Europe Fundamental Forecast | 12 November 2026 | IC
What happened in the Asia session?
The main story during Thursday’s Asian session is the strengthening U.S. dollar, supported by expectations of further Federal Reserve rate increases. The Japanese yen remains weak against the dollar, although rising Japanese wholesale inflation could increase pressure on the Bank of Japan to tighten monetary policy.
Gold faces downside pressure from the stronger dollar and interest-rate expectations, while crude oil is falling as geopolitical concerns ease and expectations of additional supply weigh on prices.
What does it mean for the European & US sessions?
The main theme today is U.S. dollar strength driven by inflation concerns and expectations of further Federal Reserve rate hikes. This is creating pressure on gold and major currencies, particularly the euro and pound.
Oil is also facing downside pressure as hopes of geopolitical progress and rising U.S. crude inventories weigh on prices. Meanwhile, the recovery in U.S. technology stocks suggests that equity sentiment is improving, although higher interest rates remain a risk.
The Dollar Index (DXY)
Key news events today
Unemployment Claims (1:30 pm GMT)
What can we expect from the DXY today?
The US dollar is gaining strength as hotter-than-expected inflation and hawkish Federal Reserve comments increase expectations of further interest rate hikes. Rising Treasury yields are also supporting the currency, while the dollar index has climbed to its highest level in approximately 19 months.
Central Bank Notes:
- The Federal Open Market Committee (FOMC) kept interest rates unchanged at 3.75%–4.00% at its October 27–28 meeting. The decision was approved by a 10–2 vote, following September’s 25-basis-point rate hike. Two members preferred another 25-basis-point increase.
- The labor market remains relatively stable. The Fed noted that job gains have kept pace with workforce growth and that the unemployment rate has changed little. Employment conditions remain an important factor in future policy decisions.
- Inflation remains above the Fed’s 2% target. Policymakers want more economic data to assess whether inflation is moving sustainably towards the target. Persistent inflation could increase the possibility of further rate hikes.
- The Fed upgraded its assessment of the U.S. economy from a solid pace of growth to a strong pace. Domestic spending remains resilient, productivity growth is strong, and business investment remains robust. However, geopolitical developments continue to create uncertainty.
- The Fed has kept the door open to further rate hikes if inflation remains elevated. The latest decision suggests policymakers want more evidence before making their next move. Markets are watching closely for signals about a possible rate increase in December.
- Chair Kevin Warsh continues to emphasize the importance of bringing inflation back to the 2% target. The October decision reflects a cautious approach, with the Fed waiting for more information before adjusting interest rates again.
- The Fed’s decision could influence the U.S. dollar, Treasury yields, gold, and other financial markets. Expectations of higher interest rates may support the dollar and pressure gold, while signs of easing inflation could weaken the dollar and support gold prices. Market reactions will depend on incoming economic data and expectations for future policy.
- The next meeting is scheduled for 8 to 9 December 2026.
Next 24 Hours Bias
Medium Bullish
Gold (XAU)
Key news events today
Unemployment Claims (1:30 pm GMT)
What can we expect from the Gold today?
Gold remains under bearish pressure on Thursday as stronger-than-expected U.S. inflation has increased expectations of further Federal Reserve rate hikes. The stronger U.S. dollar and rising Treasury yields are also reducing demand for the precious metal. Traders will now focus on U.S. jobless claims, comments from Fed officials, and Friday’s PPI inflation report for fresh direction.
Next 24 Hours Bias
Medium Bearish
The Euro (EUR)
Key news events today
ECB President Lagarde Speaks (7:30 pm GMT)
What can we expect from the EUR today?
The euro has a mixed outlook today. Expectations of another ECB interest-rate increase in December are providing some support, particularly as Eurozone inflation remains elevated. However, the strengthening US dollar and expectations of further Federal Reserve tightening are limiting the euro’s upside.
