Daily Global Analysis By zForex

[Z Forex]

Global Markets React to Business Activity Data and Economic Uncertainty

Asian-Pacific markets recovered from earlier losses, driven by the evaluation of private business activity surveys in Japan and Australia, along with South Korea's October producer price index. European markets cautiously opened higher on Tuesday, with investors monitoring the latest Eurozone business activity data.
In Japan, flash estimates from au Jibun Bank revealed a contraction in business activity in October, marking the first decline since December 2022. The composite purchasing managers index dropped to 49.9 from 52.1 in September, primarily due to a sharper decline in manufacturing activity. Australia also witnessed a decline in business activity, hitting a 21-month low in October, as reported by Juno Bank. The composite purchasing manager's index fell to 47.3 from 51.5 the previous month, with manufacturing PMI at a six-month low of 48.0 and services PMI at a 10-month low of 47.6.
Meanwhile, Treasuries are bouncing back after prominent market bears warned of an economic slowdown, raising expectations of Federal Reserve interest rate cuts. The erratic swings in government debt are unsettling investors due to the challenge of predicting when the Fed will halt rate hikes amid a resilient economy.
Preliminary Eurozone purchasing manager's index data for October is eagerly awaited, providing insights into the performance of the manufacturing and services sectors.
Bitcoin, on the other hand, started the week trading above the critical $30,000 resistance level, building on gains from the previous week, driven by optimism about the potential launch of the first spot Bitcoin ETF and a flight to safety.

 

[Z Forex]

China's Property Market Woes: Implications for Economic Recovery and Global Growth

China's economy faces significant challenges, especially in the housing market. Historically, the real estate sector has been a major contributor, accounting for up to 30% of the economy. However, it has struggled for over two years due to a government-initiated crackdown on developer borrowing. Property investments dropped by 9.1% in the first nine months of 2023, indicating worsening investor sentiment. Although GDP growth exceeded expectations, reaching 4.9% in Q3 2023, driven by consumer spending, the ongoing fragility of the property sector impedes China's economic rebound.
Although easing policies reduced buying costs, they failed to generate new demand, and support measures haven't significantly boosted confidence among buyers. New home prices in China fell for the third consecutive month in September, down 0.2% from August, traditionally a peak home buying period. Recent data also shows double-digit declines in property sales and investments, indicating ongoing economic challenges.
As of 2020, the property sector has played a substantial role in the Chinese economy, representing roughly 70% of household wealth. However, its contribution to local government income dropped from over 40% to 37% in 2022. Capital Economics estimates a 4.3% contraction in China's net household wealth in 2022, primarily due to falling home prices and stock market performance.
The Chinese government has implemented numerous stimulus measures, such as cutting mortgage rates and lifting home purchase restrictions, but these efforts haven't led to a sustained market recovery. The IMF warns that China's property downturn will impact global growth prospects.
Addressing the real estate issue requires a comprehensive strategy, including ensuring that pre-financed houses are constructed, as most new homes in China are sold before being built. Fixing the property sector is likely to be a multi-year or even decade-long endeavor.
China's rapid urbanization over the past decade is slowing down, and property market woes have eroded consumer confidence. Troubles at property giants like Evergrande and Country Garden, burdened by debt, contribute to these challenges.
Reducing the dominance of the Chinese property sector can have positive implications for the country's future economic stability.

 

[Z Forex]

Global Markets React to Business Activity Data and Economic Uncertainty​

Asian-Pacific markets recovered from earlier losses, driven by the evaluation of private business activity surveys in Japan and Australia, along with South Korea's October producer price index. European markets cautiously opened higher on Tuesday, with investors monitoring the latest Eurozone business activity data.

In Japan, flash estimates from au Jibun Bank revealed a contraction in business activity in October, marking the first decline since December 2022. The composite purchasing managers index dropped to 49.9 from 52.1 in September, primarily due to a sharper decline in manufacturing activity. Australia also witnessed a decline in business activity, hitting a 21-month low in October, as reported by Juno Bank. The composite purchasing manager's index fell to 47.3 from 51.5 the previous month, with manufacturing PMI at a six-month low of 48.0 and services PMI at a 10-month low of 47.6.

