General Comment

The U.S. economy’s impressive run continued for another week, so far belying expectations of a slowdown in growth or a recession. U.S. GDP grew by 4.9% in the third quarter of the year, far exceeding expectations of 4.2 %. Also, PMI manufacturing and services indicators announced above 50 which indicates expansion for growth. Durable goods orders rose last month by an impressive 4.7%. As for inflation, personal consumption expenditures rose marginally by 0.4% last month against 0.3% expected by markets. The impressive picture of the U.S. economy is not in line with the markets especially the stock indices, which for another week had significant losses. Obviously, the markets are not optimistic about the future since it seems that high interest rates will persist for some time while the clouds of war in the Middle East thicken and continue to cause concern.

In Europe, the European Central Bank left interest rates unchanged at its meeting last Thursday, and Christine Lagarde at a press conference reiterated how important the problem of inflation is, and she did not appear particularly optimistic about the course of the European economy.

Besides the United States, the most major stock indices in Europe also had losses. The US Dollar returned to its familiar strength while other currencies such as the euro and sterling took losses. Regarding the commodity market, the picture was mixed as gold continued its strong upward trend, but oil had corrective trends. The bond market, which has been the focus of markets lately, has had a slight fall with the U.S. 10-year closing the week at close to 4.85%. Finally, emphasis should be placed on the huge rise of Bitcoin and most cryptocurrencies.

The week we are already going through is really very important. On Wednesday, the United States will announce its decision on interest rates, while on Friday, Non-Farm Payrolls and average hourly earnings for the U.S. economy are announced. On Tuesday Europe announces inflation and GDP while on Friday it announces the unemployment rate. It is a very important week for the UK too after the Bank of England announces its interest rate decision on Thursday. Also important are the announcements of PMI indicators for manufacturing, especially in China and the United States since these indicators will show the course and investment sentiment of their economies. Japan also will announce its interest rate decision on Tuesday. With all these announcements & events, it makes sense to expect volatility to skyrocket.




US SP500 index was bearish last week, closing at 4,117 points and losses of 2.53%. Although the week started with a mild bullish reaction, from Wednesday and on, new bearish pressures prevailed. A general trend of declining equity prices persists on a global scale. This isn’t limited solely to the SP500; it’s a worldwide phenomenon, suggesting that there may be an increased emphasis on global macroeconomics and geopolitical issues. The US economy keeps on announcing unexpectedly positive results (GDP, manufacturing & services PMIs, durable goods orders, and new home sales were all announced above markets’ expectations) but markets anticipate that the future will not continue like this. The high interest rates that it is expected to be maintained for a long time in 2024 and the crisis in the Middle East cover the current impressive news. Last week many important U.S. companies announced their results for Q3 2023. In the current reporting period for Q3 2023, 49% of the companies within the SP500 have released their actual results. Among these, 78% have reported earnings per share (EPS) that exceeded expectations, surpassing the 5-year average of 77% and the 10-year average of 74%. The rise in overall earnings for the index during this period can be attributed to companies in various sectors, particularly those in the Consumer Discretionary, Information Technology, and Communication Services sectors, reporting better-than-expected earnings results. The current week is very important for the U.S. economy: Fed interest rate decisions and NFPs are critical events but investors’ eyes will also be on China’s results, mainly in manufacturing and of course in the Middle East war. Markets should be thirsty for any positive news after a long time of downtrend so maybe we will try long positions this week.



The German DAX40 index was bearish last week, closing at 14,687 points, with losses a bit more than 0.75%. European stock markets declined following the European Central Bank’s decision to maintain the Eurozone interest rates at their current levels. The ECB’s decision validates the belief that interest rates have probably hit a ceiling. Nevertheless, because the battle against inflation has not been resolved, markets foresee that the ECB will maintain high interest rates for an extended duration. The German PMI indicators that were announced this week, were all well below 50, especially the manufacturing indicator was at 40. There was a mild improvement in the last month’s business climate and expectations but these results did not remove the pressure on DAX40 as it continued to drop on Friday. The economic data of the current week are more important for the German economy: Q3 2023 GDP and trade balance. Some good news from the USA may affect the European stock markets as well but we will prefer short positions for one more week.



The British FTSE100 index moved downward last week, closing at 7,291 points, losing about 1.50%. The UK stock market experienced another difficult week, primarily due to the letdown caused by corporate earnings and the global negative investing sentiment. The company results caused disappointment. NatWest’s stock price fell to its lowest point in 30 months following the revision of its full-year net interest margin outlook, which was lowered from 3.15% to slightly above 3%. Besides NatWest other decliners on the UK stock market included Barclays, Standard Chartered, and the Reckitt Benckiser, all of which saw their share prices drop by more than 10%. The economic data did not help at all as the employment change stood at -82,000 job positions and the PMIs (manufacturing, services, and composite) were all much below 50. The central event of the current week is the interest rates decision by the Bank of England on Thursday. The current rate is 5.25% and markets anticipate that it won’t change in this decision. The FTSE100 has approached the critical support of 7,220 points which is also the lowest price of the last year and even some small positive factors are able to cause a bullish reaction which is why we may try long positions this week.



