Tuesday November 22nd, 2022

The US$ is lower, oil prices strengthen, equity markets are up, while US yields fall on Fed comments. Risk sentiment improves on comments from San Francisco Fed President Daly said that officials need to be mindful of the lags in the transmission of policy changes, while Cleveland Fed President Mester said she’s open to slowing the tempo of rate hikes. Today sees another flurry of Fed, BOC & German central bank speakers, US Richmond Fed Manufacturing Index, CAD Retail Sales, and EU Consumer Confidence report which will help drive intraday direction to markets. In other news. Europe to be hit hardest in global slowdown- OECD. World Economic growth set to slow from 3.1% 2022 to 2.2% 2023 says the OECD. China sees a surge in lockdowns as new covid cases surge to near record highs. Goldman Sachs see the S&P 500 flat in 2023. The WHO said in Ukraine hundreds of hospitals and healthcare facilities lacked fuel, water, and electricity to meet people’s basic needs. “The system is overwhelmed”: Europe confronts fresh Ukraine migrant influx (FT). In Currency markets. Markets balance Fed comments of possible easier rates vs China increasing restrictions as new covid case retest near recent highs. CNY weakens 0.45%, while Asian currencies are down 0.2% on average vs US$. Trading currencies rebound with MXN flat, while ZAR & SEK firm 0.35%, AUD, CHF & JPY up 0.5%, NOK strengthens 0.6%, and NZD rallies 0.85% vs US$.

Oil prices strengthen on the weaker US$ and after Saudi Arabia pushed back against reports of a potential OPEC+ production increase. C$ strengthens in early trading on the combination of a weaker US$ and OPEC maintaining its current pricing policy. The OCED outlook growth in Canada GDP is projected to slow from 3.2% in 2022 to 1% in 2023. Focus will be on Todays CAD Retail Sales for clues on the strength of the Canadian economy ahead of Dec 7th BoC rate decision. Support resets to 1.3350 while resistance holds at 1.3475.

EURCAD holds steady as OECD sees both CAD & EU economies slowing heading into 2023, intraday CAD Retail Sales and EU Consumer Confidence will help drive direction. Support lowers to 1.3700 while resistance resets to 1.3815.

Euro extends gains towards 1.03 amid US$ weakening. Less hawkish comments from the Fed put pressure on the US$, while ECB is also adopting a less hawkish tone as well, which will likely cap Euro strength. The OECD report forecasts the Eurozone economy will be hit the hardest, bearing the brunt as Russia’s war in Ukraine hits both business activity and drives an energy price spike. The Eurozone economy is forecast to slow from 3.3% growth in 2022 to just 0.5% in 2023. Focus will be on EU Consumer Confidence report out later in the day. Support holds at 1.0190 while resistance remains at 1.0300.

GBPEUR holds steady as markets take stock of the OECD economic report and surging covid cases across China. Support remains at 1.1450 (.8733) while resistance holds at 1.1600 (.8620).

GBP steadies balancing a less hawkish Fed and domestic concerns. Ongoing Brexit talks, a concerning OECD report and lack of confidence from the markets in the Autumn Budget is keeping the pound capped. The UK economy is expected to shrink to 0.4% in 2022 as it contends with rising interest rates, surging prices and weak confidence, OECD. Expect the pound to stall near current levels with the lack of any high tier US data releases. Support holds at 1.1770, while resistance remains at 1.1900.