The USD/MXN exchange rate has moved sideways in the past few weeks as traders eye the upcoming Federal Reserve and Banxico interest rate decision. The pair was trading at 20.11 on Friday, down by 3.45% from its highest level this month.

Federal Reserve decision

The USD/MXN pair will react to the upcoming Fed decision. In it, officials are expected to cut interest rates for the third time this year because of the relatively soft-ish labor market.

Data released earlier this month showed that the economy added over 200k jobs, while the labor participation rate retreated slightly. The unemployment rate rose slightly to 4.2% during the month.

These numbers mean that the labor market was not growing as initially expected. As a result, the Fed believes that cutting interest rates will help to ease the cost of doing business and boost the sector.

The Fed’s challenge is that US inflation is still a big challenge. Data released last week showed that the headline Consumer Price Index (CPI) rose from 2.4% to 2.6% in November.

Similarly, the core CPI remained unchanged at 3.3% during the month, much higher than the Fed’s target of 2.0%. Analysts expect that inflation may remain stubbornly higher, especially if Donald Trump implements his policies.

Trump has threatened to deport millions of undocumented migrants, a move that will affect key sectors of the economy like agriculture, hospitality, and construction. 

He has also pledged to impose large tariffs on imports, a move he hopes will reduce the trade deficit. However, as history has shown, tariffs don’t solve trade deficits since they are just added to the final cost of goods.

Trade deficit is usually the difference between imports and exports. For the US to lower it, it would need to reduce imports, while dramatically increasing exports. The challenge is that the US does not sell many goods to other countries because of the higher cost if doing business.

Banxico interest rate decision

The next important USD/MXN exchange rate news will come out on Thursday when Mexico delivers its interest rate decision.

Like other central banks, Banxico has embarked on a rate cutting cycle, a move it hopes will support the ailing economy. 

It started cutting rates in August, when it moved them from 11% to $10.75%. It has then cut rates two more times since then.

Economists see the bank cutting rates again in the next meeting as it prepares for the Trump era. In a recent X post, Trump warned that he would sign a 25% tariff on Mexican goods because the country has “allowed” illegal migrants 

The Banxico is supported by the recent inflation flows. Recent data showed that Mexico’s Consumer Price Index (CPI) slowed from 4.76% to 4.55% in November, inside the bank’s target. 

There are also signs that the Mexican economy is not doing well. It expanded by 1.6% in the third quarter, a big slowdown from the 2.1% growth in the previous quarter.

USD/MXN technical analysis

The USD/MXN exchange rate has remained under pressure in the past few weeks. It has retreated from a high of 20.82 to a low of 20.11. Along the way, it has moved below the lower side of the rising wedge chart pattern, a popular bearish reversal sign.

The pair remains between the 50-day and 25-day Exponential Moving Averages (EMA). It has also formed a double-top pattern at 20.82. A double-top is one of the most popular bearish signs in the market. 

Therefore, the USD/MXN pair’s path of the least resistance will be downwards, with the next point to watch being at 19.50.

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Nike stock price will be in the spotlight next week as the highly embattled company publishes its financial results. These numbers will come at a time when its shares have plunged by over 54% from the highest point in 2021.

Nike’s growth has stalled

Nike, one of the best names in the apparel industry, is going through a difficult phase a its growth slows and as competition rises. 

Its annual revenue jumped from over $37.4 billion in 2019 to over $51.2 billion in 2022. The trajectory then slowed a year later as its revenue rose to just $51.3 billion a year later.

Nike’s business is struggling as competition from companies like On Holding and Adidas has risen. On top of that, weak consumer spending in China has contributed to the slowdown.

All this has made Nike one of the worst-performing companies in the Dow Jones index. There are rising odds that it will be removed from that list if the performance continues.

The most recent results showed that Nike’s business deteriorated in the last quarter. Revenue retreated by 10% in its first quarter to $11.6 billion. This slowdown was spread across its business segments.

Nike Direct sales fell by 10% to $11.6 billion, while its wholesale revenues dropped by 8% to $4.7 billion. 

This slowdown is a contrast to what Adidas, the giant German company performed during the quarter. Its sales rose by 10%, with its numbers expanding across all markets, channels, and divisions. 

On Holding, another company in the industry, also reported strong numbers as its net sales jumped by 32.3% to over CHF 635 million. Its growth was driven by its direct-to-consumer business. 

Therefore, these numbers mean that Nike’s problems are mostly internal, which explains why its stock has underperformed. Adidas stock has jumped by 24%, while On Holding has risen by over 112%. 

Nike is also done worse than Under Armour, whose shares have fallen by about 4% this year as it implements its turnaround.

Nike’s results also showed that its profitability dipped during the quarter. Its net income fell by 28% to $1.1 billion, and the company withdrew its guidance.

NKE Earnings ahead

The next catalyst for the Nike stock price will be its earnings, which will come out next week. Analysts expect that its revenue dropped by 9.1% in the last quarter to $12.16 billion, continuing a trend that has been going on for a while. 

