Last week, the Dow Jones didn’t move much given the
lack of economic events and the Thanksgiving holidays in the final part of the
week. The only two important reports were the US Jobless Claims and the US PMIs. The
former beat expectations across the board, while the latter came basically in
line with forecasts. This week we can expect more action with the holidays in
the rear-view mirror and some key economic releases on the agenda.

Dow Jones Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Dow Jones is
getting closer to the cycle high at 35680 as this November rally just doesn’t
want to let up. The sellers are likely to start looking for a deeper pullback
around these levels, but it’s hard to fight such a strong bullish train without
a catalyst.

We can notice that the price is a bit overstretched
as depicted by the distance from the blue 8 moving average. In such
instances, we can generally see a pullback into the moving average or some
consolidation before the next move.

Dow Jones Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that
the price has been diverging with
the MACD for
quite some time now. This is generally a sign of weakening momentum often
followed pullbacks or reversals. In this case, it might be a signal that we
could indeed see at least a pullback very soon.

Dow Jones Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see even
better the divergence with the MACD which has been going on since the break
above the key resistance around
the 34000 level. The buyers are likely to continue to lean on the minor trendline and
the red 21 moving average to
target the cycle high. The sellers, on the other hand, will want to see the
price breaking lower to pile in and target first the low around the 34800 level
and upon a further break, the support at 34000.

Upcoming Events

Tomorrow, we have the US Consumer Confidence report. On
Thursday, we will see the latest US Jobless Claims figures and the US PCE
report. On Friday, we conclude the week with the US ISM Manufacturing PMI which
missed expectations by a big margin the last time.

 

This article was written by FL Contributors at www.forexlive.com.

The antipodeans are the ones doing some work to start the new week, with AUD/USD testing waters near 0.6600 now and eyeing a stronger technical break as seen here. And NZD/USD is also facing a somewhat similar scenario as it runs up against its own 200-day moving average (blue line) at 0.6090 today.

The key level is still holding back price action for now but a firm break above that will allow for buyers to sail past 0.6100 in search of a potential return towards the April, May, and July highs. There’s not much resistance stopping the pair from doing so after a break of the key level highlighted above.

For today, the aussie and kiwi strength comes despite more tepid risk sentiment in broader markets. Equities are sitting slightly lower but that’s not hindering traders from going in search of a technical break. And that says a lot about the current momentum in both AUD/USD and NZD/USD as we head into November month-end.

This article was written by Justin Low at www.forexlive.com.

Following Thanksgiving in the U.S., this week is expected to start slow, with a relatively quiet economic calendar for the FX market.

On Monday, attention will turn to the United States for the release of New Home Sales data.

On Tuesday, we’ll get the release of BoJ’s Core CPI y/y data for Japan and the CB Consumer Confidence and Richmond Manufacturing Index data in the U.S. Several FOMC members are also expected to deliver their remarks.

Wednesday will shift the focus Down Under with the release of Australia’s CPI data. The highlight of the day will be the RBNZ monetary policy announcement. Other notable releases include several eurozone CPI prints, the Preliminary GDP quarter-on-quarter for the U.S. and a speech by BoE Governor Bailey at an event commemorating the 50th anniversary of the London Foreign Exchange Joint Standing Committee in the U.K.

Thursday will bring the KOF Economic Barometer for Switzerland, the OPEC-JMMC Meetings, the GDP month-on-month for Canada, and a series of U.S. releases, including the Core PCE Price Index m/m, the Unemployment Claims, the Personal Income m/m, the Personal Spending m/m and Pending Home Sales m/m.

The week will conclude Friday with the Employment Change and Unemployment Rate data for Canada, while in the U.S., the market will get the ISM Manufacturing PMI, the ISM Manufacturing Prices and a fireside chat titled „Navigating Pathways to Economic Mobility“ featuring Fed Chair Powell at the Spelman College in Atlanta.

Another aspect that could impact the market this week is the month-end rebalancing.

The U.S. new home sales are likely to drop from 759K to 724K. Higher mortgage rates are putting pressure on the housing market and further decline is expected in the near future.

