London 30/11/2022

Markets keep on staying quiet as we’ve reached the middle of the week. Most likely, traders & investors are waiting for the major announcements of the week which are the NFPs – Non-Farm Payrolls (on Friday). Earlier today, the annualized US Q3 2022 GDP (later today) was announced at 2.9%, above markets’ expectations.
Later today, the speech of the head of the Fed Jerome Powell is considered quite important.
The Eurozone has some important news but the market volatility remained low. The inflation in the Eurozone dropped to 10% in November, compared to 10.6% in October.  On the same page, inflation in Germany fell from 11.6% in October to 11.3% in November. For the first time after several months, the consumer price index in Germany had a negative figure (-0.5%) on a monthly basis.
In China, the tensions continue although the Chinese government announced that Guangzhou eases restrictions despite the worsening Covid outbreak. In Europe, although there’s no visible solution to the Ukrainian war, many analysts carry more optimism saying that the estimations of the winter in Europe were too gloomy. The lower inflation announced today is an indicator of slowing down.
The US dollar is slightly stronger this week while some currencies of higher risk are getting weaker. Most of the major stock indices are bearish except for the FTSE100 in the UK which is in a bullish rally. Commodities such as gold and oil are also bullish while there’s a bullish attempt for cryptocurrencies as well. Finally, bond yields are moving marginally higher with the US 10-year having climbed to 3.74%.
EURUSD (current price at 1.0376) is so far unchanged this week since both the US dollar and euro are relatively strong. The greenback is strong as a part of global concerns that have returned to the investing community, mostly due to the Chinese lockdown and protests. On the other hand, the euro is strong as there is restrained optimism regarding the winter in Europe which may be less hard than it was initially estimated. The inflation in the Eurozone that fell, didn’t have any serious impact on the EURUSD. The bullish trend requires a breakout above 1.05 to be established while any pullback below 1.0220 favors the bearish scenario.

GBPUSD (current price at 1.2008) is bearish this week, based on the relative strength of the dollar and on the weakness that the sterling performs. Yesterday, the head of BoE Andrew Bailey, while testifying before the Lords Economic Affairs Committee sounded less hawkish than the markets expected, especially regarding the labor market that “has turned out to be much more constrained than we thought, different to other countries”. Since there is no other important news this week in the UL, the dollar will be the pair’s dominator, especially with the NFPs announcement on Friday. Below 1.20 the GBPUSD becomes weaker while above 1.2150 the uptrend becomes stronger.

USDJPY (current price at 138.75) is bearish this week, despite the relative strength of the dollar and the partial recovery of the bond yields. Some macroeconomic news that was announced earlier this week was disappointing for Japan: the unemployment rate rose to 3.6% in October (compared to 3.5% in September) and industrial production fell in October by 2.6% on a monthly basis. Ahead of this week is the important speech of BoJ’s head Haruhiko Kuroda and maybe we’ll be able to learn more things regarding the future steps of the monetary policy in Japan. Every bullish reaction above 140 gives more credibility to the bullish scenario while in the opposite direction, there is important support at 137.50.

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

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