Market News

USD/JPY is hovering around 115.60 as holidays in Japan and lack of major data/events limited the pair’s move during Monday’s Asian session. Besides the lack of domestic companies, which are key to the global bond market, mixed concerns about the next move by the Fed and the coronavirus are also limiting the pair’s latest moves on the risk barometer. The US Dollar Index (DXY) posted its biggest daily loss in six weeks after the December jobs report failed to impress Fed advocates. That said, US Non-Farm Payrolls (NFP) disappointed markets with 199k numbers for December versus previous 400k and 249k forecasts (upgraded from 210k) thousand). However, the unemployment rate fell to 3.9% from 4.1% in the market and 4.2% in November, while the U6 underemployment rate fell to 7.3% from 7. .7% revised down in November, both closing pre-pandemic levels.

It should be noted, however, that the disappointment led by the NFP has been largely offset by the unemployment and underemployment rates in the U6 age group, which appear to be challenging market sentiment during the period recent times. As a result, market bets on the Fed’s March 2022 rate hike remain at 80%, following Friday’s increase to 90% prior to data.

Returning home, Okinawa, Hiroshima and Yamaguchi prefectures are seeing new virus activity restrictions starting Sunday, lasting until January 31. An increase in infections that the governors their say is derived from the spread of the Omicron variant in US facilities,” said Kyodo News. Elsewhere, struggles between the United States and China continued, recently over trade and human rights issues, as the Russia-Ukraine issue drew attention ahead of Washington’s meeting in Moscow this week. Between those games, S&P 500 futures are down 0.20% while non-Japanese Asia Pacific stocks trade mixed at press time. A light schedule could then limit market movement beyond the Japanese public holidays. However, the cautious sentiment as US inflation figures this week and December retail sales approach could drive US Treasury yields higher, which in turn could lead USD/JPY buyers to lose ground Mandarin. A clear downside break of the three-week-old ascending trend line, near 115.80 by the press time, keeps USD/JPY sellers hopeful around November’s peak of 115.52.

6:23 am

Forex News

January 7, 2022

XAG/USD: As actual yields rise, silver`s collectable attraction can also suffer

Silver and XAG/USD fell around 0.3% in Asia and the bulls are under pressure to correct their strong bearish momentum in response to the minutes of the previous day’s FOMC meeting. The protocol has shown that accelerated rate cuts will give officials an opportunity to raise rates in March as soon as they arrive. There was a sharp rally but the dollar hit a bid on Thursday, which changed again midway through the New York session.

The DXY, which measures the dollar against a basket of major currencies, hovered in 96 zones overnight while 10-year US yields sampled a daily high of 1.7530%. St. Louis Federal Reserve Bank Governor James Bullard said at a meeting of the St. Louis CFA Society that a rate hike is expected in March. This brought the dollar back to life. “The FOMC is well-positioned to take the additional steps necessary to control inflation, including (a) allowing passive balance sheet outflows, raising interest rates, and adjusting the timing and pace of subsequent rate hikes,” Bullard said.

“With the real economy strong but inflation far above target, US monetary policy has shifted to more directly addressing inflationary pressures,” Bullard said. “The FOMC could start raising rates from the March meeting to better control inflation,” Bullard said. Depending on the circumstances, it may be postponed or postponed,” he added.

The next day, the market will be guided by Nonfarm Payrolls data. But given the Fed’s hawkish sentiment, factors other than shocks are unlikely to have an impact. “The COVID-19 surge at the end of December was too late to halt U.S. employment growth,” said TD Securities analyst In the short term, however, regardless of the data outcome, markets will continue to revise the latest data on the Fed’s balance sheet, which will continue to push up real interest rates and put pressure on precious metals. However, analysts at TD Securities assert that while gold and silver prices are under pressure, “containing growth in the money supply will further dampen demand for all collectibles, including silver coins.” It could potentially offset global macroeconomic headwinds for gold.
Instead, while silver prices appear more vulnerable from accelerated liquidation of ETF assets, CTA trend advocates are seeking to increase short selling in response to the escalating downtrend.

