Market Drivers – US Session 07/11/2022

Mohamed Abdelhamid 8 November, 2022 2:36 am Forex Market, Market Update

The US dollar began the trading week, on Monday, with an attempt to recover the gains lost before Friday’s closing bell. Instead, the dollar ended with losing further ground against its major rival currencies.

The dollar accelerated its decline late in the US session as Wall Street picked up momentum ahead of the close. US Treasury yields, however, were also on the rise. The yield on the 10-year note settled at 4.20%, while the 2-year note yield hovers around 4.72%.

Economic Data

US Banks are confident that a recession is coming, and they are already working to keep their balance sheets safe, according to a recent survey by the Fed.

The banks have been tightening their lending standards over the last three months and seeing their commercial customers being more cautious about taking on more debt amid rising interest rates and economic uncertainty, according to the Fed’s quarterly Senior Loan Officer Opinion Survey (SLOOS).

Other Developments

Different factors boosted the market’s mood, including the anticipations concerning Fed’s nearing dovish stance on monetary policy. The US central bank is expected to ease the pace of quantitative tightening regardless of Chair Jerome Powell´s hawkish comments. Another factor is China.

Despite the number of new coronavirus cases on the rise, investors are once again pricing in easing restrictive measures. Finally, there is some growing speculation Russia and Ukraine may de-escalate the ongoing conflict.

The week will be lighter in terms of first-tier events, with the focus on the US Consumer Price Index, foreseen at 8% YoY in October, slightly better than the previous 8.2%.

The EURUSD pair trades in the 1.0030 price zone, its highest in over two weeks. Better than anticipated German data helped the shared currency, with Industrial Production improving by more than anticipated in September.

The GBPUSD pair trades above the 1.1500 level, benefiting from the broad dollar’s weakness. Market participants anticipate UK Chancellor Jeremy Hunt will outline £60 billion in tax increases and spending cuts.

USD/CAD trades right below the 1.3500 threshold, while AUD/USD hovers around 0.6470. Safe-haven currencies appreciated vs their US rival, with USD/CHF currently trading around 0.9880 and USD/JPY at 146.50.

Gold holds on to the previous weekly gains and stands at $1,676 a troy ounce, while crude oil prices ticked higher. WTI currently trades at $92.00 per barrel.

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