Fundamental updates by Solid ECN

[SOLIDECN]

GBPUSD - The political crisis in the UK puts pressure on the pound quotes​

GBPUSD is trading with a multidirectional dynamic, testing the level of 1.1200 for a breakdown. The British currency is still under pressure from the rising US dollar, which is supported by expectations of a tightening of the US Federal Reserve's monetary policy. The Bank of England is also set to further increase the interest rate, given the fact that inflation in the UK in September exceeded the psychological barrier of 10.0%; in addition, the regulator is considering launching a quantitative tightening program.

At the same time, the Bank of England is forced to respond not only to economic challenges, but also to the political crisis. The day before, British Prime Minister Liz Truss announced her resignation after only 45 days in office, but the official will continue to fulfill her duties until the elections, which are to be held next week. Analysts call the former Chancellor of the Exchequer Rishi Sunak the most likely candidate for the post of chairman of the Conservative Party and the head of government. In addition, Boris Johnson announced the decision to return to his political career. Truss resigned after being criticized for an initiative to reduce the fiscal burden and subsidize utility bills.

Today, investors are watching the publication of a block of macroeconomic statistics from the UK on the dynamics of Retail Sales: on a monthly basis, the indicator slowed down the negative dynamics from -1.6% to -1.4%, and on an annualized basis, on the contrary, strengthened it from -5.4% to -6.9%, while Retail Sales excluding Fuel on a monthly basis corrected from -1.6% to -1.5% with a forecast of -0.3%, and from -5.0% to -6.2% on an annual basis, although analysts expected -4.1%. Weak statistics may push the pound quotes to a new decline.

Resistance levels: 1.13, 1.1494, 1.16, 1.17 | Support levels: 1.115, 1.106, 1.0922, 1.06​

 

[SOLIDECN]

Euro hits three-week high ahead of major European data​

Euro rose on Monday for the third straight session against dollar, hitting three-week highs on prospects Bank of Japan might intervene in the market, and ahead of major European data in October. The dollar index hit multi-week lows as US 10-year yields decline while risk appetite improves in the market.

EURUSD rose 0.3% to 0.9899, the highest since October 5, after rising 0.75% on Friday, the second profit in a row as investors buy up riskier assets.

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Major Data​

Investors await important European data later today, including the manufacturing and services PMIs in October for Europe. Such data will offer clues on the state of the European economy in the fourth quarter.

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The Dollar​

The dollar index fell 0.4% on Monday for the third session to three-week lows at 111.47 against a basket of major rivals. US 10-year treasury yields fell over 2% for the second session away from 15-year highs at 4.335%, improving risk appetite.

Such developments come on profit-taking and prospects Bank of Japan might intervene soon in the market to support yen against major rivals.

 

[SOLIDECN]

Crude Oil - Consolidation near 91​

Yesterday, the oil quotes showed a moderate decline, reacting to the publication of statistics from China and news about the election of President Xi Jinping for a third term, but then the "bulls" managed to recover, and the focus of investors' attention shifted to macroeconomic statistics from the United States.

China reported that in the first three quarters of this year, total oil imports fell by 4.3% due to frequent quarantines due to the "zero tolerance" policy for COVID-19 and a general slowdown in economic growth. At the same time, national statistics showed the growth of Q3 gross domestic product (GDP) by 3.9%, which is much less than the target level of 5.5%. Experts were disappointed by the data, which indicated a sharp slowdown in retail sales in September from 5.4% to 2.5%, with a forecast of growth of 3.3%.

The focus of investors on Tuesday, also to statistics on consumer confidence in the US, will be a report from the American Petroleum Institute (API) on the dynamics of oil inventories: the previous report reflected a drop in inventories by 1.27M barrels.

Resistance levels: 92.47, 94.5, 96.54, 97.8 | Support levels: 91, 88.79, 87, 86​

 

[SOLIDECN]

EURUSD​

The European currency shows flat trading dynamics, consolidating near 0.9950 and updating local highs from October 5. Yesterday, the pair EUR/USD showed a fairly active growth, which was due to a sharp correction in the US currency in response to the publication of disappointing statistics. The Housing Price Index in the US in August fell by 0.7% after falling by 0.6% in the previous month, while analysts' forecasts assumed a value of -0.3%. S&P/Case-Shiller Home Price Index fell from 16.0% to 13.1% YoY, which was worse than the expected 14.4%, and also became the most significant slowdown in the index on record. Analysts believe that the negative dynamics will be reflected in the monetary policy of the US Federal Reserve. Despite a sharp decline in home prices, activity in the real estate market is yet to recover, as mortgage rates have alienated potential buyers, who are now more focused on meeting basic needs. In turn, some support for the euro on Tuesday was provided by data from Germany, where the index of Business Climate from the Institute for Economic Research (IFO) corrected from 84.4 points to 84.3 points in October, while expectations were at 83.3 points. The indicator for Current Assessment, in turn, decreased from 94.5 points to 94.1 points, with the forecast for a fall to 92.4 points, and the index of Economic Expectations increased from 75.3 points to 75.6 points, while analysts assumed its correction to 75.0 points.

