Markets Report - 14 November 2022

A daily breakdown of the markets for the 14th November 2022, provided to you by Sterlex.

🇪🇺💶This week, the Eurozone’s GDP will be under investors’ radar. European Central Bank (ECB) policymakers are continuing with their verdict of hiking interest rates as inflationary pressures are getting beyond their control. The economy is facing the turbulence of soaring inflation, energy crisis, and supply chain bottlenecks due to Russia-Ukraine tensions. This may keep EURUSD on the tenterhooks. As per the consensus, the annual Gross Domestic Data (GDP) is expected to remain stable at 2.1%. He further added that only a deep recession in Eurozone could save the economy from mounting inflation. The cross is currently placed above the mid-0.8700s, though lacks any follow-through buying or bullish conviction. Therefore, stable GDP data might be supportive of the shared currency. Hawkish commentaries from ECB and expectations for a retreat in the US dollar are restricting EURUSD in a limited territory. The shared currency continues to draw some support from bets for a more aggressive policy tightening by the European Central Bank (ECB). The EURGBP cross edges higher for the second successive day on Monday and sticks to its modest intraday gains through the early European session. The Euro could face pressure as European Central Bank (ECB) Governing Council member Isabel Schnabel noted last week that inflation expectations in the Eurozone are still broadly anchored but added that risks of high inflation persistence had increased further, as reported by Reuters.

🇬🇧💷Reuters quotes The Independent while stating, “The government must follow through on its promise of tax rises and spending cuts in this week's autumn statement or risk a market backlash destabilizing the UK economy, Rishi Sunak has said.”. “UK Chancellor Jeremy Hunt is expected to delay much of the £55 billion ($65 billion) of savings to fill the hole in the public finances until after the next election in an attempt to protect the economy and shore up Tory support as the country heads into recession,” said Bloomberg. At home, Bloomberg came out with the news suggesting the UK Chancellor Jeremy Hunt may delay cuts to defend the British economy should have challenged the GBPUSD bears but the latest announcements suggesting more tax hikes and comments from UK Prime Minister Rishi Sunak weigh on the quote. British Embassy said in a statement on Monday that the UK Prime Minister Rishi Sunak will “call for coordinated global action to address international economic instability and the rising cost of living at G20 Summit.

🇺🇸 🏦The US Dollar Index stages a rebound after losing nearly 4% last week and US stock index futures trade in negative territory. So far, and according to CME Group’s FedWatch Tool, the probability of a 50 bps interest rate hike at the December 14 meeting is at nearly 81%, from around 60% a week ago and nearly 37% a month ago. Eurostat will publish September Industrial Production data and the US economic docket will not feature any high-impact macroeconomic data releases. The dollar appears somewhat bid at the beginning of the week and briefly revisits the 107.00 neighbourhood when gauged by the USD Index (DXY). Nevertheless, investors will pay close attention to comments from US Federal Reserve officials, including Vice Chair Lael Brainard and NY Fed President John Williams. Following the strong risk rally witnessed in the second half of the previous week, markets seem to have turned cautious to begin the new week as investors assess the latest developments.