Forex and other markets news
Weekly review / 07.11 - 13.11
Weekly review / 07.11 - 13.11
The First Signs of Weakening Inflation
U.S. Consumer Price Index (CPI) YoY slide to 7.7 %
U.K. Gross Domestic Product (GDP) YoY Q3 rose to 2.4%
U.S. dollar index fell to 106.221
Gold hiked to 1,767 USD
Bitcoin dropped to 16,673 USD
Gold soared on the U.S. inflation news, as investors expect a softer rate hike in December. The precious metal price reached 1.767 USD, the level of August. From a technical point of view, there was a reversal of the downtrend as an important level of 1.725 USD was broken. The daily chart shows that the next targets may be at 1.782 USD and 1,808 USD, an important historical resistance level. Key support levels remain at 1,683 USD, 1,725 USD and 1,760 USD.
Traders were excited about the decline of the U.S. annual inflation to 7.7%, against expectations 8%. At the same time, in October, inflation was 0.4% higher than in September, and prices continued to rise in the service sector. In addition, the decrease of annual inflation rates in the United States is purely mathematical in nature: in October 2021, inflation rose sharply by 0.9% compared to September, i.e. the base for calculation of the annual dynamics was sharply increased, which led to a decrease in annual rates to 7.7%. It is important to remember that the Fed's inflation targets of 2% are almost 4 times less than the current levels, so don't wait for the Fed to ease up.
There are problems with consumer finances in Europe: due to the tightening of monetary policy, the supply of credit to households is decreasing, and commercial banks are tightening requirements for borrowers, both for individuals and for companies.
Signs of weakening inflation have not yet lifted the consumer sentiment of Americans. Consumer sentiment worsened in November, reaching the lowest level since July, as people faced continued inflation and a worsening economic outlook. Fears of an impending recession also affected confidence in the economy. The Michigan U.S. consumer sentiment index fell by 5.2 points from 59.9 in October, while economists had expected a value of 59.5. The instability of sentiment is likely to persist, which is a reflection of uncertainty about both global factors and possible election results.
EURUSD hiked to 1.03577 upon U.S. CPI data and the upcoming Fed decision in December.
GBPUSD reached 1.18444 by the end of the week due to a weak dollar and good U.K. economic data.
USDJPY dropped to 138.670 as the positive U.S. inflation data.
AUDUSD finished the week at 0.67088 thanks to the weak U.S. dollar.
The bitcoin has fallen to 16,700 USD and has updated the minimum since November 2020. Most other cryptocurrencies have also fallen in price. Ethereum approached the level of 1,000 USD, and Solana fell in price by 25 %. Earlier, bitcoin reached a local maximum of 21,450 USD as last Friday's positive unemployment data in the United States. This became an argument in favor of a possible easing of the Fed's policy. A more lenient Fed policy means the growth of risky assets, and one of which is cryptocurrency. To overcome the bearish trend, the bitcoin exchange rate must overcome the 22,000 USD. After a confident consolidation above this milestone, it will be possible to talk about the end of the downtrend.