Market Drivers – US Session, Nov. 17

The US dollar experienced its most significant drop in one week since May, with negative momentum dominating.

Next week will be shorter in the US, with the preliminary November PMIs being the important economic report to keep an eye on.

The Fed will publish the minutes of its most recent meeting on Wednesday, but given the most recent economic data and remarks made by Fed Chairman Jerome Powell, it might as well not happen.

The US Dollar Index lost 1.65% of its value this week, as inflation continued to decline, supporting the market’s view that the Federal Reserve had finished raising interest rates and hurt the value of the American currency.

Wall Street saw its strongest level in eight weeks and a third straight weekly gain as risk appetite prevailed.

Ahead of Thanksgiving, Wednesday is going to be very busy with several significant reports: the final reading of the University of Michigan Consumer Sentiment, the weekly Jobless Claims, and the Durable Goods Orders.

The short-term momentum for the US Dollar remains firmly tilted to the downside, but fundamentals indicate that US economic growth is above trend, while the Eurozone is either heading toward or already in a recession.

This divergence suggests that the decline of the Dollar may not be without the risk of sharp corrections.

EUR/USD broke above 1.0750 and surpassed the 20-day Simple Moving Average (SMA), setting the outlook for more gains.

The Monetary Policy Report Hearings will take place on Wednesday, when the Bank of England Governor and members of the Monetary Policy Committee will testify on inflation and the economy before the Parliament’s Treasury Committee.

USD/JPY had the biggest weekly loss since July, amid a weaker US Dollar and lower Treasury yields. The Australian Dollar has so far remained within the recent range, and a break above 0.6050 would likely trigger a bullish acceleration.

USD/CAD continues to move in a range between 1.3870 and 1.3630, with a decline to 1.3545 (20-week SMA) likely if it breaks 1.3630.

Gold experienced a two-week decline before rising sharply, helped by a decline in US yields. XAU/USD went close to $2,000 but was unable to take that territory back. It seems as though the risk is skewed upward. After rising from $22.40 to $24.15, silver had its best week in months, but it fell back below $24.00 late on Friday.