Important calendar events
The dollar surged last week, and the dollar went from 105.0 to 107.0 mid-week, its highest value since October 2022, before paring some gains and ending the week at 106.7. US treasury yields also strengthened, with the US 10-year bond yield rising from 4.31% to 4.46%.
The dollar added gains last week as Republicans secured full control of the US Government, allowing Trump’s administration to pass laws more easily. After winning the US Presidency last week and the majority in the US Senate earlier this week, Republicans won control over the House of Representatives on Thursday.
Trump will be able to pursue his agenda and pass legislation on key issues, such as immigration and taxation. Trump’s proposed tariffs and tax policies are expected to support economic growth, boosting the dollar. In addition, the import tariffs imposed are expected to drive inflation higher. This may force the Fed to keep interest rates at restrictive levels for longer.
The US Federal Reserve cut interest rates by 25 basis points last week to a target range of 4.50% to 4.75%. The Fed had already launched its easing cycle in September, with an aggressive 50-bp rate cut, signaling the end of its restrictive monetary policy.
Fed Chair Jerome Powell stated that the progress of disinflation is steady, and the labor market is strong, permitting a shift towards a more neutral monetary policy. After the Fed policy meeting, Powell allayed fears that he would be forced to step down by Trump’s administration. Powell stressed that it is not permitted under the law for the US President to remove the Fed Chair, indicating that he intends to complete his term of office, until May 2026.
This was reflected on Fedspeak this week, which was rather hawkish. Fed officials speaking this week adopted a cautious stance towards future rate cuts. Powell delivered a hawkish speech on Thursday, stating that there is no need to lower interest rates aggressively. Powell stressed that US inflation remains above the Fed’s 2%, while the US economy and labor market remain strong.
Odds of another rate cut in December shot up to 90% after the release of the US inflation report on Wednesday despite evidence that disinflation in the US is not progressing but dropped back to 65% after Powell’s speech. Persistent price pressures may prevent the Federal Reserve from pivoting to a less restrictive monetary policy.
Fed’s Susan Collins echoed Powell’s remarks on Friday, stating that there is no urgency to lower interest rates. FOMC member Austan Goolsbee also spoke in favor of slowing down the pace of rate cuts on Friday. FOMC policymaker Lorie Logan warned on Wednesday, that price stability has not been achieved yet and that the Fed should move slowly with future rate cuts to avoid reaccelerating inflation. Fed member Robert Kaplan was also hawkish on Wednesday, expressing doubts about a rate cut in December. Fed’s Alberto Musalem, speaking after the release of the US inflation report on Wednesday, stated that the risk of inflation moving higher has risen and warned that interest rates should stay at restrictive levels while inflation remains above 2%. Fed's Kashkari stated on Tuesday that he is confident that the battle with inflation would be won in the long run but stressed that it is too soon to declare victory on inflation. Fed Policymaker Tom Barkin was more hawkish, warning that US inflation might get stuck above the Fed's 2% target.
On the data front, US inflation is proving to be sticky despite the Federal Reserve’s efforts to bring it down to its 2.0% target. Headline inflation rose to 2.6% year-on-year in October from 2.4% in September according to CPI data released on Wednesday. Monthly CPI rose by 0.2% for the fourth consecutive month in October, which was in line with expectations. Annual Core CPI, which excludes food and energy, rose by 3.3% in October and monthly core CPI rose by 0.3%, as predicted by markets in both cases.
US Producer Price Index (PPI) data on Thursday, coming after Wednesday’s hot inflation print confirmed that inflationary pressures in the US are not decelerating. Producer Prices rose by 2.4% year-on-year in October up from 1.9% in September, which was revised upward and exceeding expectations of 2.3%. Monthly PPI rose by 0.2% in October, while September’s print was revised upward to reflect 0.1% from 0.0% previously. Core PPI, which exclThe monthly and energy, rose by 0.3% in October, which was in line with expectations, against 0.2% growth in September.
US Retail Sales expanded by 0.4% in October, surpassing expectations of a 0.3% gain but coming down from September’s 0.8% rise. Core Retail Sales, which exclude the sales of Automobiles, expanded by just 0.1% in October, against expectations of 0.3% growth, while September’s print was revised upward to 1.0%.