 

[SOLIDECN]

Euro hits six-week high ahead of ECB decisions​

Euro rose in European trade on Thursday for the sixth straight session against dollar, hitting six-week highs after piercing parity successfully, ahead of the European Central Bank's decisions later today, expected to increase interest rates by 75 basis points for the second time in a row.

Dollar extended its losses amid estimates the Federal Reserve will alleviate its aggressive stance on US interest rates as recession threatens the economy.
EURUSD rose 0.15% to 1.0093, the highest since September 13, after rising 1.2% yesterday, the fifth rise in a row, and the largest profit since October 17 amid signs of economic weakness.

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ECB​

Investors await the results of the ECB's policy meeting today as inflation in Europe hits successive record highs while the fuel crisis develops. Most analysts expect the ECB to increase interest rates by 75 basis points to 2%, the highest since 2008. ECB President Christine Lagarde will explain the decision following the meeting by 12:45 GMT.
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The Dollar​

The dollar index fell 0.1% today for the third session in a row, plumbing five-week lows at 109.53 against a basket of major rivals. A string of negative US data showed weakness in the world's largest economy and hurt prospects of aggressive policy tightening by the Federal Reserve.​

 

[SOLIDECN]

EURUSD​

The European currency shows moderate growth, trying to recover from a corrective decline the day before. The EUR/USD pair is again preparing to test the strong resistance level of 1, however, investors are waiting for the publication of macroeconomic statistics in Europe and the US. Today, Germany will present data on the dynamics of Gross Domestic Product (GDP) for the third quarter. Europe's largest economy is expected to decline by 0.2% after rising 0.1% in the previous month, and on an annualized basis, the rate is likely to slow from 1.8% to 0.7%. During the day, October data on consumer inflation will also be released in Germany, and the eurozone will report on the level of consumer confidence. In addition, investors evaluate the results of the meeting of the European Central Bank (ECB). As expected, the regulator adjusted the interest rate by 75 basis points for the second time in a row from 1.25% to 2.00%. In a follow-up statement, board members spoke in favor of further tightening of monetary policy to achieve inflation targets, which have not yet been revised and are at around 2.0%.

 

[SOLIDECN]

Euro Climbs Amid Forecasts about European Rates​

Euro rose in European trade against a basket of major rivals, away from week lows against dollar on prospects the European Central Bank might hike interest rates by 75 basis points for the third time in a row in December. The dollar lost ground ahead of the Federal Reserve's policy meeting later today, expected to announce its decisions tomorrow with a 0.75% rate hike to interest rates.

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• EURUSD rose 0.6% to 0.9938, after falling 0.9% yesterday, plumbing week lows at 0.9872 as US treasury yields surge.​
• Euro rose 0.8% on October, the first monthly profit in five months as the ECB finally moved aggressively to control record inflation.​

European Rates​

Europe's consumer prices rallied 10.7% in October, a record high, passing estimates of 9.9%, and up from 9.9% in September.

As inflation hits double digits in Europe, analysts expect the ECB to raise interest rates by 75 basis points for the third time in a row in December. ECB President Christine Lagarde already warned from the record inflation rates all over the euro zone, noting the bank hasn't reached its targets yet with prices.

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The Dollar​

The dollar index fell over 0.5% on Tuesday on track for the first loss in four sessions against a basket of major rivals. Investors await the Federal Reserve's policy meeting later today, expected to announce its decisions tomorrow with a 0.75% rate hike to interest rates.

 

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You think the DXY has topped?

 

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Sterling sharpens decline ahead of BoE decisions​

Sterling fell in European trade against dollar for second straight day, hitting week lows ahead of Bank of England's policy decisions today. The greenback rose to two-week highs against a basket of major rivals after the Federal Reserve's bullish policy meeting. GBPUSD fell 0.45% to 1.1336, a week low, after losing 0.8% on Wednesday, the second loss in three days following Fed Chair Jerome Powell's remarks.