5:12 am

Forex News

January 6, 2022

NZD/USD slides to over two week low, below mid0.6700s amid stronger USD/risk off

The NZD/USD pair endured dropping floor via the early European consultation and dropped to over a two-week low, under mid-0.6700s within side the ultimate hour. The pair prolonged the preceding day`s retracement slide from the 0.6835-forty place and witnessed heavy promoting all through the primary 1/2 of of the buying and selling on Thursday. The US greenback became again in call for following the discharge of especially hawkish FOMC assembly mins on Wednesday. Apart from this, the risk-off impulse in addition benefitted the safe-haven dollar and drove flows far from the perceived riskier kiwi. The December 14-15 FOMC financial coverage assembly mins pointed to a faster-than-predicted upward thrust in hobby rates. Moreover, a few Fed officers additionally notion that it’d be suitable to provoke stability sheet runoff in some unspecified time in the future after the primary increase. This underscored a massive shift with within the policymakers’ tone, which, in turn, became visible as a key thing that endured appearing as a tailwind for the USD.

Meanwhile, the market was quick to assess an approximately 80% chance of a 25bp Fed hike in March 2022. This was reflected in the prolonged sell-off in the US bond market, pushing up government bond yields Long-term US – 10 and 30 years – to their highest levels since October. In addition, concerns about the rapid spread of the Omicron variant have sparked a new wave of risk-averse global trading.

A combination of factors put a lot of pressure on the NZD/USD pair, resulting in a few short-term trading stops placed near the 0.6800 round figures. Therefore, a further drop to the 2021 tough low, around the 0.6700 mark reached on December 15, now looks a clear possibility. The negative outlook is reinforced by bearish technical indicators, which are still far from being in oversold territory.

Market players are now eagerly awaiting the US economic records, highlighting publications from the usual Weekly Initial Jobless Notice and ISM Services PMI. This, coupled with US bond yields and the broader market risk sentiment, should weigh on the USD price dynamics and give fresh impetus to the NZD/USD pair. However, the main focus will remain on the release of the US Monthly Employment Report (NFP) on Friday.

10:01 am

Forex News

December 29, 2021

NZD/USD sellers attack 0.6800 as yields, New Zealand corona virus cases drop

NZD/USD maintained yesterday’s downtrend and dropped to 0.6800 during Wednesday’s Asian session. In doing so, the Kiwi pair discourages positive news regarding the coronavirus at home amid widespread pessimism about the virus. Stronger expectations of the Fed slated to raise rates in 2022 are also putting downward pressure on the listing. While reporting 46 new community cases of Covid19 in New Zealand, the NZ Herald said: ‘during the holiday period. On the other hand, “China reported 197 confirmed new corona virus cases on December 28, up from 209 cases a day earlier, its health authorities said on Wednesday,” according to Reuters.

It should be noted that the UK is reporting a record number of daily infections, exceeding 122,000 a day after authorities ruled out any further activity restrictions for the rest of 2021. France joins with 179 807 new confirmed cases, making it the world’s heaviest daily toll. Elsewhere, “The average number of new COVID19 cases in the United States has increased by 55% to more than 205,000 per day over the past seven days,” according to a Reuters tally. Additionally, Australia’s most populous state of New South Wales (NSW) reported a doubling of fallopian tube infections on Tuesday, with 11,201 new infections and three deaths from the virus.

Inflation expectations in the United States remain close to monthly highs, according to 10-year breakeven inflation data from the Federal Reserve Bank of St. and weigh in on the NZD/USD price. That said, the US released mixed data a day earlier, with the US home price index falling below the 1.2% forecast at 1.1% in October, while The S&P/Case Shiller home price index fell 19.5% ahead of 18.4%, against 18.5% of market consensus. . However, the Richmond Fed manufacturing index for December broke the adjusted number, rising from 12.00 to 16.00%.

Amid those games, the 10-year US Treasury yield remains under pressure at 1.475% while the two-year benchmark, which hit its highest since March 2020, is also hovering at 0.746%. Additionally, the S&P 500 Futures index showed slight gains, while the latest Asia-Pacific stocks traded mixed.