Meanwhile, Treasuries are bouncing back after prominent market bears warned of an economic slowdown, raising expectations of Federal Reserve interest rate cuts. The erratic swings in government debt are unsettling investors due to the challenge of predicting when the Fed will halt rate hikes amid a resilient economy.

Preliminary Eurozone purchasing manager's index data for October is eagerly awaited, providing insights into the performance of the manufacturing and services sectors.

Bitcoin, on the other hand, started the week trading above the critical $30,000 resistance level, building on gains from the previous week, driven by optimism about the potential launch of the first spot Bitcoin ETF and a flight to safety.

 

[Z Forex]

The Asian market experienced a substantial sell-off, with Japan and South Korean benchmark indexes leading the region's declines. In Australia, shares closed at a level not witnessed for over a year, as investors drew insights from Wall Street's overnight performance.

In Europe, stock markets opened with a sharp decline on Thursday, with a focus on third-quarter earnings and government bond yields. Notable developments included Unilever Plc falling due to a third-quarter sales miss, WPP Plc dropping more than 5% after revising its revenue growth outlook, Mercedes-Benz Group AG declining by 6% as it projected car-making margins at the lower end of its forecast, and Standard Chartered Plc's shares falling after missing profit estimates.

On Wall Street, a series of corporate earnings reports drove stock prices lower, with notable impact from Meta Inc.'s uncertain earnings outlook and Google parent Alphabet Inc.'s underwhelming cloud-related figures.

Furthermore, the 10-year Japanese government bond yield reached a fresh 10-year high ahead of a central bank meeting next week, pushing the yen past 150 per dollar and raising the risk of intervention from authorities in Tokyo. Japan's finance minister, Shunichi Suzuki, emphasized their vigilant monitoring of currency movements.

Simultaneously, monetary policy decisions are expected from the European Central Bank, where a hold in interest rates is highly anticipated, and the central bank of Turkey, with economists polled by Reuters, expects a 500 basis point hike to 35%.

Later on Thursday, a flurry of data, including US Initial jobless claims and GDP numbers, will offer a fresh snapshot of the world's largest economy. Global increases in bond yields are also casting a shadow over the markets. Recent volatility may influence the ECB's decisions on quantitative tightening, while the gradual rise in the 10-year U.S. Treasury yield is causing concerns about the outlook for stocks.

 

[Z Forex]

Global Markets React to Economic Trends and Political Shifts

On Friday, markets in the Asia-Pacific region attempted a rebound, with Australian stocks bouncing back from a one-year low in the previous session. Investors continued to process new inflation data. Meanwhile, European stocks are expected to open slightly higher as investors remain cautious due to earnings and the state of the global economy.
Chinese state media reported that former premier Li Keqiang passed away at the age of 68. Data released by the government shows that China's industrial profits fell in the first nine months compared to the previous year.
In Australia, government data released on Friday revealed that producer prices rose at a faster pace during the third quarter. The country's PPI recorded a 1.8% increase quarter-on-quarter, a significant jump from the previous quarter's 0.5% rise.
In Tokyo, the headline inflation rate for October came in at 3.3%, a faster rate of growth compared to the 2.8% seen in September. Core inflation, which excludes fresh food prices, stood at 2.7%, slightly higher than the 2.5% expected by economists polled by Reuters.
The European Central Bank (ECB) maintained its interest rates at their current levels on Thursday following a series of 10 rate hikes. ECB President Christine Lagarde clarified that the bank had not deliberated on the timing of the initial rate reduction, considering such a move as "totally premature."
The U.S. GDP expanded by an annualized rate of 4.9% in the third quarter, surpassing the Dow Jones forecast of 4.7% growth. This is an improvement from the 2.1% growth seen in the second quarter, indicating economic resilience despite the Federal Reserve's efforts to control inflation.
On Friday, the U.S. personal consumption expenditures reading, which is the Federal Reserve's preferred inflation gauge, is set to be released.

 

[Z Forex]

Global Economic Concerns Mount as Markets Reflect a $12 Trillion Loss​

Investors eagerly awaited significant economic data from the Asian-Pacific markets as the week began with a mixed start. Meanwhile, investors closely watched the latest inflation figures from Spain and Germany, anticipating a mixed opening for European markets on Monday.

The global stock market has suffered a significant loss in value of $12 trillion since the end of July. This decline has raised concerns about the sustained "higher-for-longer" interest-rate policies of central banks, which could potentially lead the global economy toward a recession.