Meanwhile, US Unemployment Claims for the week ending November 8 came in lower than expected on Thursday. Initial jobless claims dropped to 217K down from 221K the week before against market estimates of 223K.
The US economy expanded by only 2.8% in the third quarter of 2024, after rising by 3.0% in the second quarter of the year and by 1.4% in the first quarter of the year, while markets were anticipating 3.0% growth in the third quarter of 2024. The US economy is suffering from prolonged tightening, raising recession concerns.
Key releases that may affect the dollar this week include US unemployment claims on Thursday, as well as Manufacturing and Services PMI data on Friday.
EUR/USD continued to trade in a downtrend last week as the dollar gained strength. The currency rate dipped from 1.072 to 1.052, its lowest level since October 2023. If the EUR/USD pair declines, it may find support at 1.043, while resistance may be encountered near 1.093.
The ECB lowered its benchmark interest rate by 25 basis points in October, bringing its main refinancing rate to 3.40%. The ECB started its easing cycle in June, lowering interest rates by 25bps for the third time this year in October.
ECB President Christine Lagarde has not committed to future rate cuts. Lagarde stressed that economic activity in the Eurozone is slowing down, prompting the ECB to lower interest rates. She also stated that policymakers are confident that inflation will drop to the central bank’s 2% target in 2025 but stressed that there are both upside and downside risks to inflation.
ECB’s Luis de Guindos stated on Thursday that Eurozone inflation is cooling towards the central bank’s 2% target and that policymakers are ready to respond accordingly. ECB member Olli Rehn also delivered a dovish speech on Tuesday, stating that if disinflation stays on track, the central bank may cut interest rates further. Rehn, however, also stated that he is waiting for December’s market data to form a clearer idea of the EU’s economic outlook.
On the data front, Flash GDP data for the third quarter of the year, which were released on Thursday tallied with Preliminary GDP estimates. Flash GDP data showed that the Eurozone economy expanded by 0.4% in Q3 of 2024, rising from 0.2% in Q2. The Eurozone economy also expanded by 0.3% in the first quarter of 2024. The economic outlook of the EU remains fragile as prolonged tightening has brought the Euro area economy to the brink of recession.
EU Flash Employment Change on Thursday for the third quarter of 2024 came in at 0.2% as anticipated, bringing the annual Employment Change to 1.0%.
Economic activity data released on Tuesday for the Eurozone were underwhelming, putting pressure on the Euro. German ZEW Economic Sentiment dropped to 7.4 in November from 13.1 in October, missing expectations of 12.8. The Eurozone ZEW Economic Sentiment Index also worsened in November, dropping to 12.5 from October’s reading of 20.1, versus 20.5 anticipated. German Final CPI data released on Tuesday showed that German inflation rose by 0.4% in October, which was in line with expectations.
Inflationary pressures in the Eurozone are not cooling as fast as expected. Eurozone inflation rose to 2.0% year-on-year in October from 1.7% in September, against expectations of 1.9%. Core CPI, which excludes food and energy, also came in higher than anticipated, remaining steady at 2.7% in October, against expectations of a 2.6% print.
The Euro has been under pressure due to political turmoil in Germany, the Eurozone’s leading economy. German Chancellor Olaf Scholz has fired Finance Minister Christian Lindner, causing the collapse of the three-party coalition that was ruling Germany. The country will be headed towards elections and political instability is expected to cause volatility in the Euro in the coming months.
This coming week, important economic activity indicators for the Eurozone are scheduled to be released on Friday. Manufacturing and Services PMI data are due on Friday for some of the Euro area’s leading economies and for the EU as a whole, which may cause volatility in the price of the Euro.
GBP/USD remained in a downtrend last week, dropping from 1.292 to 1.261, its lowest level since May, testing the 1.260 level support at the end of the week. If the GBP/USD rate goes up, it may encounter resistance near 1.304, while support may be found near 1.260.
At the latest BOE policy meeting, MPC members voted with a strong majority of 8-1 to cut rates to 4.75%. Bank of England Governor Andrew Bailey stated that the central bank intends to adopt a gradual approach to cutting interest rates. This would give policymakers time to assess the impact of the Government’s new budget on inflation.
