Thursday November 10th, 2022

The US$ edges higher, oil prices slip, equity markets & US yields are down heading into the US inflation report. Markets are sidelined ahead of the US inflation report which will have an impact on the scale of future Fed interest rate hikes. Economists polled by Reuters expect the Consumer Price Index to have fallen slightly to 8% for October vs 8.2% in September. An inflation print above or below the 8% forecast will have impact on market volatility today. In the US Midterms, Republicans appear headed for control of the House by smaller margins than forecast while the race for the Senate continues. Alongside the US CPI report investors will also be monitoring US Initial Jobs claims, and speeches from BoC Governor Macklem, BoE Tenreyro & ECB Schnabel. In other news. China warns against extra ‘layers’ of covid curbs as outbreaks widen. Biden says Xi meeting at G20 summit would discuss US- China ‘red lines’ (SCMP).US President Biden intends to run in 2024 with announcement ‘early next year’ (FT). Bitcoin under pressure with FTX on brink of collapse after Binance abandons rescue. Russian President Putin will not attend the G20 summit in Bali. Hurricane Nicole hits Florida’s Atlantic coast. In Currency markets. CNY tests 1-week lows on worsening covid outbreaks. US$ edges higher ahead of the inflation report and easing risk sentiment. CNY and Asian currencies fall 0.2% on average vs US$. Trading currencies remain under pressure with NOK tumbles 0.8%, AUD & NZD down 0.6%, CHF & SEK weaken 0.5%, ZAR drops 0.3%, MXN lower 0.1%, while JPY is flat vs US$.

Oil prices fall for a 4th day as renewed covid curbs in China raises concern about future fuel demand from the worlds biggest crude importer. C$ continues to edge weaker on a combination of US Midterm results, easing of risk-sentiment and weakening oil prices. The US Inflation report and BoC Governor Macklem’s speech will be in focus today and will be the primary market drivers for the loonie. Support resets to 1.3480 while resistance rises to 1.3600.

EURCAD extends its weakness as growing risk-aversion sentiment has a greater impact on the Euro, while C$ finds support ahead of BoC Governor Macklem’s speech. Support holds at 1.3435 while resistance remains at 1.3550.

Euro drops below parity as risk-off sentiment returns. The increasing risk-averse markets put renewed selling pressure on the Euro, snapping the single-currencies 3-day winning streak. Investors are sitting on the sidelines heading into the US inflation report today, a print at 8% or higher will put fresh selling pressure on the Euro. Today US CPI report will be the primary market driver. Support resets to .9900 while resistance lowers to 1.0025.

GBPEUR rallies vs Euro as optimism improves for UK PM Sunak’s upcoming economic plan. Support resets to 1.1400 (.8772) while resistance resets to 1.1525 (.8677).

GBP steadies below 1.1400 ahead of US inflation report. Increasing optimism for UK PM Sunak economic plan, being released Nov 17th is providing some support the pound. Investors are focused on today’s US inflation report expected at 8%, but if we see a print below 7.6% expect risk-sentiment to improve and would support a stronger pound. Support resets to 1.1300, while resistance lowers to 1.1435.