Market Drivers – US Session 21/11/2022

Mohamed Abdelhamid 22 November, 2022 3:38 am Forex Market, Market Update

The US dollar capitalized on Monday’s prevalent risk aversion and negative market sentiment to edge higher. Risk aversion dominated markets after China’s National Health Commission reported death cases of Covid-19 patients in Beijing. China also reported over 26,000 new infections on Sunday.

Commodity-linked currencies ended the day with losses against the greenback. The AUD/USD pair trades around 0.6600, while USD/CADstands at 1.3440, down from an intraday high of 1.3416.

The Japanese yen was among the weakest US Dollar rivals, ending the day at around 142.05. In the meantime, the USD/CHF pair recovered to the 0.9590 price zone.

Gold fell for a fourth consecutive day, settling at around $1,738 per ounce. Crude oil prices fell before US opening amid market talks suggesting some OPEC members were considering an output increase of up to 500,00 barrels per day. The news was later denied by the Saudi Energy Minister, who said the current OPEC+ deal would continue until the end of 2023. Crude oi prices trimmed early losses and finished the day with WTI now trading at $80 a barrel.

Other Developments

ECB’s Philp Lane was said that any recession in the European Union would be mild and short-lived. He added that the central bank would hike rates again in December, progressing towards the levels needed.

Government Council member Robert Holzmann said if the current situation persists, policymakers will go for a 75 bps hike in December. Finally, ECB’s Mario Centeno noted that many conditions exist for rate increases to be less than 75 basis points in December.

The week will be mostly light regarding macroeconomic releases, focusing on the FOMC Meeting Minutes to be out on Wednesday.

Economic Data

The EUR/USD pair trades not far above a daily low of 1.0222, while the GBP/USD pair holds above the 1.1800. Germany published the October Producer Price Index, which unexpectedly contracted by 4.2% MoM. The annual figure was up by 34.5%, well below the previous 45.8%. It is the first sign of easing inflation in the EU.

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