pound could extend its gains toward 1.3450 and the 1.3500 figure.
Conversely, a drop below the 100- and below the 200-day SMA at 1.3322 could expose the 1.3300 milestone. Once breached, the next support would be the 50-day SMA at 1.3266.
(This story was corrected on December 4 at 16:03 to say that the previous Continuing Jobless Claims figure was 1.943 million, not 1.96)
Pound Sterling Price This week
The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.61% | -1.03% | -0.88% | -0.27% | -1.09% | -0.74% | -0.35% | |
| EUR | 0.61% | -0.41% | -0.29% | 0.34% | -0.48% | -0.11% | 0.26% | |
| GBP | 1.03% | 0.41% | 0.39% | 0.75% | -0.07% | 0.28% | 0.68% | |
| JPY | 0.88% | 0.29% | -0.39% | 0.61% | -0.21% | 0.15% | 0.54% | |
| CAD | 0.27% | -0.34% | -0.75% | -0.61% | -0.86% | -0.46% | -0.07% | |
| AUD | 1.09% | 0.48% | 0.07% | 0.21% | 0.86% | 0.35% | 0.75% | |
| NZD | 0.74% | 0.11% | -0.28% | -0.15% | 0.46% | -0.35% | 0.39% | |
| CHF | 0.35% | -0.26% | -0.68% | -0.54% | 0.07% | -0.75% | -0.39% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Germany’s pension reform looks set to pass after Die Linke signals abstention, giving Euro (EUR) a temporary boost against the Pound Sterling (GBP). Despite this parliamentary relief, slow structural reforms and a narrow coalition majority limit EUR/GBP upside, with gradual gains expected into next year, Rabobank's FX analyst Jane Foley reports.
Merz avoids parliamentary defeat on key vote
"While GBP is faced with BoE rate cuts, slow growth and the potential of political headwinds, the outlook for the EUR could be tempered by disappointment. While the single currency is likely to find support from the view that the ECB may have already finished its rate cutting cycle, EUR bulls could grow impatient waiting for structural reforms to take effect in Germany."
"That said, today has brought some good news for the EUR. Reports suggest that Germany’s far-left Die Linke party is set to abstain from a vote on pension reform which should allow the package to pass a vote in parliament. The news follows a rebellion from within Chancellor Merz’s own conservative bloc by eighteen lawmakers who have argued that the current pension benefits are not sustainable. If the pension reforms fail, this would have been viewed as an embarrassing defeat for Merz which would further weak his authority."
"Merz’s coalition only has a narrow twelve vote parliamentary majority. While a success for Merz’s reform this week could bring some relief, various industry voices in Germany have raised concerns about the slow pace of structural reform. On balance, we are forecasting only a very slow upwards creep in EUR/GBP into next year to a 6-12-month forecast of 0.89."
- Silver slips as traders book profits after Wednesday’s record high near $58.98.
- Dovish Fed expectations, strong demand and tightening supply keep the broader outlook constructive.
- Technically, the daily chart shows RSI divergence, hinting at cooling momentum while the uptrend holds.
Silver (XAG/USD) trades on the back foot on Thursday as bulls take a breather and book partial profits after the metal climbed to record highs near $58.98 on Wednesday. At the time of writing, XAG/USD is trading around $56.87, down roughly 2.77% on the day.
The fundamental backdrop remains constructive for Silver, helped by dovish Federal Reserve (Fed) expectations, resilient industrial and investment demand, and a tightening supply environment that has helped propel the metal to a near 100% gain year-to-date.
Meanwhile, a Gold-Silver ratio near 73 highlights Silver’s relative outperformance within the precious metals space, suggesting further upside potential for XAG/USD.
From a technical perspective, the daily chart shows early signs of fatigue, with price action stalling below the record high. A bearish divergence has emerged between price and the Relative Strength Index (RSI), signalling cooling momentum, though a strong reversal still appears unlikely as the broader uptrend remains intact.
Prices continue to hold well above key moving averages, keeping the bias tilted to the upside. Initial support is seen around $55.00, and a decisive break below this zone could open the door to a deeper pullback toward $50.00, where the 50-day Simple Moving Average (SMA) is likely to cushion the downside.
On the upside, a sustained break above the all-time high at $58.98 would push Silver deeper into uncharted territory, exposing the $60.00 psychological level as the next bullish target.
The Average Directional Index (ADX) at 28.56 rises, reinforcing a strengthening directional bias; sustained trend strength would favor further upside as long as price holds above the 50-day SMA.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
The Japanese Yen (JPY) strengthens sharply as tightening expectations for the BoJ accelerate, driven by Governor Ueda’s latest hawkish remarks. With markets now pricing a December hike and USD/JPY momentum turning bearish, attention shifts to support near the 50-DMA at 153.09, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.
Government signals openness to December rate hike
"The yen is strong, up 0.4% vs. the USD and outperforming all of the G10 currencies on the back of a continued repricing of tightening expectations for the BoJ."
"The short-term rates market is now pricing 22bpts for December 19, reflecting the latest hawkish comments from BoJ Gov. Ueda as he spoke to parliament. Markets are also cheering media reports of a shift in the government’s position, as officials are said to be willing to tolerate the BoJ’s decision to hike rates on December 19."
"USD/JPY is extending its recent bearish reversal and momentum is confirming the turn as the RSI has pushed below the neutral threshold at 50. We see limited near-term support ahead of the 50 day MA at 153.09."
The Pound Sterling (GBP) stays firm near the top of its overnight range, with options markets sharply repricing protection against GBP weakness after the UK budget. Weak PMI data and steady inflation expectations had little impact, leaving BoE commentary and MPC member Mann’s remarks as the next key drivers, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.
Sentiment lifts GBP as risk reversals surge
"The pound remains well supported as it pushes toward the upper end of a tight overnight range and threatens an extension of its recent gains to fresh highs at levels last seen in late October. Sentiment is dominating and risk reversals are surging as the options market reprices the cost of protection against GBP weakness in the aftermath of last week’s UK budget."
"Fundamental releases have been limited to second-tier construction PMI data (weak, disappointing) and as-expected inflation expectations figures. Comments from the BoE have been largely neutral, and near-term risk lies with a scheduled appearance from neutral MPC member Mann at 7:45am ET."
The Euro (EUR) is consolidating this week’s advance, supported by widening rate differentials and a neutral ECB outlook, with little reaction to soft euro-area data. Bullish momentum is intact after clearing the 50-day MA, with the EUR now tracking a 1.1650–1.1750 range and eyeing resistance toward 1.18, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.
Euro steady ahead of Lane’s speech
"The EUR is quietly consolidating this week’s gains and entering Thursday’s NA session flat vs. the USD. Fundamentals remain supportive, as interest rate differentials reflect expectations for renewed dovishness at the Fed and a neutral policy outlook for the ECB. Yield spreads are up on the week, pushing to fresh 14 month highs and threatening a break to levels last seen in mid-2023."
"We note the absence of any material reaction to the release of as-expected euro area retail sales data for October (0.0% m/m) and see near-term headline risk centered around the ECB with a focus on Chief Economist Lane’s speech scheduled for 10am ET."
"The EUR’s latest gains have delivered a clear break of the 50 day MA (1.1612) as well as the mid-November highs in the mid-1.16s. The RSI is above 60 and confirming the EUR’s bullish momentum. We note the potential for near-term resistance at 1.17 and 1.1750 and highlight the importance of 1.18 as the next major resistance level. We look to a near-term range bound between 1.1650 and 1.1750."
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