Morning Market Review – Asian Session

EUR/USD

Morning Market Review, EUR is showing insignificant growth against USD during today’s Asian session, correcting after falling the day before. The “bullish” activity remains rather low, so the instrument is still holding near 1.1200 and its record lows since mid-summer 2020. The euro is noticeably inferior to the dollar, as investors are not sure that the European Central Bank (ECB) is ready to start tightening monetary policy, while the US Federal Reserve, judging by the comments of its representatives, is looking for an opportunity to accelerate the winding down of the current quantitative easing program (QE).

Additional pressure on the position of the euro is exerted by the worsening epidemiological situation in the region, which forces the European authorities to take extremely unpopular measures. Macroeconomic statistics released in Germany yesterday also did not add optimism to the markets. The IFO Business Climate index in November fell from 97.7 to 96.5 points, which was close to the forecasts at 96.6 points. The IFO Expectations index for the same period was revised from 95.4 to 94.2 points against the forecast of analysts at 95 points.

GBP/USD

The British pound is trading higher against the US currency during the morning session, trying to recover from a strong “bearish” rally since the end of last week, which has led to a renewal of record lows since December 2020. The growth of the instrument at the end of the week is mainly driven by technical factors, while the fundamental background changes little. Also, buying activity for the pound is affected by the markets closed in the US on the occasion of Thanksgiving Day. The day before, a large block of macroeconomic statistics was released in the US, which provided additional support to the American currency.

The number of initial jobless claims fell sharply from 270K to a new post-crisis low of 199K. Analysts had expected a decline to 260K. Personal Income of American citizens in October increased by 0.5% MoM, while Personal Expenses added 1.3% MoM. At the same time, the Durable Goods Orders suddenly decreased by 0.5% MoM (the forecast assumed an increase of 0.2% MoM), and the annualized GDP data for Q3 2021 reflected the acceleration of the economy to only 2.1% from 2.0% YoY.

NZD/USD

The New Zealand dollar is showing near-zero trading dynamics during the Asian session, consolidating around 0.6870. The “bulls” are trying to slightly recoup after a sharp decline the day before, which led to the renewal of local lows since August 23. Trading activity remains subdued today as markets in the US are closed for Thanksgiving. Nevertheless, traders have at their disposal a large block of statistics from the United States, which was published the day before.

The data managed to support the buyers of the American currency with a confident decrease in the number of Initial Jobless Claims from 270K to 199K, while the dynamics of GDP in Q3 2021 changed slightly (from 2.0% YoY to 2.1% YoY), while the statistics on Durable Goods Orders reflected a decline of 0.5% MoM, contrary to forecasts of an increase of 0.2% MoM. Some support for the New Zealand dollar is provided by statistics from New Zealand. Exports in October increased from 4.36B to 5.35B dollars. Imports for the same period accelerated from 6.57B to 6.64B dollars. The trade deficit narrowed from 2.206B to 1.286B dollars.

USD/JPY

The US dollar is trading mixed against the Japanese yen in Asia, consolidating near 115.35 and new all-time highs since March 2017. The American currency showed another growth the day before, responding to the publication of a large number of macroeconomic statistics from the United States, which, in general, confirmed the possibility of accelerating the pace of tightening of monetary policy by the US Federal Reserve.

The most striking positive moment was the decrease in the number of initial jobless claims below the next psychological level of 200K. Additional support was provided by data on the dynamics of personal income and spending of American citizens in October. Trading activity during the Asian session remains rather low as Thanksgiving is celebrated in the US today. Investors are focused on macroeconomic statistics from Japan today. The Coincident Index in September showed a decrease from 91.3 points to 88.7 points, which turned out to be better than market expectations at 87.5 points. The Leading Economic Index for the same period decreased from 101.3 to 100.9 points with the forecast of 99.7 points.

XAU/USD

Gold prices are showing weak corrective gains during the Asian session, trying to recover from a sharp decline earlier this week, which led to the renewal of local lows from November 4. At the moment, the instrument is again testing 1800.00 for a breakout; however, only technical factors contribute to the growth of buying activity, while the news background changes insignificantly. The macroeconomic statistics from the United States published yesterday supported investor confidence that the US Fed will probably try to reconsider the pace of monetary tightening, which will ultimately lead to a more rapid increase in interest rates.

