Market Update – November 11 – Boom goes the Greenback

USD (USDIndex 94.86) spiked 94.96 (July 2020 high). US Inflation at 30-yr highUSD & Gold rocket, Yields rise and stocks sink. Weekly Claims in-line and at pandemic lows. Musk has sold $5bln of #TSLA stock this week, (3% of the 10%) TSLA closed   +4.34% yesterday. US & China agree a surprise pact at COP26 and Biden has a plan to “reduce high energy costs”. Overnight – AUD jobs & GBP GDP both missed & UK Industrial & manu. data also weak.
Evergrande $148m interest payment was PAID – avoiding immediate default. Next payment due December 28 – $255m. They have total debts of $300bln ($19bln due outside of China).
US Yields (10yr rallied to close up at 1.56%, at a 7-week high, from the a 6-week low at 1.4150 on Tuesday. Treasury markets closed today for Veterans Day.    
Equities down in worse day in a month. USA500 -38.5 (-0.82%) at 4646 – Big movers; TSLA +4.34%, PFE +3.64%, Ford -3.78% GOOGL -2.03%. Disney missed (DIS+ subscriptions & Theme parks) – 4.5% after hours. USA500.F trades lower at 4650. Asian equities weaker (ASX worst – Nikkei actually +ve on weak JPY) .
USOil – off 7-year highs on Biden’s comments – Inventories – a smaller build than expected 1.0 m vs 1.6m & 3.3m last week – USOil fell to 79.50. Trades at $80.00 now.
Gold recovers further testing as high as $1870 yesterday (5-mth high) as Inflation hedge trade builds, back to $1856 now.
FX markets – EURUSD down to 1.1470, USDJPY back over 114.00, & Cable back to 1.3385. AUD & NZD at 5-wk low.

European Open – The December 10-year Bund future is down -31 ticks at 170.38, That will leave European markets to continue to digest yesterday’s hot US inflation number and continue to adjust rate hike expectations, which have come back with a vengeance. The spike in bond market volatility over the past month highlights that central bankers need to adjust their communication policy as the rate cycle turns and that repeating the mantra that inflation pressures will be temporary are no longer enough to soothe nerves. DAX and FTSE 100 futures are currently down -0.2% and up 0.1% respectively.

Today – OPEC MOMR, ECB’s Lane, Schnabel,- US & CAD Veterans Day (Bond markets & Banks closed).

Biggest FX Mover @ (07:30 GMT) NZDUSD (-0.36%)  Collapsed from 0.7100 to 0.7030 so far.  Faster MAs aligned lower, MACD signal line & histogram falling & under 0 line, RSI 25 & still falling. H1 ATR 0.0011, Daily ATR 0.0062.

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Stuart Cowell

Head Market Analyst

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