Forex Signals Brief November 8: Canada Employment Closing A Week Full of Action

The USD also weakened yesterday, erasing some of the gains from Wednesday’s sharp increase. The greenback experienced an average depreciation of nearly 1% against major currencies. As expected, the Bank of England (BOE) cut rates by 25 basis points at the start of the US session, followed by the FOMC’s 25-basis-point rate cut.

Despite faster-than-expected disinflation, BOE Governor Bailey emphasized that a more widespread decline in services inflation is needed and highlighted the importance of understanding the inflationary impact of the recent budget. He also noted that wage inflation pressures might persist beyond current projections. These comments were seen as hawkish, pushing GBP/USD above the 1.30 mark.

Meanwhile, Fed Chair Jerome Powell maintained the theme of rate recalibration. During his press conference, he emphasized that the Fed is closely monitoring risks on both sides of its mandate, reaffirming its commitment to achieving maximum employment and price stability. While acknowledging that wage growth has slowed and unemployment remains low, Powell pointed out that recent hurricanes and strikes impacted job numbers in November.

He noted that the labor market is less tight than pre-pandemic levels, which helps ease inflationary pressures. This dovish tone led to a decline in the USD during the US session. The upward momentum in US stock indices continued, with the S&P and NASDAQ closing at all-time highs after three consecutive days of gains. The Dow Industrial Average, which saw its largest percentage increase since November 10 (up 3.57%), closed just slightly lower.

Today’s Market Expectations

In September, Japanese household spending fell by 1.3% month-over-month, which was a larger decline than the expected 0.7%. This followed a 2.0% increase in August. Year-over-year, spending dropped 1.1%, marking the second consecutive month of decline, although this was less severe than the anticipated 2.1% decrease. The ongoing y/y decline underscores weakness in consumer spending, potentially signaling challenges for Japan’s economic recovery.

In October, the Canadian labor market added 33.2K jobs, down from the 46.7K added in September. The unemployment rate is expected to rise slightly, from 6.5% to 6.6%. Market projections indicate a 33% chance of another 50-basis-point rate cut in December and four additional 25-basis-point cuts in 2025, as the Bank of Canada has shifted its focus from inflation to supporting growth.

Yesterday the volatility declined somewhat from Wednesday, but there were still some decent sized moves, with the USD retracing some of the gains and then falling further after Jerome Powell’s dovish comments following an initial jump. We got caught on the wrong side with a trade early in the day, but made  up for it with several winning forex signals through the day.

Gold Bounces After the Decline Stops at the 50 SMA

Gold prices have climbed by about 30% in 2024, rising from $2,000 to around $2,790, largely due to global political and economic uncertainties. However, prices have since pulled back, recently trading at approximately $2,652. The 50-day SMA on the daily chart is stable, holding as support, and yesterday XAU bounced above $2,700 as the USD gave back some of the Trump gains.

XAU/USD – Daily Chart

The 50 Weekly SMA Rejects USD/CHF

Following yesterday’s FED rate cut, USD/CHF initially dropped by 50 pips after facing resistance, but it has since recovered around 4 cents after bottoming at 0.84. The weekly chart indicates that the pair is currently overbought, suggesting a potential decline after the bearish reversal observed yesterday. The moving averages on the weekly chart continue to act as resistance, with the 50 SMA (yellow) exerting pressure similar to the 100 SMA (green), which acted as resistance earlier this year.

USD/CHF – Weekly Chart

Cryptocurrency Update

Bitcoin Breaks Above the $76K Level

BTC/USD – Daily chart

Ethereum Approaches $3,000

Ethereum has also seen strong buying interest, surpassing its 100-day SMA to trade above $2,700. It initially dipped below $2,500 but quickly regained support above its 50-day SMA, confirming its upward trend. With Trump’s election win, Ethereum turned bullish again, pushing above $2,500 over the weekend and rising even higher yesterday.

ETH/USD – Daily chart