BoE’s Catherine ManMannlivered a hawkish speech on Wednesday, warning that she doesn’t see inflationary risks subsiding yet and hinted that the central bank may have cut interest rates prematurely. Mann was the only MPC member not to vote in favor of a rate cut last week and is known for her hawkish stance. Mann reiterated her determination to keep interest rates in restrictive territory in a speech on Thursday.
BOE Chief Economist Huw Pill stated on Tuesday that wage growth remains at elevated levels that are hard to reconcile with the central bank's inflation target of 2%. Pill stressed that there is still work to be done towards stabilizing price pressures in the UK. Pill emphasized that potential rate cuts would be gradual and hinted that interest rates may need to remain at restrictive levels for longer.
On the data front, GDP data on Friday showed that the British economy contracted by 0.1% % in September, falling short of expectations of 0.2% expansion. In addition, Preliminary GDP data for the third quarter of the year showed that the British economy expanded by just 0.1% against expectations of 0.2% expansion. In addition, GDP data for the second quarter of 2024 were revised downward to reflect 0.5% growth against initial estimates of 0.6%.
British labor data last week were mixed overall. The British Unemployment Rate rose unexpectedly to 4.3% annually in September from 4.1% in August against a reading of 4.1% anticipated. Claimant Count Change data showed that the number of people claiming unemployment benefits rose to 26.7 K in October from just 10.1K in September versus 30.5 anticipated. The Average Earnings Index for the three months to September rose faster than expected, however, to 4.3% from 3.9% previously. Wage growth is a leading indicator of consumer inflation pointing to rising inflationary pressures.
Headline inflation in the UK dropped to 1.7% year-on-year in September from 2.2% in August against expectations of a print of 1.9%. Core annual inflation, which excludes food and energy, dropped to 3.2% in September from 3.6% in August against 3.4% anticipated. Inflation in the UK has cooled to its lowest level since April 2021.
This coming week the British Monetary Policy Report Hearings on Tuesday are expected to attract market attention and may create volatility in the price of the Sterling. During these hearings, the BOE Governor and MPC members testify on inflation and the economic outlook before the Parliament's Treasury Committee.
In addition, headline inflation data are due on Wednesday and analysts anticipate an uptick in British inflation in October, which may prevent the BOE from cutting interest rates further.
USD/JPY surged from 152.6 to 156.8 early last week but dropped sharply below the key 155.0 level on Friday. If the USD/JPY pair declines, it may find support at 151.2. If the pair climbs, it may find resistance at 156.8.
USD/JPY rose above the 155.0 level last week for the first time since July, which is considered a line in the sand for another intervention in support of the Yen. The currency rate continued moving in an uptrend until Thursday, raising intervention concerns. The Yen rallied on Friday, however, falling below the key 155.0 level.
Japan’s Finance Minister Katsunobu Kato warned markets last week that Japan’s government is prepared to respond to excessive Forex moves against the Yen. Kato stressed that the Japanese government would monitor closely the impact of Trump’s policies on Japan’s economy. Incoming US President Donald Trump has promised in his presidential campaign to raise import tariffs by 10%, which will affect Japan’s exports to the US.
GDP data released on Friday showed that Japan’s economy expanded by 0.2% in the third quarter of the year, down from 0.7% in the second quarter. The Japanese economy has started to expand, after shrinking by 0.5% in the first quarter of the year. Japan's Economy Minister, Ryosei Akazawa, stated that he expects modest economic growth to continue, driven by improvements in Japan’s labor sector.
Producer Price Index (PPI) data on Wednesday, showed that producer prices in Japan rose by 3.4% annually in October, exceeding expectations of 3.0%, while September’s print was revised upward to 3.1%. Monthly PPI rose by 0.2% in October from an upwardly revised reading of 0.3% in September, above expectations of 0.0%.
Headline inflation in Japan dropped to 2.4% year-on-year in September from 2.8% in August against expectations of a 2.3% print. BOJ Core CPI remained at 1.8% year-on-year in August, the same as in July. Annual Tokyo Core CPI fell to 1.8% in October from 2.0% in September, which was in line with expectations. Inflation in Japan remains weak lowering the odds of another BOJ rate hike this year.
