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Despite a quiet news week, the USD moved significantly.
The Fed could hike 50bps in December after CPI data unexpectedly declined. Sellers responded by weakening the USD across the board.
UK GDP decreased for a second month to -0.6%. Last month’s number rose to -0.1%. The Bank of England predicted a two-year slump.
Last week, USD Index fell by 4.29% after an unexpected US CPI data release that was lower than expected, creating market optimism to anticipate a 50bps rate hike next month.
(All data taken from MT4 VT Markets)
(Picture taken from forexfactory.com)
This week’s Retail Sales and PPI data will help determine whether the US Federal Reserve will raise 50bps or 75bps rates at its December meeting, as last week’s lower-than-expected inflation figures suggest.
Meanwhile, here’s what to expect for the week ahead:
RBA Monetary Policy Meeting Minutes (15 November)
The Reserve Bank of Australia increased the cash rate by 25bps to 2.85% during its November meeting, marking the sixth consecutive rate hike.
The board reiterated its commitment to bringing inflation back to target levels and stated it would do all to accomplish it. The incoming data will determine the size and timing of rate hikes.
US Empire State Manufacturing Index (15 November)
The NY Empire State Manufacturing Index dropped 7.6 points to -9.1 in October 2022, suggesting business activity in New York State declined for the third straight month. Firms expect business conditions to remain the same over the next six months.
Analysts expect that data will decline to -12 this month.
US Producer Price Index (15 November)
The Producer Price Index for final demand in the US went up 0.4% month-over-month in September of 2022, the first increase in three months.
Analysts expect that US PPI for October will go up by another 0.3%.
UK Consumer Price Index (16 November)
The annual UK CPI data shows that the inflation rate in the UK rose to 10.1% in September of 2022 from 9.9% in August, returning to the 40-year high hit in July.
Analysts forecast October’s annual UK CPI data would be higher at 10.4%.
Canada Consumer Price Index (16 November)
The Consumer Price Index in Canada increased 0.10% in September of 2022 over the previous month.
For October, data is forecast to increase by another 0.10%.
US Retail Sales (16 November)
US retail sales were unchanged in September 2022 as high inflation, and rising borrowing costs hit consumer demand.
For October, US Retail Sales data is expected to increase by 0.8%.
Australia Employment Data (17 November)
Employment in Australia increased by 900, at a record high of 13.59 million in September 2022. Meanwhile, the unemployment rate stood at 3.5% in September 2022, unchanged from the previous month.
For October, analysts expect that employment would be at 32,000 and the unemployment rate would be at 3.4%.
Last week we mentioned that gold might move to reach our resistance level at $1,695 – $1,697. Gold closed the week higher at $1,770 due to the unexpected CPI data.
On a weekly timeframe, we can see that the Stochastic Indicator shows a strong higher movement. Gold price moves above the 20 and 200-period moving averages and touched the 50-period moving averages.
Our Weekly resistance levels are at $1,830 and $1,878, with the support levels at $1,743 and $1,688.
Meanwhile, on the daily timeframe, the Stochastic Indicator is inside the overbought level with no sign of going lower. The price moves above the 20 and 50-period moving averages and can break above the 200-period moving average.
Our Daily resistance levels are at $1,806 and $1,873, with the support levels at $1,728 and $1,696.
Conclusion: With shocking CPI data released last Thursday, all eyes will now be on PPI and Retail sales data, which will confirm the potential of the Fed to lower its interest rate hike to 50bps in December. We expect that gold might try to move higher to reach our daily resistance level of $1,806.
Last week, EURUSD increased, breaking all our resistance levels.
The Stochastic Indicator is progressively rising in the weekly timeframe, able to break above the downward channel movement, indicating that upward movement is trying to continue. The price continues to trade below the 50 and 200-period moving averages but can break above the 20-period moving average.
Our Weekly resistance levels are now at 1.0547 and 1.0780, with the support levels at 1.0037 and 0.9869.
On our daily timeframe, we can see that our stochastic indicators reached the overbought level but are not yet able to exit. Price is still trading below the 200-period moving averages, but it is moving above the 20 and 50-period moving averages.
Our Daily resistance levels are now at 1.0365 and 1.0484, while the support levels are at 1.0258 and 1.0121.
Conclusion: With shocking CPI data released last Thursday, all eyes will now be on PPI and Retail sales data, which will confirm the potential of the Fed to lower its interest rate hike to 50bps in December. We expect that the EURUSD will attempt to trade higher, trying to reach our weekly 50-period moving average at 1.0518 and daily 200-period moving average at 1.0389.
Last week, we expected the DJ30 to rise and reach our resistance level at 33763 and able to end the week at 33772.
On the Weekly timeframe, we can see that the Stochastic Indicator is inside the overbought level. The price is now moving above all the 20, 50 and 200-period moving averages.
Our Weekly resistance levels are now at 34785 and 35627, with the support levels at 32194 and 31171.
In our daily timeframe, we can see that our stochastic indicator is moving into the overbought level. The price is moving above the 20, 50 and 200-period moving averages.
