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GBP/USD hovers around 1.1940s following mixed US data, as traders’ eye Fed Powell speech
274907 November 30, 2022 23:51 FXStreet Market News
- Investors await the speech of Federal Reserve Chairman Jerome Powell.
- Mixed economic data in the United States calendar provided no support for the US Dollar.
- BoE Pill: Expects inflation to fall in 2nd half of 2023 and rates to peak below market estimates.
- GBP/USD Price Analysis: To pull back towards 1.1800 before re-testing the 200 DMA.
The Pound Sterling (GBP) edges lower amidst a mixed sentiment as traders brace for the Federal Reserve (Fed) Chairman Jerome Powell’s speech, eyeing to get some signs of his current posture about interest rates. Also, a busy economic calendar in the United States (US) failed to support the US Dollar (USD). At the time of writing, the GBP/USD is trading at 1.1942 after hitting a daily high of 1.2029.
Federal Reserve Chair Jerome Powell eyed around 18:30 GMT
Sentiment remains fragile, as shown by US equities wavering. Latest Federal Reserve officials commented that the US central bank is ready to moderate the pace of rate hikes but also stated that rates would end higher than September projections. Even the St. Louis Fed President James Bullard commented that the Fed is “ways to go to a restrictive policy,” added that the Fed needs to increase rates until 2023 and foresees the Federal Funds rate (FFR) peaking at around 5% to 7%. Nonetheless, the markets are underpricing Fed policymakers. So any hawkish tilt remarks by Jerome Powell could rock the boat and bolster the US Dollar.
Dismal ADP Employment report kept the US Dollar defensive
Data-wise, the ADP Employment Change report for November disappointed investors as the economy added just 127K jobs below expectations and trailed the 239K employees hired by private companies in October. Nela Richardson, the Chief Economist at ADP, said the November report suggests that the Federal Reserve’s aggressive policy “is having an impact on job creation and pay gains.”
Economy in the United States in Q3 grew above estimates
Elsewhere, the US Gross Domestic Product (GDP) for the third quarter, on its second estimate, increased by 2.9% above forecasts of 2.7%, smashing Q3’s advanced reading of 2.6%. Even though the report sent recession speculations in the United States to the trash can, it failed to bolster the US Dollar, with the GBP/USD remaining trading in the green, well below the daily high of 1.2024.
BoE’s Chief Economist Huw Pill foresees rates to peak lower than the market’s projections
The UK economic docket featured the Bank of England (BoE) Chief Economist Huw Pill. He said inflation is expected to fall quickly in the second half of 2023 while supply chain issues are being solved. Regarding the Bank’s Rate peak, he said that the BoE is expected to hike rates, lower than money market futures expectations of 5.25%. Pill echoed the BoE’s Governor Andrew Bailey’s remark on foreseeing a lower peak for the bank rates at their last monetary policy meeting. Therefore, further GBP weakness is expected.
GBP/USD Price Analysis: Technical outlook
From a daily chart perspective, the GBP/USD remains neutral-to-upward biased once the major could not crack the 200-day Exponential Moving Average (EMA) around 1.2157. Of note, after printing a daily high of 1.2029, shy of the week’s high of 1.2117, the Pound Sterling has fallen sharply, registering fresh weekly lows around 1.1941. The Relative Strength Index (RSI) aims downwards, albeit in bullish territory, suggesting buying pressure is waning. So in the near term, the GBP/USD might pull back before resuming upwards. Therefore, the GBP/USD first support would be the 1.1900 figure. A breach of the latter will expose the November 23 daily low at 1.1872, ahead of the November 21 swing low of 1.1762.
USD/JPY breaks above 139.50 boosted by higher US yields, ahead of Powell
274903 November 30, 2022 23:51 FXStreet Market News
- USD/JPY rises to highest level in a week, holds above 139.50.
- US yields rise following US economic data that includes Q3 GDP and ADP employment.
- Fed chair Powell to speak later on Wednesday at the Brookings Institution.
The USD/JPY is rising on Wednesday before a speech from Federal Reserve (Fed) Chairman Jerome Powell. Following the release of various economic reports from the United States, US yields moved to the upside, supporting the pair that is hovering near daily highs at 139.70, the strongest level in a week.
Overall US data came in mixed, having a not very clear impact on the Dollar. Measured by the DXY, it is falling by 0.05%. The Japanese yen is among the worst performers of the day.
US economic data: mixed numbers
The report published by Automatic Data Processing (ADP) on Wednesday showed that private sector employment in the US rose by 127K in November, below the 200K of market consensus. It was the lowest reading since January 2021.
