Articles
Powell speech: Risk of higher inflation has increased
187337 November 30, 2021 23:49 FXStreet Market News
Fed Chair Jerome Powell is testifying before the Committee on Banking, Housing, and Urban Affairs of the US Senate alongside US Treasury Secretary Janet Yellen.
Key takeaways:
“Higher prices are generally related to supply-demand issues.”
“Also the case that price increases have spread more broadly.”
“Risk of higher inflation has increased.”
“It’s a good time to retire ‘transitory’ for inflation.”
Market Reaction
The US dollar, short-end and real US yields all popped higher in response to Powell’s hawkish comment that it is time to retire the word “transitory” to describe inflation.
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US Manufacturing Purchasing Managers Index November Preview: Businesses are watching the consumer
187333 November 30, 2021 23:40 FXStreet Market News
- US Manufacturing sector forecast to maintain current expansion.
- New Orders Index dropped to a 16-month low in October.
- Consumers have maintained spending despite sinking optimism.
The US manufacturing sector has lost its heady spring expansion as firms and workers wait for the supply chain to unkink and for the pandemic to lose its grip on consumer attitudes.
Purchasing Managers Indexes (PMI) from the Institute for Supply Management (ISM) are expected to show little change in November, with the overall gauge to rise to 61 from 60.8 in September.
Manufactuirng PMI
New Orders dropped sharply last month to 59.8 from 66.7 in August and September. It was the lowest score for this crucial measure of incoming business in 16 months and the first reading below 60 for that period.
New Orders Index
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The Employment Index registered 52 in October, a three-month high and has averaged 50.8 over the half-year. The pandemic top was 59.6 in March.
Inflation has put the spotlight on the Prices Paid Index which tracks the purchasing costs of manufacturers. Price pressures have eased since the index reached 92.1 in June. October’s release was 85.7 and the six-month average is 85.4.
Retail Sales, Personal Spending and Consumer Confidence
The US economy is heavily dependent on consumer spending, 70% is the figure normally ascribed to the consumption role in Gross Domestic Product (GDP). Historically, consumer optimism is directly related to spending. Over the past several months that link has weakened.
Americans are unhappy, that is clear from the University of Michigan Consumer Sentiment Index, but families and individuals have continued to spend liberally.
The Michigan Index plunged from 81.2 in July to 70.3 in August and has averaged 70.6 for the months since that late summer tumble. These are some of the lowest optimism readings in over a decade and are comparable to the scores in 2010 and 2011 when the economy was still recovering from the financial crisis.
Michigan Consumer Sentiment
Despite the distress many Americans expressed in the confidence and sentiment surveys, consumption has remained strong.
Personal spending has averaged a 0.70% monthly increase for August through November. In comparison, in 2019, the last full year before the pandemic, Personal Spending averaged 0.36% monthly.
In 2019 unemployment was at a record low for much of the year, wages for many workers were rising at the highest pace in a generation and inflation was below 2%.
Yet despite those excellent economic conditions, and with the Michigan Survey averaging 96 for the year, consumers were only about half as active then as in the past four months.
Retail sales offer another comparison.
From August to November, sales averaged a 0.58% monthly increase. In 2019 the average gain was 0.45%.
Retail Sales and Personal Spending are the numbers that inform the manufacturing and services PMI outlooks and despite the carping media background, they remain strong.
Inflation
The biggest potential problem for consumers is that wages have not equaled inflation.
Average Hourly Earnings (AHE) have averaged a 3.86% annual increase each month since April. Unfortunately, the Consumer Price Index (CPI) for the same period is 5.45%. The Personal Consumption Expenditure Price Index (PCE), the core version of which is the Fed’s chosen measure, rose 4.3%. Under either gauge, consumers are losing purchasing power every month..
Two other factors have made this year’s inflation more damaging to consumers than past bouts.
First, prices have ballooned in a near record time. Retail costs have more than quadrupled from 1.4% in January to 6.2% in November. In the second half of 2020, CPI averaged 1.25% and for almost all of the prior decade CPI was less than 2%. The United States has not seen this rate of inflation in a generation, no one is inured.
Second, the prices of many necessities have risen much faster than the overall inflation rate. One example is gasoline. This necessity for most American families has jumped 62% in a year. Housing costs, new and used automobiles, meat, poultry, eggs and all forms of energy have advanced more than CPI.