The Bank of Japan initiated its two-day monetary policy meeting, leading to an 11-year high in 10-year government bond yields. Nearly two-thirds of economists anticipate that the Bank of Japan will end negative rates in 2024, which could lead to higher Japanese yields and present additional challenges to the Treasury market.

Australia reported a 0.9% month-on-month increase in seasonally adjusted retail sales for September, indicating growth in the retail sector.

China Evergrande Group, the world's most indebted developer, experienced a decline in its shares. However, the company gained some breathing space as a Hong Kong court postponed a winding-up hearing to December 4.

The director-general of the World Trade Organization has warned that the ongoing Israel-Hamas war could significantly impact global growth if it spills into the broader Middle East region.

The core personal consumption expenditures (PCE) price index, a closely watched inflation measure by the Federal Reserve, increased by 0.3% in September, aligning with Dow Jones forecasts. The core PCE rose by 3.7% year-over-year, consistent with expectations. Inflation expectations also experienced a significant swing in the final revision of the University of Michigan consumer sentiment survey for October, which was released on Friday.

Bitcoin is expected to record its strongest week since June, following a substantial rally earlier in the week that broke it out of the tight trading range it had been stuck in for most of this year.

 

[Z Forex]

Global Markets React to Central Bank Decisions and Economic Data
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Japan's stocks partially recovered losses following the Bank of Japan's monetary policy decision, while several Asia-Pacific markets saw declines due to an unexpected contraction in Chinese manufacturing activity. The Bank of Japan decided to maintain its short-term lending rate and announced increased flexibility in its yield curve control policy. Specifically, the bank stated that it would maintain the target level of the 10-year Japanese government bond yield at 0% but consider the upper bound of 1% as a reference point. Furthermore, the BOJ raised its inflation forecast for the next fiscal year to 2.8%, surpassing its previous prediction of 1.9% from three months ago.

Meanwhile, in China, the manufacturing purchasing manager's index for October came in at 49.5, falling below the Reuters poll expectation of 50.2. A PMI reading below 50 indicates a contraction in the sector.

In European markets, there is an expectation of a mixed opening as investors await important data releases in the region. Of particular interest are preliminary euro zone inflation data for October and third-quarter gross domestic product figures. Recently, German gross domestic product showed a modest 0.1% quarterly decline, which was slightly better than the 0.3% decline anticipated in a Reuters poll of economists. Inflation in Germany for October was estimated at 3.8%, the lowest since August 2021, and prices fell 0.2% on an EU-harmonized basis on a month-on-month basis. French gross domestic product growth slowed to 0.1% in the third quarter, down from the 0.6% growth experienced in the second quarter.

 

[Z Forex]

Europe's Delicate Balance Between Growth and Inflation Control

The economic situation in Europe and Germany has seen a slight downturn, with both experiencing a 0.1% drop in GDP in the third quarter of 2023. This decline reflects the challenges of high inflation and rising interest rates that have curtailed consumer spending and slowed growth. There is a glimmer of hope, however, as inflation rates have begun to fall, suggesting that the strict monetary policy measures may be having an effect. In October, inflation in the Eurozone fell to 2.9% and in Germany to 3.9%, showing significant progress in price stabilization.
Despite this progress, Germany's economic forecast remains guarded, with an anticipated 0.6% shrinkage for the year due to the enduring impacts of inflation and interest rate hikes. However, the outlook isn't entirely bleak, as there's an expectation of economic recovery towards the end of 2023 and continued improvement into 2025.
The path ahead for Germany and the wider European economy is a tricky one, balancing between slight economic decline and stagnation. Consumer spending, which is critical to economic health, isn't recovering as quickly as some had hoped. Ongoing adjustments by the European Central Bank and geopolitical uncertainties also play a role in shaping future economic conditions.
In summary, the current economic climate is a mixed bag for the ECB: Inflation is being brought under control, yet there is still the challenge of promoting growth without causing a renewed rise in prices or a recession.

