Market analysis
Highlights:
- EUR/USD : Hits fresh 2016 lows
- GBP/USD : Falls to fresh two-week lows
- USD/JPY : Raises to 6-month high
- USD/CAD : Edges higher near 9-month highs
- Gold : Hovers at 6-month lows on stronger dollar
- Crude Oil : Edges higher amid OPEC deal hopes
EUR/USD
Hits fresh 2016 lows
Euro continued its deep dive and hit new lows as the dollar rally continued and euro-zone data was mixed. German GDP missed expectations but thanks to a beat in Italy, the 0.3% growth rate was confirmed for Q3. On the other hand, German business confidence looks good. Trump’s Triumph continued supporting the dollar, sending EUR/USD to support at first and after a pause, to new lows, leaving only two support lines left. The pair was not helped by Draghi, which remained dovish.
The European Central Bank will focus on whether a recovery in euro zone inflation can sustain itself even if its exceptional monetary stimulus is withdrawn when deciding on policy, ECB President Mario Draghi said on Friday. Data from Eurostat showed on Thursday that the Euro area annual inflation was 0.5% in October 2016, up from 0.4% in September. In the week ahead, investors will be looking to another public appearance from Draghi and fresh PMIs.
EUR/USD
GBP/USD
Falls to fresh two-week lows
Sterling dropped sharply last week, losing 250 points. The U.K. data showed on Tuesday that Consumer Price Index rose 0.9% y/y in October, below expectations of 1.1%, and compared to September's 1.0% rise, while core CPI rose 1.2%, down from 1.5% before, and missing forecasts of 1.4%.Weak inflation rates last month raised worries about more drops in the rate in the future, contrary to what the Bank of England forecast, which raised worries and pushed the pound lower. The U.K. unemployment rate ticked down to a new 11-year low of 4.8% in the July-September period, the Office for National Statistics said on Wednesday, compared to forecasts for an unchanged reading of 4.9%. The number of people signing on for unemployment benefits jumped by 9,800 in October and September’s figure was revised up to 5,600 from an initial estimate of 700. The rate of employment growth also slowed, as just 49,000 people found work in the July-September quarter, the slowest increase since March. Meanwhile, the U.K. average earnings index rose 2.3% in the three months to September, compared to forecasts for a 2.3% advance. On Thursday, U.K. Office for National Statistics reported that retail sales increased 1.9% in October, compared to expectations for a 0.4% rise. Year-on-year, retail sales climbed 7.4% last month, beating expectations for a 5.3% rise. Core retail sales, which exclude automobile sales and fuel, gained 2.0% in October, above expectations for an increase of 0.4%. This week’s key event is Second Estimate GDP.
GBP/USD
USD/JPY
Raises to 6-month high
Yen held steady at 110.80, after rising to a six-month high of 111.19 overnight declined as central bank chief comments, third quarter economic growth figures from Japan and Chinese data on retail sales, industrial output and asset investment were weighed regionally, China fixed asset investment for October rose 8.3%, beating the 8.2% rise seen year-on-year and industrial production gained 6.1%, below the expected 6.2% rise seen and retail sales increased 10.0%, below the 10.7% increase seen. The numbers suggest, as China's National Bureau of Statistics said, that the foundation of economic recovery is not yet solid and there are still too many uncertainties. With Beijing shifting focus to risk prevention and less policy easing expected in the period ahead, growth looks likely to slow again in the first half next year, Japan reported third quarter GDP jumped 0.5% quarter-on-quarter and at a 2.2% pace year-on-year, handily beating expected gains of 0.2% and 0.9% respectively. Economists expect Japan's economy to post continued modest growth in the final quarter of 2016, backed by a pickup in consumer sentiment and increased public works projects in the government's stimulus package, while dollar slipped lower but remained close to a 14-year peak against the other majors currencies, as overall optimism over the U.S. economy since election and expectations for an upcoming rate hike continued to support the greenback.
