On Thursday (November 16th), due to data showing a gradual slowdown in the US economy, the US stock market was mixed and bonds climbed, exacerbating speculation that the Federal Reserve would end its interest rate hike. The price of crude oil continues to decline.
US treasury bond bond yields fell as investors closely followed another batch of economic data on Thursday, and US unemployment benefit application continued to rise to the highest level in nearly two years. The decline in factory production exceeded expectations, and the confidence of home builders fell to the lowest point in 2023. Australian and New Zealand bonds followed the trend of US treasury bond bonds.
Harris Financial Group analyst Jamie Cox said, "The lagging effect of monetary policy is catching up with the economy, from rising costs to industrial production and then to the labor market. The challenge now has shifted from dealing with inflation to maintaining economic growth and avoiding economic recession. Interest rate cuts may be closer than people imagine
Federal Reserve Governor Lisa Cook pointed out that she is aware of the risk of an unnecessary sharp downturn in the economy and points out that tightening financial conditions is putting pressure on certain industries. Cleveland Fed Chairman Loretta Mester stated that she has not yet decided whether another rate hike is still needed, and added that officials have time to understand how the economy is developing.
Chris Larkin, head of trading at Morgan Stanley ETrade, said that although the Federal Reserve's announcement of a victory over inflation is still too early and a rate cut is still far away, recent data will calm lingering concerns about further rate hikes. The question now is whether this favorable data for the Federal Reserve will continue to provide bullish momentum for the stock market
At the same time, oil continues to fall into the bear market zone, trading at approximately $73 per barrel. Trend tracking transactions have accelerated losses caused by increased inventory and falling levels of key technical support.
The US stock market experienced volatility after rebounding from the 'oversold' level, driven by bets that the central bank will complete interest rate hikes and short covering. The S&P 500 index is still expected to achieve its best monthly performance in over a year. James Demmert, Chief Investment Officer of Main Street Research, stated that the recent rebound is a result of investors realizing that the Federal Reserve may end its interest rate hikes. Further short covering, coupled with institutional and retail investors reducing their holdings in stocks, may continue to drive the market higher at the end of the year
At the same time, due to interest rates exceeding 5% and fluctuations in the fixed income market prompting investors to turn to safe haven assets, money market fund assets have risen to historic highs for the second consecutive week.
Gold and silver prices have risen significantly, with gold hitting a two-week high and silver hitting a 6-week high. This week's relatively mild US inflation data has led to a decline in the US dollar index, and the market is also considering the Federal Reserve's interest rate cut in the spring, which has given impetus to precious metal bulls. The recent technical aspects of gold and silver have also improved this week. This has sparked the interest of short-term futures market speculators in chart-based purchases. The latest increase in December gold was $21.20 to $1985.70. In December, silver finally rose by 0.392 US dollars to 23.935 US dollars.
In the foreign exchange market, the US dollar/yen quickly fell from 151.10 to 150.65, then continued to decline to 150.30, and then rebounded to 150.76. The US dollar was particularly weak in the London fixed price, hitting a daily low throughout the day. This highlights a trading day with low trading volume and insufficient confidence, and many market participants hope to take a break and evaluate the situation. The euro closed flat on the same day, rising from 1.0850 to 1.0895, and then retreated, all trading in the United States. The pound followed a similar path from 1.2400 to 1.2455, and then fell back to 1.2411.
Friday trading day focus and wind vane:
① 15:00 UK October Quarterly Adjusted Retail Sales Monthly Rate
② 16:30 European Central Bank President Lagarde delivers a speech
③ 17:00 Eurozone September quarter adjusted current account
④ 18:00 Eurozone October CPI annual rate final value, Eurozone October CPI monthly rate
⑤ 21:30 Annualized total number of new housing starts in the United States in October, and total number of construction permits in the United States in October
⑥ 22:45 Federal Reserve Gullsby delivers a speech on the economy
⑦ The total number of oil wells drilled during the week from 02:00 the next day to November 17th in the United States
Analysis of Major Currency Trends:
EUR: EUR/USD up, closing at 1.0851, up 0.05%. Technically, the initial resistance to the upward trend of the exchange rate is at 1.0885, the further resistance is at 1.0922, and the key resistance is at 1.0950; The initial support for the downward trend of the exchange rate is at 1.0819, further support is at 1.0792, and more critical support is at 1.0754.
GBP: GBP/USD fell, closing at 1.2413, a decrease of 0.01%. Technically, the initial resistance to the upward trend of the exchange rate is at 1.2454, the further resistance is at 1.2493, and the key resistance is at 1.2532; The initial support for the downward trend of the exchange rate is at 1.2375, further support is at 1.2336, and more critical support is at 1.2296.
JPY: USD/JPY fell, closing at 150.722, a decrease of 0.39%. Technically, the initial resistance to the upward trend of the exchange rate is at 151.31, the further resistance is at 151.94, and the key resistance is at 152.448; The initial support for the downward trend of the exchange rate is at 150.172, further support is at 149.664, and more critical support is at 149.034.
