VOT Research Desk
Markets appear to have turned cautious to begin the new week as investors evaluate the most recent developments after the strong risk rally in the second half of the previous week. After losing nearly 4% last week, the US Dollar Index makes a comeback, and futures on the US stock index are negative .
There will be no high-impact macroeconomic data releases on the US economic docket, but Eurostat will release data on September Industrial Production. Nonetheless, statements made by officials from the US Federal Reserve, such as Vice Chair Lael Brainard and President John Williams of the New York Fed, will be closely watched by investors.
Federal Reserve Governor Christopher Waller argued that markets were “way out in front” of the reaction to the weak October Consumer Price Index (CPI) data and that added rates will not fall until there is “clear, strong” evidence that inflation is falling. In the meantime, Mary Daly, president of the San Francisco Fed, advised investors to focus on the level rather than the rate of rate increases.
The daily coronavirus cases in China increased to nearly 15,000 on November 12 from 11,950 on November 11.China’s top health officials stated in their explanation of the modifications they have made to coronavirus restrictions that they are not “relaxing rules,” but rather improving them. China’s National Health Commission (NHC) stated in a statement on Sunday that “it is necessary to maintain strategic focus and carry out the work of epidemic prevention and control scientifically and accurately.”
On Friday, EUR/USD gained more than 100 pips and closed above 1.0300 for the first time since the end of June. The pair was last seen trading in negative territory just above 1.0300, indicating that it had entered a consolidation phase.
GBPUSD posted impressive weekly gains and reached its highest level since August 26 at 1.1855 late on Friday. The pair is organizing a descending rectification and was keep going down 0.7% on the day at around 1.1750.
The USDJPY fell below 140.00 for the first time in ten weeks on Friday, ending the fourth consecutive week in negative territory. “Thanks partly to the government’s FX intervention, abnormally one-sided, sharp yen weakening appears to have paused,” Bank of Japan (BoJ) Governor Haruhiko Kuroda stated on Monday, noting that the BoJ did not anticipate the US Dollar’s “solo strength” to last indefinitely. The USDJPY is currently trading close to 139.50 in a narrow range.
Gold gained over 5% last week as it took advantage of risk flows and the general weakness of the US dollar. Early on Monday, XAUUSD remains weak and is trading around $1,760.
As investors reacted to the most recent developments surrounding the FTX collapse, Bitcoin continued its slide over the weekend and finished the week with a loss of 22% at $16,300.Similarly, Ethereum lost more than 20% last week, but for the time being, it appears to have stabilized near $1,200.