The BOJ Summary of Opinions published on Monday showed that Japanese policymakers are divided over the timing of future rate cuts. According to the report, BOJ board members expressed diverging opinions on future rate cuts at the previous policy meeting in October. Some policymakers advised caution before moving forward with rate hikes, stressing the need to monitor market conditions, especially yen fluctuations.
The BOJ maintained its current monetary policy guidelines steady and its interest rate at 0.25% at its latest policy meeting. The BOJ had pivoted to a more hawkish policy at its meeting in July, raising interest rates by 15 basis points, the BOJ’s largest rate hike since 2007. The BOJ had already hiked interest rates once more in March, ending its negative interest rate policy.
BOJ Governor Kazuo Ueda’s forward guidance was hawkish. Ueda hinted at another rate hike in the following months, if economic and inflationary conditions are met. Ueda emphasized, however, that the BOJ’s policy will be data-driven and stated that the central bank will scrutinize data before each policy meeting.
Gold prices remained bearish last week, dropping from $2,690 per ounce to $2,540 per ounce. If gold prices rise, they may encounter resistance at $2,790 per ounce, while if gold prices decline, support may be encountered near $2,500 per ounce.
Uncertainty over the US presidential elections propelled gold prices to an all-time high of 2,700 per ounce earlier this month. Gold prices had been moving in overbought territory, however, and collapsed after the announcement of Donald Trump’s victory in the US Presidential elections on November 7th.
Republicans secured full control of the US Government on Thursday, allowing Trump’s administration to pass laws more easily. After winning the US Presidency last week and the majority in the US Senate early last week, Republicans won control over the House of Representatives on Thursday.
The implications of the Republicans’ victory are putting pressure on gold prices, which have registered a steep decline so far in November. Trump’s proposed tariffs and tax policies are expected to support economic growth, boosting the dollar and putting pressure on gold prices.
Gold prices have been typically directed by the dollar’s movement, as the competing gold typically loses appeal as an investment when the dollar rises. The dollar surged last week, and the index rose from 105.0 to 107.0 mid-week, its highest value since October 2022, before paring some gains and ending the week at 106.7. US treasury yields also strengthened, with the US 10-year bond yield rising from 4.31% to 4.46%.
The US Federal Reserve cut interest rates by 25 basis points last week to a target range of 4.50% to 4.75%. The Fed had already launched its easing cycle in September, with an aggressive 50-bp rate cut, signaling the end of its restrictive monetary policy.
US inflation is proving to be sticky despite the Federal Reserve’s efforts to bring it down to its 2.0% target. Headline inflation rose to 2.6% year-on-year in October from 2.4% in September. The dollar surged after the release of the US inflation report on Wednesday, dragging gold prices down.
Gold prices are supported by expectations of further Fed rate cuts. Odds of another rate cut in December shot up to 90% after the release of the US inflation report on Wednesday but dropped back to 65% by the end of the week after Fed Chair Jerome Powell delivered a hawkish speech, putting pressure on gold prices. Fed Chair Jerome Powell stated that the progress of disinflation is steady, and the labor market is strong, allowing for a shift towards a more neutral monetary policy.
Geopolitical tensions raise the appeal of safe-haven assets propping up gold prices. The crisis in the Middle East had been boosting demand for safe-haven assets, keeping gold prices high. The conflict in the Middle East, however, has been raging for over a year and markets are starting to ignore this risk, lowering the appeal of safe-haven assets. In addition, reports that Trump has urged Russian President Vladimir Putin to deescalate tensions in Ukraine put pressure on gold prices last week.
Oil prices dropped last week and WTI prices dipped from $70.2 to $67.1 per barrel. If oil prices retreat, they may encounter support near $66.9 per barrel, while resistance may be found near $73.0 per barrel.
Oil prices exhibited high volatility after the US elections, but have steadied since, as markets had time to digest the US election outcome. Trump’s anti-renewable energy policies are raising demand for fossil fuels, but the President-elect has already expressed his intention to start more drilling for oil in the US. Republicans secured full control of the US Government on Thursday, allowing Trump’s administration to pass laws more easily. After winning the US Presidency and the majority in the US Senate early last week, Republicans won control over the House of Representatives on Thursday.