Tuesday RBA Gov Bullock will speak in a panel discussion titled “Inflation, Financial Stability and Employment” at the Hong Kong Monetary Authority and Bank for International Settlement High-Level Conference. No market moving revelations are expected from her speech, but it’s worth watching in case she provides hints about future rate hikes. The focus of this talk will likely be the recently observed unusually weak productivity in Australia. The RBA remains focused on returning inflation back to target and current wage growth could help with that, but only if productivity recovers soon. However, without very clear reasons for the drop it’s hard to say if the trend will continue or if it’s temporary.

In Japan, the Core CPI y/y is expected to remain unchanged at 3.4%. This means that inflation is a bit higher than what the bank would want, but despite the elevated numbers, production and consumption for last month are expected to print above expectations due to the tight labor market conditions, according to ING.

The Australian CPI y/y is expected to drop from 5.6% to 5.2%. Last week we got hawkish inflation comments from Gov Michelle Bullock where she pointed out that inflation is kept high by strong domestic demand. She stressed that inflation numbers for Australia might remain above target for a while.

The RBNZ’s official cash rate is expected to remain unchanged at 5.50%. The focus at this week’s meeting will be mainly on the Bank’s updated projections and its likely goal of discouraging the market from pricing in rate cuts too early. Many analysts believe that the current rates are high enough to bring inflation into the desired target of 2-3% and the economic data released recently seems to back that up, but there is still a possibility for another hike in February next year before a pause until 2025, according to analysts at Westpac. New Zealand has seen weakness in retail sales and several PMIs, while the labor cost index for Q3 also printed softer than anticipated. Despite market anticipation for cuts, rates are likely to remain at current levels for the time being.

Over the past two months we’ve seen inflation data dropping more than expected in the eurozone and the market wants to see if the trend will continue. However, the fight against inflation is not over yet and there is still some inflation pressure on the horizon. Expectations for core inflation are 4% while for headline inflation are 2.7%.

The consensus for the KOF Economic Barometer is to rise from 95.8 to 96.2. 

Analysts at ING anticipate that the Core PCE Price Index, the Fed’s favorite measure of inflation, will see a 0.2% increase m/m. This is in line with what the central bank expects and they argue that if repeated over time, it will help bring inflation to the 2% target.

The employment change data for Canada is expected to rise from 17.5K to 18.5K and the unemployment rate is likely to remain unchanged at 5.7%. This means that the labor market conditions for Canada remain tight as wages are also elevated.

The ISM Manufacturing PMI in the U.S. is expected to rise from 46.7 to 47.7, a slight improvement, but still in contractionary territory without clear signs of a rebound in the near future.

This article was written by Gina Constantin.

This article was written by FL Contributors at www.forexlive.com.

• TUE: EZ M3 (Oct), US Richmond Fed (Nov).
• WED: RBNZ Policy Announcement; German Prelim. CPI
  (Nov), UK Mortgage Approvals/Lending (Oct), EZ Economic Sentiment (Nov),
  US GDP 2nd (Q3).
• THU: Chinese NBS PMIs (Nov), German Retail Sales
  & Import Prices (Oct), Swiss KOF (Nov), German Unemployment (Nov),
  EZ HICP Flash (Nov), US PCE Price Index & Personal
  Income/Consumption (Oct), IJC (20 Nov w/e), Canadian GDP (Q3).
• FRI: Swiss GDP (Q3), EZ/UK/US Final Manufacturing PMI, Canadian Jobs Report (Nov), US ISM Manufacturing PMI (Nov).

CHINESE INDUSTRIAL PROFITS (MON):

There are
currently no expectations for Industrial Profits YTD for October,
although the data comes against the backdrop of a slew of recently
announced economic stimulus measures. In terms of the prior release,
China’s industrial companies recorded profit increases for the second
consecutive month in September, reinforcing signs of a manufacturing
sector recovery. Profits rose by 11.9% year-on-year, following a 17.2%
surge in August. Despite recent gains, industrial profits for the first
nine months of 2023 fell 9% compared to the previous year – a reduced
pace of decline from an 11.7% drop in the first eight months. Meanwhile,
the latest PMI data for October “signalled a renewed deterioration in
overall manufacturing conditions across China in October, albeit one
that was marginal overall. Firms registered a fresh fall in production
amid slower growth in overall sales, with the latter dampened by weak
foreign demand. As a result, goods producers trimmed their purchasing
activity and ran down their inventories of inputs. Employment across the
sector also fell and at a quicker rate than in September. On the costs
front, manufacturers signalled the quickest increase in average input
prices since January, leading to a further rise in selling prices.”