Looking forward, US tier two data could keep NZD/USD traders entertained, but risk catalysts are key importantly, weak liquidity conditions towards the end of the year could limit the pair’s momentum.

5:19 am

Forex News

December 28, 2021

USD/CAD consolidates losses around weekly lows below 1.2800 as oil eases from monthly high

USD/CAD is struggling to regain the 1.2800 level while healing yesterday during Tuesday’s Asian session. The loonies seem to be watching the end of the risk-on mood as well as the decline in the price of Canada’s main export, WTI crude, to challenge the one-week drop from yearly highs.

A question of previous optimism regarding the South African variant of covid, namely Omicron, as well as the lack of major updates, could be responsible for the recent disruption due to the weakening of the US dollar. Even so, the market holiday vibe joins the light news feed to challenge the pair’s momentum.

USD/CAD is struggling to regain the 1.2800 level while healing yesterday during Tuesday’s Asian session. The loonies seem to be watching the end of the risk-on mood as well as the decline in the price of Canada’s main export, WTI crude, to challenge the one-week drop from yearly highs. A question of previous optimism regarding the South African variant of covid, namely Omicron, as well as the lack of major updates, could be responsible for the recent disruption due to the weakening of the US dollar. Even so, the market holiday vibe joins the light news feed to challenge the pair’s momentum.

It should be noted that an increase in virus cases and fears of falling oil prices could challenge USD/CAD sellers in the absence of a major catalyst. Even so, data from US housing and Richmond Fed Manufacturing will come ahead of the American Petroleum Institute’s weekly prints of industry inventories to guide USD/CAD volatility in the short term.

Clear bearish breakout of 21DMA, closest around 1.2800, directs USD/CAD bears towards upward support line from early November, around 1.2755.

5:02 am

Forex News

December 27, 2021

XAU/USD hits $1,814 hurdle as Omicron weighs profits

Gold (XAU/USD) shows slight gains around $1,810 on a dismal Monday morning. The yellow metal welcomed the weakening of the US dollar, as well as low Treasury yields to produce the latest gains around monthly highs, flashed on Dec. 17.

That gives The US Dollar Index (DXY) fell 0.08% to 96.10 as 10-year US Treasury yields fell 1.1 basis points (bps) to 1.482%, falling back to highs the most in two weeks reached a day before. In contrast, S&P 500 Futures are up 0.11% on the day to around 4,720 by press time. Mixed concerns about the COVID19 variant in South Africa, specifically Omicron, join with cautious optimism surrounding US President Joe Biden’s Build Back to Better (BBB) plan, which promotes boost the recent risk-on mood. According to a Mastercard report, China’s industrial profits and an update from the US show an uptick in US retail sales data. However, the lack of key data/events joining the holiday mood in New Zealand, Australia, Canada and the UK seems to be holding back market movements. It should be noted that the Dallas Fed manufacturing index for December, expected at 13.2 versus 11.8 previously, could offer intermediate moves in a sluggish session expected.

A sharp rise beyond the 200DMA gives gold buyers hope of overcoming the two-month horizontal barrier around $181,416 despite the holiday mood. After that, the double tops marked in July and September around $1,834 will return to the chart before $1,850 can challenge the bulls planning a break above the November highs. is $1,877. Meanwhile, the ascending support line from August around $1,778 is added to bearish filters below the 200DMA level of $1,797. In the event that the gold bears remain dominant beyond $1,778, $1,758 could offer an intermediate stop before the quote slips to September’s low of $1,721 and the rounded figure is 1,700 dollars. In a nutshell, gold prices are bullish but have a bumpy road north.

7:16 am

Forex News

December 22, 2021

XAU/USD hangs at 100DMA ahead of US data

Gold prices have remained steady so far in Asian trading on Wednesday, hovering around the daily moving average (DMA). The shiny metal lacks a clear direction, in the absence of a new catalyst, as attention now turns to US CB consumer confidence data for more impetus. Persistent concerns about the rise of Omicron covid variants in Europe, Australia and the UK continue to emerge amid a diminishing market situation over the holidays. Technically, gold prices remain confined between the major DMAs, with the 14-day Relative Strength Index (RSI) still hovering at 50.00, showing the acumen of gold traders.