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Bank of England​

The BoE is widely expected to increase interest rates by 75 basis points to 3% today, the eighth increase in a row. The decisions alongside the official policy statement will be released on 12:00 GMT.

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The Dollar​

• The dollar index rose 0.3% on Thursday for the second session, hitting two-week highs at 112.53 against a basket of major rivals.​
• The Fed raised interest rates yesterday by 75 basis points for the fourth time in a row to below 4%, the highest since December 2007.​
• Fed Chair Jerome Powell said recent data shows the final levels of interest rates might be higher than previously expected.​

Such statements bolstered the case for more aggressive policy tightening by the Fed through March 2023, with 0.75% rate hike odds now increasing from 34% to 43%.​

 

[SOLIDECN]

Euro tries to recover as eyes fixed on Christine Lagarde​

Euro rose in European trade above two-week lows against dollar ahead of ECB President Christine Lagarde's speech later, which might offer clues on the future of European interest rates. The greenback gave up two-week highs on transient profit-taking ahead of US payrolls data, crucial for deciding the future path of US monetary policies.

EURUSD rose 0.5% to 0.9796, after closing down 0.7% yesterday, the fourth loss in a row, plumbing two-week lows at 0.9730 on bullish remarks from Fed Chair Jerome Powell.

 

[SOLIDECN]

Euro Declines on Profit-taking after Biggest Daily Profit Since 2015​

Euro fell in European trade against a basket of major rivals on profit-taking after marking the biggest profit since late 2015 against dollar, however risks continue to surround the common currency. The dollar was boosted as well amid risk-averse sentiment with China asserting its commitment to strict Covid 19 restrictions, dashing hopes of reopening the world's second largest economy.

EURUSD fell lover 0.5% to 0.9902, after closing up 2.2% on Friday, the first profit in five days, and the largest since December 2015.

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Standing Risks​

The divergent levels of European and US interest rates are ongoing risks that continue hurting euro's standing, in addition to high energy costs and natural gas shortages. A historic increase in energy prices sent inflation considerably higher and hurt economic growth and the trade flow.
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Lagarde​

ECB President Christine Lagarde is preparing to present a speech organized by the European Commission in Belgium, which might offer fresh clues on the future of interest rates in the euro zone. Lagarde also noted the extremely higher inflation rates all over the euro zone, which remain far from the 2% targets.

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The Dollar​

The dollar index rose over 0.4% on Monday, recouping some of its hefty losses on Friday against a basket of major rivals. The dollar swooned on Friday after four Fed policymakers said they're considering raising interest rates at the next December meeting by a lower amount compared to the previous meeting.​

 

[SOLIDECN]

Dollar widens losses ahead of mid-term elections​

Dollar fell against most major rivals on Monday as risk appetite oscillates, losses mount ahead of Congressional elections. Tomorrow, the mid-term elections for both houses of Congress will be launched, with the Republican Party expected to remove Democrats from their current majorities.​

• Important US inflation data will be released later this week, and will help investors predict future Fed steps.​
• Recent US data released last week showed the economy added 261 thousand jobs in October, while analysts expected an addition of 220 thousand.​
• US unemployment rose to 3.7% last month from 3.5% in September, while analysts expected 3.6%.​
• The Fed decided last week to raise interest rates by 75 basis points as expected.​

The dollar index fell 0.6% to 110.2 as of 18:25 GMT, with a session-high at 111.2, and a low at 110.1.​

 

[SOLIDECN]

Dollar Heads to more Losses Amid Geopolitical Uncertainty​

Dollar fell against most major rivals on Tuesday amid geopolitical uncertainty, coinciding with today's US mid-term Congressional elections. Most analysts expect the Republican party to win most seats in this election, moving aside the Democrats from their current majority. Later this week, important US inflation data will be released and will provide clues on the Federal Reserve's next monetary policies.

The Federal Reserve decided last week to increase interest rates by 75 basis points as expected, the fourth such increase in a row to control inflation. The dollar index fell 0.4% to 109.6 as of 18:36 GMT, with an intraday high at 110.6, and a low at 109.3.​

 

[SOLIDECN]

Euro resumes gains ahead of US inflation data​

Euro rose in European trade against dollar on track for two-month highs amid prospects of further policy tightening by the ECB. The greenback lost additional ground ahead of US inflation data in October, which will provide additional clues on the Fed's next rate hike in December.

EURUSD rose 0.35% to 1.0043, with a session-low at 1.0006, after falling 0.6% yesterday, the first loss in four days on profit-taking away from two-month highs at 1.0096.