RBNZ ANNOUNCEMENT (WED):

The RBNZ is expected to
keep the Official Cash Rate unchanged at 5.50% at its meeting next week
with money markets pricing in almost a 100% chance for rates to be
maintained at the current level. The central bank has kept rates steady
since its last adjustment in May which looks to be the case for the
foreseeable future as it sees the Cash Rate to remain on hold throughout
the entire of next year, while it reiterated at the last meeting in
October that the Committee agreed the OCR needs to remain at a
restrictive level and stated that demand growth in the economy continues
to ease. Furthermore, it stated that interest rates are constraining
economic activity and reducing inflationary pressure as required with
inflation still expected to decline to within the target band by H2
2024, although it acknowledged near-term risk that activity and
inflation do not slow as much as needed with a prolonged period of
subdued activity required to reduce inflationary pressure. The statement
lacked any major deviations or hawkish surprises and the rhetoric since
the last meeting has been light, while data releases also point to a
lack of urgency for a shift in the status quo with CPI and Labour Cost
Index softer-than-expected in Q3 and although Employment contracted, the
central bank would likely welcome this as further progress of its
restrictive policy.

CHINESE OFFICIAL PMIs (THU):

There are currently no
expectations for November PMI data, with the Manufacturing PMI
previously at 49.5, Services at 50.6, and Composite at 50.7. The latest
surveys also come amid the backdrop of several measures announced to
prop up the economy, namely the housing market, with the latest
suggesting China is reportedly mulling unprecedented builder support
with unsecured loans, according to Bloomberg sources. Meanwhile, Reuters
sources suggested earlier this week that Chinese government advisers
are set to recommend economic growth targets ranging from 4.5% to 5.5%
for 2024 at the upcoming Central Economic Work Conference. The preferred
target among most advisers is around 5%, in line with this year’s goal,
whilst noting that achieving these targets will likely require
increased fiscal stimulus. “After a surprise decline in manufacturing
activity for China last month, we are expecting the official
manufacturing PMI to bounce back to the expansion region at 50.1 and the
non-manufacturing PMI to accelerate to 51.2”, says the desk at ING.

OPEC+ PREVIEW (THU):

The Joint Ministerial
Monitoring Committee (JMMC) was initially set to meet on November 26th,
although this has now been moved to November 30th, and online. Policy
change recommendations are not expected, while Saudi Arabia and Russia
could extend or deepen their voluntary curbs. The latest reports suggest
talks reportedly ran into issues amid Saudi dissatisfaction with the
production level of other members, particularly Angola and Nigeria.
Compliance among members is expected to be stressed. The meeting is part
of routine confabs to evaluate market fundamentals. Saudi Arabia and
Russia have suggested voluntary cut decisions will be reviewed monthly
when they will consider deepening the reduction or increasing supply. In
terms of potential scenarios – 1) Extension of Current Cuts: The
current consensus among analysts is seemingly that at least Saudi Arabia
will extend its voluntary 1mln BPD production cuts until the spring. 2)
Deeper Cuts: With the backdrop of geopolitical tensions and market
volatility, there might be discussions about deeper production cuts,
although this could be more contentious among members. 3) No Changes:
Amid the fluidity of geopolitics and China’s recovery, there is a
non-zero chance the group may adopt a wait-and-see approach for the
month. In terms of current policy, Saudi Arabia and Russia, alongside
other OPEC+ members, have committed to reducing oil production by some
5.2mln BPD. This accounts for approximately 5% of the world’s daily oil
demand. The current cuts comprise 3.7mln BPD by OPEC+ collectively, with
further voluntary reductions made by Saudi Arabia and Russia. During
the last policy meeting in June, OPEC+ reached a consensus on a
comprehensive agreement to restrict supply into 2024. Additionally,
Saudi Arabia committed to a voluntary production reduction of 1mln BPD
for July – this commitment has been extended and is now set to continue
until the end of 2023. Russia pledged a voluntary supply cut of 500k BPD
for August and 300k BPD for September, with the 300k BPD export curbs
later extended until the end of 2023.

