* USD quiet, EUR flat in muted Thanksgiving trade

* Wednesday saw S&P 500 snap seven-day win streak, losing the 6,000 milestone

* Gold steady in quiet holiday trade below 50-day SMA

FX: USD was quiet as expected during the US Thanksgiving holiday. Money markets are currently pricing a 65/35% chance of a 25bps December Fed rate cut or a pause. If the FOMC do cut next month, there’s a 58% chance they pause at the January meeting.

EUR was steady, printing a narrow inside day candle. Prices are still in a long-term downtrend with the 50-day SMA above at 1.0622 as near-term resistance. Yesterday’s ECB Schnabel’s hawkish comments were expected and took out some bets on a 50-bps ECB rate cut next month. French political chaos is rearing its head again.

GBP saw similar price action to the euro with bulls trying to reverse the long-term down move. Cable’s 50-day SMA sits at 1.2742.

USD/JPY found support at the 100-day SMA at 150.72. The 50% retracement level of the summer sell-off resides at 150.76. The one-month yen high from yesterday means JPY is heading for its strongest week since early September. This is primarily due to increasing BoJ rate hike expectations.

AUD consolidated above a minor Fib level from the August spike low up to the September highs at 0.6475. The RBA’s Bullock said inflation as ‘too high’ to consider rate cuts. USD/CAD traded modestly lower but with some room above previous major resistance now turned support at 1.3969.

Asian stocks: Futures are mixed. Asian equities were again mixed ahead of the US holiday period. The ASX 200 saw gains in tech, healthcare and financials. The Nikkei 225 rose above the 38,000 level as yen strength steadied. The Hang Seng and Shanghai Composite sold off on tariff concerns around China chip curbs.

Gold printed a narrow ranged doji candle holding just below the 50-day SMA at $2648. The 100-day SMA sits at $2668.

Day Ahead – Eurozone CPI

Inflation in the euro area is expected to accelerate for a second straight month in November. An increase could be enough to dissuade the European Central Bank from a “jumbo” rate cut of 50 bps at its final meeting of the year next month. An economists’ poll predicted that the headline inflation rate increased to 2.3% this month from 2.0% in October. That would push it back above the ECB’s target of 2% over the medium term.

The less-volatile core rate is set to move in the opposite direction of what is usually expected for loosening monetary policy. The indicator, which excludes energy and food costs, is forecast to rise to 2.8% y/y from 2.7% last month. There’s now around 30bps priced into the December ECB meeting, so around a 60% chance of a big 50bps rate reduction.

 Chart of the Day – EUR/GBP still trading around support zone

This popular cross has been trading around the low from August 2022 at 0.8339 for some weeks now. The expansionary UK budget lifted the BoE’s GDP and CPI forecasts. It forced Bailey to backtrack on his earlier call for an activist policy easing approach and instead he sounded cautious on future cuts.

But the eurozone is suffering with domestic political, war and economic stagnation headwinds. Market believe the ECB is toying with a 50bps rate cut. The economic picture between the UK and Europe has therefore diverged to the benefit of sterling. But prices need to decisively break 0.8259 to then challenge another long-term low at 0.8202.