The previous week was bullish for gold, with the next month’s futures closing at $1,988.60 and profits of 0.30%. Early this week, the gold prices surpassed the critical price of $2,000 for the first time since last May. The Israel-Hamas conflict has escalated as Israel increases its military operations in Gaza. In response to this situation, it makes sense for the investors to shift their focus towards safe-haven assets such as gold. The outlook for the next week largely depends on any significant developments or de-escalations in the Middle East conflict. The non-yielding gold was also favored by the decline in bond yields since the U.S. 10-year bond yields dropped to 4.85% from 5%. Very important factors that influence the gold’s trend are the central banks’ actions. On Wednesday, the Fed will announce the rates decision but most likely there will be no change. In Europe, the European Central Bank’s choice to keep interest rates at the current level has interrupted a sequence of 10 successive rate hikes, introducing an additional element of intricacy to the price movements of gold. As per the macro results, the U.S. economy expanded at its swiftest rate in almost two years during the third quarter, alleviating concerns about a recession. The events of the current week are important for gold, especially the ones that will come from the USA but the uptrend looks strong so we may try long positions for one more week.


US Oil

Last week was bearish for oil with the next month’s futures closing at $85.16, with losses of 3.60%. Oil prices had a volatile week, characterized by significant fluctuations due to geopolitical issues, primarily centered on the escalating tensions between Israel and Hamas. While there haven’t been direct interruptions in global oil supplies, traders are apprehensive about the future course of oil prices. The number of oil rigs in the United States increased for the first time since November, suggesting a gradual resurgence in production. Nevertheless, economic variables like inflation and the policies of the U.S. Federal Reserve may also play a role in shaping oil demand. According to most statements from Fed officials, high interest rates will be maintained at least until mid-2024, indicating a high probability of a growth slowdown. Such a scenario creates concerns regarding the oil demand. The current week is expected to be highly volatile as well. First of all, the important economic announcements for the world’s major economies such as the USA, China, Eurozone, and the UK can affect oil prices. Secondly, the potential engagement of Iran, a major oil producer and supporter of Hamas, in the Middle East war can cause significant disruptions in the worldwide crude oil market. We may try long positions this week.



EURUSD (Euro US Dollar)
Last week was bearish for EURUSD as it opened at 1.0595 and closed at 1.0564. The strength of the US dollar did not leave much room for the exchange rate to recover even if it had started with an uptrend the week, reaching the price range of 1.07. The positive news of the U.S. economy that we saw in detail in general comment, helped the dollar return to its bullish trend. By contrast, the European Central Bank by leaving interest rates in the Eurozone unchanged did not allow the euro to resist, even if this was relatively predicted by markets. Earlier Tuesday, negative results for the European economy came after PMI indicators for manufacturing and services were announced below market expectations. Christine Lagarde in her speeches does not seem particularly optimistic about the course of the European economy and any complications in the Middle East could lead to a new energy crisis in the European continent. So, the most logical thing is for the fall to continue but nothing is ruled out in a week dominated by important announcements at all levels as we have seen above. We may choose sell positions.


GBPUSD (Great Britain Pound – US Dollar)

Slightly bearish was the last week for GBPUSD, which opened at 1.2129 and closed at 1.2117. Apart from the continued strengthening of the US dollar, due to the impressive performance of the United States economy, the British sterling had no particular reasons for strengthening. The jobs balance was sharply negative while PMI indicators continued to be well below 50, indicating a contraction in the British economy. Next Thursday the Bank of England announces its decision on interest rates and a rate hike could give sterling a boost and take the exchange rate away from the critical 1.20 price zone. There is a similar announcement for the United States on Wednesday, but the likelihood of a rate hike is very small. United States has other major announcements like the labour market (NFPs) and PMI indicators, and all the above are capable of increasing GBPUSD volatility significantly. Sell positions is our selection for the current week.


USDJPY (US DollarJapanese Yen)

USDJPY was bearish last week, opening at 149.83 and closing at 149.59. Within the week the rate fairly passed 150, reaching one-year highs. The strengthening of the U.S. dollar due to the impressive results of the U.S. economy was a key factor in this rise. Also, the continued very loose monetary policy from the Bank of Japan does not leave the yen much room to resist. However, the picture changed on Friday and the violent fall in the exchange rate was able to reverse the weekly figure. Japan’s inflation rate was reported at 3.3% last month, a particularly high figure for the Japanese economy, raising legitimate concerns about whether Japan’s ultra-loose monetary policy could continue. Also, every time the USDJPY exceeds 150 there is the possibility of Japan intervening in the foreign exchange market. The de-escalation in bond yields was also a contributing factor to the fall in the exchange rate on Friday. In addition to what we mentioned above, the interest rate announcements from the Fed and the Bank of Japan and the other major announcements of the week are enough for us to stay out this week.


