Weekly outlook | Impact of Recent Economic Events and upcoming Interest rates ahead of US elections

Fundamental data

The USDJPY rate sank to 152.72, a three-month low, as Japan’s coalition lost its majority, casting doubt on rate hikes with the BoJ rate holding steady at <0.25%. The USD retraced as October’s NFP growth plummeted to 12K, well below September’s revised 223K, affected by strikes and storms. Oil prices dropped 6% to 67.80 USD following Israel’s strike on Iran, which did not impact energy sites, while gold surged to a record 2,800 USD due to safe-haven demand ahead of the US election.

Important events this week

Australia Interest Rate- on Tuesday, November 5, 2024, at 3:30 CET, Australia is set to release its cash rate decision, projected at 4.35%. The Reserve Bank of Australia (RBA) held its rate steady at 4.35% in September, marking the seventh straight pause, in line with market expectations to keep borrowing costs consistent.

Last week, AUDUSD broke the 4HR support at 0.6620, currently around 0.6560, impacted by strong US economic data and Trump election expectations, while the RBA’s trimmed mean CPI rose to 3.5%. Looking ahead, a confirmed downside breakout at 0.6540 could target 0.6350, influenced by upcoming Australia and Fed interest rate decisions; however, a failure to break could see a rebound to 0.6620.

Presidential Election- the upcoming U.S. election on Tuesday, November 5, 2024, is set to create substantial volatility across markets—from forex pairs and crypto assets to stocks and commodities—potentially shaping investor sentiment and price action across the board.

Last week, USDJPY continued its bullish trend, breaking resistance at 152.00 and currently trading around 153.00. Technical analysis suggests that if the breakout holds, USDJPY could target 162.00; conversely, a failure may lead to a drop to 149.10. Upcoming volatility will likely stem from the US election and the Fed’s rate decision.

UK Interest Rate- on Thursday, November 7, 2024, at 12:00 CET, the Bank of England is set to announce its interest rate decision, with market expectations targeting a 4.75% forecast. The BoE previously held its Bank Rate steady at 5% in September.

After the GBPUSD tested strong resistance last week the market is now trading around 1.2930. This downside movement was fueled by concerns over inflation from British Finance Minister Rachel Reeves’ budget announcement and weaker US job data. If the downside breakout holds, the rate could fall to 1.2660; if it fails, a rebound to 1.3050 is possible.

United States Fed Funds Interest Rate- on Thursday, November 7, 2024, at 19:00 CET, the US is set to release its interest rate decision, with expectations pinned at 4.75%. During the September FOMC meeting, Fed officials expressed uncertainty over the magnitude of rate cuts, ultimately opting for a 25bps reduction, bringing the rate down from 5% to 4.75%.

Last week, USDCAD broke above resistance at 1.3870, currently trading around 1.3950, close to the August 5 peak. This bullish trend was fueled by a strong US Dollar. The Bank of Canada’s gradual rate cuts may prolong CAD weakness. If the resistance at 1.3950 holds, now turning into a support, prices could rise to 1.4280. Else a drop back to 1.3870 might be likely.