Here is what you need to know on Friday, November 11:
The upbeat market mood remains intact on the last trading day of the week as investors cheer the soft inflation data from the US and news of China easing the Covid-related restrictions. The US Dollar Index continues to edge lower below 108.00 after having lost more than 2% on Thursday and global stock indices push higher. Bond markets in the US will be closed in observance of the Veterans Day holiday but Wall Street will operate at the usual hours. The US economic docket will feature the University of Michigan’s Consumer Sentiment Survey (preliminary) for November and investors will keep a close eye on central bank speakers ahead of the weekend.
The US Bureau of Labor Statistics announced on Thursday that inflation in the US, as measured by the Consumer Price Index (CPI), declined to 7.7% on a yearly basis in October from 8.2% in September. The Core CPI, which excludes volatile food and energy prices, fell to 6.3% from 6.6% in the same period. With both of these readings coming in below market expectations, the CME Group FedWatch Tool’s probability of a 50 basis points Fed rate hike in December jumped above 80% from 50% earlier in the week. In turn, major equity indexes in the US registered impressive gains, the US Dollar suffered heavy losses and the benchmark 10-year US Treasury bond yield declined toward 3.8%, losing nearly 7% on the day.
US Inflation Analysis: Hiking is hard in the fog, Dollar set to decline (until the next CPI).
Earlier in the day, China’s National Health Commission announced that they have decided to reduce the required quarantine times for travellers and people who had close contact with identified Covid cases. The Shanghai Composite Index was last seen rising nearly 2% on the day and Hong Kong’s Hang Seng Index was up 6.8%. Reflecting the risk-positive market environment, US stock index futures are rising between 0.5% and 0.7%.
The UK’s Office for National Statistics (ONS) reported on Friday that the Gross Domestic Product (GDP) grew at an annualized rate of 2.4% in the third quarter, compared to the market expectation of 2.1%. Other data from the UK showed that Industrial Production expanded by 0.2% on a monthly basis in September. GBPUSD largely ignored the latest data and was last seen moving sideways slightly above 1.1700.
EURUSD registered impressive gains on Thursday and continued to edge higher during the Asian trading hours on Friday. The pair was last seen trading at its highest level since mid-August slightly above 1.0200.
USDJPY lost more than 400 pips on Thursday and touched its weakest level in seven weeks near 140.00 before staging a rebound on Friday. At the time of press, USDJPY was up 0.5% on the day at 141.65.
Fueled by plunging US Treasury bond yields, gold price rose nearly 3% on Thursday and registered one of its largest one-day gains of the year. XAUSD is currently trading above $1,750 and it’s up nearly 5% since the beginning of the week.
Bitcoin gained 10% on Thursday after having lost more than 20% in the first half of the week. BTCUSD, however, seems to be having a difficult time gathering bullish momentum early Friday as markets keep a close eye on developments surrounding the FTX drama. As of writing, Bitcoin was down nearly 2% on the day at $17,250. Ethereum trades in negative territory at around $1,250 early Friday following Thursday’s 17% gain.
California financial regulator announces FTX investigation.
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