USD/JPY
USD/CAD
Edges higher near 9-month highs
The U.S. dollar was almost unchanged against its Canadian counterpart on Friday, hovering within close distance of a nine-month high after Canadian inflation data came out in line with expectations and as expectations for an upcoming U.S. rate hike still supported the greenback. The commodity-related Canadian dollar found some support as oil prices moved higher on Friday, amid growing hopes for a production cut deal. Also Friday, Statistics Canada said the consumer price index gained 0.2% in October, in line with expectations. Year-on-year, consumer prices advanced 1.5% last month, also in line with forecasts. Core CPI, which excludes food and energy, rose by 0.2% in October, in line with expectations. Data showed on Wednesday that manufacturing sales rose 0.3% in September, exceeding expectations for a 0.1% gain, after an increase of 0.9% the previous month.
USD/CAD
Gold
Hovers at 6-month lows on stronger dollar
Gold prices fell to the lowest level since May on Friday as the dollar rallied to almost 14-year highs amid a rally driven by the U.S. presidential election and expectations that the Federal Reserve will raise interest rates next month. Gold prices were pressured lower as the dollar continued to surge following the outcome of the U.S. presidential election, tracking rising U.S. Treasury yields amid expectations that President-elect Donald Trump’s plans to ramp up fiscal spending and cut taxes will spur economic growth and inflation. The dollar rally has also been boosted by bets that the U.S. central bank will almost certainly raise interest rates next month. Fed Chair Janet Yellen on Thursday reiterated that a rate hike “could well become appropriate relatively soon.” The U.S. Department of Labor said on Thursday that initial jobless claims fell by 19,000 last week to 235,000, the lowest level since 1973. Separately, the Commerce Department said housing starts surged 25% in October to hit 1.323 million units, while building permits rose 0.3% to 1.229 million units. Data also showed that U.S. consumer prices rose 0.4% in October, in line with expectations. Year-over-year, consumer prices increased by 1.6% last month, its highest reading since October 2014. Data showed on Wednesday that U.S. producer price index rose 0.8% in October, disappointing expectations for an increase of 1.2%. The core PPI, which excludes food and energy, fell 0.2% last month, compared to expectations for a 0.2% gain. A separate report showed that U.S. industrial production was flat in October, confounding expectations for a 0.2% increase.
In the week ahead, trade volumes are expected to remain light around Thursday's U.S. Thanksgiving holiday and Friday's shortened trading session. The U.S. is set to release data on durable goods orders, jobless claims and new home sales ahead of the holiday, on Wednesday.
GOLD
Crude Oil
Edges higher amid OPEC deal hopes
Oil futures finished higher on Friday, logging their first weekly gain in more than a month amid optimism that OPEC will agree to production cuts at a meeting scheduled for the end of the month. New York-traded oil futures rose $2.28, or 5%, on the week, after three straight weekly declines. The December contract expires at the end of Monday’s session. OPEC is moving closer toward finalizing its first deal since 2008 to limit oil output, with most members prepared to offer Iran significant flexibility on production volumes, ministers and sources said on Friday. The oil group reached an agreement to cap output to a range of 32.5 million to 33.0 million barrels per day in talks held in Algeria in late September. However, OPEC said it won’t finalize details on individual output quotas until its next official meeting in Vienna on November 30. If OPEC reaches a deal at the end of the month, it may also draw support from non-OPEC members including Russia, which promised to cooperate but so far has refrained from any firm commitment. Prices were also weighed by a broadly stronger U.S. dollar, which climbed to a 14-year high against a basket of other major currencies.
The U.S. Energy Information Administration said in its weekly report that crude oil inventories rose by 5.3 million barrels in the week ended November 11. Market analysts' expected a crude-stock gain of 1.5 million barrels, while the American Petroleum Institute late Tuesday reported a supply increase of 3.7 million barrels. Oil's gains were capped after oilfield services provider Baker Hughes said late Friday that the number of rigs drilling for oil in the U.S. last week rose by 19 to 471, marking the 11th increase in the last 12 weeks. Meanwhile, market participants will eye fresh weekly information on U.S. stockpiles of crude and refined products on Tuesday and Wednesday to gauge the strength of demand in the world’s largest oil consumer. Oil traders will also pay close attention to comments from global oil producers to gauge their readiness on freezing or cutting output.
