GOLD Analysis:
XAUUSD Gold price is moving in the Descending channel and the market has reached the lower high area of the channel
Gold prices experienced a decline as the conflict between Hamas and Israel showed slower developments compared to the previous week. Meanwhile, the US Dollar is gaining strength, driven by bullish comments from Federal Reserve (FED) members regarding potential rate hikes.
With a limited economic calendar in the United States, most traders are eagerly anticipating the release of the Consumer Price Index. A New York Fed poll indicates a cooling of inflation expectations for the upcoming year, with projections suggesting a decline in October prices from 3.7% to 3.3% year-on-year.
Forecasts also estimate that the Core CPI will remain unchanged at 4.1%, consistent with previous data. Despite ongoing conflict in the Gaza Strip between Israel and Hamas, geopolitical risks appear subdued in market reactions; however, an escalation of the conflict could potentially favor gold.
Gold traders will be monitoring remarks from Federal Reserve speakers throughout the week. While Governor Lisa Cook offered no noteworthy insights into monetary policy on Monday, Tuesday’s agenda features Fed Vice-Chairman Philip Jefferson, John Williams from the New York Fed, and Lisa Cook. Additionally, on Wednesday, US President Joe Biden and his Chinese counterpart, President Xi Jinping, are set to meet at the Asia-Pacific Economic Cooperation summit in San Francisco, where discussions are anticipated to include matters of military cooperation.
SILVER Analysis:
XAGUSD Silver price is moving in the Descending channel and the market has rebounded from the lower low area of the channel
Today, the US Consumer Price Index (CPI) data is set to be released, with expectations of a decrease from the previous month’s 3.7% to 3.3%. Federal Reserve Chair Powell has already indicated that the rate hike cycle is ongoing, emphasizing that inflation is still far from the target.
The U.S. Bureau of Labor Statistics is set to unveil the latest consumer price index (CPI) numbers. Given the Federal Reserve’s heightened sensitivity to incoming data and its awareness of potential upward inflation risks, the financial markets will assign added significance to the forthcoming CPI report. This heightened attention could result in increased volatility for gold prices, the EURUSD currency pair, and the Nasdaq 100 in the upcoming trading sessions.
Projections indicate that the headline CPI, adjusted for seasonal factors, is expected to show a 0.1% increase in October, potentially reducing the annual rate from 3.7% to 3.3%. Concurrently, the core CPI, which excludes food and energy, is anticipated to rise by 0.3% on a monthly basis, maintaining a 4.1% reading for the 12-month period.
The Federal Reserve has adopted a data-centric approach and emphasized a cautious outlook, stating their intention to proceed carefully. However, Chair Powell has hinted that the door to additional policy firming is not entirely closed, as officials remain uncertain about achieving a sufficiently restrictive stance to bring inflation back to the 2.0% target. Powell’s comments suggest that the Federal Open Market Committee (FOMC) is not committed to a predetermined path and is prepared to respond appropriately to adverse developments hindering the fulfillment of its mandates.
In light of this, any deviation from consensus expectations in the October CPI figures may influence policymakers to consider another rate hike at upcoming meetings. A hot CPI report could shift interest rate expectations in a more hawkish direction, leading to a rise in U.S. yields and a subsequent boost to the U.S. dollar. This, in turn, may exert downward pressure on gold, the Nasdaq 100, and the EURUSD. Conversely, a downside surprise in last month’s inflation data could support precious metals, tech stocks, and the EURUSD by curbing yields and undermining the argument for a higher-for-longer interest rate environment.
USDCHF Analysis:
USDCHF is moving in an Ascending channel and the market has reached the higher low area of the channel
It is widely anticipated that in today’s speech on uncertainty and volatility in Zurich, Swiss National Bank Chairman Thomas Jordan will emphasize the intention to keep rates lower, aligning with the SNB’s expectations of lower inflation.
The Swiss Franc exhibited a generally sideways trend as investors adopted a cautious stance, anticipating the release of the United States Consumer Price Index (CPI) data for October. In the early European session, S&P500 futures traded without much enthusiasm, reflecting a sense of caution among market participants ahead of the crucial US inflation figures. While the US Dollar Index rebounded from 105.60, its overall movement remained subdued, with market focus on the upcoming consumer inflation data that is expected to offer fresh insights into potential monetary policy actions by the Federal Reserve.
According to consensus estimates, the monthly headline CPI is projected to show a nominal increase of 0.1%, a decline from the 0.4% growth recorded in September. The annual CPI is anticipated to rise by 3.3%, a decrease from the 3.7% increase in September. The monthly and annual core CPI, which excludes the volatile components of oil and food prices, is expected to expand at a steady pace of 0.3% and 4.1%, respectively. A persistent core inflation report could influence Federal Reserve policymakers toward a more tightening-oriented narrative. In the previous week, Fed Chair Jerome Powell expressed the view that the current monetary policy is insufficient to bring down inflation to the 2% target. Turning attention to the Swiss Franc, investors are awaiting a speech from Swiss National Bank (SNB) Chairman Thomas J. Jordan. It is anticipated that Jordan will provide guidance on potential monetary policy actions, with an emphasis on maintaining higher interest rates to keep inflation below 2%.