EUROZONE HICP (THU):

November’s headline Y/Y print
is expected to show a slightly lower pace of inflation, at 2.8% (prev.
2.9%), with the super-core seen slowing similarly, to 4.0% (prev. 4.2%).
A headline print which would push the metric further below the ECB’s
overall 2023 view of 5.6% and pertinently the 3.2% 2024 forecast, and by
extension, closer to the 2.0% target. This will likely spark commentary
from the ECB’s hawkish contingent who have been speaking extensively
recently in an attempt to keep the door to further tightening open;
despite markets pricing an unchanged December announcement with near
certainty.

US PCE (THU):

The headline PCE price index is
expected to be unchanged, at 0.0% M/M in October (prev. +0.4%), while
Core PCE is seen rising 0.2% M/M, cooling from the 0.3% pace in
September. The data will be looked to for confirmation that inflation
trends have eased – that was the message from the October CPI report,
which helped build conviction that inflation was moving back down to the
Fed’s 2.0% target. October CPI eased from 3.7% to 3.2%, while core
price fell from 4.1% to 4.0% – both below consensus and resulting in
expectations for an FOMC December rate hike diminishing significantly.
The slower rate of price growth was underpinned by a fall in gasoline
prices, which is expected to continue next month. The pace of shelter
price gains also eased. “With evidence of easing inflation across both
the goods and services sectors, the October CPI report underlines our
view that inflation is heading back to the Fed’s target whether or not
the recent resilience of the real economy continues,” Capital Economics
said, adding that “we continue to expect a further decline in inflation
over the coming months, which will bring interest rate cuts onto the
agenda before long.” Currently, the market is fully pricing a rate cut
next June, though implied money market rates suggest that there is a
decent chance of a cut in May.

US ISM MANUFACTURING PMI (FRI):

The consensus view
looks for the ISM manufacturing PMI to tick-up to 47.7 in November
(prev. 46.7). Oxford Economics said that “early indications are that the
ISM manufacturing survey bounced back in November but remains below its
2023 high from September (49.0) and squarely in contraction territory.”

This article was written by Newsquawk Analysis at www.forexlive.com.

Friday’s Canadian retail sales report for September far-surpassed expectations at +0.6% compared to a flat reading expected. In addition, the advance reading for October was +0.8% in a sign of even-more strength.

CIBC highlights a contrast in consumer spending patterns in the report. While auto sales surged, there was a noticeable dip in discretionary spending in areas like clothing, sporting goods, and furniture. The latter could reflect the ongoing correction in house prices and a slowdown in home sales.

„The September print suggests that overall GDP in that month will have looked slightly better
than the advance estimate, at 0.1% m/m,“ CIBC writes. „And while the underlying core group of sales continues to suggest a wilting
consumer, solid auto sales may prevent another drop in goods consumption in the final quarter.“

CIBC also notes that the October print could have been impacted by auto sales, which surged in part due to a delay in deliveries following a port strike.

Looking ahead, the risk here is that strong car sales hide a broader weakening of the consumer and delay Bank of Canada rate cuts beyond what’s prudent. Ultimately, that could kneecap the spring housing market and lead to a deeper downturn.

This article was written by Adam Button at www.forexlive.com.

• Major indices lock in the 4th straight week of gains. Major indices close mixed
• ECBs Muller: Inflation is clearly showing a trend of slowing
• European indices close marginally higher on the day/week
• US 10-year yield surges, USD falters amid technical frenzy
• Bitcoin trades to the highest level since May 2022
• S&P Global flash Manufacturing PMI for November 49.4 vs 49.8 estimate
• Kickstart your FX trading with a technical look at the EURUSD, USDJPY and GBPUSD
• Canada retail sales for September 0.6% vs 0.0% estimate
• Israel Defense minister: Pause in military action is a short pause
• ECBs de Guindos: Euro area economy is stagnating in 2nd half of 2023
• The NZD is the strongest and the USD is the weakest as the NA session begins
• ForexLive European FX news wrap: Light changes mostly ahead of Thanksgiving weekend

The CAD is ending the day as the strongest of the major currencies while the USD is the weakest.