Consumer attitudes have not been helped by the Federal Reserve. Bank officials have spent the last year reassuring markets, and by extension consumers, that the price increases would be limited and temporary. Fed Chair Jerome Powell has recently changed his mind, admitting that inflation has been more of a problem than expected.
The admission seems particularly out of touch with the American consumer reality as the bank switched to an inflation-averaging model last September, designed to let inflation run above the 2% target for an extended period.
Business outlook
Despite consumer optimism that in any prior year would have had analysts predicting recession and business executives reaching for the pruning shears, attitudes in the executive suites have stayed positive.
The reason is straightforward. Sales have been strong, new business has been the best in a decade. For many firms labor and supply shortages have inhibited production below the level of orders and permitted large scale price increases for the first time in a generation. Firms can look forward to several quarters of rising profits.
Markets
Business attitudes reflect the consumer. Until the consumer begins to pull-back on spending PMI’s should remain healthy if not strong.
The latest threat to the global recovery from the Omnicron variant is too recent to have any impact on these November figures. These numbers are already retrograde and will have little import for the trading markets.
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Gold Price Forecast: XAU/USD surges above $1,800 on falling US T-bond yields
187332 November 30, 2021 23:40 FXStreet Market News
- Gold advances firmly, as US-10 year T-bond yields drop ten basis points, down to 1.43%.
- Risk-off market sentiment boosted the prospects of the XAU/USD, as the COVID-19 omicron variant threatens to derail the economic growth.
- XAU/USD Technical outlook: A break above $1,807 would expose $1,815, followed by $1,834.
Gold (XAU/USD) edges high during the New York session, jumping from $1,780 daily low earlier in the day towards $1,807 at press time, amid comments of Moderna’s CEO in an interview with the Financial Times, predicted a drop in existing vaccines efficacy, spurring a flight to safe-haven assets, as portrayed by US equity futures indices falling, ahead of the Wall Street’s open.
That boosted the prospects of the yellow metal, which has strengthened on the back of falling US T-bond yields, acting as a headwind for the greenback. The US 10-year Treasury yield is plummeting ten basis points, sitting at 1.43%, while the US Dollar Index, which measures the greenback’s value against a basket of its peers, falls sharply 0.74%, breaking below the 96.00 threshold, sitting at 95.65 at press time.
It seems that market participants are focused on the coronavirus omicron developments and its impact on the global economy. The fall in US bond yields reflects investors’ postures, scaling back bets of Fed hiking rates from three to two increases, depending on the ongoing COVID-19 developments.
Therefore, gold has and will keep benefitting from the abovementioned, unless data of the omicron variant show that despite being contagious, it would not be as dangerous as another COVID-19 variant.
The US macroeconomic docket so far featured the S&P/Case-Shiller Home Price Index (MoM) for September, which rose by 19,1%, more than the 19.3% expected. Meanwhile, the Chicago Purchasing Managers Index for November increased to 61.8, lower than the 67 estimated.
XAU/USD Price Forecast: Technical outlook
Gold in the 1-hour chart is approaching resistance at the R2 daily pivot level at $1,807. The 50 and the 100-hour simple moving averages (SMA’s) were left behind around the $1,796 area, while the 200-hour SMA lies in the confluence of the R3 daily pivot at $1,815, which is also the November 26 high.
On the way up, $1,815 would be the most robust line of defense for USD bulls, which in the case to be broken, would expose the September 3 high at $1,834.
On the flip side, failure to break above the former would expose the $1,800 figure, followed by the confluence of the 50 and the 100-hour SMA’s around the $1,892-94 range.
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SafeMoon price bullish breakout challenged by market circumstances
187330 November 30, 2021 23:09 FXStreet Market News
- SafeMoon bulls break the downtrend firmly, triggering a strong rally.
- As global markets are again on the back foot, the bullish flag in Safemoon to be considered a firm sign.
- Expect Bulls to face some profit-taking at $0.00000400 at the 50% Fibonacci retracement level.
SafeMoon (SAFEMOON) price has been on the back foot for almost the full month of November. As concerns on Covid variants rattle markets, investors are looking for gems to invest in, which sparked a massive buy-side explosion in SafeMoon price this morning under challenging circumstances. As bulls have broken the downtrend, expect a reboot of the uptrend from September, targeting $0.00000700 as the final profit target, holding 116% profit.
