Despite the continuous deterioration in the majority of the major stock markets, the US Dollar Index has been trading sideways over the past week while the commodities currencies have remained strong. After the US non-farm payrolls report for October clouded market-based Fed rate rise bets, US equity indexes rose on Friday.
US Dollar DXY Index
After rate speculators reduced the yield on the 2-year Treasury by seven basis points, the US Dollar DXY Index fell by about 2%. Gold surged 3% higher, reaching its highest level since early October.
Although the long-term trend is undeniably very positive, they are bearish indicators, and the bullish trend does appear to have slowed down and may be about to make a significant reversal.
The consumer price index (CPI) for October, which is coming Thursday, is now the market’s primary concern. Analysts predict that core inflation, which includes volatile food and energy costs, would cross the wires at 6.5% from a year ago. That would be lower than the 6.6% y/y number from September.
As traders appear prepared to purchase on news that would cause the Fed to ease its rate-hiking pace, a failure on that number would probably promote greater risk-taking.
The Reserve Bank of Australia keeps a slower rate of tightening, while the Bank of Japan maintains its ultra-loose policy position. While AUD/NZD dropped to its lowest level since April, NZD/JPY increased by 1.5%. The APAC economic docket will begin on Monday with data on Australian consumer confidence.
The AUD/USD currency pair printed a bullish inside bar last week that concluded very close to the weekly range’s high. After reaching multi-year lows in October, this is the third week in a row that the price has increased.
The US Dollar’s long-term, extremely bullish trend is now in doubt, and all the commodity currencies, including the Australian Dollar, are doing well. It is important to remember that the New Zealand Dollar is considerably stronger, thus it could be wiser to trade the NZD/USD at this time rather than this currency combination.
There may be a continued upward movement in keeping with the positive short-term momentum here in favor of the Australian dollar since the US Dollar is likely to remain relatively stable until the release of US CPI (inflation) data later this week.
To pair the AUD with a major currency that is less strong, such as the British Pound, traders could prefer. The potential resistance of 0.6520 should be avoided by anyone trading this currency pair long.
The USD/CAD currency pair produced a sizable outside bearish candlestick last week, which finished quite close to the range low. As new economic data shows major economies to be surprisingly healthy despite a string of rate hikes, there is some dip in the US dollar.
The evidence is particularly compelling in Canada, where both the employment rate and GDP growth are outperforming expectations.
The negative case is strengthened by the fact that there is no clear strong crucial support until the $1.3225 area, which might stop additional movement downward in the near term, despite the fact that the bearish momentum is not particularly strong or long-term.
The New Zealand Dollar has a regional advantage because of the Reserve Bank of New Zealand’s (RBNZ) continued aggressiveness. The NZD/USD currency pair printed a sizable bullish candlestick last week that concluded quite close to the high of the weekly range. After reaching multi-year lows in October, this is the third week in a row that the price has increased.
The US Dollar’s long-term, extremely bullish trend is now in doubt, and all the commodity currencies, including the New Zealand Dollar, are doing well.
A continued upward movement may be seen in keeping with the positive short-term momentum here in favor of the Kiwi since the US Dollar is likely to remain stable until the release of US CPI (inflation) data later in the week. Traders may, however, prefer to pair the NZD as a cross with a major currency that is weaker, such as the British Pound.
The next large round figure of 0.6000 may serve as resistance for those who are long this currency pair.
Upcoming Data and Earnings
Although there are only a few important data and major earnings releases scheduled this week, market volatility is likely to be on par with last week. They include the extremely crucial US CPI (inflation) data, US Congressional Elections (mid-terms), UK GDP data and US Preliminary UoM Consumer Sentiment.
Activision Blizzard, Inc.
On Monday 7th, following the close of the market, Activision Blizzard ATVI is expected to release its quarterly financial results. Over the past few months, there have been both positive and negative profit estimate revisions. These have caused conflicting emotions from analysts regarding the upcoming quarter. The $0.51 consensus EPS estimate points to an earnings loss of almost 29% year over year.
Same day Monday, before the market opens, BioNTech SE is also expected to disclose earnings. The financial quarter covered by the report will end in September 2022. According to analyst, the consensus EPS for the quarter is $3.66.
Although BioNTech has increased earnings per share (EPS) at an outstanding rate over the past three years after starting from a relatively low base, the three-year percentage growth rate isn’t especially predictive of anticipated future performance.
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