• EUR/USD -0.23%, USD/JPY 0.3%, GBP/USD 0.09%, AUD/USD -0.65%

• S&P E-minis 0.08%, DAX 0.02%, Nikkei 225 0.53%, FTSE -0.51%

• EUR/USD shies away from an overbought situation nL1N3NB0DV

• Dollar climbs versus yen, news breaks about huge acquisition nL1N3NB0A2

• GBP/USD holds below 1.28 as UK job, inflation news digested nL1N3NB0A8

• AUD/USD slides towards four-month low on RBA's dovish pivot nL1N3NB08Y

• Option expiries nL1N3NB06N. U.S. Open nL4N3NB0UQ

• Friday's rise to 1.0630 almost resulted in overbought situation

• Top of 20-day Bollinger Bands was 1.0653 has dropped to 1.0623

• On Tuesday EUR/USD sinks 1.0568-1.0524 EBS

• Renewed weakness follows Death Cross on Nov 28 (55-DMA below 200-DMA)

• Downside targets: 1.0293 and 1.0189

• The euro may resume its long-term decline nL1N3NB09F

• SDRV shows a wealth of large EUR/USD FX option strike expiries this week

• Related hedging flows can draw/contain FX and add support/resistance

• 3-billion euros expire between 1.0500-30 Tues, 3-billion 1.0490-1.0500 Wed

• Friday now has a mega 6 billion euros expiring at 1.0500

• There are now almost 4 billion euros expiring at 1.0550 between Thurs-Fri

• Almost 6-billion euros expire at 1.0600 Thur and Fri - the bulk on Friday

• U.S. CPI and ECB are near term risks, but strikes can help contain EUR

For more click on FXBUZ

• The AUD/USD daily chart shows this market remains very vulnerable

• There is scope for an eventual big drop below the 2024 0.6349 low

• Tenkan and kijun line are negative aligned, reinforcing the bearish market

• Also note the fourteen-day momentum reading remains negative

• We are short at 0.6540 and have lowered our stop to 0.6455 to lock in profit

• AUD/USD Trader TGM2347. Previous update nL2N3N50DR

• EUR/CHF 0.9267-72 EBS on Dec 10 and below 0.9330 since Nov 25

• The limit for a correction of 0.8500-1.2005 rise is 0.9250

• Sustained decline under 0.9250 should see pair return to 0.8500

• Base 20-month Bollinger at 0.9202 will allow for deeper drop

• Speculators are betting franc drops nL1N3NA057

• Swiss franc may be on cusp of significant rise nL1N3MQ091

• SNB intervention is having less impact on franc nL2N3N7064

• USD/JPY's bounce this week shows the downside is quite limited

• The thickening cloud, that currently spans 146.73-150.52 region, underpins

• There is growing scope for a probe of the 151.75 Fibo

• 151.75 Fibo is a 38.2% retrace of the 156.76 to 148.65 (EBS) low

• A break and close above 151.75 Fibo would unmask the kijun line

• The kijun line is currently at 152.71

• Be mindful, however, that fourteen-day momentum remains negative

• We are looking to get long at 151.10. Trader TGM2336. Prev nL1N3N909Q

• AUD/USD remains under pressure as RBA ends 2024 with dovish pivot

• Governor Bullock says little bit more confident on inflation

• Notes that data has been softer; c.bank cautiously opens room for rate cut

• Previous line that RBA was "not ruling anything in or out" on rates removed

• Feb 25 bps rate cut odds at 54%; first cut fully priced for Apr 0#AUDIRPR

• AUD drops to a low 0.6380, more support at 0.6373 Friday low

• Strong support base at 0.6340-0.6362, loss opens 0.6271

• Resistance 0.6425, 0.6455; China stimulus vow, higher commodities underpin

• Asia range 0.6380-0.6443

• For more click on FXBUZ

Synopsis:

MUFG expects the Bank of Canada (BoC) to deliver a 50bps rate cut this week, citing a weakening Canadian labor market. They recommend staying long USD/CAD, targeting 1.4550 as policy divergence supports further CAD downside.

Key Points:

BoC Rate Cut Expectation:

• Forecast: BoC expected to cut rates by 50bps to 3.25%.
• Labor Market Data: November’s Canadian jobs report showed a sharp labor force expansion (+137.8k) and a higher unemployment rate at 6.8%, reinforcing slack in the economy.
• Policy Outlook: More cuts are likely as the BoC aims to lower rates toward its revised policy range of 2.25%-3.25%.

USD/CAD Trade Recommendation:

• Trade Idea: Stay long USD/CAD targeting 1.4550.
• Rationale:
  • Monetary Divergence: Expected rate cuts by the BoC contrast with more stable US policy.
  • CAD Weakness: Canada’s softening labor market and broader economic risks weigh on the CAD.