Gold (XAU/USD) remains slightly offered around $1,790, up for the second day in a row during Wednesday’s Asian session. Even so, the metal has not kept up with other risk barometers, such as Antipodeans and WTI, in depicting the mood at risk. The reason could be related to the cautious market sentiment ahead of the US data series as well as the bearish chart trend.

The refusal by global policymakers of lockdown measures ahead of the Christmas holidays, despite the latest spread of the covid variant in South Africa, known as Omicron, seems to have boosted sentiment. . US President Joe Biden’s expectations for the completion of the “Build Back Better (BBB)” plan and vaccine/treatment optimism are also positive for gold.

Although Texas reported its first Omicron-related death in the United States, President Joe Biden curtailed any nationwide embargo, as previously revealed, while promoting vaccination faster. Similarly, cautious optimism emanates from the Pacific countries and the United Kingdom. In addition, news that the US Food and Drug Administration (FDA) will allow a duo of drugs Pfizer and Merck to treat Covid19 earlier this week, according to Bloomberg sources, also added to the increase mood at risk.

In addition, “President Biden said Tuesday that he believes there is still room to achieve his Better Build Back program, despite Senator Joe Manchin’s opposition to the spending bill social and climate goals,” said The Hill. In contrast, inflation expectations rose in the United States, as measured by the 10-year breakeven inflation point according to data from the Federal Reserve of St. Louis (FRED), ahead of key US data from this week challenges gold buyers. In addition, the struggles between China-US and the US-Russia add to the downward trend in gold prices.

That said, US Treasury yields rose 4.8 basis points (bps) to 1.467 percent, while Wall Street benchmarks recorded a three-day downtrend in late Tuesday trading. of America. However, the S&P 500 Futures index is down 0.10% on the day at press time.

Moving on, gold traders could reassess the latest level of market optimism despite Omicron woes and firmer inflation expectations ahead of US data.

7:10 am

Economic News

November 29, 2022

This week’s currency pair, USD/CNH

This week will bring a lot of US macroeconomic data and speech from US Fed Chairman Powell, which should give the markets a clearer direction of where the Fed may be headed next regarding monetary policy. Powell speaks at the Brookings Institute on Wednesday. The topic is the economy and labor market. The statement after the November 2nd FOMC meeting stated that “ in determining the pace of rate hikes, we will consider cumulative tightening, policy lags, and economic and financial developments”. The markets took this to be dovish. However, in the press conference that followed, Powell said that the incoming data suggests that the ultimate level of rates will be higher than previously anticipated. However, the pace of tightening is not as important as the terminal rate. Markets took this to be hawkish, Traders will be looking for Powell to clarify these statements and try to determine if the Fed will hike by 50bps or 75bps at the December meeting. In addition, the US will release the Fed’s favorite measure of inflation, Core PCE. Expectations are for a YoY print of 5% vs a September reading of 5.1%. If this number is stronger, the Fed may feel comfortable leaning towards a 75bps hike in December. The US will also release Non-Farm payrolls on Friday. Expectations are for a print of 200,000 vs a previous reading of 261,000. The Unemployment rate is expected to remain unchanged at 3.7%.

As China’s “zero-covid” restrictions and lockdowns heat up, so are the emotions of many Chinese people. A fire over the weekend in Xinjiang in which 10 people died , angered protestors who said that the fire was made worse by the zero-covid policy. Riots and clashes with police flared up in some areas where the protests were held, such areas as Shanghai and Beijing. Protestors are frustrated with the amount of quarantines and restrictions. However, despite the lockdowns, Beijing reported record levels of covid. This may lead to even more quarantines and restrictions. WTI crude oil has dropped from a high of 82.51 on November 23rd to an intra-day low of 74.02 on Monday as fears of a lack of demand swelled in the markets. Will the zero-covid policy lead to a recession in China ?

