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Pound Sterling (GBP) has bounced after the BoE’s steady decision, but with Governor Bailey leaning toward a December cut, downside risks for GBP remain, ING’s FX analyst Chris Turner notes.

Pound Sterling (GBP) has bounced after the BoE’s steady decision, but with Governor Bailey leaning toward a December cut, downside risks for GBP remain, ING’s FX analyst Chris Turner notes.

USD/JPY is softening as lower U.S. yields and a developing descending triangle pattern tilt risks toward further downside. Pair was last at 153.48 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

EUR/USD may have carved out a key low, but weak Chinese trade data and uncertainty over the US labor backdrop limit confidence in a sustained rebound, ING’s FX analyst Chris Turner notes.

USD/CAD has regained momentum after defending major technical supports, with the pair now eyeing channel resistance near 1.4150 and higher projections toward 1.4240–1.4300, Société Générale’s FX analysts note, Société Générale’s FX analysts note.

Emini S&P shorts at resistance at 6845/6855 worked perfectly with a high for Wednesday at 6857 & a test of 1st support at 6800/6795.

China’s exports contracted for the first time since February and imports slowed more than expected in October.

The US Dollar trims losses on Friday with investors wary of risk following another sell-off on Wall Street, as concerns of an AI bubble remain alive.

Fundamental
Overview

The USD has been stronger
across the board since the hawkish turn from Fed Chair Powell at the last FOMC
press conference. The repricing in interest rate expectations acted as a
tailwind for the greenback as Treasury yields continued to push higher.

On Wednesday, we got a
couple of strong US data. The US ADP beat forecasts (although that was expected)
and the ISM Services PMI came in much better than expected
with the price index pushing into a new cycle high.

Despite the strong data,
the greenback failed to extend the rally. This is generally a signal of a
short-term top with the market needing more to keep the trend going. In fact,
the market pricing is now showing a 65% probability of a December cut, which is
about right. The data in December will probably have the final say and
hopefully we will get an NFP and CPI report before the next FOMC decision.

On the CAD side, the BoC
cut interest rates by 25 bps last week as expected bringing the policy rate to
the lower bound of their neutral rate estimate of 2.25%-3.25%. The central bank
has also signalled that they reached the end of their cutting cycle, although
they kept the door open for another cut if needed.

In fact, the statement
said: “if inflation and economic activity evolve broadly in line with the
October projection, Governing Council sees the current policy rate at about the
right level to keep inflation close to 2% while helping the economy through
this period of structural adjustment. If the outlook changes, we are prepared
to respond. Governing Council will be assessing incoming data carefully
relative to the Bank’s forecast.”

USDCAD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCAD is consolidating above the recent high around the 1.4080 level.
The buyers will likely continue to pile in around these levels with a defined
risk below the 1.4080 level to keep targeting the 1.4295 level next. The sellers,
on the other hand, will want to see the price falling below the 1.4080 level to
position for a pullback into the trendline around the 1.3950 level.

USDCAD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the consolidation above the 1.4080 level. There’s not much we
can add here as the buyers will likely step in around the 1.4080 level with a
defined risk below it to keep pushing into new highs, while the sellers will
look for a break lower to position for a correction into the major trendline.

USDCAD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the high at 1.4140 is acting as a new resistance. If we push into it
again, the sellers will likely step in there with a defined risk above it to
position for the pullback into the major trendline. The buyers, on the other hand,
will look for a break higher to increase the bullish bets into new highs. The
red lines define the average daily range for today.

Upcoming Catalysts

Today we conclude the week with the Canadian employment report and the US
University of Michigan Consumer Sentiment report.

This article was written by Giuseppe Dellamotta at investinglive.com.