Canada retail sales came in much stronger than expected with a gain of 0.6% for the month. That was much higher than the 0.0% gain expected.  The ex-auto came in at 0.2% vs -0.2% est, while ex-auto and gas did show a -0.3% decline. The September advance „guesstimate“ had growth at 0.0%. So the  number was quite a surprise. 

Contributing to the strong CAD was that the advance estimate for October came in at 0.8%. 

The data helped to push the USDCAD lower (higher CAD) with the pair testing the 38.2% retracement of the move up from the July low at 1.35908.  The price bounced off of that target and is trading at 1.3611 as the market winds down for the holiday-shortened week. 

The fall in the USD came despite a rise in yields that saw the US 10-year yield move up 5.4 basis points at 4.470%. The divergence could be explained by the technical breaks. For the US 10 year yield, it moved away from support at 4.34%.  For the USD, it had its own breaks in some of the major currency pairs today which propelled the greenback lower. 

For a technical review of the dynamics, click on video below:

The bond market closed early today with the final numbers showing:

• 2 year yield 4.950%, +4.1 bps
• 5 year yield, 4.488%, +4.9 bps
• 10 year yield 4.470%, +5.4 bps
• 30 year yield 4.602%, +5.4 bps

In the US stock market, the price action was limited with the Dow closing higher, the S&P near unchanged and the Nasdaq down marginally:

• Dow industrial average rose 117.12 points or 0.33% at 35390.16
• S&P rose 2.70 points or 0.06% at 4559.33
• Nasdaq fell -15.01 points or -0.11% at 14250.84.

For the trading week, the major indices closed higher for the 4th consecutive week gain:

• Dow industrial average rose 1.27%. The 4 week gain has taken the price up 9.2%
• S&P rose 1.0% this week. The 4-week gain has taken the price up 10.73%
• Nasdaq rose 0.89% this week. The 4 week gain has taken the price up 12.29%

Next week, the RBNZ will announce their latest decision on rates with expectations for no change (8 PM ET on Tuesday) at 5.50%.   The RBNZ has kept rates unchanged since May and plans to keep them steady for the foreseeable future. The central bank views the current rate as restrictive and believes it needs to remain at this level throughout the next year. The RBNZ sees interest rates as constraining economic activity and reducing inflationary pressure, with inflation expected to decline to target levels by the second half of 2024. Recent data, including softer-than-expected CPI and Labor Cost Index figures in Q3, supports the central bank’s current approach, and the decline in employment is likely seen as progress in its restrictive policy goals.

German preliminary CPI will be announced on Wednesday with the expectations for a decline of -0.1% vs 0.0% last month.

US PCE and Core PCE data will be released on Thursday. The headline PCE price index remained unchanged at 0.0% month-on-month (MoM) in October, compared to the previous month’s increase of 0.4%. Meanwhile, the Core PCE, which excludes volatile food and energy prices, is expected to rise by 0.2% MoM, slightly cooling from the 0.3% pace seen in September. This data is crucial in confirming the trend of easing inflation, as indicated by the October CPI report. Recall, the October CPI showed a decline from 3.7% to 3.2% in headline inflation and from 4.1% to 4.0% in core inflation, both falling below consensus expectations. These trends have led to diminished expectations for an interest rate hike by the Federal Open Market Committee (FOMC) in December. Markets believe that further declines in inflation may prompt discussions about potential interest rate cuts in 2024. Currently, the market fully priced in a rate cut for June.

ON Friday, US ISM PMI for November will be released (at 10 AM ET). The expectations are for an increase to 47.7, compared to the previous reading of 46.7. A reading below 50 is indicative of contracting manufacturing.

