Today we have three main events, the UK employment report for October, the Canadian CPI inflation and US retail sales for November which will be the last major data release ahead of tomorrow’s FOMC meeting.

Yesterday started with a round of data from China, which showed that retail sales cooled off again, indicating that the Chinese consumer is under pressure. In the European session, the UK Services PMI showed an increase, which helped the GBP despite the deteriorating manufacturing activity. A similar picture was in the Eurozone, with services climbing out of contraction, but manufacturing diving further.

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The forex market saw mixed movements throughout the day, with the USD gaining against the yen but weakening against risk-sensitive currencies. The US Dollar Index (DXY) edged down by -0.11% at the close. In equity markets, performance was uneven; the Dow dropped for the eighth consecutive session, while the Nasdaq reached a record high. The latest Flash US S&P Global PMI data revealed a mixed outlook.

The Services PMI rose to a 38-month high of 58.5 points, up from 56.1 previously. Similarly, the Composite PMI climbed to 56.6 points, marking a 33-month high from 54.9 in the prior period. However, the Manufacturing PMI dropped to 48.3 points, indicating contraction in the sector. Inflationary pressures continued to ease, signaling a further moderation in price growth.

Today’s Market Expectations

UK employment is projected to decline by 12,000 in the three months to October, following a rise of 219,000 in the previous quarter. Despite this, the unemployment rate is expected to hold steady at 4.3%. Average earnings excluding bonuses are forecasted to grow by 5.0%, compared to 4.8% last year, while earnings including bonuses are anticipated to rise by 4.6%, up from 4.3% previously. This report is unlikely to alter expectations that the Bank of England will keep rates on hold this week, unless there are significant downward surprises, particularly in wage growth figures.

In Canada, CPI year-over-year is forecast to remain steady at 2.0%, while the month-over-month figure is expected to rise by 0.1%, compared to 0.4% previously. The Trimmed-Mean CPI year-over-year is anticipated to stay at 2.6%, while the Median CPI year-over-year is expected to edge down slightly to 2.4% from 2.5%. The Bank of Canada has indicated that further rate reductions are contingent on the economy evolving as forecast, signaling a potential shift to 25-basis-point cuts and a more moderate pace of easing.

In the US, Retail Sales month-over-month are expected to increase by 0.5%, compared to 0.4% in the prior quarter. Excluding autos, sales are predicted to rise by 0.4%, up from 0.1%. The Control Group’s month-over-month sales are forecast to climb by 0.4%, rebounding from a previous decline of -0.1%. Consumer spending remains steady, underpinned by robust real wage growth and a resilient labor market. Additionally, rising consumer sentiment and confidence reports suggest that household financial conditions are stable or improving.

Yesterday the USD dollar retreated ahead of the FOMC meeting tomorrow, is expected to cut rates by 25 bps. However, most pairs traded in a range so we couldn’t close any forex signals. We opened four trading signals in total, one in Gold and three in forex which continued to remain open into today.

Gold Rejected at November 25 Highs

Gold saw a sharp rebound of over $20 yesterday after last week’s steep $100 drop. However, buyers struggled to push prices above the moving averages near the November high of $2,725. The strong US services PMI, indicating growth in December, added downward pressure, causing gold to reverse lower. On the H4 chart, XAU/USD returned to the range defined by two moving averages, eventually closing the day around $2,650 after failing to surpass the 100-day SMA barrier.

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XAU/USD – Daily Chart

AUD/USD Faces the Support at 0.6350

The GBP/USD pair, after recovering in late November, faced significant resistance around 1.28, a level reinforced by multiple moving averages. This led to a doji candlestick on the weekly chart, signaling potential reversal risk. Sellers capitalized on this, driving the pair 2 cents lower last week to settle at 1.26, aligning with the broader bearish trend. Yesterday, the pound briefly climbed following the UK services PMI hitting a two-month high of 51.4, indicating slight recovery in the services sector.

AUD/USD – H4 Chart

Cryptocurrency Update

Bitcoin Moves Away From $100K

BTC/USD – Daily chart

Ethereum Shying Out at $4,000 Again

Ethereum (ETH) rebounded from its dip below $3,000, trading close to $4,000. The cryptocurrency remains above $3,500 and its 50-day SMA, reflecting improved investor sentiment. However, ETH failed to break through the $4,000 resistance yesterday, leading to a slight pullback. Despite this, the recovery underscores steady confidence in Ethereum’s performance.

ETH/USD – Daily chart

Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank’s local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.