EURUSD Analysis:
EURUSD is moving in an Ascending channel and the market has fallen from the higher high area of the channel
Martins Kazaks, a member of the European Central Bank Governing Council, expressed the view that it is premature to conclude that the terminal rate has been reached. He highlighted the potential risk of spillover into inflation and noted the absence of a clear peak in wage growth. Kazaks emphasized that there is no automatic certainty regarding the next rate move.
EURCAD Analysis:
EURCAD is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
Deputy Governor Toni Gravelle of the Bank of Canada discussed financial stability and regulation within the Canadian economy during the Zurich meeting. The Canadian Dollar continues to exhibit weakness in the market, attributed to lower-than-expected demand for oil.
The Canadian Dollar is experiencing limited momentum in quiet holiday markets, as most Canadian provinces and territories observe Remembrance Day. With little notable economic data on the agenda for the CAD this week, the Loonie’s trajectory will be influenced by overall market sentiment as the trading week unfolds.
The scarcity of substantial economic data for CAD traders underscores the likelihood of the Loonie being guided by market flows, particularly with a robust US data schedule scheduled for the week. On early Tuesday, Bank of Canada Deputy Governor Toni Gravelle is set to deliver remarks as part of a panel discussion titled Challenges for Financial Stability and Financial Regulation amid Heightened Uncertainty. Gravelle is participating in the Third High-Level Conference on Global Risk, Uncertainty, and Volatility in Zurich, Switzerland. While the BoC Deputy Governor’s comments are not anticipated to significantly impact the markets, investors are advised to remain vigilant.
EURAUD Analysis:
EURAUD is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
Assistant Governor Marion Kohler of the Reserve Bank of Australia mentioned that inflation in the Australian economy is elevated, primarily influenced by robust consumer demand and strong labor and wage conditions. The RBA is anticipated to implement a rate hike in the first half of 2024.
The Reserve Bank of Australia Assistant Governor Marion Kohler remarked that the decline in inflation is expected to be slower than initially anticipated, citing sustained domestic demand and robust labor and cost pressures.
Kohler emphasized the need for a tighter policy to counter elevated inflation.
AUDCHF Analysis:
AUDCHF is moving in the Descending channel and the market has reached the lower high area of the channel
Market expectations lean towards additional rate hikes by the RBA in the first half of the coming year. Looking ahead, market participants will monitor Australia’s Westpac Consumer Confidence and the National Australia Bank’s Business surveys. Additionally, the US CPI data is scheduled for release on Tuesday. Later in the week, attention will turn to Australia’s Q3 Wage Price Index on Wednesday and the employment report on Thursday.
GBPCAD Analysis:
GBPCAD is moving in an Ascending channel and the market has reached the higher high area of the channel
In the quarter ending in September, the unemployment rate stood at 4.2%, aligning with the anticipated data. Jobless claims for September totaled -17.8K, a decrease from -20.4K in August. Additionally, the employment change for September reported a figure of -207K, contrasting with the -82K recorded in August.
The Office for National Statistics revealed that the United Kingdom’s ILO Unemployment Rate remained stable at 4.2% in the quarter ending in September, aligning with the market forecast for the same period. Additional data disclosed that the count of individuals claiming unemployment benefits increased by 17.8K in September, a slight decrease from the previous rise of 20.4K.
The British Employment Change for September reported a figure of -207K, contrasting with the -82K recorded in August.
In terms of earnings, the Average Earnings excluding Bonus in the UK exhibited a 7.7% year-on-year increase in September, slightly lower than the 7.8% growth observed in August but in line with market expectations. Furthermore, another gauge of wage inflation, Average Earnings including Bonus, showed a 7.9% acceleration during the reported period, compared to an 8.2% increase in August and exceeding the anticipated 7.4%.
AUDJPY Analysis:
AUDJPY is moving in the Descending channel and the market has fallen from the lower high area of the channel
Japanese Finance Minister Shunichi Suzuki stated that foreign exchange levels are guided by fundamentals, and increased volatility is undesirable. He emphasized the careful monitoring of FX movements, acknowledging both positive and negative aspects related to the yen.
Japanese Finance Minister Sunichi Suzuki emphasized the significance of currencies moving in a stable manner that aligns with underlying fundamentals. He stressed that excessive fluctuations in foreign exchange rates are undesirable. Suzuki committed to taking all necessary measures to address currency movements and acknowledged the potential advantages and disadvantages associated with a weaker yen. However, he refrained from making specific comments on currency levels.
AUDNZD Analysis:
AUDNZD has broken the Descending channel in upside
The New Zealand Dollar Food Price Index fell below expectations, registering at -0.90%. This index holds a 19% weight in the Consumer Price Index. Analysts from Goldman Sachs indicated that the Reserve Bank of New Zealand has initiated rate cuts in Q4 of 2024, signaling the conclusion of the rate hike cycle in the New Zealand economy. It is anticipated that inflation will subside in Q4 2024.
The New Zealand Dollar is under downward pressure, potentially stemming from the Kiwi Food Price Index reporting a 0.9% decline in October. Given that food prices make up almost 19% of the NZ Consumer Price Index, the Food Price Index holds significance as an indicator of inflation in the country. It monitors the prices of a basket of food items representing the typical spending patterns of New Zealand households. Goldman Sachs is predicting a decrease in New Zealand CPI rates to below 3.0% by Q4 2024. This projection includes an expectation that the Reserve Bank of New Zealand has completed its rate hike cycles, and Goldman Sachs foresees the RBNZ initiating rate cuts starting in Q4 of 2024.
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