Weekly Economic & Financial Commentary: Downside Surprises For G10 Economic Data

This week's reports pointed to slowing growth and slowing inflation among the economies. After solid growth during the first half of the year, Japan's Q3 GDP shrank by 2.1% quarter-over-quarter annualized, a larger than expected decline. U.K. October inflation slowed sharply to 4.6% year-over-year.

Markets Daily

Short-term bond yields rose Friday amid Fed comments disagreeing with markets pricing rate cuts. Equities were steady, while oil rose and the US dollar fell, AUD up to 0.6510. Today’s global calendar is low key. Friday Australia’s calendar was effectively empty. AUD/USD traded a very tight 0.6458-75 range. Regional equities were quite mixed, Hong Kong […]

Trade-Weighted Dollar Remains in Dire Straits

The (trade-weighted) dollar remains in dire straits even as the core bond rally seems to be losing some steam. DXY extends its drop this morning, falling to 103.70 which represents the lowest level since early September. Key support levels are 103.46 and 102.55 which are respectively 50% and 62% retracement on the greenback’s rally from mid-July to early October.

Japanese Yen Benefited from U.S. Dollar Weakness

The Japanese yen rose over 149.000, reaching its highest level in over five weeks, driven by overall weakness in the U.S. dollar. Now, the market doesn't expect rate hikes from the Federal Reserve. Expectations shifted towards a more dovish policy by the regulator, so investors believe rate cuts will come in May 2024.

Gold Lacks Bullish Momentum

Today, XAUUSD decreased in the Asian trading session but rose in the early hours of the European session. The People's Bank of China maintained its one and five-year loan prime rates unchanged at 3.45% and 4.2%, aligning with market forecasts. 'Spot gold looks neutral in a range of $1,976–1,990 per ounce, and an escape could suggest a direction,' said Reuters analyst Wang Tao.

Japanese Yen Improves to Six-Week High

The Japanese yen is up for a third straight day on Monday and has climbed 2% against the US dollar in the current rally. In the European session, USD/JPY is trading at 148.40, down 0.84%.

AUD/USD Extends Gains, RBA Minutes Next

The Australian dollar is in positive territory on Monday. In the European session, AUD/USD is trading at 0.6553, up 0.59%. The Aussie is flexing its muscles, gaining some 3% in the past week.

Nikkei225 Retreats After Touching the Peak

There are significant moves in the Japanese markets today. The Japanese stock market started the day with a rise of over 1%, taking the Nikkei225 to 33850. It was the second brief climb to this height since June, last seen 33 years ago. Touching the highs triggered a sharp sell-off, and the index is now down 0.6% from the day’s open, which could be the start of a broader correction or a prolonged pullback.

Market Cautious As Focus Falls On US CPI

The October US Consumer Price Index (CPI) report may heavily influence expectations around the Fed's policy outlook beyond 2023.

Safe-Haven Demand Boosts Gold Ahead of U.S. Inflation Data

The gold price rose slightly towards 1,945 on Monday, bolstered by safe-haven demand as both the U.S. dollar and Treasury yields declined ahead of today's release of the U.S. inflation data for October.