US crude oil inventories released on Thursday showed a surprising build in US crude stockpiles, putting pressure on oil prices. The US Energy Information Administration reported that weekly crude stocks rose by 2.4M barrels for the week to November 8, exceeding expectations of growth by 0.4M barrels, and following a rise of 2.1M barrels the week before.
The Organization of Petroleum Exporting Countries (OPEC) released its monthly report on Tuesday. OPEC revised its global Oil demand forecast downward for the fourth month in a row, putting pressure on oil prices. OPEC announced earlier this month that it would extend its output cuts of 2.2 million barrels per day into December. The organization had already delayed output rises in October due to low demand and weakening oil prices.
Geopolitical concerns are easing, putting pressure on oil prices. According to a report by Bloomberg, President-elect Donald Trump is putting pressure on his Russian counterpart for a solution to the crisis in Ukraine. Reports that Trump has urged Russian President Vladimir Putin to deescalate tensions in Ukraine put pressure on oil prices last week.
Concerns of a broadening conflict in the Middle East have boosted oil prices in the past year. The conflict in the Middle East, however, has been raging for over a year without significantly affecting oil supply and distribution, and markets are starting to ignore this risk, putting pressure on oil prices.
Oil prices are kept in check by high central banks’ interest rates. The US Federal Reserve cut interest rates by 25 basis points last week to a target range of 4.50% to 4.75%. The Fed had already launched its easing cycle in September, with an aggressive 50-bp rate cut, signaling the end of its restrictive monetary policy.
Fed Chair Jerome Powell has stated that the progress of disinflation is steady, and the labor market is strong, permitting a shift towards a more neutral monetary policy. Odds of another rate cut in December shot up to 90% after the release of the US inflation report on Wednesday but dropped back to 65% by the end of the week.
Bitcoin price surged last week, registering a new all-time high of $93,300. Bitcoin’s rally was halted towards the end of the week and the cryptocurrency traded sideways over the weekend around the $90,500 level. If the BTC price declines, support can be found at $75,400, while resistance may be encountered at the psychological level of $95,000.
Ethereum price rose to $3,430 early last week for the first time since July, but pared gains towards the end of the week, dropping to $3,090. If Ethereum's price declines, it may encounter support near $3,000, while if it increases, resistance may be encountered near $3,430.
Crypto markets surged after the announcement of Donald Trump’s victory in the US Presidential elections on November 7th and continued to gain strength last week. Trump’s proposed tariffs and tax policies will support economic growth, boosting high-risk assets, such as cryptocurrencies. Republicans secured full control of the US Government last week, allowing Trump’s administration to pass laws more easily. The Republicans have completed the government trifecta, by winning the US Presidency, the majority in the US Senate, and gaining control over the House of Representatives.
In addition, Trump has openly declared his support of crypto markets, announcing that he will make the US ‘the crypto capital of the planet’. Growing expectations that the new government will adopt a pro-crypto regulatory and fiscal policy have been boosting crypto markets, especially since Donald Trump announced plans to accumulate a national Bitcoin stockpile.
Cryptocurrency prices are also affected by central banks’ interest rates. High interest rates are restricting economic growth, putting pressure on risk assets, while the promise of rate cuts boosts crypto markets. The US Federal Reserve cut interest rates by 25 basis points on Thursday, to a target range of 4.50% to 4.75%. The Fed had already launched its easing cycle in September, with an aggressive 50-bp rate cut, signaling the end of its restrictive monetary policy.
Odds of another rate cut in December shot up to 90% after the release of the US inflation report on Wednesday but dropped back to 65% by the end of the week after Fed Chair Jerome Powell delivered a hawkish speech. Powell stated that the progress of disinflation is steady, and the labor market is strong, permitting a shift towards a more neutral monetary policy.
Concerns of a broadening conflict in the Middle East are promoting a risk aversion sentiment, lowering the appeal of high-risk assets such as cryptocurrencies. The conflict between Israel and Hamas continues to escalate, putting pressure on risk assets such as cryptocurrencies. The conflict in the Middle East, however, has been raging for over a year and markets are starting to ignore this risk. In addition, reports that Trump has urged Russian President Vladimir Putin to de-escalate tensions in Ukraine have promoted a risk-on sentiment this week.
BTC/USD 1h Chart
ETH/USD 1h Chart
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Written by:
Myrsini Giannouli
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