Conclusion:

MUFG expects the BoC’s aggressive easing path to weaken the CAD further, making long USD/CAD a favorable trade. They maintain a target of 1.4550, banking on continued policy divergence and mounting economic concerns in Canada.

• Off 0.05% in a tight 1.2739-1/2753 range with solid flow on FX Matching

• Without tier-one UK data or BoE events, the USD, risk appetite lead GBP

• UK government departments to focus spending on Starmer's priorities

• External experts to scrutinise departmental budgets to eliminate waste

• Good government intentions - it will be interesting to see the reality

• Techs - neutral daily momentum studies, 21-day Bollinger bands contract

• 5, 10 & 21-DMAs conflict - little daily bias, weeklies still bearish

• Last week's 1.2619 low, then the 1.2475 November trend low initial supports

• Friday's 1.2810 top then 1.2839, 0.382% September/November fall resistance

• A close above 1.2839 would end the September-November downtrend

For more click on FXBUZ

• AUD/USD down 0.25% as traders position for a slightly less hawkish RBA

• Feb 25 bps rate cut odds at 54% from 49% earlier this morning

• First cut fully priced for April 0#AUDIRPR as economy stays weak

• Australia business conditions worst since pandemic, NAB survey says

• What to watch for in the RBA rate decision

• China stimulus vow, buoyant commodity prices likely to limit downside

• Resistance 0.6450-55, 0.6483-93, support 0.6420, 0.6380, 0.6348-0.6362

• Asia range 0.6418-0.6453

• For more click on FXBUZ

• RBA rate decision, Statement on Monetary Policy at 0330 GMT/2.30 PM AEST

• C.bank holds media conference on monetary policy decision at 0430 GMT

• Expected to hold rates at 4.35% but may soften hawkish stance slightly

• Reiterate that returning inflation to target remains the priority

• May do away with line on "not ruling anything in or out on policy"

• Feb 25 bps rate cut odds at 49%, first cut fully priced for Apr 0#AUDIRPR

• For more click on FXBUZ

• Flat after closing up 0.1%, resilient with the U.S. dollar also up 0.1%

• British gov't departments to focus spending on Starmer's priorities

• UK fin min Reeves met the 'Eurogroup' - pushing to reset ties after Brexit

• As rising US tariffs approach, a strong UK/EZ working relationship is key

• Techs - neutral daily momentum studies, 21-day Bollinger bands contract

• 5, 10 & 21-DMAs conflict - neutral daily setup, weeklies still bearish

• Last week's 1.2619 low, then the 1.2475 November trend low initial supports

• Friday's 1.2810 top then 1.2839, 0.382% September/November fall resistance

• A close above 1.2839 would end the September-November downtrend

For more click on FXBUZ

• Steady after easing 0.1% with the USD +0.2%, supported by higher UST yields

• VW, unions hold 'constructive' talks, but there is no solution in sight

• Hard to be a Euro optimist with Paris, Berlin mired in political uncertainty

• Charts - daily momentum studies climb as 21-day Bollinger bands contract

• 5, 10 & 21-DMAs coil, weekly moving averages fall - a neutral setup

• Daily technical signals converge, which often precedes a breakout

• 1.0668 0.382% of the Sep/Nov fall remains pivotal resistance

• Last week's 1.0461 base and the November 1.0331 low are initial supports

• 1.0500 1.402BLN, 1.0550 650mln and 1.0600 2.299BlN Dec 10 close strikes

  For more click on FXBUZ

Synopsis:

ANZ suggests selling EUR/CHF on short-term rallies, citing limited upside without Swiss National Bank (SNB) intervention. Simultaneously, they recommend buying USD/CHF medium-term, leveraging higher US yields and persistent European geopolitical risks.

Key Points:

EUR/CHF Outlook:

• Short-Term View: Sell on rallies above 0.95, targeting 0.92.
• Rationale:
  • EUR/CHF lacks upside momentum despite SNB rate cuts and intervention threats.
  • The EU's uncertain economic outlook limits potential gains.
  • Expectation: Downward pressure persists without explicit SNB action.

USD/CHF Outlook:

• Medium-Term View: Buy USD/CHF on dips around 0.88, targeting 0.91.
• Rationale:
  • Yield Support: Higher US yields increase USD attractiveness.
  • Geopolitical Hedge: European geopolitical concerns favor the USD over the CHF.
  • Historical Reference: 2022's risk-driven CHF moves suggest USD/CHF upside under similar conditions.

Conclusion:

ANZ favors a dual trade strategy: short EUR/CHF on rallies and long USD/CHF on dips. The strategy hinges on the SNB's policy stance, US yield trends, and geopolitical developments in Europe. Investors may position accordingly based on these dynamics.

