Trading Week Ahead: 22nd – 26th November
Important Data Releases & EventsTuesday
Bank Holiday Japan
EUR German Flash Manufacturing PMI, German Flash Services PMI Wednesday
NZD Official Cash Rate, RBNZ Monetary Policy Statement, RBNZ Rate Statement, RBNZ Press Conference
USD Prelim GDP, USD Core PCE Price Index, USD FOMC Meeting Minutes Thursday
GBP BOE Gov Bailey Speaks
What happened last week?
Last week, we continued to watch the USD show roll on. US inflation and expectation around a possible faster-than-expected adjustment in Fed policy are some of the possible drivers for the dollar. Last week, the USD index hit 16-month highs after buyers tested 96.26. Risk majors remain mixed for the week, as the AUD and EUR hit consecutive weekly declines while the GBP broke its run of weekly declines moving higher. Inflation and interest rate rise expectations helped support the GBP to the dollar and JPY. The EUR fell sharply last week as the ECB confirmed higher inflation but steered clear of committing to a rate hike. On top of this, EU nations have seen spikes in COVID cases and reintroduction of restriction. Austria is moving back into a nationwide lockdown from Monday this week.
After a few weeks of correlation Gold and the USD saw a separation last week as Gold declined for the first time in three weeks. This could just be profit-taking? Fundamentals remain in play as US inflation continues as the main driver. Silver and Platinum followed Gold’s lead ending lower for the week.
Oil continued to be a talking point as OPEC continued to justify itself as the US continued to put pressure on the group to increase supply. OPEC continued to hold firm, opinion continues that they could be right as speculation builds that the 1st quarter of 2022 could see an oversupply. Price continues its recent decline, trading below the 80$ point. Last week was the 4th straight week of declines for USOUSD.
Inflation and data and earnings look to be continuing to upset the Dow. The US30 fell for a 2nd week while the SPX500 and NDX100 hit new records. The NDX100 led the gains last week, buyers moving above 16,600.
What’s coming this week?
This week we will be watching the rate decision in New Zealand, as the central bank is set to raise the cash rate. What will we see from the statement? Is this a one-off adjustment, or will the RBNZ confirm a series of rises?
US inflation will remain on point as traders look to the PCE data. This also lines up with the FOMC minutes traders will be looking for Fed’s thoughts on the inflation situation and opinions around possible future action. These two could impact the USD this week, but will it result in price retesting or beating last weeks highs? US stock indexes have largely ignored the inflation situation, but rate hike talk could start to set up some worry.
The GBP has been running its own race of late, and we will be interested to see if any hints come from Gov Baily’s comments on Thursday that may continue to support the pounds current fightback. The EUR has been under heavy pressure as the ECB, and covid cases continue to dampen demand. Could his week’s services and manufacturing data offer any support? Or could the EURUSD move back into the 1.12 handle?
Crypto markets did see demand come back late last week. Will this carry forward this week, and could we see counter-rallies start to develop? A level to watch on Ethereum is 3950.