USD/CNH has been on the rise since late-February as it became more apparent that the Fed would begin raising in March. On May 13th, price peaked at 6.8375 before consolidating in a symmetrical triangle. However, on August 15th, USD/CNH broke higher out of the triangle and rose in an ascending wedge formation as price peaked on October 25th at 7.3748. This was also the highest level since 2007. Price then pulled back and broke below the bottom trendline of the wedge, reaching the target for the breakdown near 7.0192. Since then, the pair has been bid, and gapped higher on Monday, opening at 7.2308.

With Fed Chairman Powell speaking, US Core PCE and Non-Farm Payrolls, along with the increase in Covid cases and unrest in China, USD/CNH could be volatile this week. Watch for aggressive moves in the pair should Powell’s speech or the data paint a more hawkish picture heading towards the December 14th meeting.

7:29 am

Economic News

November 28, 2022

Growing unrest in China Setting the Stage for a Risk-off Start

US and European bond markets showed a divergent picture as US markets reopened after the Thanksgiving Holiday. US Treasuries continued to outperform. A disappointing US PMI released earlier last week only reinforced the view that there is a strong enough case for the Fed to slow the pace interest rate hikes to a 50 bps step at the December meeting. US yields in the 2-10-y sector eased 1-2 bps with the 30-y gaining marginally. The US 10-y closed the week at the 3.67% support. The picture in Europe was different. German yields jumped 8.3 bp to 12.4 bps. There was not one unequivocal driver. ECB comments suggested that the debate on a 50 bps or 75 bps next step isn’t really decided yet. Recent EMU eco data also were slightly better/less worse that expected. The German 10-y yield closed exactly at 1.97%, returning the neckline that was broken earlier last week. Equities in the US and Europe both closed little changed. The dollar also showed no clear trend. EUR/USD finished the week at DXY 105.96, with recent correction lows still nearby. Similar story for the EUR/GBP cross rate.

The growing unrest related the new covid restrictions in China is setting the stage for a risk-off start to the new trading week as investors ponder the impact on demand. Early indications on Black Friday spending in the US also show a mixed picture. Asian equities mostly trade in negative territory with Chinese indices underperforming. US Treasuries remain well bid with yields declining bps currently. Despite the risk-off, USD gains remain modest.

China/commodity related currencies underperform as does the yuan, breaking above the 7.17 ST. Uncertainty on global/Chinese demand is pushing Bent oil to the lowest level since January.

The eco calendar in the US and Europe is thin. We keep an eye at speeches of ECB Lagarde, Fed Williams and Fed’s Bullard as the countdown the December ECB & Fed meetings has started. Core bond yields this morning feel some downward pressure due to the China related risk-off. The upcoming data EMU CPI Wednesday, US consumer confidence , US manufacturing . ISM and PCE Wednesday, US consumer confidence, US manufacturing. ISM and PCE deflator and the US payrolls on Friday probably are more important to shape markets view on the pace of Fed and ECB rate hikes. Breaking below 3.67%, the US 10-y yield finds next support at 3.55%. The 10-y Bund stays below the 2.0% barrier. The USD performance this morning is far from impressive. Even so, it’s probably too early for EUR.USD to return to recent peak levels.

Australian retail sales disappointed in October, dropping 0.2% M/M vs a 0.5% monthly gain expected. Weakness was broad-based across industries with food retailing being the positive outlier. Higher interest rates and faster inflation are effecting Australian households. Part of tourism spending is also back done offshore as borders reopened.

9:48 am

Economic News

November 25, 2022

EUR/JPY Eyes Breakout – Xtreamforex

The US out on holiday, there’s not much point in discussing the dollar. Instead, something that could move during the Asian hours. The Japanese yen.

After being the weakest of major currencies for an extended period this year, the yen has stormed back against the dollar, along with equities, gold and other risk-sensitive assets. Wednesday’s publication of less hawkish Fed minutes and weaker-than-forecast US business activity data further fueled speculation the Fed is going to slow down its rate increases and potentially pause in early 2023.

As the USD/JPY slumped, other yen pairs have started to move lower with it – including the EUR/JPY – albeit to much lower extent. This is because nothing has changed in terms of the Bank Of Japan’s ultra-loose monetary policy. Thus, the USD/JPY has been hit because of dollar weakness than yen strength.

