Forex in November: what surprises have the central banks prepared? Forecast for GBPUSD, GBPCHF, USDCAD, USDNOK, AUDJPY and NZDJPY as of 28.10.2021

2021-10-28 2021-10-28
Forex in November: what surprises have the central banks prepared? Forecast for GBPUSD, GBPCHF, USDCAD, USDNOK…logo

Faster normalization of the Fed’s monetary policy than the markets expect, as well as strong US employment data, will bring interest back to the US dollar. However, other central banks may surprise traders. Let’s discuss the Forex outlook and make up a trading plan for GBPUSD, GBPCHF, USDCAD, USDNOK, AUDJPY and NZDJPY.

Monthly G10 currencies fundamental forecast

Expectations of monetary policy normalization and the return of financial markets to normal in October paid off handsomely. Supported by rising US Treasury yields and increased global risk appetite, AUDJPY and NZDJPY purchases yielded 6.4% and 6.1%, respectively. AUDCAD price rose by 1.65%. 14% to the deposit for the month is quite a good figure. This fact allows traders to look with interest at the future of currency pairs in Forex.

In November, the US and New Zealand dollars, the euro, Swiss franc, and Australian dollar, usually performed better than other G10 currencies. In contrast, the British pound, Canadian dollar, and Japanese yen were most often outsiders. The pound statistics were especially weak from 1975 to 2020. GBP closed in the red zone 29 months out of 46.

Rise-fall periods

   

Source: BoE, LiteForex calculations.

The Australian and New Zealand dollars, the euro and the Swiss franc are among the November leaders in terms of medians. The Norwegian krone was included in the list of outsiders. Together with weak CAD statistics, this circumstance suggests that the oil uptrend will no longer be as impressive as in October.

Averages and medians

  

Source: BoE, LiteForex calculations.

During favorable periods, the NZD and the AUD rose by an average of 2.4% and 2.3%, the euro by 2.1%, and the Swiss franc by 2.6%. After closing the month in red, the pound and the CAD lost 2.1% on average, and the Norwegian krone lost 2.6%.

Price dynamics during rise-fall periods

Source: BoE, LiteForex calculations.

The main events of November will be the meetings of the Fed and the Bank of England, the US October jobs report, as well as the return of topics such as Brexit and the public debt ceiling. The first three will occur at the very beginning of the month and can set an impulse for dollar pairs for several weeks. In particular, if the Fed tapers QE more decisively than investors expect, and US employment data will be strong (due to a successful fight against Delta), investors will be interested again in the USD.

Monthly GBPUSD, GBPCHF, USDCAD, USDNOK, AUDJPY and NZDJPY forecast

The pound’s seasonal weakness is worrying news. The Bank of England convinced investors about raising the interest rate at the 4th MPC meeting so much that if it abandons this idea, the GBPUSD and GBPCHF prices will go down sharply. The situation for sterling is exacerbated by tensions over the already resolved Brexit issue, possibly triggering a trade war between the UK and the EU.

The expansion of OPEC+ commitments concerning the increased production and lifting sanctions against Iran in the event of successful negotiations on the nuclear program can provoke a Brent and WTI rollback. These events will make longs on USDCAD and USDNOK relevant.

In the second half of November, investors will probably focus on the problem of the US government debt ceiling. Against the background of the end of the corporate reporting season, it may lead to a rollback of stock indices and increased demand for safe-haven assets. As a result, exit AUDJPY and NZDJPY longs and start forming short trades.

  

 

Price chart of GBPUSD in real time mode

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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