Our Daily resistance levels are at 34188 and 34796, while the support levels are at 32486 and 31790.
Conclusion: With shocking CPI data released last Thursday, all eyes will now be on PPI and Retail sales data, which will confirm the potential of the Fed to lower its interest rate hike to 50bps in December. We expect that DJ30 will move higher to our daily resistance level at 32486 before moving a little bit lower.
USOUSD (WTI) was lower last week after health authorities in China eased some of the country’s heavy COVID-19 curbs, raising hopes for improved economic activity and demand in the world’s top crude importer. USOUSD closed the week at 88.16.
On the Weekly timeframe, we can see that the Stochastic Indicator is still rising. The price has reached and tried to move above the 20 and 50-period moving averages while still above the 200-period moving average.
Our Weekly resistance levels are at 93,86 and 100,90, with the support levels at 83,66 and 76,09.
In our daily timeframe, we can see that our stochastic indicator is entering the oversold level. The price moves back below the 200-period moving average also moving above the 20 and 50-period moving averages.
Our Daily resistance levels are 89.95 and 92.20, while the support levels are 85.74 and 83.94.
Conclusion: We anticipate some good market activity after health authorities in China eased some of the country’s heavy COVID-19 curbs, raising hopes for improved economic activity and demand in the world’s top crude importer. We expect the USOUSD to rise and reach our daily resistance levels of 89.95 and 92.20.
Last week, we expected the NAS100 to reach our resistance level at 11305 and be able to close higher at 11809.
On the Weekly timeframe, we can see that the Stochastic Indicator is moving higher. The price is still moving below the 20 and 50, and breaking above 200- period moving average.
Our Weekly resistance levels are at 12159 and 12714 (50-period moving average), with the support levels at 11575 and 11057.
On our daily timeframe, our stochastic indicator is also moving higher, targeting the overbought level. Price is still moving above the 20 and 50-period moving averages but still below the 200-period moving average.
Our Daily resistance levels are at 12179 and 12575, while the support levels are at 11314 and 10902.
Conclusion: With shocking CPI data released last Thursday, all eyes will now be on PPI and Retail sales data, which will confirm the potential of the Fed to lower its interest rate hike to 50bps in December. We expect that NAS100 will continue to move higher to reach our daily and weekly resistance levels at 12159 and 12179.
Last week, GBPUSD are stronger following the USD weak because of the inflation data and able to break our resistance levels.
In the Weekly timeframe, we can see that the Stochastic Indicator is still moving higher, indicating that there is significant upward momentum. The price is still able to move above the 20-period moving average, but still moving below the 50, and 200-period moving averages.
Our Weekly resistance levels are at 1.1868 and 1.2279, with the support levels at 1.1406 and 1.1074.
On the daily timeframe, we can see that our stochastic indicator entering the overbought level. Price is moving above the 20 and 50-period moving average, but it is still below the 200-period moving average.
Our Daily resistance levels are at 1.2000 and 1.2250, while the support levels are at 1.1711 and 1.1468.
Conclusion: This week we will have CPI data from the UK. We expect that GBPUSD to continue rise higher to reach our daily resistance level at 1.2000.
Last week, the USD Index fell due to unexpected CPI data. USD Index closes the week at 106.24.
On the Weekly Time Frame, we can see that the Stochastic Indicator is moving lower. The price is moving below the 20-period moving average but still above the 50 and 200-period moving averages.
Our Weekly resistance levels are 107.94 and 109.94 with the support levels at 104.81, and 101.62.
Meanwhile, on the daily timeframe, the Stochastic Indicator is inside the oversold level. Price is now trading below the 20 and 50-period moving averages but remains above the 200-period moving average.
Our Daily resistance levels at 108.20 and 109.23 with the support levels at 105.47 and 104.50.
Conclusion: With shocking CPI data released last Thursday, all eyes will now be on PPI and Retail sales data, which will confirm the potential of the Fed to lower its interest rate hike to 50bps in December. We expect the USD Index might move lower to reach our support level and daily 200-period moving average at 105.47.
Last week, USDJPY was affected by the USD fall because of unexpected CPI data from the US. USDJPY ended the week at 138.75.
On the Weekly timeframe, we see that the Stochastic Indicator is moving lower. The price moves below the 20-period moving average but remains above the 50 and 200-period moving averages.
Our Weekly resistance levels are at 140.33 and 145,15, with the support levels at 133,39 and 130,80.
On the daily timeframe, the stochastic indicator enters the oversold level. Price is moving below the 20 and 50-period moving averages but above the 200-period moving average.
Our Daily resistance levels are 141.50 and 145.02, while the support levels are 137.53 and 135.82.
Conclusion: With shocking CPI data released last Thursday, all eyes will now be on PPI and Retail sales data, which will confirm the potential of the Fed to lower its interest rate hike to 50bps in December. We expect the USDJPY to move lower to reach our daily support levels at 137.53 and 135.82.