In terms of the EUR/JPY, it is true that the euro carries some positive yield over the yen. With the ECB determined to get the 10% inflation back down by aggressive rate increases, the disparity between Eurozone and Japan monetary policies are likely to grow larger over time. This is something that should help provide a floor for EUR/JPY in the long-term outlook.

But the short-term, especially with the USD/JPY moving lower, we could see some weakness in the EUR/JPY and other yen pairs. Also, much of the interest rate disparity is already priced in. And with the eurozone economy on its knees, there is a risk that the ECB might end its hiking cycle quicker than expected, reducing the appeal of the single currency over the safe-heaven yen.

The EUR/JPY actually formed a bearish engulfing candle on the daily chart on Wednesday, and we saw some downside follow-through today. The selling then came to a pause as rates tested support and the bullish trend of the triangle pattern around 143.80.

The upside was capped by the bearish trend line and resistance circa 146.00. Shorter-term resistance is seen around 144.65 to 145.00 range. Thus, conservative speculators may wish to wait for price to break out of this triangle consolidation pattern and trade in the direction of the breakout.

6:52 am

Economic News

November 22, 2022

RBNZ seen raising rates by historic 75 bps

Whilst there has been some less expectations that inflation around parts of the world have topped out, recent data for New Zealand is remining us that inflation can remain at elevated levels for longer than anyone would like.

CPI rose 2.2% q/q, up from 1.7% and well above the 1.6% consensus. Annual CPI rose 7.2% y/y – slightly below the 7.3% peak – but if the quarterly is trending higher then it can send the annual higher too. Labor costs have risen to a record high of 3.8% y/y and, whilst the quarterly read pulled back from its record, at 1.1% q/q labor costs remain quite elevated from its long-term average of 0.01%.

Despite the inflation figures, the consensus was still for the RBNZ to hike by 50bp tomorrow – until inflation expectations threw a spanner in the work. Central banks pay close attention to inflation expectations, as fear of higher prices can result in higher places as fear of missing out demand drives prices.

We suspect a 75bp hike is more likely, given the central bank does not meet again until February and rising inflation and inflation expectations are not showing signs of topping out.

The understanding is for the RBNZ to hike by 75bp from 3.5% to 4.25%, with around one third of economists polled by Reuters opting for a 50bp hike.

The one-month OIS suggests an 87.6% chance of a 75bp hike, which means a 50bp has been more than priced in and we may get more of a market reaction if the RBNZ only go for 50.For what it’s worth, the RBNZ shadow board has favored a 75bp hike.

7:23 am

Economic News

November 18, 2022

Japan’s Inflation hits the ‘40-year high

Despite the BOJ’s best efforts to contain inflation, prices are indeed rising.

Nationwide inflation rose to its highest levels since 1984 at 3.7% y/y and core inflation is also at 3.6%. If food and energy are excluded, CPI is now 1.4% y/y- which is its highest since 1998 we exclude the pre-emptive buying ahead of 2015’s tax hikes. Services PPI is down to 9.1% but historically high after peaking at 10.2% last month.

At 3.7%, nationwide CPI is nearly twice their 2% target. The BOJ were relatively late to the 2% inflation bandwagon by introducing their 2% target in January 2013. Of the 118 months since it was introduced, only 16.1% of them have been above 2%. There was a 12-month period from April 2014, and more recently inflation has been above 2% since April this year and still rising.

BOJ is still in no rush. With that said, the recent summary of opinions highlighted that some members expressed concern about elongating ultra-dovish policies, and risks to inflation.

So far, the BOJ have maintained their yield curve control target at the expense of a weaker yen to help boost exports and growth, whilst keeping interest rates at -0.1%. But if prices continue to rise there is surely a case to be made for interest rates to be zero, or even above. Yet time and time again the BOJ have poured cold water on the conventional method, and veer towards the unconventional. So be prepared for the BOJ to remain in negative interest rates longer than investors can remain solvent betting against them.