Also on tap next week is the OPEC+ meeting on November 30. The JMMC meeting for OPEC+ that was originally scheduled for November 26th was rescheduled to November 30th as members debated production cuts. The meeting is not expected to bring policy changes, but there are discussions about Saudi Arabia and Russia potentially extending or deepening their voluntary production cuts. Saudi Arabia has expressed dissatisfaction with the production levels of certain members, particularly Angola and Nigeria, and compliance among members is expected to be a point of emphasis. Possible scenarios for the meeting include an extension of current cuts, deeper production cuts, or maintaining the status quo. Currently, Saudi Arabia and Russia, along with other OPEC+ members, have collectively committed to reducing oil production by approximately 5.2 million barrels per day (BPD), with additional voluntary reductions from Saudi Arabia and Russia. These cuts account for around 5% of the world’s daily oil demand, and the commitment to these reductions has been extended into 2023.

Wishing you all a great and healthy weekend.

This article was written by Greg Michalowski at www.forexlive.com.

The major US indices are closing mixed on the day with the Dow leading the way higher. The broader S&P is little changed, while the tech-heavy Nasdaq is down marginally.

The final numbers are showing:

• Dow Industrial Average is up 117.12 points or 0.33% at 35390.14
• S&P is up 2.70 points or 0.06% at 4559.33
• Nasdaq is down -15.01 points or -0.11% at 14250.84

The Russell 2000 closed the day  up 11.95 points or 0.67% at 1807.50.

For the trading week, the major indices are closing higher for the 4th consecutive week:

• Dow industrial average rose 1.27%.  The 4 week gain has taken the price up 9.2%
• S&P rose 1.0% this week. The 4-week gain has taken the price up 10.73%
• Nasdaq rose 0.89% this week. The 4 week gain has taken the price up 12.29%

The Russell 2000 rose 0.54% for its 3rd increase in the last 4 weeks for the small cap index.  

This article was written by Greg Michalowski at www.forexlive.com.

ECB’s Muller is chatting late on Friday in Europe saying:

• Inflation is clearly showing a trend of slowing
• We probably do not need to increase rates anymore. 
• High ECB rates are smaller problem than high inflation. 

This article was written by Greg Michalowski at www.forexlive.com.

Citigroup has started their purging of manager jobs as they start the reorganization. Now The Guardian is reporting that Lloyds is looking to shed 2,500 jobs in their own shakeup.  

Job cuts beget job cuts. Banks and financial institutions tend to march to the same drum when they hire (the competition for deals is intense) and also when they get over their skis with too many hires. 

Major U.S. banks have been quietly downsizing their workforces throughout this year, despite the economy’s unexpected resilience, and some of the most significant layoffs are yet to come.  JPMorgan Chase stands out as an exception among the largest banks, as it has not announced any layoffs and has even expanded its workforce. However, the next five largest U.S. banks have collectively cut around 20,000 jobs in 2023. These job reductions have been driven by various factors, including the impact of higher interest rates on the mortgage business, reduced Wall Street deal-making, and higher funding costs.

Wells Fargo and Goldman Sachs have made significant reductions in their workforces, with each cutting about 5% of their employees this year. While Goldman Sachs has already gone through several rounds of cuts.

This article was written by Greg Michalowski at www.forexlive.com.

The major European  indices are closing the day marginally higher:

• German Dax, +0.22%
• France CAC, +0.20%
• UK FTSE 100, +0.06%
• Spain’s Ibex, +0.34%
• Italy’s FTSE MIB, +0.68%
• Euro Stoxx, +0.30%

For the trading week, Spain’s Ibex led the upside, while the UK FTSE 100 and Italy’s FTSE MIB closed lower for the week. :

• German Dax, +0.69%
• France CAC, 0.81%
• UK FTSE 100, -0.21%
• Spain’s  Ibex, 1.82%
• Italy FTSE MIB -0.24%

As London/European traders head for the exit, the CAD is the strongest and the JPY is the weakest.  THe USD is also lower with the greenback falling 0.62% vs the CAD, 0.56% vs the NZD, and 0.57% vs the GBP. The Canada retail sales data came in stronger than expected helping to send that currency higher today.  

US stocks are muddling along with the S&P above and below unchanged. The Dow is higher. The Nasdaq is lower.

• Dow +0.18%
• S&P -0.03%
• Nasdaq -0.16%.

Crude oil is down -$0.84 at $76.26.  OPEC+ is reportedly close to a deal to resolve African oil quota dispute.  They will meet on November 30th. 

This article was written by Greg Michalowski at www.forexlive.com.