Morning Market Review – Asian Session
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.
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.
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.
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.
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.