Monetary policy divergence front and center

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The door is now open for the next major upside extension towards the 2018 high at 1.4377. Setbacks should be well supported above 1.2500 on a monthly close basis.

• R2 1.2834 – 6 November low – Strong
• R1 1.2812 – 6 December high –Medium
• S1 1.2617 – 2 December low – Medium
• S2 1.2566 – 27 November low – Medium

GBPUSD – fundamental overview

Most of the latest setbacks in the Pound come from post-ECB positioning in EURGBP, where traders have lightened up short Euro exposure in the aftermath of the event risk. Key standouts on Friday’s calendar come from German trade, UK GDP, trade, industrial production, construction output, Eurozone industrial production, Canada manufacturing sales, Canada wholesale sales, and US import and export prices.

USDJPY – technical overview

The market is looking to resume the longer-term uptrend after an intense correction in 2024. A higher low is ideally sought out above 140.00 in favor of a bullish continuation. The recent weekly close back above 150.00 strengthens the case for longer-term uptrend resumption.

• R2 155.89 – 20 November high – Strong
• R1 153.24 – 27 November high – Medium
• S1 150.00 – Psychological – Medium
• S2 149.08 – 2 December low – Strong

USDJPY – fundamental overview

The Yen is under pressure on Friday despite the stronger than expected Japanese Tankan report. It seems the bigger focus right now is on the interest rate outlook. And with as much as possible priced in as far as expectations for another BOJ rate hike go, there is little additional room for the Yen to want to appreciate. Key standouts on Friday’s calendar come from German trade, UK GDP, trade, industrial production, construction output, Eurozone industrial production, Canada manufacturing sales, Canada wholesale sales, and US import and export prices.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6200 would give reason for rethink. A monthly close back above 0.7000 will take the big picture pressure off the downside and strengthen case for a bottom.

• R1 0.6688 – 7 November high – Strong
• R2 0.6550 – 25 November high – Medium
• S1 0.6337 – 11 December 2024 low – Strong
• S2 0.6300 – Figure – Medium

AUDUSD – fundamental overview

All of the gains from Thursday's stronger Aussie jobs data have been wiped away, with the market more concerned about trade wars and the impact this will have on China, which will weigh on the very connected Aussie economy. Key standouts on Friday’s calendar come from German trade, UK GDP, trade, industrial production, construction output, Eurozone industrial production, Canada manufacturing sales, Canada wholesale sales, and US import and export prices.

USDCAD – technical overview

A sustained hold above 1.3000 over the past several months signals an end to a period of longer-term bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4500-1.5000 area, exposing a retest of the 2020 high just ahead of 1.4700. Setbacks should be very well supported ahead of 1.3500.

• R2 1.4300 – Figure – Medium
• R1 1.4244 – 13 December/2024 high – Medium
• S1 1.4200 – Figure – Medium
• S2 1.4120 – 11 December low – Strong

USDCAD – fundamental overview

The Canadian Dollar is back to trading to fresh multi-month lows as the market continues to price a clear divergence between policy outlooks at the Fed and Bank of Canada. The outlook for the BOC continues to favor more cuts relative to the Fed given a more distressing Canada economic outlook and heightened fears around trade. Key standouts on Friday’s calendar come from German trade, UK GDP, trade, industrial production, construction output, Eurozone industrial production, Canada manufacturing sales, Canada wholesale sales, and US import and export prices.

NZDUSD – technical overview

Overall pressure remains on the downside with the market continuing to stall out on runs up into the 0.6500 area. At the same time, there are some signs of the market wanting to put in a longer-term base. Ultimately, a break back above 0.6500 would be required to take the medium-term pressure off the downside and encourage this prospect. A monthly close below 0.5800 will intensify bearish price action.

• R2 0.6038 – 7 November high – Strong
• R1 0.5948 – 13 November high – Medium
• S1 0.5758 – 13 December/2024 low – Strong
• S2 0.5750 – Mid-Figure – Medium

NZDUSD – fundamental overview

More weakness for the New Zealand Dollar on Friday after yesterday's discouraging credit card spending was followed up today with a soft business PMI read. All of this strengthens the case for another 50 basis point rate cut at the next RBNZ meeting. Key standouts on Friday’s calendar come from German trade, UK GDP, trade, industrial production, construction output, Eurozone industrial production, Canada manufacturing sales, Canada wholesale sales, and US import and export prices.

US SPX 500 – technical overview

The longer term uptrend remains intact and dips continue to be exceptionally well supported. Critical support comes in at 5679, with only a break back below this level to compromise the structure and open the door for a more significant corrective decline. Until then, the focus remains on a continued push to fresh record highs.

• R2 6200 – Round Number – Strong
• R1 6104 – 6 December/Record high – Medium
• S1 5838 – 19 November low – Medium
• S2 5697 – 4 November low – Strong

US SPX 500 – fundamental overview

The US equities market remains exceptionally well supported in 2024 on the back of an ongoing expectation for more rate cuts than less going forward. Investors are feeling better about a soft landing in the US economy and this has also been accompanied by an accommodative adjustment of Fed policy. Moreover, there has been a fresh wave of market optimism in the aftermath of the Trump election victory. It will however be important to keep an eye on inflation, bigger picture economic data, and geopolitical risk in the weeks and months ahead.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs and this next major upside extension into the 3000 area. Setbacks should now be well supported above 2500 on a monthly close basis.

• R2 2791 – 31 October/Record high – Strong
• R1 2727 – 12 December high – Medium
• S1 2537 – 14 November low – Medium
• S2 2500 – Round Number – Strong

GOLD (SPOT) – fundamental overview

The yellow metal has pushed record highs in 2024 with solid demand from medium and longer-term accounts. These players are more concerned about inflation, geopolitical risk and a less upbeat global growth outlook. All of this should keep the commodity well supported over the coming months.