London 09/11/2022

It’s been a quiet week so far as all eyes of the markets are on tomorrow’s announcement of the US inflation. The result of this announcement is very critical because it may affect the next steps of the Fed: lower-than-anticipated inflation may drive the Fed to calm down with the aggressive interest rate hikes while an inflationary rate that persists may make the Fed even more aggressive. Another important aspect of the current week is the US mid-term elections, especially if the Democrats will not be able to retain control.
So far, the US dollar is weak although there is a poor attempt for a bullish reaction today. Bullish are both the US and the European stock markets while in the commodities markets, things are mixed: gold has remarkable profits and oil is in a corrective course. No important trend for the bond yields. The US 10-year bond yield is currently moving around 4.16%.
EURUSD (current price 1.0037) has managed to surpass the parity but after it touched the important resistance of 1.01, it performs a slight pullback. The retail sales in the Eurozone were announced better than expected and this fact gave a boost to the euro yesterday. Markets are waiting for the US inflation announcement tomorrow which may seriously affect the trend and the volatility of the pair. Any possible solid breakout above 1.01 may cause a better bullish trend while below the parity we may see a downtrend.

GBPUSD (current price 1.1408) had a good uptrend yesterday but today we see a strong correction so the week is neutral so far. Yesterday the sterling was boosted by some statements from the Bank of England officials about new interest rate hikes in the next period. As there were no other economic announcements for the UK, all eyes of the markets are on the US inflation announcement tomorrow. If the dollar gets weaker we may see the pair moving up to the resistance of 1.1650. A strong dollar though may cause a big drop in the vulnerable pair and 1.10 cannot be ruled out.

USDJPY (current price at 146.35) is bearish this week and this is the 4th consecutive bearish week for the pair. The Japanese government approved a new supplementary budget spending of 29.1 trillion yen as a new economic stimulus package but the weakness of the dollar seems to dominate the weakness of the yen. Bond yields which do not have a trend this week, remain a neutral factor for the pair. Below 145, we may see an established downtrend for the pair.

DISCLAIMER: The information produced by a-Quant is of a general nature only. It is not personal financial advice. It does not take into account your objectives, financial situation, and personal needs.

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