Central Bank Notes:
- At its 29 October meeting, the ECB kept all three key interest rates unchanged. The deposit facility rate remains at 2.50%, the main refinancing operations rate at 2.65%, and the marginal lending facility rate at 2.90%. The ECB maintained its data-dependent, meeting-by-meeting approach, with no commitment to future rate changes.
- Inflation remains a major concern. Euro-area annual inflation rose to 3.8% in September, up from 3.2% in August. Higher energy prices were the main contributor, with energy inflation reaching 18.8%. This keeps inflation well above the ECB’s 2% target.
- Economic growth remains relatively modest. The ECB’s September projections expect GDP growth of 0.9% in 2026, 1.4% in 2027, and 1.5% in 2028. Although the economy has shown resilience, higher energy costs and geopolitical uncertainty continue to threaten the outlook.
- Economic confidence weakened in October. The Euro-area Economic Sentiment Indicator declined by 0.6 points to 96.9, marking its second consecutive monthly decline. Consumer confidence also weakened, suggesting continued pressure on household spending and business activity.
- Energy prices remain a major risk to the inflation outlook. The ECB warned that prolonged increases in oil and natural gas prices could push inflation higher while weakening economic growth. The bank is also monitoring whether higher energy costs begin spreading into wages and broader consumer prices.
- The ECB’s balance-sheet reduction continues. The APP and PEPP portfolios are gradually declining as the central bank no longer reinvests principal payments from maturing bonds. This process represents continued quantitative tightening and a gradual withdrawal of monetary support.
- The main focus heading into November is whether persistent inflation will require further interest rate increases. The ECB remains cautious as rising energy costs create inflation risks, while weaker economic confidence and tighter financing conditions could weigh on growth. Upcoming inflation and economic activity data will be important in determining the bank’s next policy decision.
The next meeting is on 16-17 December 2026.
Next 24 Hours Bias
Weak Bearish
The Swiss Franc (CHF)
Key news events today
No major news event
What can we expect from the CHF today?
The Swiss franc is under pressure as a stronger US dollar and expectations of further Federal Reserve rate hikes encourage investors to move towards higher-yielding currencies. Although Swiss inflation has increased to 1.5%, the SNB’s interest rate remains at 0%, limiting the franc’s yield advantage. For now, the overall outlook is bearish for CHF against the US dollar, while any increase in global uncertainty could bring safe-haven demand back into the currency.
Central Bank Notes:
- At its 24 September meeting, the SNB kept the policy rate unchanged at 0.00%, citing appropriate monetary conditions.
- Swiss inflation increased from 0.6% in May to 0.8% in August, mainly due to higher energy prices. The SNB expects inflation to rise somewhat in Q4 before easing during 2027.
- The SNB now projects average inflation of 0.7% in 2026, 0.8% in 2027, and 0.8% in 2028, assuming the policy rate remains at 0%.
- The SNB remains willing to intervene in the foreign-exchange market if necessary to maintain appropriate monetary conditions, particularly if exchange-rate movements become problematic.
- The SNB expects Swiss growth to remain moderate, forecasting 1.5–2% growth in 2026 and around 1.5% in 2027.
- The main risks remain Middle East tensions, elevated energy prices, global growth, and trade-policy uncertainty. Higher energy prices could increase inflation while weakening economic growth.
The next meeting is on 10 December 2026.
Next 24 Hours Bias
Medium Bullish
The Pound (GBP)
Key news events today
GDP m/m (7:00 am GMT)
Prelim GDP q/q (7:00 am GMT)
What can we expect from the GBP today?
The British pound faces a mixed outlook today. The Bank of England’s recent interest-rate increase provides some support, but a stronger US dollar and concerns about elevated energy prices are creating pressure on sterling.
The biggest event today is the UK GDP release at 07:00 GMT. Stronger-than-expected growth could help the pound recover, while disappointing figures could trigger further weakness.