The US Bureau of Economic Analysis revealed that the US economy grew at an annual rate of 2.9% in the third quarter, above the 2.6% previous estimation. Price indicators were revised higher with the GDP deflator from 4.2% to 4.3%.
Other US economic reports showed the Chicago PMI tumbled from 45.2 to 37.2 in November against expectations of a modest increase. Pending Home Sales fell by 4.6%, a little less than expected.
Overall the numbers were mixed, supporting the idea the labor market continues to slowdown. On Thursday, the key report will be the core Personal Consumption Expenditure Price Index. Friday will be the turn of the official employment report that includes Non-farm payroll and the unemployment rate.
Fed’s Powell ahead
Fed Chair Jerome Powell will deliver a speech at 18:30 GMT at the Brooking Institution on “Fiscal and Monetary Policy on the outlook for the economy, inflation, and the changing labor market”. After his remarks, Powell will be interviewed by David Wessel, director of the Hutchins Center and will take questions.
Market participants will look in Powell’s comments for clues into whether the Fed will slow down its rate hikes. After the latest inflation readings, expectations of a 50 basis points rate hike at the December meeting rose. Also the economic outlook presented from Fed’s chair will be relevant for price action.
Higher yields weighed on JPY
The Japanese yen is among the worst performs on Wednesday hit by higher bond yields. The US 10-year yield is at 3.79%, the highest level since November 23. The German 10-year yield is up at 1.96%. At the same time the Greenback is gaining momentum from the moves in the bond market.
The JPY is not receiving help from the deterioration in market sentiment. The Dow Jones is falling by 0.55% and the S&P drops by 0.22%. The Nasdaq gains 0.31%.
USD/JPY price outlook
The USD/JPY is breaking a key resistance level seen around 139.50. If the US Dollar manages to consolidate above it would point to further gains, with a potential target at the resistance zone near 141.00.
A decline back under 139.50 would suggest a continuation of the current consolidation. On the downside, the critical support is located at 138.50. A daily close below would deteriorate the outlook for the USD, suggesting a test of the November low at 137.52.
USD/JPY daily chart
USD to weaken again when Fed cuts its key interest rate again next year – Commerzbank
274901 November 30, 2022 23:49 FXStreet Market News
The US Dollar was the clear winner in the G10 universe in 2022. But economists at Commerzbank expect the US currency to weaken in 2023 as the Federal Reserve cuts interest rates.
Fed to lower its key rate again in the second half of 2023
“Our Fed watchers expect the US central bank to lower its key rate again in the second half of 2023 in view of easing inflation and in view of an (albeit mild) recession, with further rate cuts to follow early in 2024.”
“When the Fed cuts its key interest rate again next year, while hitherto less aggressive central banks like the ECB have been able to keep still, the Dollar is likely to weaken again.”
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United States EIA Crude Oil Stocks Change below forecasts (-2.758M) in November 25: Actual (-12.58M)
274900 November 30, 2022 23:49 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.
Rising yields and month-end help to underpin US dollar bid
274899 November 30, 2022 23:40 Forexlive Latest News Market News
USDJPY daily
The US dollar is broadly higher and adding to momentum at the moment.
Economic data today was a mixed bag and I don’t think that was the driver. Yields are moving up for the second day today and that’s certainly helping USD. Ten-year benchmark Treasuries are up 4.5 bps to 3.79%, which is a session high.
This move to me looks like it’s driven by month-end flows and perhaps by longer-term USD bids. This is shaping up to be the worst month for the dollar in a decade but it comes after many months of gains. That’s the typical ‘up the escalator, down the elevator’ price action in a bull market.
If this is driven by month end, it will flatten out after the London fix at the top of the hour and and London close in 90 mins.
Full Article
1422 | +0.316% | EURUSD GBPUSD
274401 November 30, 2022 23:35 SwingFish Trading Room Journal EURUSD • GBPUSD
No Sleep yet … hope this will be a short day.
well,that didn’t work so well, took a “nap” and woke up at 6pm …
(more…)
EIA weekly US oil inventories -12,580K vs -2758K expected
274895 November 30, 2022 23:33 Forexlive Latest News Market News
- Prior was -3691K
- Gasoline +2769K vs +1625K expected
- Distillates +3547K vs 1457K expected
- SPR draw of 1.4m barrels
There was a huge draw but it was foreshadowed somewhat by the 7m draw in the API data from late yesterday. Oil made some gains on the headlines but it’s not back to the session highs as it fights a rising USD on the tape.
Terra Classic price sees 2022’s negative backdrop easing in last weeks of December
274892 November 30, 2022 23:17 FXStreet Market News
- Terra Classic price flirts with a break above a pivotal level.
- LUNC sees a few key tail risks being resolved before year-end.