 

[Z Forex]

Asia-Pacific Gains, Europe Optimistic, and U.S. Fed Decision Looms Amid Economic Shifts

Japanese equity markets outperformed other markets in the Asia-Pacific region as the Bank of Japan corrected its yield curve, attracting investor interest while keeping an eye on the U.S. Federal Reserve's upcoming interest rate decision. European equity markets are expected to open on a positive note in anticipation of the Federal Reserve's decision due on Wednesday.
On a separate note, the Caixin/S&P Global manufacturing PMI in China for October fell to 49.5 from September's 50.6, indicating an economic contraction and defying analysts' expectations.
Japanese bond futures recovered marginally after the central bank announced unexpected bond purchases to control a rise in yields following the policy announcement. The Japanese yen appreciated after the country's monetary watchdog hinted at possible market intervention due to discrepancies with economic fundamentals.
Market predictions heavily favor the Federal Reserve keeping interest rates unchanged, with futures markets indicating a 97% likelihood of this outcome.
European data revealed inflation has decreased to its lowest in two years, and contrary to the stagnant growth forecasted, the economy contracted slightly in the third quarter. This economic update comes after the European Central Bank paused its streak of interest rate hikes.
Additionally, there is interest in the U.S. government's new borrowing plan, which is expected to be disclosed shortly before the Federal Reserve shares its policy decision.

 

[Z Forex]

Asia-Pacific Gains, Europe Optimistic, and U.S. Fed Decision Looms Amid Economic Shifts

Japanese equity markets outperformed other markets in the Asia-Pacific region as the Bank of Japan corrected its yield curve, attracting investor interest while keeping an eye on the U.S. Federal Reserve's upcoming interest rate decision. European equity markets are expected to open on a positive note in anticipation of the Federal Reserve's decision due on Wednesday.
On a separate note, the Caixin/S&P Global manufacturing PMI in China for October fell to 49.5 from September's 50.6, indicating an economic contraction and defying analysts' expectations.
Japanese bond futures recovered marginally after the central bank announced unexpected bond purchases to control a rise in yields following the policy announcement. The Japanese yen appreciated after the country's monetary watchdog hinted at possible market intervention due to discrepancies with economic fundamentals.
Market predictions heavily favor the Federal Reserve keeping interest rates unchanged, with futures markets indicating a 97% likelihood of this outcome.
European data revealed inflation has decreased to its lowest in two years, and contrary to the stagnant growth forecasted, the economy contracted slightly in the third quarter. This economic update comes after the European Central Bank paused its streak of interest rate hikes.
Additionally, there is interest in the U.S. government's new borrowing plan, which is expected to be disclosed shortly before the Federal Reserve shares its policy decision.

 

[Z Forex]

Global Markets React to Trade Data and Central Bank Actions

Global markets experienced significant fluctuations on Tuesday. South Korean stocks led losses in the Asia-Pacific region with a 3% decline. Investors closely monitored trade data from China and reacted to the Reserve Bank of Australia's recent interest rate hike.
In Europe, markets were set for a negative opening as the positive momentum of the previous week began to fade. On Monday, regional markets closed lower after a period of buoyant sentiment. Tuesday promised a plethora of earnings reports in Europe, including releases from UBS, Deutsche Post, Metro Bank, and Associated British Foods.
China reported October's trade figures, which proved to be a mixed bag. Exports in U.S. dollar terms fell by 6.4% compared to the previous year, worse than the Reuters poll's prediction of a 3.3% drop. Surprisingly, imports rose by 3% in U.S. dollar terms compared to the previous year, defying Reuters' forecast of a 4.8% decline.
Australia's central bank took action on Tuesday by raising interest rates to a 12-year high, marking the end of four months of steady policy. The Reserve Bank of Australia (RBA) left the door open for potential further tightening to address ongoing inflation concerns.
The RBA concluded its November policy meeting by increasing the cash rate by 25 basis points to 4.35%, citing data suggesting a risk of prolonged high inflation.
In the United Kingdom, retail sales for October showed a 2.5% increase, exceeding the 1.6% growth from the previous year but falling short of the three-month and twelve-month averages of 3.1% and 4.2%, respectively.
Market observers are now anticipating the Federal Reserve's response to the recent easing of financial conditions. Minneapolis Fed President Neel Kashkari emphasized that it is too soon to declare victory over inflation, despite some positive signs of easing price pressures. Several Fed officials, including Chair Jerome Powell, are scheduled to speak in the coming days.
Market swaps currently indicate expectations of over 100 basis points in rate cuts by the Fed by the end of 2024, down from an expected peak rate of 5.37%.

