Trading Week Ahead: 7th – 12th November

November 7, 2021
by Joseph Jeffriess, Market Analyst

Article Recap

Important Data Releases & Events

Sunday Daylight savings shif USA and Canada

Tuesday USD Fed Chair Powell Speaks, EUR ZEW Economic Sentiment, German ZEW Economic Sentiment

Wednesday – USD PPI, Core PPI, Fed Chair Powell Speaks, GBP BOE Gov Bailey Speaks, CAD BOC Gov Macklem Speaks, USD 10 -Year Bond Auction

Thursday USD CPI, Core CPI, AUD Employment Change, Unemployment rate, French Bank Holiday

Friday USA and Canadian bank holiday

What happened last week?

Last week we saw a shift away from risk and back to the USD and JPY. Risk major all tracked lower during the week. The USD didn’t have it all, as buyers departed the safe haven after the FOMC. The Fed confirmed tapering and advised that inflation was running over 2%. This normally would set off alarm bells, but after the Fed reshaped their target, this is not what it used to be. Due to this, there was no hard talk about monetary adjustment. One indicator showed inflation had hit 30-year highs. Despite this, the USD fell after the FOMC, but the fall was short-lived as the USD raced back to strength late into the week.

Better than expected US employment data added to USD momentum. The DXY is breaking above October’s high. Employment change came in at 531k, average earnings flat at 0.4%, and unemployment lower at 4.6%.

Tapering talks heighten

Super Thursday also gave us some fireworks on the GBP. The BOE effectively hosed down imminent rate rise expectations. The UK has its own inflation concerns and has started winding back its stimulus program. The rate shock hit the GBP hard, and it was knocked sharply lower to the USD and JPY. The selling continued into Friday’s session. Staying with rate rise disappointments, we can forget Tuesday’s RBA meeting. Traders had been eagerly awaiting this meeting with the idea rates could be set to rise soon. The AUD was belted as the RBA said rate rises were off the cards till the current bond matured. That date is set for April 2024. The talk also suggested 2023 as an early target, but that’s still a while away and didn’t go down well. Тhe GBP selling continued into Friday.

Surprisingly, with tapering locked in and now looking factored in, US stocks continued to trade at new records for most of the week. The Nasdaq charged moving above 15,900. The CAC and DAX also followed suit, both indexes hitting new record highs on Friday.

Oil troubles

Oil followed up with further selling as oversupply worries emerged from OPEC members. Price continued lower, and we saw some accelerated selling as prices traded below $79. Gold had a mixed week, but we want to highlight last Thursday’s action as price broke its mirror with the USD. Price tumbled last Wednesday but reversed on Thursday, ignoring solid moves by the USD. Price continued to see demand into Friday with a firmer USD. It looks like buyers are returning to gold as an inflation hedge.

New crypto records

Crypto wasn’t out of the spotlight last week as we saw several markets jump to new records. Ethereum, Avalanche, and Solana all set new records, while Bitcoin failed to see any real drive. SHIB, which was a dynamo the week prior, was hit hard by sellers and traded as much at 42% lower last week.

What’s coming this week?

This week is a little lighter than last week. The focus will be on Wednesday and Thursday. Traders will be looking at Powell’s comments, and attention will be on Gov Baily, after last week’s BOE rate bust. Traders may be looking for any hints to clarify the situation in the UK and if adjustments need to be made, and when.

US PPI and CPI are another big one this week. With inflation over 2% and the Fed not hinting at adjustments, could this week’s data magnify the inflation worries? The last CPI data came in higher at 0.4% and the core at 0.2%.

Last month’s AU employment change disappointed. Could further lower numbers justify the RBA stance on no rush in adjusting the cash rate? Crypto, with plenty of new records last week followed by pullbacks, could we see further profit-taking emerge this week?

All times are AEDT.