Market Drivers – US Session 16/11/2022

The US dollar gathered some strength during the US trading session, closing mixed. The US dollar benefited from a deteriorating sentiment following Poland’s developments in relation to the Russo Ukrainian war, but also from Wednesday’s economic news.


The EUR/USD pair trades at around 1.0370, while GBP/USD is stable around 1.1890. Commodity-linked currencies suffered the most, with AUDUSD down to the 0.6720 region and USDCAD trading at 1.3230.

There was slight price action regarding safe-haven currencies, with USD/CHF and USD/JPY confined to tight intraday ranges and settling at 0.9440 and 139.60, respectively.

Gold consolidated gains and held within familiar levels, now trading at around $1,773 a troy ounce, while crude oil prices edged lower, with the barrel of WTI changing hands at $85.50.

Wall Street spent the day in the red territory, following the lead of its overseas counterparts. Losses, however, have been limited. US Treasury yields reflect renewed growth-related concerns. The yield on the 2-year note is marginally higher, at 4.37%, while the 10-year note pays 3.70%, down roughly 9 bps on the day.

Economic Data

Shortly, before the US session’s opening bell, Industrial production in the U.S. declined in October, highlighting the sector’s increasing headwinds as higher interest rates weaken demand for goods even as supply-chain bottlenecks gradually ease.

Industrial production declined 0.1% in October on month, swinging from a downwardly revised 0.1% advance in September. Industrial production figures are adjusted for inflation.

The UK published the annualized Consumer Prices Index, which came in at 11.1% in October when compared to 10.1% in the previous month, the highest reading in over four decades.

The US published positive Retail Sales data that rose by 1.3% MoM in October, better than anticipated. The figure sent stocks down amid speculation inflation may resume its advance, forcing the Fed to maintain the aggressive tightening path. The same reason backed yields gain at the shorter end of the curve.

The Energy Information Administration announced that US crude inventories retreated by 5.4 million barrels last week, compared with expectations for a 440,000-barrel drop.

On Thursday, Australia will publish October employment figures on Thursday. The country is expected to have added 15,000 new job positions in the month, while the unemployment rate is foreseen to tick higher, to 3.6% from the current 3.5%.

Other Developments

Various geopolitical influences – from an oil tanker being hit by a bomb-carrying drone off the coast of Oman, to Russia tensions – are being largely dismissed in favor of a focus on the more bearish elements such as weak Chinese economic data and demand.

Iraq plans to raise its production capacity to around 7 million barrels a day in 2027 according to state-owned oil marketer SOMO, although any increases will be in coordination with OPEC.


Brent crude futures settled a dollar lower at $92.86 a barrel, down 1.1% and WTI crude futures slid by $1.33, or 1.5%, to settle at $85.59 a barrel. Oil markets abandoned early gains after statements by Hungarian Foreign Minister Peter Szijjarto that flows through the Druzhba oil pipeline from Russia had resumed after a temporary outage.

Former US President Donald Trump announced he will run for president for returning to the White House 2024. The news stirred concerns about his views on the US relationship with China and other economy-linked issues.

ECB President Luis de Guindos said that the ECB would continue with policy normalisation and continue with the restrictive monetary policy, although Governing Council member Ignazio Visco added that reasons for a less aggressive ECB approach is gaining ground.

Kansas Fed President Esther George said the Fed should slow the pace of rate increases, noting that an economic contraction may be necessary to bring the services sector inflation down.

Tensions rose in China as the country keeps reporting increased coronavirus contagions. Regional lockdowns spread across the country and even triggered protests in the streets, likely worsening the situation.

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