 

[Z Forex]

Global Markets React to Powell's Inflation Focus and Economic Developments

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On Friday, Asia-Pacific markets saw declines, influenced by a negative sentiment from U.S. markets overnight. However, South Korea's benchmark index outperformed its regional counterparts for the week. European equity futures followed a similar trajectory as Asian and U.S. shares.

Investors in Europe faced a bearish market, as they abandoned hopes of a risk asset rally following Fed Chair Jerome Powell's clear focus on addressing inflation, with potential rate hikes still under consideration. This statement, although consistent with previous remarks by several Fed speakers, caught investors' attention on Thursday, particularly after a recent rally in both stocks and bonds. Traders adjusted their expectations, with slightly higher odds of an additional rate hike and a delay in the anticipated 25-basis point rate cut, now projected for July instead of June.

U.S. Treasury yields rose following Powell's comments, along with a disappointing $24 billion 30-year Treasury auction.

Later in the day, ECB President Christine Lagarde is scheduled to participate in a fireside chat, and traders will analyze her every word.

Initial figures revealed that the U.K. economy stagnated in the third quarter, with Gross Domestic Product showing no growth in the three months ending in September, following a 0.2% increase in the previous quarter. On an annual basis, third-quarter GDP was 0.6% higher than the same period in 2022.

Investors will follow the University of Michigan Consumer Sentiment Survey and pay attention to comments from Dallas Fed President Lorie Logan and her Atlanta counterpart, Raphael Bostic.

 

[Z Forex]

Economic Crossroads: Hawkish Fed, Moody's Downgrade, and Key Data Releases Shape Market Outlook​

Last week's highly anticipated comments from Fed Chair Jerome Powell and other Fed members presented a hawkish stance. Despite ongoing uncertainty about inflation levels, they left the door open for rate hikes if necessary. However, the swap market still indicates an 86% probability of no hikes in December. The U.S. economic outlook remains strong, and recent NFP data indicating a slowdown in job creation is viewed positively by markets as a sign of risk appetite and a potential soft landing.

In Europe, concerns about high inflation were reiterated by ECB President Christine Lagarde, emphasizing the need to address it promptly while maintaining a restrictive monetary stance. Economic struggles in the Eurozone, especially in Germany, are evident in deteriorating PMI readings, creating a more uncertain outlook for the EURUSD pair.

Moody's Investors Service downgraded the United States government's rating outlook from stable to negative, citing increasing fiscal risks. This comes as Congress faces a potential government shutdown with current funding expiring next Friday. House Speaker Mike Johnson is expected to unveil a Republican funding plan soon. On the economic data front, investors are watching October’s federal budget and the New York Fed’s consumer expectations survey, ahead of Tuesday's crucial consumer price index data.

Bank of England policymakers Huw Pill and Katherine Mann express concerns about the impact of high-interest rates on inflation and the deepening recession fears, suggesting potential support for earlier rate cuts. Meanwhile, the Pound Sterling finds some optimism despite recession fears, as the UK economy narrowly avoids a contraction in Q3.

Ahead of the upcoming summit between U.S. President Joe Biden and Chinese President Xi Jinping, signs of improving US-China relations are emerging, including potential developments for Boeing Co. in China. The yen's drop to a 2023 low against the dollar raises the possibility of intervention by Japanese authorities. Japan’s wholesale inflation data indicates a gradual cooling of cost pressures.

Gold prices may be influenced by economic growth concerns in China, the world's largest gold producer and consumer. The Chinese CPI showed a 0.2% drop in October, with upcoming Retail Sales and Industrial Production data likely to provide further insights into China’s economic condition.

The U.S. Consumer Price Index (CPI) release on Tuesday is a key event, with the monthly CPI expected to ease to 0.1% in October and the core CPI projected to remain at 0.3%. These figures could significantly influence the direction of gold prices.

After a three-week selloff, oil prices have dropped due to concerns about the weakening demand in the United States and China. The U.S. Federal Reserve's mixed signals have also impacted market sentiment. According to the U.S. Energy Information Administration (EIA), crude oil production in the United States is expected to increase slightly less than previously thought, while demand is predicted to decrease this year.

