Fundamental
Overview

The puzzling weakness in
the US Dollar following Trump’s victory looks more and more like it was just a
“sell the fact” reaction. The greenback is now back in the driving seat, and we
might have also seen some pre-positioning in the past couple of days into a
potentially hot US CPI report today.

At the latest Fed’s decision,
Fed Chair Powell said that they expect bumps on inflation and that one or two
bad data months on inflation won’t change the process. This keeps the 25 bps
cut in December in place even if we get higher inflation readings.

The market though is
forward-looking, and the rise in Treasury yields showed that the market sees
risks to the inflation outlook. Moreover, the red sweep could increase those
fears if the progress on inflation stalls, or worse, reverses.

The market might have
already assigned some premium to a higher than expected print, so there’s some
risk of a short-term „sell the fact“ reaction on a higher than
expected number.

It goes without saying that
a bigger than expected upside surprise should see the momentum increasing
immediately with the US Dollar likely rallying across the board and Treasury
yields shooting higher.

On the other hand, a soft
print will likely see the US Dollar and Treasury yields falling, although one
can argue that it’s just going to provide a pullback to go long the US Dollar
and short bonds again at even better levels as future conditions will likely
see inflation getting stuck above the target or even moving back higher.

USDCAD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCAD is once again back at the 2-year high amid USD strength. The
buyers will want to see the price breaking higher to increase the bullish bets
into new highs, while the sellers will look for a rejection to position for a
drop back into the 1.38 handle.

USDCAD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a strong support zone around the 1.3825 level where the price
got rejected from several times in the past weeks. We may now have a range
between the 1.3825 level and the 1.3950 level. The market participants will
continue to play the range until we get a breakout on either side.

USDCAD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, there’s
not much else we can add here as the rangebound price action makes all the
technical levels between the main support and resistance zones pretty weak. The
red lines define the average daily range for today.

Upcoming
Catalysts

Today, we have the US CPI report. Tomorrow, we get the latest US Jobless
Claims figures. On Friday, we conclude the week with the US Retail Sales data.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• An ‚activist‘ approach means to cut less until it is clear inflation persistence has been purged
• I would be ready to cut rates in bigger steps when inflation risks have gone

As mentioned, she’s arguably the most hawkish member on the policy committee. So, these comments need to be taken with that in consideration. Her comments are also reflected by her bank rate vote last week here, as she was the only member to dissent against the rate cut decision.

This article was written by Justin Low at www.forexlive.com.

For some context, these subsidies did come to an end in May but were reinstated in August through to October to cope with the warmer weather. Subsequently, they were continued until this year-end but the funds had to be drawn from reserves in the budget for the fiscal year that started in April.

NHK is now reporting that the government is considering keeping these subsidies from January through to March next year. Amid a higher cost of living in key populated areas such as Tokyo, the measure above is mainly to try and combat rising consumer prices.

This article was written by Justin Low at www.forexlive.com.

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This article was written by FL Contributors at www.forexlive.com.

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This article was written by FL Contributors at www.forexlive.com.

• OPEC cuts 2024 global oil demand growth forecast to 1.82 million BPD (prev. 1.93 milliong BPD).
• OPEC cuts 2025 global oil demand growth forecast to 1.54 million BPD (prev. 1.64 million BPD).
• OPEC says its crude oil production averaged 26.53 million BPD in October 2024, up 466,000 BPD from September led by Libya.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

The MSTR chart is a perfect example of the importance of market timing.

The MSTR stock did nothing for almost two decades! Imagine investing in it early and waiting 20 years to get a return.

If you want to have conviction in your ideas, you need to know what moves your stocks and position for that change.

In the book “The New Market Wizards”, Stanley Druckenmiller said this in response to the question of how he evaluates stocks:

“When I first started out, I did very thorough papers covering every aspect of a stock or industry. Before I could make the presentation to the stock selection committee, I first had to submit the paper to the research director.“

„I particularly remember the time I gave him my paper on the banking industry. I felt very proud of my work. However, he read through it and said, This is useless. What makes the stock go up and down? That comment acted as a spur.“

„Thereafter, I focused my analysis on seeking to identify the factors that were strongly correlated to a stock’s price movement as opposed to looking at all the fundamentals. Frankly, even today, many analysts still don’t know what makes their particular stocks go up and down.”

His number one advice? Do not invest in the present. The present does not move stock prices. Change moves them.

MicroStrategy is basically a Bitcoin play, so you just need to know where Bitcoin is going to trade MSTR stock. No valuation analysis needed.

The catalyst for the latest rally? Trump’s victory.

