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Market Wrap
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This morning started well for Europe with the ZEW economic sentiment surveys for the Euro Area and Germany both coming in a lot higher than market expectations. This helped the EURGBP rise after it completed the Breakout, Retest, Continuation, trade that we have been watching out for since the Bank of England decided not to raise interest rates.
Overall, the forex heatmap has remained mixed with the Aussie and Kiwi continuing to be sold for the entire London session. The pound is mixed following the euro news but also a GDP report from NIESR which stated UK GDP is projected to grow 6.9% in 2021 and 4.7% in 2022. The Bank of England is more bullish on the GDP figures as they are looking for 7.0% and 5.0% respectively.
The big news so far out of the US session has been that US PPI for October came in largely as expected and that House Speaker Pelosi said that the Build Back Better plan is intended to pass in the week of November 15th. The talking Feds today included Chair Powell, Bullard and Daly but nothing new came from their comments.
There was also new around US household debt which showed that mortgage balances remain the largest debt burden per household and that total household debt and increased $286billion to reach $15.24trillion in Q3 2021. This may sound awful, but it shows that banks have been willing to extend credit, which is an economic expansion.
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Currently the market is buying up the TLT ahead of the US treasury auctions today and tomorrow. This is putting pressure on the yields of the benchmark 10-year to 30-year bonds, but also capping equities which have failed to get out of their recent ranges. The USDJPY is also under pressure as it tries to hold within the bull flag pattern on the daily time frame and above the daily 50 ema. This is good news for gold, which has risen another 0.29%.
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For the last few months, we have been talking about the triple top resistance level around the $1830 /oz and as we approach that level, I am interested to see what sort of spike through the resting liquidity there is. If traders close out their shorts, there could be a greater acceleration through this level.
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The US dollar index is now firmly in the middle of the most recent trading range and above the Ichimoku trend following indicators. Tomorrow is the US CPI data and Unemployment Claims figures, so we could get a decent move after those metrics drop.