Analysts also expect that its forward guidance for the next quarter will be revenues of $11.5 billion. For the year, they see its revenues falling by 7.7% to $47.4 billion. 

On the positive side, analysts expect that Nike’s revenue growth will resume in the next financial year when its revenue will grow to almost $5o billion.

Another positive is that analysts expect that Nike’s stock is relatively undervalued. The average stock target is $90.45, higher than the current $77.25. The general view is that Nike is a strong brand that will ultimately recover.

Read more: Can Nike’s new CEO and Jordan anniversary turn around its stock performance?

Nike stock price forecast

The weekly chart shows that the NKE share price has been in a strong bearish trend in the past few years. It has remained below the descending trendline that connects its highest levels since November 2021.

The stock has formed a descending triangle pattern and a death cross pattern. It is also sitting at the lower side of the triangle. Therefore, there is a likelihood that the stock will have a bearish breakdown as sellers target the key support at $60. 

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The Russian ruble has remained under pressure this year as the impact of sanctions and a stronger US dollar continued. The USD/RUB pair was trading at 104.50, down by 8.8% from the highest point this year. It has shed about 14% of its value this year. Here’s why the USD to RUB would be a good carry trade pair.

Bank of Russia interest rate decision

The USD/RUB exchange rate has been in the spotlight as the Russian war in Ukraine started. 

It was trading at 78.2 before the war started and then surged to 154 as more countries implemented large sanctions on Russia. The Russian ruble then strengthened to 50.72 in June 2022. 

It has then weakened by over 106% even as the Russian economy remained resilient. Recent data showed that Russia has an unemployment rate of 2.3%, much lower than US’s 4.2%. Its rate remains much lower than the pandemic-era high of 6.4%.

Russia’s GDP has also continued to do well, helped by the increased military spending. As a result, recent data showed that Russia had a GDP growth of about 3.1% in the last quarter.

The challenge, however, has been that Russia’s inflation has remained high in the past few months. Recent data showed that the headline Consumer Price Index (CPI) rose from 8.5% to 8.9% in the last month. The CPI has grown steadily from last year’s low of 2.3%.

Russia has also been hit by the ongoing trends in the energy market, where Brent and West Texas Intermediate (WTI) have retreated by double-digits this year. Energy is an important part of the Russian economy because it is the biggest export and cash generator. 

The next important catalyst for the USD/RUB pair will be the upcoming Bank of Russia interest rate decision. Economists expect that the bank will continue hiking interest rates in a bid to bring inflation down. 

The central bank started hiking rates in July last year, moving them from 8% to 21% today. Analysts expect the bank to continue hiking rates this week, moving them from 21% to 23%.

RUB and USD carry trade opportunity

In an ideal situation, the divergence between the Federal Reserve and Bank Rossii would make a great carry trade opportunity.

A carry trade is a situation where people borrow from a low-interest rate country and invest in higher rate country.

In this case, the Russian central bank is hiking rates, while the Federal Reserve is cutting them. Economists expect the Fed to cut rates by 0.25% in its meeting on Wednesday this week.

If this happens, it means that the Fed has now slashed rates by 1% as it continued to engineer a soft landing for the economy. 

Fed’s rate cuts and Bank of Russia’s hikes, have led to a wider spread, which would be ideal. The challenge, however, is that the Russian economy is suffering from substantial sanctions such that a carry trade would be almost impossible.

Russia has also embarked on currency controls, where it has made it highly difficult for people to move cash from the country. 

USD/RUB technical analysis

The weekly chart shows that the USD/RUB exchange rate has been in a steady uptrend in the past few months. It recently crossed the important resistance level at 102.30, its highest swing in October last year. 

The USD/RUB pair has formed a rising triangle pattern, a popular bullish sign. It has also remained above the 50-week and 100-week moving averages.

Therefore, the pair will likely continue rising in the near term. If this happens, the next point to watch will be at 114.48, the highest point on November 25.

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The USD/TRY exchange rate has had another difficult year as actions of Turkey’s central bank failed to reboot the currency. The pair has jumped to a record high of 34.88, up by almost 20% this year. This performance has made the Turkish lira one of the worst-performing currencies this year.

US dollar index strength

One reason for the ongoing USD/TRY surge has been the US dollar, which has been in a strong rally in the past few months. The US dollar index has jumped to $107, up by about 7% from the lowest level in October. 

This rally has continued after Donald Trump won the US election in November. He has pledged to implement some policies that are seen as being highly inflationary.

For example, Trump has pledged to deport millions of illegal migrants, a move that will lead to labor shortages in key industries like construction and agriculture and lead to high inflation. 

He has also promised to implement large tariffs on imports. Historically, tariffs have led to higher inflation in the country since sellers increase their prices.

The next key catalyst for the USD/TRY pair will be the upcoming Federal Reserve interest rate decision scheduled on Wednesday. This will be a crucial decision because it will set the tone for what to expect in 2025.

