Market Update – November 4 – A Cooler USD To Start NFP Day

The BOE rose rates by the as expected 75 bp (highest since 1989; 33 years) from 2.25% to 3%, and suggested the UK was already in recession and that it would last until mid-2024, (the longest on record). 2 of the 9 members of the MPC only wanted 25 or 50bp. The peak for Inflation was reduced from 13.3% to 11% but still over 5 x times the 2% target rate. However, Governor Bailey said that they expected interest rates to peak at 4.75%, below the current consensus level of 5.25%. Unemployment is likely to rise to 6.4% from current decade lows at 3.5%. Lending and Mortgage rates will also likely rise to between 4.5-5.5% from 2.5-3.0% a year ago. Sterling tanked as UK stock markets rallied.

USDIndex – Dipped from a test of 113.00 to trade at 112.40 ahead of the NFPjobs news. ISM Services PMI (54.4 vs 55.5) data missed but Weekly Claims were better (217k vs 220K) than expected. Stocks fell (NASDAQ -1.73% once again underperformed). 10-yr yields rallied closing at 4.124%. Asian markets have rallied (Japan is closed) on more speculation that China is about to ease it’s zero-covid policy, Chancellor Schultz is also in Beijing today.  (Hang Seng +6.54%, Shanghai +3.75%).
Overnight – AUD Retail Sales in line (0.6%).
EUR – hit 8-day lows at 0.9730 yesterday, back to 0.9780 now.   
JPY – pushed to 148.50 yesterday back to 148.00 now. Suzuki once again said BOJ intervention was “stealth” and that there is no intention of guiding FX to certain levels. 
GBP – Sterling tanked from a pivot at 1.1400 lifted to 1.1150 following the Bank of England announcements and Bailey’s suggestion that the terminal rate will be lower than expected.
Stocks – Wall Street were lower with big moves for Tech stocks again (APPL -4.24%, GOOG -4.11%, COIN -8.09%) in particular. US500 closed -39.80 (-1.73%) at 3719, FUTS trades at 3735 now. 

USOil – rallied from $87.75 lows again yesterday and earlier today to breach $90.00, following all the “China opening” gossip. 
Gold – again tested the key support (Sept, Oct. & now Nov. lows) at $1620 yesterday, before following Oil higher to test $1650 now. 
BTCrecovered back to the $20.5k, pivot from the test of 20k yesterday. 

Today – EZ Composite/Services PMI (Final), US & Canadian Labour Market Reports, Speeches from Fed’s Collins, ECB’s Lagarde & de Guindos.

 

Biggest FX Mover @ (06:30 GMT) AUDUSD (+0.72%) reversing some of this weeks declines to 0.6270 now up to 0.6335 and testing 0.6350. MAs aligned higher, MACD histogram & signal line negative but rising & testing 0 line,  RSI 56.00, H1 ATR 0.00156, Daily ATR 0.01077. 

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Stuart Cowell

Head Market Analyst

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