USD/JPY hopes for a Fed pivot, streaming from soft US inflation data, has been the main driver of the pair over the past week. This saw the pair break trend support and briefly trade blow 137. The 61.8% Fibonacci level has provided support, like it has previously during this trend and it’s also worth noting the stochastic oscillator has generated a buy signal in the overbought zone. Furthermore, looking across USD pairs suggests the dollar could be due a retracement higher.

6:36 am

Economic News

November 17, 2022

US Consumer Remains Strong

Equity markets in Europe are back in the red yesterday, while the US looks largely unchanged around the open on Wall Street.

Reports of missile strikes in Poland on Tuesday naturally caused a shudder in the markets. The prospect of a sudden and unexpected escalation in the war in Ukraine, particularly involving a NATO state, doesn’t bear thinking about but it’s almost forced to and under the circumstances, the reaction was fairly modest.

It could have been much worse but investors appear to have come to the view that it was a situation that would be quickly de-escalated which is what occurred despite initial reports not looking good.

US retail sales data will be a minor concern for investors as they continue to cross their fingers for a full Fed pivot next month. In an ideal world, the Fed could bring inflation back to target without causing much damage to the economy, while maintaining a strong labor market and healthy spending. But we don’t live in an ideal world and it’s unlikely that will be the case. So as long as we continue to see firm figures in employment and spending, the risk of high and stubborn inflation will remain. This won’t provide the comfort the Fed wants in order to slow the pace of tightening and draw it to close earlier than envisaged.

Gold is struggling to take the next step higher after struggling around $1,780 once again today. That’s not overly surprising considering this was major level of support from January to July, at which point it gave way in style losing almost 4% in less than 48 hours.

What’s encouraging is that it’s not showing signs of easing up. Pullbacks have been minimal and pressure remains to the upside. A break of $1,780 could be catalyst for another spike and ease any doubts about the sustainability of the rally in the process. Assuming both US inflation releases haven’t done that already.

7:33 am

Economic News

November 16, 2022

Markets Position, The lower-than-expected US inflation

The lower-than-expected US inflation print simply extended with economic data serving as an accelerator. European stocks add a normal 0.6% but US indices open with very solid 0.9-2.5% gains. The US NY Empire manufacturing index surpassed the bar with ease, coming in at 4.5 vs a -6 consensus. But new orders turned negative again and the outlook for six months ahead turned deeper below zero from -1.8 to -6.1. Financial markets definitely also spotted the PPI easing by more than expected.

Headline factory inflation for September was revised lower to 8.4% and slowed to 8% vs 8.3% expected. Core gauges retreated from 7.1% to 6.7% and 5.6% to 5.4%. All of them are still at elevated levels but similar to last Thursday’s CPI, that’s of no importance to markets who just want to see pressure decline, both on prices and on the Fed. US yields at some point shed between 4.2 and more than 9 bps at the front and 4.6-6bps at the longer end of the curve before taking back some bps as the US session gets going.

German yields dip 3.3 to 6bps across the curve. The 10y yield earlier didn’t confirm the break beneath its upward sloping trend channel but is attacking that support area again. The European swap counterpart is losing 6.6bps and is closing in on the June interim high/October correction low 2.72/2.73%. Gilts underperform global peers with yields advancing 1.4 to 3.8 bps. We didn’t see a specific trigger but UK yields bottomed around the time of a 2.25bn pounds 2046 bond auction that tailed and had a lower bid-cover than previously. The UK labor market report was a mixed bag, unable to provide any guidance.

The dollar stayed in the defensive overall, unable to benefit from a potential flare-up in the Ukraine war after Russian missiles hit two residential buildings. The trade-weighted greenback slipped from 107 to 105.94. Intermediate support is being tested with the actual next reference already located at 105.01. EUR/USD got an early technical boost as EUR/USD surpassed the 1.035/7 resistance area. The pair went as high as 1.048 before paring gains to just north of 1.04. USD/JPY erases up stick to trade back below 139. At 7.04, USD/CNY is trading at the weakest since mid-September. Staying in Anglo-Saxo spheres, sterling is doing well. EUR/GBP dropped from 0.88 to 0.871 while GBP/USD with a little help from dollar tested the 1.20 big figure.