SafeMoon bulls squeeze bears out preliminary of their short positions
SafeMoon price has been under siege of the bears throughout November, with a 50% devaluation at one point. It looked like SafeMoon price action would complete the bearish triangle, break $0.00000271 and trade even lower towards $0.00000103. Given the recent turn of events in global markets with sparks of concerns on the recovery story, this could well have been the case. Instead, investors are scouring the markets, looking for exciting assets that are trading at a discount.
With SafeMoon as one of those gems in cryptocurrencies, quoting at a significant discount, the bullish breakout comes as no surprise. And with current market sentiment as a headwind, the bullish sign could have been even more violent in its pop to the upside. Essential to see next is if bulls can keep their act together and close above that red descending trend line to keep the momentum going.
SAFEMOON/USD daily chart
The first target to the upside will be $0.00000400, the 50% Fibonacci retracement level between the low and high from September. If bulls can keep current sentiment going, only the 23.6% Fibonacci at %0.00000559 looks to be a potential problem before hitting $0.00000700 and completing the Fibonacci retracement. Should market turmoil persist, expect investors to pull their funds and see a quick nose dive in SafeMoon price to $0.00000100, the swing low from September.
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US: CB Consumer Confidence drops to 109.5 in November versus expected 111.0
187329 November 30, 2021 23:05 FXStreet Market News
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If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
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USD/TRY clinches new all-time highs near 13.2000
187328 November 30, 2021 23:05 FXStreet Market News
- USD/TRY moves further north of the 13.0000 mark.
- The lira remains depressed as bets on extra rate cuts raise.
- Investors’ attention shifts to the CPI release on Thursday.
The Turkish lira extends the drop and lifts USD/TRY to fresh all-time highs near 13.2000 on Tuesday.
USD/TRY now looks to data, CBRT
USD/TRY advances for the third session in a row on Tuesday and records new all-time peaks near the 13.2000 mark, always on the back of the intense depreciation of the Turkish currency.
Indeed, President Erdogan’s recent defence of the low-rates policy from the Turkish central bank did nothing but put the lira under extra downside pressure, pushing spot to fresh tops.
In the meantime, all the attention is expected to be on the release of the Turkey’s inflation figures on Thursday, with consensus already pointing to a reading above 20% in November.
USD/TRY key levels
So far, the pair is gaining 2.59% at 13.1069 and a drop below 11.5451 (low November 24) would expose 10.8767 (20-day SMA) and then 9.7214 (55-day SMA). On the other hand, the next up barrier lines up at 13.1838 (all-time high Nov.24) followed by 14.0000 (round level).
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US November consumer confidence 109.5 vs 111.0 expected
187327 November 30, 2021 23:02 Forexlive Latest News Market News
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US dollar slides as Treasury yields fall
187324 November 30, 2021 22:56 Forexlive Latest News Market News
US dollar under pressure
US 10-year yields are down 10 basis points today with the entire curve moving down.
It reflects fear about the new covid variant after the comments from Moderna’s CEO saying the vaccine might not be effective.
The market is pricing out Fed rate hikes and it’s particularly troublesome for USD/JPY. That pair is through the November lows and at the worst levels of the day and without much support below.
What’s interesting is that — despite all the fear — NZD and AUD are both about where they were when the omicron fears kicked off.
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US: ISM Chicago PMI falls to 61.8 in November versus 67.0 expected
187323 November 30, 2021 22:49 FXStreet Market News
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
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United States Chicago Purchasing Managers’ Index below forecasts (67) in November: Actual (61.8)
187322 November 30, 2021 22:49 FXStreet Market News
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Omicron: Merck says its Covid-19 anti-viral pill will have similar efficacy against Omicron
187321 November 30, 2021 22:45 FXStreet Market News
US pharmaceutical giant Merck said on Tuesday that it expected its antiviral pill to show similar activity against any new Covid-19 variant, including Omicron, according to Reuters. The company’s remarks come after the Regeneron CEO said live on CNBC earlier in the session that he thought Merck’s pill would no longer work.
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ECB’s de Cos: Recent developments anticipate a significant negative revision to 2021 growth estimates
187320 November 30, 2021 22:26 FXStreet Market News
ECB governing council member and Bank of Spain governor Pablo Hernandez de Cos said on Tuesday that recent developments anticipate a significant downward revision to the 2021 economic growth outlook, plus a more moderate slowdown in 2022. The recent inflation spike, supply bottlenecks and rise in Covid-19 infections in Europe, he added, could lead to a slight downwards revision to Spanish GDP growth forecasts for Q4 and early 2022.
Market Reaction
The euro has not seen a significant reaction to the latest comments from de Cos.
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