GBP/USD Current level – 1.3379

The Cable is in a clear downtrend and, in the early hours of today, prices gravitate around the local support of 1.3360. Due to the shrinking activity, a corrective wave with a target of around 1.3500 can be expected. The first daily resistance for the pair is 1.3427. The current expectations are for new declines and a breach of 1.3360 would pave the road towards 1.3200. A change in sentiment can only be expected if prices stay above 1.3550.

EUR/USD Current level – 1.1642

The attempt to breach the support of 1.1623 was not successful and, at the time of writing this analysis, the currency pair is preparing to test the resistance zone between 1.1668 and 1.1687. A violation of the mentioned zone will pave the way towards the next goal of 1.1750, a breach of which would strengthen the positive expectations for the future path of the EUR/USD. On the downside, bears could attack the support level of 1.1623 and, if successful, could easily deepen the drop towards the level of 1.1582. A spike in volatility is likely during the announcement of the economic data for the initial jobless claims for the U.S. (today; 12:30 EEST).

Morning Market Review

EUR/USD

Morning Market Review, The European currency is showing ambiguous dynamics against the US dollar during today’s Asian session, testing 1.1300 for a breakdown again. Market activity remains low as investors prepare for the release of the final US labor market report for November. As before, traders will closely monitor the state of this important sector of the American economy, hoping that strong data will be a catalyst for the US Fed to decide on a faster cut in the quantitative easing program and a subsequent increase in interest rates in 2022.

The US economy is expected to show the creation of 550K new jobs outside the agricultural sector, which is 20K more than last month. Europe during the day will also release October retail sales statistics for October and a block of data on business activity in November. In addition, today the President of the European Central Bank Christine Lagarde is scheduled to speak. She will again try to calm the markets, worried about the prospects of quarantine restrictions against the backdrop of the emergence of a new Omicron strain of coronavirus infection.

GBP/USD

British pound quotes began to decline, developing flat dynamics in the short term. The instrument is still holding close to record lows, updated at the beginning of the week, as the market avoided risk amid a deteriorating epidemiological outlook. By the end of the week, the situation has stabilized somewhat, but there is still no clarity on the issue.

The incidence of the new virus continues to rise in South Africa and is gradually being reported in other regions of the world. The day before it became known that the first case of infection with the Omicron strain was confirmed in the United States, after which President Joe Biden called for tougher spot checks on tourists arriving in the country.

AUD/USD

Morning Market Review, The Australian dollar has shown negative dynamics against the US currency during the Asian session, returning to previous record lows, updated last Tuesday. The situation can only worsen with the publication of a large block of macroeconomic statistics at the opening of the session in the US. Today, November data on the US labor market will be released, which, if positive investors’ forecasts are realized, will be an additional signal for the US Fed to more rapidly tightening monetary policy next year.

Statistics from Australia provided insignificant support to the instrument on Friday. Commonwealth Bank Services PMI in November rose from 55.0 to 55.7 points, which was better than the neutral forecasts of analysts. In turn, the AiG Performance of Construction Index for the same period decreased from 57.6 to 57.0 points.

USD/JPY

The US dollar shows corrective growth against the Japanese yen in trading in Asia, recovering from a decline earlier in the week, which led to the renewal of local lows for the instrument from October 11. The American currency managed to consolidate above the psychological resistance at 113.00, receiving support from the expectations of a faster tightening of monetary policy by the US Fed.

On Friday, traders will be watching the November labor market report, which may confirm the continued uptrend in the US economy. In addition, during the day ISM business activity data for November will be released in the US, as well as statistics on factory orders in October. Analysts’ forecasts are rather modest and imply a reduction in the ISM Services PMI in November from the previous 66.7 points to 65 points. In contrast, the volume of Factory Orders may show an increase from 0.2% (MoM) to 0.5% (MoM).

XAU/USD

Morning Market Review, Gold prices show corrective growth at the end of the trading week, retreating from the local lows from November 3, updated the day before. Technical factors contribute to the positive dynamics in the instrument, while the news background changes insignificantly. Traders are awaiting today’s publication of the November US labor market report, hoping that the US Fed will soon react to the supposedly strong data by tightening its rhetoric.

Earlier this week, the Chairman of the regulator, Jerome Powell, confirmed the systemic nature of inflation in the country, noting that the Fed may need additional efforts to stabilize its pace. At the same time, the European Central Bank and the Bank of England are still taking a wait-and-see attitude, analyzing data on the incidence of a new strain of coronavirus. Previously, the markets predicted that the British regulator may raise the interest rate in December in response to the rapid rise in inflation.