Economists expect the Fed to cut interest rates by 0.25% because of the deteriorating labor market. Precisely, the bank is concerned that the unemployment rate has remained stubbornly high.

Turkish Central Bank ahead

The other crucial catalyst for the USD/TRY will be the next Central Bank decision, which will happen on December 26. 

This will also be an important decision because it will set the tone for what the bank will do next year.

There are signs that the CBRT will delay its rate cuts plan because inflation is not falling as expected.

Recent data shows that the headline Consumer Price Index (CPI) retreated from 48.58% in October to 47% in November. The CPI figure was higher than the median estimate of 46.60.

October and September figures were also higher than expectations. This means that the CPI will end the year above 40%, higher than what the CBRT was expecting.

Ideally, the CBT  should maintain higher interest rates for longer because Turkey’s inflation remains stubbornly high. The challenge, however, is that Turkey does not have an independent central bank and President Erdogan does not love high rates. 

On the positive side, some analysts believe that the Turkish lira is a good carry trade because of the ongoing 50% interest rates. With US rates being below 5%, some money managers have decided to borrow US dollars and invest in the Turkish lira, especially now that the latter has been stable. 

Some of the most popular companies that have bought the Turkish lira are from T. Rowe Price and Pinebridge. In a recent note, an analyst at T.Rowe Price said:

“Long Turkish lira has been a high-conviction carry trade in some of our multi-asset portfolios since June 2024 – we have recently added to the position following a sudden depreciation.”

USD/TRY technical analysis

USD/TRY chart by TradingView

The weekly chart shows that the USD/TRY exchange rate has been in a steady uptrend in the past few months. It has remained above the 50-week moving average, while the Relative Strength Index (RSI) has moved above the overbought level.

The pair has also formed a rising wedge pattern, a popular bearish reversal sign. Therefore, there are rising odds that the pair will have a strong bearish breakout in the coming months, with the next point to watch being at 32.5. 

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Bitcoin price has held steady in the past few months, and is holding near a record high as demand remains high. The coin was trading at $101,760, which is about 570% from its lowest point in 2022, making it the best-performing major asset.

Bitcoin demand and supply dynamics

All signs show that Bitcoin has strong demand and supply dynamics, which explains why the price may continue rising in the near term.

Bitcoin has a supply cap of 21 million coins and the total supply as of now is 19.79 million. This leaves about 1.21 million coins to be mined. 

At the same time, millions of coins have been lost permanently, while the amount of Bitcoins in exchanges has dropped to the lowest level in years. These coins stand at about 2.2 million, meaning that millions more are held in self-custody accounts. 

Bitcoin’s mining difficulty has continued to rise, especially because of the halving events. It is unclear whether many mining companies will produce enough coins in the next few decades. 

Therefore, Bitcoin’s supply will continue being a big challenge in the next few years. At the same time, demand is expected to continue rising in the next few years. Recent data shows that spot Bitcoin ETFs are seeing robust inflows. These funds have had over $35 billion in inflows this year, a trend that may continue in the next few years. 

Most importantly, companies will likely continue buying more coins in the future. Data shows that companies like MicroStrategy, Marathon Digital, Riot Platforms, Tesla, and Coinbase owns thousands of coins. Other large holders are firms like Block, Galaxy Digital, Semler Scientific, and NEXON have continued to buy more coins.

The next wave of purchases will likely come from mainstream companies like Apple, NVIDIA, and Amazon. These firms have seen MicroStrategy’s success and will likely want to replicate it over time.

Countries to start buying BTC

After that, countries will likely start buying these coins. Already, the US holds thousands of Bitcoins, which it has seized from criminal organizations. Donald Trump is considering converting these coins into a strategic reserve. 

If this happens, more countries will likely embrace Bitcoin as their reserve assets. Already, most countries like China, Russia, and Turkey have invested in gold, and many analysts see Bitcoin as a digital gold. If this happens, it will make Bitcoin, a rare asset, rarer.

A main catalyst for such a move will be the soaring global debt, which has been in a strong uptrend. The US now has over $36.3 trillion in public debt, a figure that is growing by $1 trillion each quarter. This means that it will cross the $40 trillion mark in the next few years.

Other countries are not doing well either. For example, China has over 71 trillion RMB in debt or 69% of the GDP, a figure that is growing. The same trend is happening in Europe, where a country like France is seeing a near 10% deficit.

Therefore, there are chances that these countries will move to Bitcoin, which is seen as a good asset.

Bitcoin price analysis

The weekly chart shows that the price of Bitcoin has been in a strong bull run in the past few months. It has constantly remained above all moving averages and formed a cup and handle pattern. 

If we measure the depth of the cup, we can assume that the coin will rise to $122,000 in this bullish cycle. If this happens, it will then suffer a brief pullback and then resume the strong bullish trend in the next few months. Over time, Bitcoin may rise to over $200,000.

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