With hindsight, one could almost say that during the shutdown, investors did not miss much, as the statistics published since then have done little to change the overall picture. Meanwhile, the stockmarket is varying in line with the probabilities of another rate cut in December. Thus, on November 20, investors were pricing in a 39% chance of a cut while the S&P 500 was marking its low point. The rebound since then has gone hand in hand with forecasts that now put the odds of another rate cut at 85%. Fundamentally, whether the rate cut comes in December or in January does not change the narrative: the market is being driven by corporate earnings and an expected increase in liquidity via a rate cut and the end of Quantitative Tightening. On the macroeconomic front, employment is resisting and inflation is not reaccelerating, while seasonality remains supportive.
In this broadly supportive context for the equity market, the dollar is going nowhere, as is gold, while bonds are sinking, with the 10-year, for example, returning to test its recent lows at 3.93% after stalling at 4.15%. As you can see, all this translates into very little change in G10 currencies.
Thus, the EUR/USD has still not managed to break below 1.1500/1480, with a first resistance zone at 1.1675/95; a break above this would, at the very least, postpone, if not undermine, the scenario of a dollar rebound. In this respect, USD/JPY is currently testing its support at 155.00, a break of which would open the way to a more significant consolidation towards 153.15. Conversely, USD/CHF is still in a holding pattern between 0.8130 and 0.7830.
On the commodity-currency front, USD/CAD has touched its key support at 1.3835, and only a break below this would lend credence to a bullish CAD scenario. The Aussie is trying to break above 0.6550, while the Kiwi is already in rebound mode after crossing 0.5680, with 0.5740 and then 0.5790/5800 as key medium-term resistance levels.
