FX Weekly Update – December 4th, 2023

Posted Under: Weekly updates

The dollar is unchanged compared to the last couple of weeks. U.S. yields continue to soften. Gold prices have just hit a historical high, and Bitcoin is over $40k. The global flow of currencies is reflected in the current trading activity. Various non-dollar pairs (EUR/GBP, EUR/JPY) have outsized movements. Flows into gold, crypto, and treasuries, has the dollar trading sideways. The U.S. has several economic releases this week, with the employment situation will be released on Friday and this data will be the focus of the markets. The forecast calls for +180K non-farm payrolls and a 3.9% unemployment rate.

EUR (1.0880): Last week, euro weakness pushed the currency to 1.0828 before it recovered into the weekend. There is support at last week’s low, but more critical support is at 1.0750. EUR/GBP, EUR/JPY, and several other pairs put pressure on the EUR/USD, which may continue throughout the week. Choose levels to buy the single-currency and stay committed to that level.

GBP (1.2675): The pound Sterling has been relentless in its quiet rally. More adjustments in EUR/GBP are favoring the pound which could trade at 1.3000. There will be “sellers” near that critical level. Support is coming in at 1.2500.

JPY (146.75): Yen buyers are positioning themselves for a change in the BoJ policy that would increase Japanese interest rates. USD/JPY is beginning to break down from its current consolidation and the target for this is 144.00. The BoJ does release an inflation number this week and unless that number is outsized from the forecast, there should be a limited impact on currency pair.

CAD (1.3515): The BoC will release its interest rate decision on Wednesday and there is no change expected (5.0%). This past week their employment report showed an increase of 25k jobs which is a significant number, putting a “bid” in the Canadian dollar. 1.3450 and 1.3250 are support levels, which may be touched this week.

MXN (17.2000): The driver behind the peso weakness (versus the last two weeks) was the Banxico interest rate decision where they decided to leave its overnight rate unchanged at 11.25%. USD/MXN is in a range of 16.7500 to 18.0000. It may seem like a large range, but with USD/MXN volatility, it can trade both sides in a week!

CNH (7.1300): Predictable CNH strength after a meeting between Presidents Biden and Xi. The main support lines have broken, and this USD/CNH trend may continue. 7.0550 was a recent low, which will be the first meaningful support zone—resistance above 7.1800.