 

[Z Forex]

EUR/USD is currently moving towards its previous resistance level at 1.0750. The market is waiting for the release of today's data to determine whether there will be a bullish trend breaking this resistance level or a return to the down side. If a breakout occurs, the next target would be at 1.0800.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.0930	1.0800	1.07500	1.0630	1.0550	1.0450

The GBP/USD received a boost from today's data and its next target is the 200MA at 1.2445. The US CPI may also impact the pair if it's higher and could take it back.

Resistance 3​	Resistance 2​	Resistance 1​	Support 1	Support 2	Support 3
1.2550​	1.2450​	1.2300​	1.2260	1.2200	1.2100

The USDJPY has reached the 152 level and is currently awaiting today's data to make a move. It seems likely that an intervention from the Bank of Japan (BOJ) is imminent, as they cannot accept such a significant deterioration in the yen's value. When positioning on the USDJPY, it is important to take into account the high volatility and an average of 350 pips.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
160.00	155.00	153.50	149.3	148.00	146.50

Gold is currently being supported by the 100/200MA levels, which have also acted as resistance twice before. This creates a confluence area where the price is likely to be rejected and come back towards the 1947 resistance. Despite this, the outlook for gold remains positive, considering the fundamental factors. If today's CPI comes in lower than expected, then gold is likely to increase in value.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1980​	1965​	1947​	1937​	1920​	1902​

OIL is correcting today, but the bearish outlook persists. Further selloffs are expected, with a target of 74.20. OPEC may intervene to prevent further price drops, as they have pledged to combat short sellers.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
82.5​	80​	77.20​	74​	72​	68​

 

[Z Forex]

Global Market Update: China's Economic Strength, Inflation Trends, and Oil Market Dynamics

​

Strong industrial output and retail sales data in China, along with news of a significant stimulus plan to boost the housing market, contributed to a sense of optimism in the markets. The MSCI's broadest index of Asia-Pacific shares, excluding Japan, surged by 2.7%, while the Hang Seng in Hong Kong saw a nearly 4% rise. Mainland property developers also experienced a strong rally, with gains of over 5%.

China's retail sales for October showed a 7.6% increase, a figure that may have been influenced by the Golden Week holiday. However, the real estate sector continues to face challenges, with a year-on-year investment decline of 9.3%. It is expected that Beijing will provide increased support through fiscal and monetary measures to aid in the sector's recovery.

In Europe, stocks recorded gains, with the pan-European STOXX 600 index rising by 0.8 %. This was partly due to UK inflation data, which pointed to a slowdown and impacted sterling. It also supported expectations of an interest rate cut by the Bank of England by the middle of next year. The UK's consumer price index rose by 4.6% in the 12 months to October, a fall from the 6.7% rise in September, increasing the likelihood of a potential rate cut.

U.S. inflation data had a significant influence on global markets, as U.S. headline consumer prices remained flat in October, and core CPI came in below expectations. This supported the view that the Federal Reserve might pause its interest rate hikes.

Late on Tuesday, the House of Representatives passed a bill aimed at avoiding a government shutdown, which will now be sent to the Senate for a vote. If approved by lawmakers, the legislation will then go to President Joe Biden. Without a funding bill in place, the federal government is set to shut down on Friday.

Investors are now awaiting U.S. retail sales data and the producer price index (PPI) on Wednesday for further insights into the Federal Reserve's interest rate outlook.

The International Energy Agency's announcement that the oil market for the current quarter won't be as tight as initially expected was attributed to better-than-anticipated production growth in the United States and Brazil. This assessment contradicted OPEC's view, which emphasized strong growth trends and healthy fundamentals in the oil market.

In addition, the American Petroleum Institute reported a 1.3 million barrel increase in U.S. crude inventories last week, along with a simultaneous 1.1 million barrel rise in stockpiles at the Cushing, Oklahoma hub.

 

[Z Forex]

Financial Insights: Inflation, Interest Rates, and Global Diplomacy​

On Tuesday, a soft U.S. inflation reading raised hopes that the Federal Reserve is nearing the end of its interest rate-hiking cycle. Furthermore, there was positive economic data from China, reporting better-than-expected retail sales and industrial data for October. This has led to speculation about potential Fed rate cuts, especially following weaker-than-estimated inflation measures (CPI and PPI) published earlier in the week.