This is why waiting for the right catalysts is paramount. Not only does it tell you WHEN to trade, but it also gives you an IMMEDIATE feedback on whether you are right or
wrong.

That helps with knowing when to bet more and when to get out to keep your drawdown low.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

Fundamental
Overview

The puzzling weakness in
the US Dollar following Trump’s victory looks more and more like it was just a
“sell the fact” reaction. The greenback is now back in the driving seat, and we
might also be seeing some pre-positioning into a potentially hot US CPI report
tomorrow.

At the latest Fed’s
decision, Fed Chair Powell said that they expect bumps on inflation and that
one or two bad data months on inflation won’t change the process. This keeps
the 25 bps cut in December in place even if we get higher inflation readings.

The market though is
forward-looking, and the rise in Treasury yields showed that the market sees
risks to the inflation outlook. Moreover, the red sweep could increase those
fears if the progress on inflation stalls, or worse, reverses.

On the GBP side, this
morning we got the UK
labour market report and although the data was mostly mixed, it leant more
on the dovish side. Overall though, it didn’t change anything for the market or
the BoE.

GBPUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that GBPUSD broke through the support
zone around the 1.2840 level and extended the drop as more sellers piled in.
The natural target should be the swing low at 1.2665 level. That’s where we can
expect the buyers to step in with a defined risk below the level to position
for a rally back into the 1.28 handle.

GBPUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the break of the support which was defining the range between
the 1.2840 support and the 1.3040 resistance. If the price retests the support
now turned resistance, we can expect the sellers to step in with a defined risk
above the level to position for a drop into the 1.2665 level next. The buyers,
on the other hand, will want to see the price breaking higher to position for a
rally back into the 1.3040 resistance.

GBPUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor downward trendline defining the current bearish
momentum. The sellers will likely keep on leaning on it to position for new
lows, while the buyers will look for a break higher to pile in for a rally into
new highs. The red lines define the average daily range for today.

Upcoming
Catalysts

This week is a bit empty on the data front with the most important releases
scheduled for the latter part of the week. Tomorrow, we have the US CPI report.
On Thursday, we get the latest US Jobless Claims figures. On Friday, we
conclude the week with the US Retail Sales data.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

The NFIB Small Business Optimism Index rose by 2.2 points in October to
93.7. This is the 34th consecutive month below the 50-year average of
98. The Uncertainty Index rose seven points to 110, the highest reading
recorded. A seasonally adjusted net negative 20% of small business
owners reported higher nominal sales in the past three months, the
lowest reading since July 2020.

“With the election over, small business owners will begin to feel less uncertain about future business conditions,” said NFIB Chief Economist Bill Dunkelberg.
“Although optimism is on the rise on Main Street, small business owners
are still facing unprecedented economic adversity. Low sales, unfilled
jobs openings, and ongoing inflationary pressures continue to challenge
our Main Streets, but owners remain hopeful as they head toward the
holiday season.”

This article was written by Justin Low at www.forexlive.com.

Gold is down another 0.7% today as a firmer dollar and higher yields since the election looks to be weighing. Alternative flows into Trump trades such as Bitcoin and stocks are also arguably in play, with gold not quite favoured as much in that sense. But how are things playing out on the charts?

The drop today reaffirms some rejection closer to $2,700 again after a brief bounce following the election result last week. The most notable thing is that we are seeing gold hold back below the broken trendline support from August (white line). And that is keeping sellers in control, alongside a push back under both its 100 and 200-hour moving averages:

That is keeping the near-term bias more bearish now, keeping with the momentum from the US election result.

So, what’s next for gold?

The daily chart shows that the latest fall is nothing too significant but there are a couple of momentum breaks/shifts as seen above.

For sellers, a push to test the October lows near $2,600 would be the first real test of gathering more downside momentum in this latest run here. And if they manage that, then only I reckon one can argue about a deeper pullback for gold. It is one that I’ve been nagging on for a while that it’s been coming.

And if we do get such a pullback, I reckon it will be a much welcome development for the bulls and dip buyers.

The run higher this year has been nothing short of breathtaking and any pullback in the next few weeks will be rather timely I would say.

It would come right before the typical seasonal buying rush in gold that usually coincides in December and January.

In the last 20 years, January has been the best performing month for gold. Meanwhile, the precious metal is on a 7-year winning streak in December trading. As such, the seasonal consideration is a tough thing to ignore if you’re looking at gold in the next two to three months.

Given that potential, any material pullback in gold prices now might just be setting up for a stronger seasonal tailwind when we get to the months ahead. Keep that in your back pocket just in case.

This article was written by Justin Low at www.forexlive.com.