- The key speech from Fed Chair Powell later this evening could be proven pivotal for the future of 2023.
Terra Classic (LUNC) price action is still licking its wounds from the massive meltdown since September. A floor can be distilled from the current view on a daily chart and falls in line with the current events that are taking place on the world stage. China is slowly but surely reopening and is letting go of Covid lockdowns, ramping up the vaccination rate for the elderly. In the background of the World Cup in Qatar, the host country is near signing a deal with Germany to provide its gas supply for the next 15 years. This eases the bearish effect of a few tail risks and should reprice LUNC at roughly $0.00022000.
LUNC sees headwinds abating going into 2023
Terra Classic is set to start gearing up for 2023, although several warnings and precautions could be a pivotal shift away from 2022. Inflation is coming off the highs in both the US and Europe, and central banks keep hiking to ensure inflation remains tilted to the downside. Markets have now grown accustomed to that. Last but not least, the energy puzzle in Europe seems to be getting solved as Germany is close to signing a 15-year gas supply deal with Qatar in the backdrop of the World Cup.
LUNC sees the weather in financial markets clearing up, though not yet to a sunny outlook. A few clouds here and there will remain. This could mean that LUNC has room to move away from the low here, $0.00016000, and a Relative Strength Index (RSI) that has been subdued for far too long. Once the pivotal level at $0.000016501 has been broken to the upside, more room is available to rally up towards $0.00020000 and the next $0.00022000, printing a 41% revaluation in all.
LUNC/USD daily chart
That pivotal level at $0.00016501 could be proven quite the hurdle to take, as although LUNC has been printing green candles it is gapping lower and then performing the gap fill toward the previous day. This could point to bears outpacing the bulls each time at the end of the trading day, building up pressure for a sharp decline in the very short term. Support at $0.00014000 will be pivotal to refrain price action from dropping toward $0.00010000.
Full Article
US: JOLTS Job Openings decline to 10.3 million in October
274891 November 30, 2022 23:17 FXStreet Market News
- US JOLTS Job Openings declined modestly in October.
- US Dollar Index stays in negative territory near 106.50.
The number of job openings declined to 10.3 million on the last business day of October from 10.7 million in September, the US Bureau of Labor Statistics (BLS) reported in its Job Openings and Labor Turnover Summary (JOLTS) on Wednesday. This print came in largely in line with the market expectation.
“Over the month the number of hires and total separations changed little at 6.0 million and 5.7 million, respectively,” the publication further read. “Within separations, quits (4.0 million) and layoffs and discharges (1.4 million) changed little.”
Market reaction
The US Dollar Index edged slightly higher with the initial reaction to this report and was last seen losing 0.3% on the day at 106.52.
Full Article
Russia oil price cap will be between $60-63/barrel – report
274890 November 30, 2022 23:12 Forexlive Latest News Market News
Oil has been on a nice run today, rising $2.44 to $80.62 despite yesterday’s report that OPEC+ won’t cut. Eyes are on Russia and the oil price cap after Poland and the Baltic states dug in yesterday on the price cap.
Meanwhile, Fox’s Edward Lawrence cites a source familiar and says the cap will be between $60-63 with an announcement coming next week and a few things still to be finalized in the G7.
Russia is already selling oil cheaper than that but where it could get interesting is if oil spikes about $100 and Russian Urals oil comes above the cap. That would take out incremental supply as prices are rising.
There’s also the question of Russia cutting off exports, which it has said it will do to any country that participates in the scheme.
Technically, oil needs to get above $82 to keep the momentum going. More positive news on China reopening would do it.
Full Article
S&P 500 Index: Break below 3907 to confirm a “double top” – Credit Suisse
274889 November 30, 2022 23:09 FXStreet Market News
The S&P 500 rally is showing tentative signs of stalling. Analysts at Credit Suisse remain of the view strength from October has been a bear market rally and look for a break below 3907/06 to establish a “double top.”
Overshoot to 4127/55 not ruled out
“Whilst we remain on alert for signs of a top, we would still not rule out an overshoot to the downtrend from the beginning of the year and 50% retracement of the 2022 fall at 4127/55, but we continue to look for a top in this 4054/4155 zone. A close above 4155 though may be the first real sign that we may have seen the worst of the sell-off, with resistance seen next at 4312/25.”
“Support stays seen at 3907 initially, below which can now set a small top to ease the immediate upside bias, with support seen next at the 63-day average at 3630. Below 3698 remains needed to suggest the recovery is over and broader downtrend is resuming.”
Full Article
United States Chicago Purchasing Managers’ Index came in at 37.2 below forecasts (47) in November
274888 November 30, 2022 23:09 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.