In Frankfurt, ECB President Lagarde is scheduled to speak at an event. Additionally, this week will see the release of weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, Industrial Production, and the NAHB Housing Market Index.

However, on Wednesday, the downbeat UK Consumer Price Index (CPI) data had a negative impact on the British Pound (GBP), serving as a tailwind for the GBPUSD cross. Moreover, the GBP's upside potential might be limited due to the possibility of interest rate cuts from the Bank of England in the near future.

The Japanese Yen (JPY) continues to underperform, primarily due to the Bank of Japan's (BoJ) more dovish stance. The BoJ is the only major central bank maintaining negative interest rates and is in no rush to shift away from its massive monetary easing. Traders also remain skeptical about the possibility of Japanese authorities intervening to combat any sustained depreciation of the domestic currency.

With the two inflation reports now behind us, investors will shift their focus to a range of economic data, including jobless claims, industrial production, and housing market data scheduled for Thursday. They will also closely follow remarks expected from Fed officials, including Cleveland President Loretta Mester and New York President John Williams, at various events throughout the day.

The softer tone around U.S. equity futures is driving some haven flows toward precious metals. Additionally, the expectation that the Federal Reserve (Fed) has completed its policy-tightening campaign is providing further support to gold, a non-yielding asset.

Crude oil prices are facing downward pressure due to a larger-than-expected weekly build in U.S. crude stockpiles. The EIA Crude Oil Stocks Change for the week ending on Nov 10 improved to 3.6M from the prior 0.774M, against an expected 1.793M. Furthermore, signs of easing demand in China are contributing to the negative sentiment surrounding oil prices, with China's oil refinery throughput in October showing a slight slowdown compared to the previous month's highs.

In a noteworthy development, U.S. President Joe Biden and China's President Xi Jinping met in person in San Francisco on Wednesday, marking their first meeting in about a year. Both leaders agreed to resume high-level military communication, but the issue of Taiwan remains a sticking point in their relationship.

 

[Z Forex]

Global Markets in Flux: Dollar Dips, Euro Rises, and Economic Signals Abound​

On Monday, the dollar declined to a two-month low, continuing its downward trend as traders grew confident that US interest rates have peaked, focusing on when the Federal Reserve might start reducing rates. The EUR/USD pair surged over 2% last week, closing above 1.0900 and reaching its highest since late August at over 1.0930 early Monday.

This strength in the euro is supported by hawkish remarks from ECB officials, countering early rate cut expectations. Bundesbank President Joachim Nagel warned against premature rate cuts, and ECB policymaker Robert Holzmann suggested the second quarter would be too soon for such a move.

Meanwhile, the UK faces recession risks, prompting market speculations that the Bank of England (BoE) might lower its 15-year high interest rates. This sentiment was bolstered by disappointing UK Retail Sales figures, potentially benefiting the Pound Sterling (GBP). Investors await further insights from the BoE Monetary Policy Report Hearings on Wednesday and the ECB Monetary Policy Meeting Accounts on Thursday.

In the US, the 10-year government bond yield hit a two-month low at 4.379% on Friday, restraining USD bulls and limiting gains for the USD/JPY pair. Conversely, the Japanese Yen (JPY) received a modest boost following optimistic comments from Japan's Finance Minister Sunichi Suzuki, who sees a unique opportunity to overcome deflation, lending strength to Japan's economy.

Gold prices continue to be underpinned by expectations that the Federal Reserve won't raise interest rates amid easing high-price concerns. Optimism following China's commitment to supporting its struggling real estate sector also influences the gold market, though its safe-haven appeal limits significant downside.

In the oil sector, OPEC+ is reportedly considering further supply cuts at its upcoming meeting on November 26 to bolster prices. Major producers Saudi Arabia and Russia are expected to maintain production cuts into the next year. This follows OPEC's steady 2024 oil demand growth forecast.

 

[Z Forex]

Global Financial Shifts: Dollar Weakness, Currency Trends, and Commodity Price Dynamics​

The dollar index dropped to around 103.2 on Tuesday, hitting its lowest point since late August. This decline reflects growing bets that U.S. interest rates might start to decrease next year, spurred by recent economic data suggesting a softer economy. The Federal Reserve is expected to hold rates steady in December, with a 30% market expectation of a rate cut by March 2024.

