Market Update – November 7 – USD subdued & Commodities hold onto gains

The mixed NFP data on Friday, the rumours of China removing Zero Covid restrictions and comments from FED member Evans all combined to see a bounce in stock markets, a cooler USD and a gargantuan leap in Commodity prices. NFP head line beat at 261K vs 200k and last month was revised higher to 351k, Earnings slipped to 4.7% from 5.0% but Unemployment rose to 3.7% from 3.5%, suggesting the interest rate hike are  beginning to have an impact. The USD Index slumped to 110.70, from 112.75 highs. Stocks rallied +1.25% on Friday, but declined -1.39% to -5.65% last week. Yields  moved higher, (10-yr 4.163%). The major beneficiaries was the Commodity Complex which leaped between 3.36%-8.00%. Evans suggested that the FED may start “thinking” about pausing, even if that did not happen until Q423. Asian stocks are firmer today despite Chinese Covid infections hitting a 6-mth high, Beijing reaffirming strict pandemic rules and a big miss for Chinese trade.  

EUR – rallied from close to hit 8-day lows on Friday at 0.9730 over 200 pips to 0.9960. Villeroy: It could take 2-3 years for inflation to return to target & rate hikes need to continue.
JPY – has retaken 147.00 and trades at 147.40  from 146.60 NFP lows. 
GBP – Sterling tested 1.1150 again following the immediate NFP announcement but closed at 1.1370 and trades back to 1.1300 now.
Stocks – Wall Street were higher with big moves for Tech stocks again (MSFT +3.33%, GOOG +3.85%, Alibaba +7.05%, +9.74%). US500 closed +50.02 (+1.36%) at 3770, (a loss of -3.34% for the week)  FUTS trades at 3763 now. Berkshire Hathaway posted a Q3 loss of $2.69b, but operating profits beat estimates by 20% and stock investments increased by $3.7b. 

USOil – charged from from $87.75 lows on Friday to test the $93.00 zone, rallying over 5%, following all the “China opening” gossip. back to $91.00 now. 
Gold – gained over 3.4% on Friday closing at $1680 and breaching key levels. back to $1670 now.  
BTCrallied with the weaker USD and risk on mood on Friday to top at $21.2k, back to $20.6k now, but holding above the key $20K level. 

Today – EZ Sentix, Speeches from ECB’s Lagarde, Panetta, BoE’s Pill, Fed’s Barkin, Mester & Collins. COP27 sees world leaders in Egypt this week and US clocks moved back 1 hour  so the difference between London (GMT) & New York (ET)  back to 5 hours.

Biggest FX Mover @ (06:30 GMT) NZDUSD (-0.72%) reversing some of Friday’s rally to  0.5935, from 0.5740 on Thursday, and trades at 0.5875 now.  MAs unaligned & flat, MACD histogram & signal line positive but falling, RSI 50.00 & neutral, H1 ATR 0.00198, Daily ATR 0.01077. 

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Stuart Cowell

Head Market Analyst

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