EURJPY (EuroJapanese Yen)
Bearish was last week for EURJPY which opened at 158.75 and closed at 158.04. There are many issues for the euro since the European Central Bank left interest rates in the Eurozone unchanged, and the results of the European economy were negative. The yen, however, until Friday had no particular reasons for strength since the Bank of Japan’s continues loose monetary policy and leaves no such room. But an announcement of high inflation in Japan on Friday combined with a fall in bond yields boosted the yen significantly, giving a negative sign for the exchange rate on a weekly basis. The Bank of Japan will announce its interest rate decision on Tuesday and the Eurozone also has major economic announcements. We may try sell positions this week.


EURGBP (Euro – Great Britain Pound)

Last week was neutral for the EURGBP, as it opened and closed around 0.8710. This balance is based on the fact that the euro and sterling are experiencing a period of weakness as negative investment sentiment around the world does not favor higher-risk currencies and investors prefer safer investment options such as the US dollar. The economies of the Eurozone and the United Kingdom continue to have negative results, while a blow to the euro was the fact that interest rates in the Eurozone remained unchanged. On Thursday the Bank of England will announce its own decision on interest rates. Any increase could give the sterling a boost and we will therefore try sell positions this week.


USDCAD (US Dollar – Canadian Dollar)

Heavily bullish was the last week for USDCAD, as it opened at 1.3701 and closed at 1.3873. All the main factors influencing the exchange rate have contributed to its rise in the past week. First of all, the strengthening of the US dollar after the very positive results announced by the US economy. Secondly, oil prices declined, which usually weakens the Canadian dollar. The third and very important fact was that the Bank of Canada left interest rates unchanged at 5%. At the following press conference, Bank of Canada chief Tiff Macklem was fairly hawkish, stressing that inflation is at higher levels than expected and that this pause in interest rate hikes was to enable so-far increases to pay off. These statements, however, did not particularly help Canada’s currency recover. Given the important news for the U.S. economy this week and a possible recovery in oil prices, it is not out of the question that we will see the exchange rate reverse its course and therefore we will choose sell positions this week.


USDCHF (US DollarSwiss Franc)
The USDCHF had an upward course last week as the opening price was at 0.8904 and the closing price was at 0.9022. The U.S. dollar’s upward momentum was enough to push the exchange rate up again to above 0.90, as Switzerland had no major economic announcements or news to contribute. The current week is much more important for both economies, as the United States announces its decision on interest rates, September’s labor market (NFPs), and PMI indicators, while Switzerland announces last month’s inflation. We prefer buy positions this week.


AUDUSD (Australian Dollar – US Dollar)

Bullish was the last week for AUDUSD, which opened at 0.6313 and closed at 0.6332. The Australian dollar was one of the few major currencies that managed to resist the strength of the US dollar. The root cause is inflation in Australia which was announced last month at 5.4%, slightly above the 5.3% markets had expected. This development, combined with the hawkish tone of Michele Bullock’s speeches from the Reserve Bank of Australia, was enough to swing the exchange rate higher. The week we are going through is of much higher importance since there are many important news and announcements about the US economy but also about China that always affect the currency of Australia. Australia is also reporting trade balance and retail sales this week, but it will be difficult for the exchange rate to continue to resist if the US dollar continues to strengthen. For this reason, we may try sell positions.



Last week, Bitcoin was heavily bullish and closed at $34,538 with profits of more than 15.10%. It appears that investors are factoring in the likelihood of the United States approving a Bitcoin spot Exchange Traded Fund (ETF). As per a Reuters report, the head of the US Securities and Exchange Commission (SEC), Gary Gensler, mentioned that the regulatory agency is evaluating as many as ten applications for Bitcoin ETFs. Another important factor was the appearance of BlackRock’s spot ETF ticker on the DTCC (Depository Trust & Clearing Corporation) website. Also, according to James Seyffart, an ETF analyst at Bloomberg Intelligence, the likelihood of approval for ARK’s Bitcoin spot ETF by the January 10 deadline stands at 90%. In a recent tweet, Seyffart indicated that the recent modifications made by Ark and 21Shares to their applications imply that there have been positive and productive discussions with the SEC, which are raising the prospects of approval. All this good news has caused a very positive sentiment in the crypto community and the October was indeed one of the most profitable months of the last couple of years with total profits so far of 28%. The uptrend is well established but many crypto traders may secure their profits so we’d better stay out this week.



The information in this report is of a general nature only. It is not a piece of personal financial advice. It does not take into account your objectives, financial situation, and personal needs.

a-Quant is not responsible for your actions and recommends you contact a licensed financial advisor before acting on any information contained in this general information report.

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