• AUD/USD opens 0.7% higher after trading in a 0.6380-0.6471 range Monday

• Rallied on China's vow to ramp up stimulus to spur growth in 2025

• China changes monetary stance to 'appropriately loose' from 'prudent'

• Fiscal policy to be more proactive; analysts say announcement "significant"

• Commodities jump on announcement, lift AUD; NYK copper +1.5%, iron ore gains

• RBA rate decision in focus; c.bank to hold rates, may soften hawkish stance

• Resistance 0.6483-93, support 0.6420, 0.6400, 0.6380, major 0.6348-0.6362

• For more click on FXBUZ

The euro was little changed against the greenback on Monday as investors moved to the sidelines before this week's U.S. inflation data on Wednesday and a European Central Bank policy meeting on Thursday.

The ECB and other central banks are expected to lower policy rates this week.

French President Emmanuel Macron will convene all political parties willing to compromise with a view to forming a government on Tuesday.

Firmer U.S. Treasury yields helped curb an earlier decline in the dollar.

U.S.
consumers see higher levels of near-term inflation and marked up expectations that their personal financial situations would improve, according to a New York Federal Reserve survey.

The yen slid against its G-10 peers amid higher Treasury yields, rising commodity prices and heightened expectations that the Bank of Japan will wait until next year to hike rates.

Commodity currencies outperformed following a report China will adopt an "appropriately loose" monetary policy next year.

The Bank of England will be vigilant over the possibility that investors will take greater risks after a year of relative stability in markets, Deputy Governor Dave Ramsden said on Monday.

Treasury yields were up 2 to 5 basis points as the curve steepened.
The 2s-10s curve was up about 1 basis point to +6.3bp.

The S&P 500 fell 0.3% on tech share weakness after a report China launched an investigation into Nvidia Corp.

Oil rose 2.1% on geopolitical risk after the fall of Syrian President Bashar al-Assad, and on a report that importer China may loosen its monetary policy stance.

Gold rose 1.2% to a two-week high on renewed China buying and in anticipation of central bank rate cuts.

Copper jumped 2.0% to the highest in nearly a month on China stimulus hopes.

Heading toward the close: EUR/USD -0.01%, USD/JPY +0.82%, GBP/USD +0.22%, AUD/USD +0.93%, DXY +0.00%, EUR/JPY +0.79%, GBP/JPY +1.01%, AUD/JPY +1.77%.

For more click on FXBUZ

• GBP$ soft in NY afternoon, +0.22% at 1.2768, Monday range 1.2799-18

• Pair backed off NorAm high 1.2799, put in near Lon fix holds gains

• Sterling wary of 1.28 ahead of inflation data, rate announcements

• Pair holds slight gain in 2024, +0.33%; relative yield advantage anchors

• Data, exp'd ECB cut; UK yield advantage over majors aids bullish GBP tone

• GBP$ res 1.2799 Monday high, 1.2822 the 200-DMA, 1.2874 the Nov 12 high

• Supt 1.2718 Monday Asia low, 1.2697 rising 10-DMA, 1.2643- 50% of 1.2475-1.2811

Synopsis:

Morgan Stanley maintains a bullish skew on the JPY due to policy convergence and reduced carry trade incentives, while turning bearish on the CHF due to deflation risks and the Swiss National Bank's (SNB) intervention stance.

Key Points:

JPY Tactical View:

• Neutral Bias | Bullish Skew
  • Supportive Factors:
    • Policy convergence trends continue to favor the JPY.
    • High volatility stemming from the US policy agenda limits further carry trade flows into JPY crosses.
  • Outlook: The currency is likely to strengthen as monetary divergence narrows between the BoJ and its G10 peers.

CHF Tactical View:

• Bearish Bias | Bearish Skew
  • Key Drivers:
    • Soft inflationary pressures raise concerns about deflation in Switzerland.
    • The SNB remains committed to preventing excessive CHF appreciation.
  • Outlook: Expect further CHF weakness as the SNB intervenes if deflation risks escalate or if CHF strength becomes too pronounced.

Conclusion:

Morgan Stanley sees JPY benefiting from narrowing policy divergence and reduced carry trade appeal, while expecting CHF to face headwinds from deflation concerns and SNB's currency management. Investors may consider positioning accordingly as these dynamics play out.