European Central Bank President Christine Lagarde is scheduled to discuss "Inflation kills democracy" in Germany. Simultaneously, the euro is gaining strength, capitalizing on a shift in sentiment favoring riskier currencies over the dollar.

The GBP/USD pair has experienced a steady upward trend for the past three days, reaching a two-month high. This is supported by the Bank of England Governor Andrew Bailey's rejection of immediate rate cut speculations, suggesting that borrowing costs might increase if inflation persists.

The USD/JPY pair is facing continuous selling pressure, dropping to a two-month low. This is influenced by declining U.S. Treasury yields and speculation about the Bank of Japan ending its negative interest rate policy by early next year, potentially strengthening the Japanese Yen.

Gold prices are approaching $1,990 an ounce, nearing their highest level since May. This rise is largely due to the dollar's sharp decline and anticipations of potential rate cuts by the U.S. Federal Reserve next year. However, expectations of more stimulus from China and caution ahead of the FOMC meeting minutes are limiting further gains in Gold.

WTI oil prices are increasing in anticipation of OPEC+'s possible announcement of further supply cuts. Saudi Arabia plans to extend oil production cuts, while OPEC+ is considering additional cuts due to declining oil prices. However, concerns about a slowing global economy are balancing the impact of these potential supply cuts on oil prices.

 

[Z Forex]

Dollar Rebounds on Fed's Signal, ECB Flags Financial Fragility, and Sterling Gains Momentum​

The dollar recovered from its 2-1/2 month low following the Federal Reserve's meeting minutes, which indicated a continuation of restrictive interest rates, suggesting the end of the rate-hike cycle. The Fed emphasized a "careful" approach, maintaining the current rate setting.

The European Central Bank (ECB), in its bi-annual Eurozone financial assessment, expressed concerns about financial stability, labeling the outlook as "fragile." ECB President Christine Lagarde expects a slight rise in headline inflation in the coming months, emphasizing it's premature to declare victory over economic challenges.

The Pound Sterling awaited the Autumn Statement budget announcement, buoyed by the Bank of England's hawkish stance and Governor Bailey's remarks on maintaining high interest rates for a prolonged period. This outlook provided support for the GBP/USD pair.

Japan’s government anticipates a moderate economic recovery, acknowledging the global slowdown and China's delayed recovery as significant risks.

Gold prices hovered around $2000 an ounce, influenced by the FOMC minutes and ongoing assessments of monetary policy directions.

Oil prices increased following a significant climb in U.S. crude oil stocks, as reported by the API Weekly Crude Oil Stock data. This rise countered the potential impact of OPEC's projected supply restrictions.

Investors are awaiting key economic data releases, including durable goods orders, weekly jobless claims, and consumer sentiment, to calculate further market movements.

 

[Z Forex]

Low Trading Volumes Post-Holidays; ECB and BoE Stances, UK Budget, Yen Recovery​

Trading volumes are expected to be low following holidays in Japan and the US. Recent data showed that the drop in new US unemployment claims exceeded expectations. ECB officials, including Bundesbank President Joachim Nagel and Vice President Luis de Guindos, maintain a stance against rate cuts until inflation reaches the 2% target, with potential short-term inflation rebounds. Today's PMI data will provide insights into Europe's economic health, which has shown signs of contraction. The euro's movement is largely influenced by sentiments about the end of the US's tightening cycle and potential early rate cuts.

BoE Governor Andrew Bailey emphasized that the central bank's interest rate policy remains steady, with inflation expected to return to the 2% target. Market attention is on the upcoming UK S&P Global/CIPS PMI data for manufacturing and services. UK Finance Minister Jeremy Hunt's autumn budget, predicting slower economic growth, could negatively impact the pound.

The Japanese Yen is recovering against the US Dollar, fueled by expectations that the BoJ might end its long-standing accommodative monetary policy. Gold prices are benefiting from the dollar's decline, approaching the $2,000 level as post-FOMC minutes did not change market expectations of a rate hike in December and a potential rate cut in Q2 of 2024. This reflects a belief that the tightening cycle in developed economies is nearing an end, with economic growth expected to decline, as exemplified by the UK.

WTI prices are falling as OPEC+ unexpectedly postponed a meeting on production cuts. The meeting's delay from November 25–26 to November 30 raises concerns about global crude oil supplies, potentially dragging oil prices lower.