Central Bank Notes:
- The BoE raised its bank rate by 25 basis points to 4.00% at its 4 November 2026 meeting. The MPC voted 8–1 in favour of the increase, with one member preferring a larger hike to 4.25%. The decision reflects growing concerns about persistent inflation driven by higher energy prices.
- UK CPI inflation increased to 3.5% in September, up from 3.1% in August, remaining well above the BoE’s 2% target. Core CPI also increased to 2.8%, while services inflation rose to 3.7%, highlighting continued underlying price pressures.
- The ongoing Middle East conflict continues to push energy prices higher. The BoE expects inflation to rise further, potentially reaching around 5% by mid-2027, before gradually declining as energy-related pressures ease.
- The UK economy has shown more resilience than previously expected, with economic activity stronger than anticipated. However, higher energy costs and borrowing expenses continue to create uncertainty for households and businesses.
- Wage growth and services inflation remain key concerns for policymakers. The BoE is closely monitoring whether higher energy costs will lead to further increases in wages and business prices, creating more persistent inflation.
- The BoE continues to review its balance-sheet reduction strategy and the management of its government bond holdings. The bank is monitoring market conditions while maintaining its longer-term approach to quantitative tightening.
- The BoE’s future decisions will remain data-dependent, with inflation, energy prices, wage growth, and economic activity determining whether further rate increases are necessary. Policymakers have indicated that the latest increase does not automatically signal the beginning of a prolonged rate-hiking cycle.
- The next meeting is on 17 December 2026.
Next 24 Hours Bias
Medium Bullish
The Canadian Dollar (CAD)
Key news events today
No major news event
What can we expect from the CAD today?
The Canadian dollar remains under pressure on Thursday, November 12, as stronger U.S. inflation, expectations of further Federal Reserve rate increases, and falling oil prices are supporting USD/CAD.
Although rising Canadian inflation and the Bank of Canada’s recent interest-rate increase are providing some support, weaker employment conditions and lower oil prices remain significant challenges.
Central Bank Notes:
- On 28 October 2026, the Bank of Canada raised its overnight interest rate by 25 basis points to 2.50%, ending its extended period of holding rates steady. The bank cited persistent inflation risks and stronger economic activity. Further rate increases remain possible.
- Canada’s economy grew by an annualized 3.3% in Q2 2026, with growth estimated at around 2% in Q3. However, new US tariffs and trade uncertainty are expected to slow economic activity in Q4.
- Unemployment has remained around 6.5%, indicating continued spare capacity in the labor market. Although employment conditions have stabilized, uncertainty over trade and economic growth remains a concern.
- Canada’s annual inflation rate rose to 3.1% in September, up from 3.0% in August. Higher gasoline prices were the main driver, while inflation excluding gasoline remained at 2.2% and core inflation measures stayed close to 2%.
- Persistently high global oil prices and Middle East tensions continue to increase fuel and transportation costs. The bank warned that these pressures could spread to other goods and services, keeping inflation elevated for longer.
- Renewed US tariffs and uncertainty over trade relations remain significant risks to Canada’s economic outlook. These pressures could weaken exports, delay business investment, and slow growth, while also increasing business costs.
- The BoC has raised its policy rate to 2.50% to limit the risk of persistent inflation. The bank may raise rates further if price pressures continue, but future decisions will depend on economic data, energy prices, and trade developments.
- The next meeting is on 9 December 2026.
Next 24 Hours Bias
Medium Bearish
Oil
Key news events today
No major news event
What can we expect from the Oil today?
Oil prices are under pressure as hopes for peace negotiations reduce geopolitical concerns, while rising U.S. crude inventories and increased OPEC+ production add to supply concerns. However, continued uncertainty around the Strait of Hormuz could limit further losses. Traders should pay close attention to today’s official U.S. inventory figures, as they could determine the next major move in oil prices.
Next 24 Hours Bias
Medium Bearish
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