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The ECB​

German two-year treasury yields are hovering near late 2008 highs at 2.252% recently. Such a spike to 14-year highs are based on expected policy tightening by the ECB soon to close the policy gap with the US.
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The Dollar​

The dollar index fell 0.3% on Thursday on track for two-month lows at 109.36 against a basket of major rivals. Such a decline comes ahead of major US inflation data in October, which will provide crucial clues to the Fed's December policy decisions. Currently, traders estimates a 67% chance of a 0.5% rate hike by the Fed in December, and a 33% chance of a 0.75% rate hike.​

 

[SOLIDECN]

Sentiment boosted in markets after US inflation data​

Global financial markets were boosted after US inflation data that showed a slowdown in prices in October. It's the fourth consecutive monthly slowdown in consumer prices, asserting a move away from record 9.1% inflation in June, as the Fed's aggressive policy tightening moves finally show their impact. Bets on a 0.50% rate hike by the Federal Reserve in December rose from 67% to 85%, while bets on a 0.75% rate hike tumbled from 33% to 15%.

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Inflation Data​

US consumer prices rose 7.7% in October y/y, less than the expected 7.9%, and down from 8.2% in the previous reading. Core prices, excluding food and fuel, rose 6.3%, less than the expected 6.5%, and less than 6.6%5 in the previous reading.
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Global Markets​

The dollar index slumped over 1.5% to 108.75, the lowest since September 13 against a basket of major rivals. Gold prices rose 1.75%, hitting two-month highs at $1,737 an ounce on track for the largest weekly profit since February.

Most European stock rose to two-month highs while Wall Street stock futures rallied as well ahead of the official opening.​

 

[SOLIDECN]

Euro jumps to four-month high on German bonds​

Euro rose in European trade against dollar after a short hiatus from gains, hitting four-month highs as two-year German yields hit 14-year highs ahead of expected ECB policy tightening. The dollar plumbed fresh three-month lows ahead of US producer prices data, important for gauging inflation in the economy. EURUSD rose over 0.8% to 1.0412, the highest since July 5, after closing down 0.3% yesterday, the first loss in three days after marking the largest weekly profit since March 2020.

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German Yields​

US two-year German yields rose over 4% after a short hiatus from gains, almost touching 14-year highs at 2.252%. It comes amid developments in the German bonds market as the ECB is expected to aggressively tighten policies and close the gap with the Fed.

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The Dollar​

The dollar index fell over 0.7% to three-month lows at 106.09 against a basket of major rivals, following the largest two-day loss since early 2020. The selloff comes ahead of US producer prices data later today, expected to provide further clues on prospects of rate hikes in December. Markets are pricing in a 89% chance of a 0.5% rate hike in December, and just an 11% chance of a 0.75% hike.​

 

[SOLIDECN]

Euro gives up four-month high on profit-taking

Euro fell in European trade off four-month highs on track for the first loss in three days on active profit-taking, while two-year German yields fell. Dollar rebounded from multi-month highs after strong data on US retail sales in October following remarks by Fed officials which asserted the continued efforts to bring inflation down. EURUSD fell over 0.3% to 1.0359, with a session-high at 1.0398, after rising 0.45% on Wednesday, the second profit in a row, marking four-month highs at 1.0481.

Such gains came as concerns about a wider conflict in eastern Europe subsided as the NATO stated the recent missile that hit Poland was probably a mistaken shot from the Ukrainian air defence force.


German Yields

Two-year German treasury yields fell over 0.6% today away from recent 14-year highs, in turn pressuring euro. A recent spike in yields to 14-year highs at 2.252% played a major role in recent extensive gains by the euro as the ECB prepares more aggressive policy tightening to come.


The Dollar

The dollar index rose 0.3% on Thursday away from three-month lows at 105.34, on track for first profit in three sessions against a basket of major rivals. The gains came after data showed US retail sales rose past estimates in October.

 

[SOLIDECN]

Euro sharpens decline to two-week low amid grim outlook

Euro fell in European trade against dollar for third straight session, hitting two-week lows amid grim outlook for European services and manufacturing, which could hinder the ECB's policy tightening plans. The dollar extended its gains following recent remarks by Fed officials, which confirms the ECB will carry on its battle against inflation in the US. EURUSD fell 0.7% fell 1.0252, the lowest since November 11, after losing 0.4% on Friday, the second loss in a row as two-year German treasury yields slowed down.

Euro fell 0.3% last week against dollar on profit-taking away from four-month highs at 1.0481.

