13.11.23 - 17.11.23
Results of the previous week
US stocks had a good week, and the latest inflation data were the reason why. The consumer price index remained the same as the previous month, while wholesale prices dropped by 0.5%, the biggest monthly decline since April 2020. This has increased anticipation that the US Fed will soften its stance. Markets are at least expecting the Fed to halt its rate hike cycle.
Changes in expectations on the US Fed's monetary policy amid falling price pressure harmed the US dollar, which weakened against other major currencies.
Brent oil prices linger below $80 a barrel. The energy resource is under pressure due to concerns about the stability of demand from fairly large consumers. Those worries are triggered by a series of weak economic data reports from Japan, China and the Eurozone. In addition, US oil reserves have risen quite dramatically amid record-high production levels. That hurts oil prices.
Key events of the current week
The US. Minutes of the Fed's monetary policy meeting
According to the latest data, inflation in the US is declining, both at the consumer price index and producer price index levels. This gives the market hope that the US Federal Reserve will reconsider its monetary policy stance and halt its rate hike cycle at the very least. According to CME Group, the probability of the Fed keeping the current interest rate at its December meeting is 99.7%. A softening of the regulator's monetary policy hurts the dollar. But the dollar's losses are the gains of precious metals, such as, gold.Should the regulator hint at continuing the pause, XAU/USD could return to the high it saw in October near 2,006.00.
The US. Durable goods orders
Durable goods orders are one of the key indicators of the economy's health. After collapsing in July, the indicator has resumed its growth. Global analysts forecast a downturn in the reporting period. This points to a fall in demand for expensive goods, leading to a decline in investment. Also, the falling indicator signals Americans' uncertainty about their future and an increased tendency to save.This is bad news for the US economy and the dollar. In such a scenario, USD/JPY could decline to 148.40.
Germany. GDP growth rate
The German economy has fully felt the effects of changing supply chains, rising energy prices and the European Central Bank's monetary policy tightening. The PMI for key sectors of the country's economy isn't the best either. GDP growth rates have slowed down. The largest economy within the Eurozone has shown negative growth rates for two quarters in a row, indicating a technical recession. That's bad news for the euro. If the report meets expectations, EUR/USD will resume its decline to 1.0750.