Europe Fundamental Forecast | 06 November 2026 | IC
What happened in the Asia session?
Today’s Asian session is dominated by a sharp deterioration in global risk sentiment following the heavy sell-off in U.S. technology and semiconductor stocks. Concerns about AI investment and potential regulatory changes have triggered significant losses in South Korea and Japan, increasing demand for safe-haven assets such as the Japanese yen and gold. The U.S. dollar remains relatively stable, while lower Treasury yields are providing some support for gold. Oil prices are gaining support from Middle Eastern geopolitical uncertainty, although concerns about weaker global economic growth remain a downside risk.
What does it mean for the European & US sessions?
Friday’s trading could be dominated by the U.S. employment report, which will provide important clues about the strength of the American labor market and the Federal Reserve’s next interest-rate decision.
The recent sell-off in technology stocks has increased demand for safe-haven assets, while lower Treasury yields have created uncertainty for the U.S. dollar. Meanwhile, the Bank of England’s latest rate increase will remain important for sterling.
The Dollar Index (DXY)
Key news events today
Average Hourly Earnings m/m (1:30 pm GMT)
Non-Farm Employment Change (1:30 pm GMT)
Unemployment Rate (1:30 pm GMT)
Prelim UoM Consumer Sentiment (3:00 pm GMT)
Prelim UoM Inflation Expectations (3:00 pm GMT)
What can we expect from the DXY today?
The US dollar is relatively stable but remains under pressure following the US midterm election results and the decline in Treasury yields. Investors are concerned that political uncertainty and tighter technology regulations could affect US economic growth and investment.
Meanwhile, falling expectations of another Federal Reserve rate hike are limiting dollar strength. However, recent employment indicators remain encouraging, meaning a stronger-than-expected Nonfarm Payrolls report could support a dollar recovery.
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 Bearish
Gold (XAU)
Key news events today
Average Hourly Earnings m/m (1:30 pm GMT)
Non-Farm Employment Change (1:30 pm GMT)
Unemployment Rate (1:30 pm GMT)
Prelim UoM Consumer Sentiment (3:00 pm GMT)
Prelim UoM Inflation Expectations (3:00 pm GMT)
What can we expect from the Gold today?
Gold is showing a strong recovery after last week’s sharp decline, supported by a weaker U.S. dollar, falling Treasury yields and renewed safe-haven demand. Prices have climbed back above $4,100, with investors now waiting for the U.S. Nonfarm Payrolls report for further direction.
The main risk for gold today is stronger-than-expected U.S. employment data, which could strengthen the dollar and push prices lower. However, weaker employment figures could support further gains by increasing expectations of lower interest rates.
Next 24 Hours Bias
Medium Bullish
The Euro (EUR)
Key news events today
No major news event
What can we expect from the EUR today?
The euro is trading mixed heading into Friday. Expectations of another ECB interest rate increase in December are providing some support, while stronger-than-expected eurozone economic growth is also positive.
However, rising oil prices, geopolitical uncertainty, and concerns about France’s public finances continue to weigh on sentiment.
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
Medium Bullish
The Swiss Franc (CHF)
Key news events today
No major news event
What can we expect from the CHF today?
The Swiss franc is showing strength on Friday as investors move towards safer currencies amid falling global equity markets and growing uncertainty. Meanwhile, rising Swiss inflation is increasing speculation that the Swiss National Bank (SNB) could consider raising interest rates in the coming months.
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
No major news event
What can we expect from the GBP today?
The British pound currently has a positive fundamental outlook following the Bank of England’s decision to raise interest rates to 4.00%. The hawkish decision suggests that the bank remains concerned about inflation and is prepared to tighten monetary policy further if necessary.
However, further gains are not guaranteed. Strong US employment data could support the dollar, while concerns about UK inflation and economic growth could create pressure on Sterling.
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
Employment Change (1:30 pm GMT)
Unemployment Rate (1:30 pm GMT)
Ivey PMI (3:00 pm GMT)
What can we expect from the CAD today?
The Canadian dollar is receiving support from a weaker U.S. dollar, recovering crude oil prices, and the Bank of Canada’s relatively hawkish monetary policy stance. Canada’s stronger September trade surplus also provides some fundamental support.
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 Bullish
Oil
Key news events today
No major news event
What can we expect from the Oil today?
Oil prices are recovering today, Friday, after suffering significant losses earlier this week. Expectations that the US midterm election results could encourage diplomatic efforts to end the Iran conflict have reduced some of the geopolitical risk premium in oil prices.
However, the market remains uncertain because tanker attacks and disruptions around the Strait of Hormuz continue to threaten Middle Eastern oil supplies.
Next 24 Hours Bias
Medium Bearish
Risk Warning: Trading in securities involves significant risk. Prices may fluctuate and securities can become entirely valueless. You may incur losses that exceed your potential profits, and in some cases, losses may exceed the amount you have deposited. Securities, futures, options, and contracts for differences are complex financial instruments and are not suitable for all investors. Engaging in such transactions requires a sound understanding of the associated risks. Please read and ensure you fully understand our Risk Disclosure.
Our leverage is dynamic and may change at any time. Such changes may affect your positions and margin requirements. You are responsible for monitoring your positions and maintaining sufficient margin at all times.
The post Europe Fundamental Forecast | 06 November 2026 | IC first appeared on IC Your Trading Edge | Official Blog.