Grim Outlook

Europe's manufacturing PMI data are expected later today to show a slowdown in activities in November.
The data is expected to bring down bets on the European Central Bank's expected rate hikes at upcoming meetings.


The Dollar

The dollar index rose 0.6% on Monday on track for the third profit in a row, hitting two-week highs at 107.59 against a basket of major rivals.
Recent US data showed retail sales rose past estimates in October, while Fed officials such as San Francisco Fed President Mary Dale said it's reasonable the Fed will raise rates to 5.25% by early next year.​

 

[SOLIDECN]

Morning Market Review

EURUSD
The European currency shows an attempt at corrective growth, testing the level of 1.0260 for a breakout. The EUR/USD pair is recovering after a noticeable decline the day before, as a result of which the single currency updated local lows from November 11. At the same time, market activity remains reduced, as trading participants are in no hurry to open new positions ahead of the publication of the minutes of the US Federal Reserve meeting, as well as a block of macroeconomic statistics on the dynamics of Durable Goods Orders in October and business activity in November. Analysts expect new signals from the US regulator regarding future monetary policy. It is assumed that already in December, the Fed may go for some softening of its rhetoric and raise the interest rate by only 50 basis points. However, the value could be adjusted to higher levels than originally estimated as domestic inflation remains well above the 2.0% target. Uncertain macroeconomic statistics from Germany put pressure on the single currency yesterday. The Producer Price Index in October fell by 4.2% after rising by 2.3% in the previous month, while analysts expected an increase of 0.9%, and in annual terms, the dynamics slowed down from 45.8% to 34.5%, which also turned out to be worse than forecasts at the level of 41.5%.


GBPUSD
The British pound is trading with a weak upward trend, testing the level of 1.1850 for a breakout. The GBP/USD pair is recovering after a moderate decline at the beginning of this week; however, the activity of the "bulls" remains very low, as investors expect new drivers to appear on the market. The focus of traders is a block of macroeconomic statistics from the US on the dynamics of Durable Goods Orders, as well as the publication of the minutes of the US Federal Reserve, which will be released tomorrow. Traders will assess the likelihood of a slowdown in the tightening of monetary policy, as previously repeatedly stated by representatives of the regulator. In turn, the global vector for a gradual increase in the cost of borrowing is likely to continue, and therefore the American currency is in high demand. In the middle of the week, speeches by representatives of the Bank of England are also expected, including David Ramsden, Huw Pill and Catherine Mann. Moderate tightening of monetary policy is also expected from the British regulator in the future; however, the UK, in addition to raising interest rates, is trying to stabilize the economic situation by reducing government spending and increasing the fiscal burden.


XAUUSD
Gold prices show corrective growth, recovering from a four-day decline, as a result of which the instrument retreated from local highs to lows from November 10. The XAU/USD pair is testing 1745.00 for a breakout, waiting for new drivers to appear on the market. Demand for gold is gradually recovering as the publication of the minutes of the US Federal Reserve meeting approaches, which may contain hints regarding future monetary policy. The market expects the regulator to allow some weakening of its position in December and raise the interest rate by only 50 basis points. In addition, the minutes will contain updated forecasts regarding economic growth rates and inflation dynamics for the near future. The pressure on the trading instrument is also exerted by the upcoming meeting of the Reserve Bank of New Zealand (RBNZ), which will be held on Wednesday, November 23. Forecasts suggest that the interest rate will be raised again by 75 basis points to 4.25%.​

 

[SOLIDECN]

Euro hovers near four-month high on US interest rate prospects

Euro rose in European trade against a basket of major rivals for the third straight session against dollar, almost hitting four-month highs amid fading concerns about the widening policy gap between the US and Europe. The dollar fell to near three-month lows under pressure from Fed's minutes, which bolstered the case for a 0.5% rate hike in December.

EURUSD rose 0.5% to 1.0448, after closing up 0.9% yesterday, the second profit in a row, as risk appetite improved.

Four-Month Peak

Euro hit four-month highs at 1.0481 on November 15 before entering a descending wave on profit-taking.
Current gains amid fading concerns about the policy gaps between the US and Europe, with the ECB expected to increase interest rates by 75 basis points in December.
It's now also widely expected the Fed will increase rates by only 0.5% next month instead of 0.75%.


The Dollar
The dollar index fell 0.4% on Thursday, sharpening losses for the third day in a row, and hitting three-month lows at 105.34 against a basket of major rivals.
Fed's minutes yesterday showed US policymakers are content about the slowdown in inflation, and are moving toward smaller rate hikes.​