Fundamental Forecast for the US Dollar: What is the 1 mistake that traders make, and how can you fix it? That would have marked a significant step toward realizing a fiscal boost that markets expect will drive inflation and force the Fed into a steeper rate hike cycle in The news was tarnished by another bombshell from Special Counsel Robert Mueller however. He issued charges against former National Security Advisor Michael Flynn, who is now reportedly ready to testify that President Trump directed him to make contact with Russia during the election campaign.
This is a major blow for the Trump administration, sapping it of much-needed political capital. Passing the tax bill in the Senate would still leave much to be done before cuts are realized as legislation, and getting through that process with the White House under mounting pressure may be prohibitively difficult.
Looking ahead, this makes for a clouded landscape. That speaks to a period of kneejerk volatility powered by headlines emerging out of Washington DC. Indeed, it may well be that incoming economic news-flow is rendered impotent, at least in the near term. Sinking fiscal stimulus hopes are far more significant to that calculus. The Euro was the second worst performing major currency during the last week of November, with no clear catalyst for the pullback other than profit taking after a strong performance during the month.
Overall, the Euro has firm fundamentals to lean on, suggesting that any weakness should be shallow. Given broad Euro strength over the past few months, any signs that inflation is trending higher will ease ECB concerns over taper the pace of its asset purchases as the calendar turns into If anything, exogenous influences like headlines regarding the Brexit talks or the reconciliation of the House and Senate tax bills in the US will be more potent drivers. Market positioning would dictate that any weakness in the Euro in the near-term would be of the profit taking variety.
Even though positioning has moderated in recent weeks, the Euro long trade remains crowded relatively speaking. To contact Christopher, email him at cvecchio dailyfx.
Fundamental Forecast for Japanese Yen: Interested in having a broader discussion on current market themes? The string of failed attempts to close above the Want to learn more about popular trading indicators and tools such as the RSI?
Sign up for David's e-mail distribution list. Fundamental Forecast for GBP: Any sell-off however would offer an opportunity to go long GBP on a medium- to long-term basis where we see GBP returning to pre-referendum levels.
As it is, a close above 1. Ireland border issue to be solved before talks can progress to the second phase.
Ahead, the US Federal Reserve is expected to raise interest rates by another 0. The pair would move sharply higher however if the US failed to raise rates, although this is a very long-shot. A close above the September 20 high of 1. You can check out our latest Q4 trading forecast for Sterling here. To contact Nick, email him at nicholas. Fundamental Forecast for Gold: Gold prices are down for the second consecutive week with the precious metal off 0.
The losses come amid continued strength in broader risk assets with all three major U. Indices probing fresh record highs this week. Heading into next week markets will be highly reactive to headline risk from the ongoing debate on the tax reform bill. That said, the degree to which this would impact the larger outlook for bullion prices may be limited. Non-Farm Payrolls are on tap next Friday and consensus estimate are calling for the addition of K jobs for the month of November with unemployment widely expected to hold steady at 4.
Keep a close eye on the average hourly earnings as concerns over subdued wage growth may keep the central bank on hold in the first half of , especially amid the upcoming rotation within the FOMC. For gold, the technical outlook heading into the December open allows for some further losses before risking major damage to the broader uptrend in bullion prices.
Get started with this Free Beginners Guide. Gold has continued to hold within the confines of a well-defined range between for the entire month of November and heading into December trade, the focus remains on a break of this zone. A closer look at near-term price action sees gold holding within this ascending slope formation extending off the late-October low.
A reversal off the upper parallel saw prices drop into the What are the traits of a Successful Trader? Find out with our Free eBook! Fundamental Forecast for Canadian Dollar: Even though the BoC is largely anticipated to keep the benchmark interest rate at 1. With the Unemployment Rate narrowing to an annualized 5. Keep in mind, the U. However, another series of mixed U. In light of recent price action, the Relative Strength Index RSI warrants attention as it pulls back ahead of overbought territory and approaches trendline support.
Fundamental Australian Dollar Forecast: Relative interest-rate prognoses are doing much of the damage. The US Federal Reserve is expected to raise its own rates again this month and, should it do so, it will be a significant moment not just for the US Dollar but for the Aussie too. While the Fed is expected to keep on raising interest rates through , futures markets suggest that the Reserve Bank of Australia is thought unlikely to lift the OCR until the following year.
This is pullback from the position only a few weeks back when a single rise was priced in. A series of weak retail and inflation reports cast doubt on that, even as the Australian economy continues to do quite well by some yardsticks, notably that of employment.
This week will see two key domestic events for the Aussie. There is just about no chance that rates will change, but the extent to which the RBA appears to endorse current market pricing will be very interesting. Even if it says nothing at all on the subject, that may well be taken as a sign that current, distant rate-hike expectations are just about right in its view, with more Aussie weakness the probable result.
Wednesday will see official Gross Domestic Product figures for the third quarter. The second was reasonably strong with a 0. The longer-term reaction will be more nuanced.
Ongoing strength in exports will be welcome, but it will take stronger signs of internal consumer demand to shift the dial on likely interest-rate timing.
So, watch for those details. But there may be sufficient news to merit at least a pause while investors think about it. Contact and follow David on Twitter: Fundamental Forecast for NZD: Bigger picture, we can really draw back to July to focus in on when the pain really started to show for the Kiwi. But in the three months since, the entirety of those gains have been eradicated. Chart prepared by James Stanley. This was very much driven by the prospect of an increase in the minimum wage; with the hope being that higher wages as brought upon by legislation could force stronger rates of inflation which, eventually, can put the Reserve Bank of New Zealand in a spot where they have to hike rates.
But — that strength was short-lived, as Ms. The proposed change would make the RBNZ also accountable for full-employment. The change would effectively put the RBNZ in a spot where they have to try to balance the forces of inflation and employment, similar to the Federal Reserve utilizing a dual mandate versus the single mandate of Central Banks like the ECB.
This is also happening while lawmakers consider an additional committee to manage the cash rate, and this invites a whole host of uncertainty around the future of the Kiwi-Dollar spot rate, along with that of the RBNZ itself. There are no expectations for any moves on rates, and for the next expected adjustment, markets are currently looking out to Q4 of for a potential hike.
While stronger rates of inflation could eventually drive rates-higher, the prospect of change within the Reserve Bank Act will likely continue to dampen demand for NZD, at least in the near-term, as the rest of the world becomes more familiar with what a Jacinda Ardern-led New Zealand will end up looking like. The one thing that does appear certain is that Ms. Ardern is not satisfied with business as usual, and this can lead to further change.
Markets, generally speaking, abhor change as this presents risk; and while the potential around those changes remain uncertain, we will likely see some element of risk aversion until market participants can gain more clarity.
The forecast for next week will be set to bearish on the New Zealand Dollar. Contact and follow James on Twitter: Click here to dismiss. Fundamental analysis, economic and market themes Connect via: Neutral US Dollar struggles as Mueller election probe brings down Flynn Chances of realizing fiscal boost undercut despite Senate progress Jobs report on tap but data flow may have lost potency near-term What is the 1 mistake that traders make, and how can you fix it?
News events, market reactions, and macro trends. Central bank policy, economic indicators, and market events. Fundamental analysis and financial markets. Brexit talks are moving forward but nothing has been decided yet. Gold Hovers Above Support: Short term trading and intraday technical levels Connect via: Too Much, Too Soon? Financial markets, economics, journalism and fundamental analysis. Price action and Macro. Looking for trade ideas? Check out our trading guides.More...