Thursday's ECB rate cut and strong US Producer Price Index (PPI) data kept the US Dollar strong despite a rise in US Jobless Claims. The Greenback benefited from signs of persistent US inflation, even with a Fed rate cut expected in December. Mixed risk news also helped the US Dollar maintain its lead. As a result, the US Dollar Index (DXY) remained firm for the sixth day in a row, on track for its biggest weekly gain in a month. The US Dollar and Gold saw gains from market uncertainty, China’s stimulus, and the People’s Bank of China's (PBoC) first gold reserve increase in six months.
Meanwhile, EURUSD and GBPUSD struggled due to weak domestic data and dovish central bank expectations. USDJPY failed to benefit from strong data and hawkish Bank of Japan (BoJ) concerns. Antipodean currencies also remained weak, with China's challenges and fears of further rate cuts weighing on them.
The ECB's rate cut and President Lagarde's growth concerns pushed the EURUSD lower, applying continued downward pressure. GBPUSD also faces a three-day losing streak, despite improved UK Consumer Confidence, as the Bank of England’s reluctance to hike rates and ongoing economic challenges weigh on the Pound. Meanwhile, USDJPY rises for the fifth day in a row, heading for a two-week uptrend, even as the Bank of Japan’s Q4 Tankan Survey boosting BoJ hawkish sentiment.
China's recent response to US trade war concerns and weak data, along with struggles to convince markets of its economic outlook, are weighing on commodity-linked currencies like the Australian, Canadian, and New Zealand Dollars. USDCAD faces extra challenges from Crude Oil’s retreat, uncertainty over OPEC+ output hikes, and the Bank of Canada’s potential for more rate cuts.
Gold breaks a two-week downtrend, despite pulling back from key resistance. The metal benefits from China’s buying, market uncertainty, and geopolitical concerns. The likely US Fed rate cut also supports XAUUSD ahead of next week’s central bank decision.
Crude Oil is set for its biggest weekly gain in three, though US Dollar strength and concerns about China and OPEC+ challenge energy buyers.
Top cryptocurrencies are on track for a weekly loss but remain near multi-year highs. Bitcoin (BTCUSD) and Ethereum (ETHUSD) are supported by favorable industry positioning from Donald Trump's diplomats, along with positive on-chain data and ETF inflows.
After a week of heightened volatility from inflation data and central bank moves, traders can expect a quiet end with a light news calendar. Market momentum may also slow as caution sets in ahead of next week's monetary policy meeting of the Federal Open Market Committee (FOMC). However, monthly UK data, Eurozone Industrial Production, and the US Import-Export Price Index could still provide opportunities for intraday traders.
The UK and Eurozone data may not reverse the weekly losses for EURUSD and GBPUSD, but strong results could challenge the bears. On the other hand, stronger US data could boost the US Dollar, adding more downward pressure on major currencies, commodities, and the Antipodeans.
Gold could benefit from market uncertainty and expectations of a Fed rate cut, possibly pushing it towards the $2,710-18 resistance zone, especially with a potential "Golden Cross" forming on the four-hour chart.
Crude Oil, meanwhile, may struggle to maintain momentum, even as it holds support at $69.70 after a mid-week breakout.
May the trading luck be with you!