CL
MAJOR DATA RELEASED DURING LAST WEEK
| Event | Actual | Previous | |
| JPY | BOJ Gov Kuroda Speaks | ||
| CNY | Industrial Production y/y | 0.061 | 0.061 |
| CNY | Fixed Asset Investment ytd/y | 0.083 | 0.082 |
| CHF | PPI m/m | 0.001 | 0.003 |
| EUR | ECB President Draghi Speaks | ||
| AUD | Monetary Policy Meeting Minutes | ||
| EUR | German Prelim GDP q/q | 0.002 | 0.004 |
| AUD | RBA Gov Lowe Speaks | ||
| GBP | CPI y/y | 0.009 | 0.01 |
| GBP | PPI Input m/m | 0.046 | 0.001 |
| GBP | RPI y/y | 0.02 | 0.02 |
| EUR | Flash GDP q/q | 0.003 | 0.003 |
| EUR | German ZEW Economic Sentiment | 13.8 | 6.2 |
| GBP | Inflation Report Hearings | ||
| USD | Core Retail Sales m/m | 0.008 | 0.007 |
| USD | Retail Sales m/m | 0.008 | 0.01 |
| USD | Empire State Manufacturing Index | 1.5 | -6.8 |
| USD | Import Prices m/m | 0.005 | 0.002 |
| NZD | GDT Price Index | 0.045 | 0.114 |
| USD | FOMC Member Fischer Speaks | ||
| AUD | Wage Price Index q/q | 0.004 | 0.005 |
| USD | FOMC Member Bullard Speaks | ||
| GBP | Average Earnings Index 3m/y | 0.023 | 0.023 |
| GBP | Claimant Count Change | 9.8K | 5.6K |
| GBP | Unemployment Rate | 0.048 | 0.049 |
| CAD | Manufacturing Sales m/m | 0.003 | 0.009 |
| USD | PPI m/m | 0 | 0.003 |
| USD | Core PPI m/m | -0.002 | 0.002 |
| GBP | MPC Member Cunliffe Speaks | ||
| USD | Capacity Utilization Rate | 0.753 | 0.754 |
| USD | Industrial Production m/m | 0 | -0.002 |
| USD | Crude Oil Inventories | 5.3M | 2.4M |
| CAD | Gov Council Member Lane Speaks | ||
| AUD | Employment Change | 9.8K | -29.0K |
| AUD | Unemployment Rate | 0.056 | 0.056 |
| GBP | Retail Sales m/m | 0.019 | 0.001 |
| EUR | Final CPI y/y | 0.005 | 0.004 |
| EUR | ECB Monetary Policy Meeting Accounts | ||
| CAD | Foreign Securities Purchases | 11.77B | 12.75B |
| USD | Building Permits | 1.23M | 1.23M |
| USD | CPI m/m | 0.004 | 0.003 |
| USD | Core CPI m/m | 0.001 | 0.001 |
| USD | Philly Fed Manufacturing Index | 7.6 | 9.7 |
| USD | Unemployment Claims | 235K | 254K |
| USD | Housing Starts | 1.32M | 1.05M |
| USD | FOMC Member Dudley Speaks | ||
| USD | Fed Chair Yellen Testifies | ||
| CHF | Gov Board Member Maechler Speaks | ||
| USD | FOMC Member Brainard Speaks | ||
| NZD | PPI Input q/q | 0.015 | 0.009 |
| NZD | Retail Sales q/q | 0.009 | 0.022 |
| EUR | ECB President Draghi Speaks | ||
| GBP | MPC Member Broadbent Speaks | ||
| CHF | Gov Board Member Maechler Speaks | ||
| EUR | German Buba President Weidmann Speaks | ||
| USD | FOMC Member Bullard Speaks | ||
| CAD | Core CPI m/m | 0.002 | 0.002 |
| CAD | CPI m/m | 0.002 | 0.001 |
| USD | FOMC Member Dudley Speaks | ||
| USD | FOMC Member George Speaks | ||
MAJOR DATA COMING OUT THIS WEEK (Time zone GMT)
| Date | Time | Event | Forecast | Previous | |
| 11/21/2016 | 1:30pm | CAD | Wholesale Sales m/m | 0.003 | 0.008 |
| 11/21/2016 | 4:00pm | EUR | ECB President Draghi Speaks | ||
| 11/22/2016 | 7:45am | AUD | RBA Assist Gov Kent Speaks | ||
