GBPUSD TECHS: Northbound
Dec-11 18:30
- RES 4: 1.3527 76.4% retracement of the Sep 17 - Nov 4 bear leg
- RES 3: 1.3471 High Oct 17
- RES 2: 1.3452 61.8% retracement of the Sep 17 - Nov 4 bear leg
- RES 1: 1.3438 High Dec 11
- PRICE: 1.3424 @ 16:20 GMT Dec 11
- SUP 1: 1.3272 50-day EMA
- SUP 2: 1.3254 20-day EMA
- SUP 3: 1.3180/25 Low Dec 2 / Low Nov 26
- SUP 4: 1.3038/10 Low Nov 20 / Low Nov 4 & 5 and the bear trigger
A recent bull flag formation in GBPUSD has been confirmed and Thursday’s gains confirm a resumption of the current bull leg. Scope is seen for a climb towards 1.3452 next, a Fibonacci retracement point. Clearance of this price point would strengthen a bull theme. Initial firm support is seen at 1.3254, the 20-day EMA. A clear break of this average would be a bearish development and signal a possible reversal.
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FOREX: USD Index Extends Recent Weakness Following Data, CHF Outperforms
Nov-11 18:22
- A softer-than-expected ADP jobs release from the US caught the market a little off guard on Tuesday, weighing on the greenback and allowing the USD index to plumb new pullback lows below 99.40.
- ADP noted that “not only is the pace of employment growth shifting lower, it’s doing so in a jagged path across occupations, industries, and geographies. Going forward, instead of being a stable constant, the break-even rate more likely will be constantly moving”.
- Most notable initially was the move for USDJPY, which extended its selloff from the overnight highs to around 80 pips. Downside momentum picked up on a break of the overnight lows, below 154.00 to 153.67 lows before stabilising. We have pointed out that USDJPY continues encounter some resistance above the 154.00 handle, potentially registering an eighth daily high between 154.14-154.49, bolstering the short-term significance of this resistance cluster. First important support to watch lies at 152.70, the 20-day EMA.
- CHF outperforms following late yesterday's optimism on a potential Swiss trade deal with the US. While such a deal would be unlikely to sway SNB rates this year or the next, it should see a moderate upwards revision of 2026 GDP forecasts for the country, which is providing a boost to the Franc. EURCHF sees downside pressure as a function of that at 0.9273, while USDCHF (-0.67%) has tracked back below 0.8000.
- EURUSD broke above Friday’s high to trade back above 1.1600. The 50-day EMA intersects at 1.1627, and a breach would alter the short-term bearish theme.
- It’s worth noting that GBPUSD fully reversed the UK labour market data inspired selloff, however, sterling weakness remains evident through the cross, with EURGBP maintaining its position back above 0.88 for now.
LOOK AHEAD: Wednesday Data Calendar: Fed Speakers, Tsy 10Y Sale
Nov-11 18:17
- US Data/Speaker Calendar (prior, estimate)
- 11/12 0700 MBA Mortgage Applications (-1.9%, --)
- 11/12 0920 Fed's Williams Delivers Keynote Speech
- 11/12 1000 Fed's Paulson speaks on Fintech
- 11/12 1020 Fed's Waller Speaks on Payments
- 11/12 1130 US Tsy $69B 17W bill auction
- 11/12 1215 Fed's Bostic Speaks at Atlanta Economics Club
- 11/12 1230 Fed's Miran Speaks in Fireside Chat
- 11/12 1300 US Tsy $42B 10Y Note (91282CPJ4)
- 11/12 1600 Fed's Collins Speaks at Community Banking Conference
- Source: Bloomberg Finance L.P. / MNI
STIR: Markets Still Undecided On Dec Cut But Broader Dovish Shift On ADP
Nov-11 18:02
- US rates hold a sizeable dovish shift seen on the soft weekly ADP jobs report, perhaps amplified by thinner volumes on Veterans Day but with the weekly deterioration in jobs growth still notable.
- Fed Funds implied rates are 1bp lower for the Dec meeting, 3bp for Mar and 4.5bp for June.
- Cumulative cuts from 3.87% effective: 16bp Dec, 27bp Jan, 37.5bp Mar, 44bp Apr and 59bp Jun.
- SOFR futures are up to 5 ticks higher through 2027 contracts.
- It sees terminal implied yields at 3.065% (H7, -5bp) for ~10bps lower since Wednesday’s post-ADP and ISM services highest close since late July, driven by a string of softer alternate labor indicators.
- This comes ahead of a nonfarm payrolls report for September that could be published on Friday or perhaps early next week, having been almost finalized ahead of the start of the government shutdown in October.
- The ADP update pointed to an average reduction of 11,250 jobs on a week-on-week basis in the four weeks to Oct 25, i.e. worth about -45k on a monthly basis.
- That’s a shift from the 42k M/M increase in last week’s main monthly report for October, as usual built on a reference week that includes the 12th day of the month, although we’re yet to establish how these weekly estimates change/are revised over time.
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