VOT Research Desk
Market Analytics and Considerations
On Thursday, the US Dollar (USD) took advantage of the risk-averse market environment, and the US Dollar Index concluded the day with a slight gain. The benchmark 10-year US Treasury bond yield is dipping slightly lower, and early Friday market sentiment has improved, making it tough for the USD to hold onto its momentum. At 11:30 GMT, Christine Lagarde, president of the European Central Bank, will speak. The US economic docket will include data on October existing home sales later in the day. Market players will closely monitor central bankers’ statements in the days leading up to the weekend.
Building permits and house starts both fell by 4.2% and 2.4% in October, according to US statistics released on Thursday, underlining investors of the detrimental effects of the US Federal Reserve’s (Fed) tightening on the housing market.
James Bullard, president of the St. Louis Federal Reserve, stated that the fiscal policy was not yet substantially stringent to lower inflation. Neel Kashkari, president of the Minneapolis Federal Reserve Bank, spoke on the rate forecast and said it was uncertain how high the Fed would need to raise the policy interest rate in order to reduce inflation by limiting demand through higher borrowing costs. The yield on the 10-year US T-bond increased by more than 2% on Thursday, even though it lost momentum and was last observed remaining stable at about 3.75%.
On Thursday, EURUSD dropped below 1.0300, but it recovered most of its daily losses to finish the day above 1.0350.Early on Friday, the pair is trading in a narrow range around 1.0370 as investors wait for the next catalyst.
GBPUSD experienced a sharp decline on Thursday during European trading hours, reaching a daily low of 1.1764 before making a decisive recovery later in the day. The pair is trading just below 1.1900 at the moment, registering modest daily gains. In order to close a significant funding gap, British Chancellor Jeremy Hunt presented the Autumn Budget to parliament, which included spending reductions and tax increases totaling £55 billion. According to Hunt, the consolidation of £55 billion in today’s statement results in significantly lower interest rates and inflation. In the meantime, retail sales increased by 0.6% in October, according to data released by the UK’s Office for National Statistics.
Friday’s data from Japan revealed that the National Consumer Price Index (CPI) increased from 3% in September to 3.7% in October. This reading was significantly higher than the 2.7% market expectation. Bank of Japan (BOJ) Governor Haruhiko Kuroda acknowledged in response to the inflation report. However, Kuroda reiterated that they would maintain the easy monetary policy to support the economy in relation to the policy outlook. The USDJPY was last seen trading in negative territory below 140.00 during Asian trading hours.
Gold price recorded losses for the second day in a row on Thursday as a result of pressure from rising US T-bond yields. XAUUSD was able to turn positive on the day above $1,760 despite the fact that US yields remained the same early on Friday.
For the third day in a row, Bitcoin is trading above $16,000 in a narrow channel on Friday. Ethereum lost more than one percent on Thursday, but it rebounded early on Friday to above $1,200.