| 11/22/2016 | 9:30am | GBP | Public Sector Net Borrowing | 5.9B | 10.1B |
| 11/22/2016 | 1:30pm | CAD | Core Retail Sales m/m | 0.006 | 0 |
| 11/22/2016 | 1:30pm | CAD | Retail Sales m/m | 0.007 | -0.001 |
| 11/22/2016 | 3:00pm | USD | Existing Home Sales | 5.43M | 5.47M |
| 11/23/2016 | All Day | JPY | Bank Holiday | ||
| 11/23/2016 | 12:30am | AUD | Construction Work Done q/q | -0.015 | -0.037 |
| 11/23/2016 | 8:00am | EUR | French Flash Manufacturing PMI | 51.5 | 51.8 |
| 11/23/2016 | 8:00am | EUR | French Flash Services PMI | 52.1 | 51.4 |
| 11/23/2016 | 8:30am | EUR | German Flash Manufacturing PMI | 54.8 | 55 |
| 11/23/2016 | 8:30am | EUR | German Flash Services PMI | 54.1 | 54.2 |
| 11/23/2016 | 9:00am | EUR | Flash Manufacturing PMI | 53.2 | 53.5 |
| 11/23/2016 | 9:00am | EUR | Flash Services PMI | 53.1 | 52.8 |
| 11/23/2016 | 12:30pm | GBP | Autumn Forecast Statement | ||
| 11/23/2016 | 1:30pm | USD | Core Durable Goods Orders m/m | 0.002 | 0.001 |
| 11/23/2016 | 1:30pm | USD | Unemployment Claims | 241K | 235K |
| 11/23/2016 | 1:30pm | USD | Durable Goods Orders m/m | 0.012 | -0.003 |
| 11/23/2016 | 3:00pm | USD | New Home Sales | 591K | 593K |
| 11/23/2016 | 3:00pm | USD | Revised UoM Consumer Sentiment | 91.6 | 91.6 |
| 11/23/2016 | 3:30pm | USD | Crude Oil Inventories | 5.3M | |
| 11/23/2016 | 7:00pm | USD | FOMC Meeting Minutes | ||
| 11/24/2016 | 9:00am | EUR | German Ifo Business Climate | 110.6 | 110.5 |
| 11/24/2016 | All Day | USD | Bank Holiday | ||
| 11/24/2016 | 5:15pm | CHF | Gov Board Member Zurbrugg Speaks | ||
| 11/24/2016 | Tentative | NZD | Trade Balance | -950M | -1436M |
| 11/24/2016 | 11:30pm | JPY | Tokyo Core CPI y/y | -0.004 | -0.004 |
| 11/25/2016 | 9:30am | GBP | Second Estimate GDP q/q | 0.005 | 0.005 |
| 11/25/2016 | 9:30am | GBP | Prelim Business Investment q/q | -0.002 | 0.01 |
Disclaimer
√ Moving Average Convergence/Divergence (MACD) : MACD uses different exponential moving averages to generate buy and sell indicators. The lower pane of the chart shows two lines: a Differential Line and a Signal Line. The Differential Line is the difference between a short and long-period exponential moving average, typically 12 and 26 periods. The Signal Line is typically a 9-period exponential moving average. When the DL crosses the SL from above, a sell indicator is generated, and when it crosses from below a buy signal is generated.
√ Relative Strength Index (RSI): This is a momentum indicator that measures a security\'s price in relation to itself. The lower pane of the chart shows a line that fluctuates on a scale of 0 to 100. Typically buy signals are generated at 30 and sell signals are generated at 70. If the line breaks 30, the security is oversold, and a reversal is imminent. If the line breaks 70, it is overbought and is due for a downward correction.
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