• Ether closed above $4000 Friday, first time since March 11, 2024

• Selling in weekend trading saw Ether fall below that psychological level

• Today Ether fell further, pierced the 10-DMA, dipped below $3803

• Bitcoin BTC= drop helped to drag Ether to a 3-session low

• US yield US10YT=RR gains, equity ESv1 drop helped to weigh on Ether

• Ether traded down -0.30% into Europe's close despite gold XAU= gains

• Daily RSI turned lower from overbought territory, monthly doji has formed

• Techs suggest Ether may have to correct a bit before broader rally resumes

• For more click on FXBUZ

Synopsis:

Goldman Sachs expects the Bank of Canada (BoC) to deliver a 50bps rate cut at this week’s December policy meeting, though they acknowledge a 25bps cut is a credible alternative. Slowing growth, a rising unemployment rate, and a lower-than-expected Q3 GDP print strengthen the case for more aggressive easing.

Key Points:

• Rate Cut Expectations:

  • Base Case: A 50bps cut, bringing the policy rate closer to the lower end of the BoC’s neutral range estimate of 2.25%.
  • Alternative Scenario: A smaller 25bps cut, reflecting cautious adjustments amid uncertain economic conditions.

• Economic Drivers:

  • Weak Growth: Q3 GDP expanded just 1.0% (vs. the BoC’s 1.5% forecast), underscoring economic softness.
  • Labor Market Struggles: The unemployment rate has climbed after a brief stabilization period, adding urgency to policy easing.

• USD/CAD Outlook:

  • Near-Term Impact: A 50bps cut could apply upward pressure on USD/CAD, reflecting policy divergence with the Fed.
  • Medium-Term View: Goldman Sachs sees the market underpricing the BoC’s easing potential and expects more USD/CAD upside due to tariff-related risks and Canada’s weaker economic trajectory.

Conclusion:

Goldman Sachs anticipates a 50bps rate cut from the BoC, driven by disappointing growth and labor market data. A smaller 25bps cut is possible but less likely. The expected policy move could push USD/CAD higher in both the near and medium term, especially as Canada’s economic vulnerabilities and tariff-related uncertainties persist.

With BoE rate expectations skewed slightly higher before upcoming rate meetings, sterling bulls are likely to remain optimistic heading into 2025, barring a downside surprise in UK inflation.

Currently, futures are pricing a 80% chance the Fed will cut by 25bp on Dec.
18, while the BoE is expected to remain on hold.

Further out the respective front-end strips, SOFR and Sonia futures foresee the BoE easing more slowly than the Fed next year, projecting UK rates to end 2025 at 3.96% versus 3.86% in the U.S., which should keep the pound anchored near current levels.

The current sterling bid comes with risks, particularly as it relates to inflation.
The upcoming inflation data, Dec.
11 for the U.S. and Dec.
18 for the UK, may not upset the apple cart for December central bank expectations.
Data surprises for either bank will lead traders to adjust expectations and positions, injecting increased volatility.

With U.S. inflation up first, traders will be eying the core data, which is forecast at 3.3%, flat over the past few months but up from the July low at 3.2%.
That might prod the Fed to pause cuts, which may cap GBP/USD's run by its 200-DMA near 1.2822.

For more click on FXBUZ

Synopsis:

BofA expects the RBA to keep rates unchanged at its December meeting, citing mixed economic data. While consumption has improved, job growth has slowed, and inflation pressures are easing, supporting a "wait and see" approach.

Key Points:

• Positive Economic Indicators:

  • Household Spending: Retail sales and household consumption data showed notable improvement in October, driven by higher real wage growth.

• Negative Economic Indicators:

  • Job Market Weakness: Job growth surprised to the downside for the first time in seven months.
  • Easing Inflation: Core monthly CPI excluding volatile items fell by 0.2% in October, while inflation expectations continued to moderate.

• Policy Outlook:

  • The RBA is expected to remain in a holding pattern but could cut rates if economic conditions deteriorate faster than expected.
  • BofA maintains its call for the first rate cut in April 2025.

Conclusion:

BofA believes mixed economic data will keep the RBA cautious at its December meeting, holding rates steady while closely monitoring further developments. A rate cut is still expected in April 2025 if economic weakness persists.

• GBP/USD price action similar to EUR/USD in spot and FX options

• GBP/USD implied volatility under significant pressure last week

• Benchmark 1-month expiry from 8.0 to 6.6, 3-month 7.85 to 6.75

• These match initial post election lows, previously seen in September

• 1-month expiry 25 delta risk reversal at 0.5 GBP puts over calls

• That matches initial post election lows previously seen in early October

• Price reductions signal falling GBP/USD volatility and downside risks

• Stand-out FX option strikes expiring this week nL1N3NA06N

For more click on FXBUZ

• Traders wager $7.5 billion on euro dropping nL1N3NA057

• Bearish bets act as restraint on a possible drop

• While notable, the bet isn't big and could grow much larger

• Past trends have been sustained with bets three times greater

• The record bet is roughly four time bigger than current short

• Probable limit for correction before move lower circa 1.0650

• China's policy shift may fuel more demand for dollars