North American News
S&P 500 Futures print mild gains, Treasury yields struggle amid Fed, Covid chatters on Thanksgiving Day
- Market sentiment remains cautiously optimistic despite Thanksgiving holiday, light calendar.
- Fed Minutes propelled ‘pivot’ discussions, China brush aside virus woes to ease zero-covid policy.
- Wall Street closed positive, US Treasury bond yields refreshed weekly low.
The risk profile improves during early Thursday as a holiday in the US joins a light calendar. Also keeping the buyers hopeful are the expectations from the Chinese authorities, as well as chatters surrounding the Fed’s pivot and the easy monetary policy.
While portraying the mood, S&P 500 Futures print 0.25% intraday gains around the weekly high near 4,045 whereas the US 10-year Treasury yields remain depressed at around 3.69%.
It’s worth noting that the latest Federal Open Market Committee (FOMC) Meeting Minutes signaled that the policymakers discussed the need of slowing down the interest rate hikes. Additionally weighing on the Greenback were chatters over the “sufficiently restrictive” level of the Federal Reserve’s (Fed) interest rates, as indicated in the Fed Minutes.
US: Job growth to moderate further in November and the subsequent months – Wells Fargo
Ahead of the next US official employment report, due next week, analysts at Wells Fargo, look for job growth to moderate further in November and the subsequent month. They point out that wage data will also be crucial for the Federal Reserve.
Key Quotes:
“Nonfarm payrolls rose 261K in October, topping expectations again. Yet beneath the surface, there were some signs in the data that cracks are emerging in the labor market. Technical factors related to the birth-death model appear to be flattering the headline nonfarm payroll numbers. Employment, as measured by the household survey, fell by 328K in October, and the labor force participation rate again tumbled back to where it was when the year began.”
“We look for job growth to moderate further in November and the subsequent months. Layoffs, according to initial jobless claims and the JOLTS report, remain low, but discharges are only half the net hiring equation. Demand for additional workers appears to be slipping. Job openings, hiring plans, PMI employment sub-components and consumers’ views of the labor market have all deteriorated since the spring. Beyond the headline, the average hourly earnings data also will be crucial for Federal Reserve policymakers. It will take more than normalizing supply chains to return inflation to 2%, and slower wage growth is another important piece of the puzzle.”
Commodities
Silver retraces after hitting a new week high around $21.60s
- US Dollar weakened across the board on dovish-tilted Federal Reserve minutes.
- Mixed economic data from the United States keeps the US Dollar pressured.
- XAG/USD Price Analysis: Remains upward after conquering the 200-DMA, eyeing $22.00.
Silver price retraces after hitting a weekly high of $21.67, after climbing sharply on Wednesday, following the release of the Federal Reserve’s (FED) November meeting minutes, which weakened the US Dollar (USD). Also, factors like China’s Covid-19 crisis failed to trigger a flight to safety into the white metal. Hence, the XAG/USD trades at $21.47 a troy ounce.
On Thursday, Wall Street is closed in observance of the Thanksgiving holiday. The last meeting minutes of the Federal Reserve showed that “A substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate,” giving the green light to investors seeking riskier assets. However, caution is warranted, as policymakers expressed “uncertainty” about how high rates need to go after emphasizing that inflation in the United States (US) remains “too high.”
Regarding Wednesday’s US economic calendar, S&P Global PMIs witnessed most indices moving into contractionary territory, another headwind for the US Dollar, while the Initial Jobless Claims for the last week jumped above forecasts, signaling that the labor market is easing.
On the positive side, US Durable Good Orders for October surprisingly rose, while the University of Michigan (UoM) Consumer Sentiment for November portrayed Americans are optimistic about the economy. The University of Michigan poll updated inflation expectations, with one-year ticking down to 5%, while for a 5-10 year horizon, were unchanged at 3%.
Back to price action, the US Dollar Index (DXY), a gauge of the buck’s value vs. its peers, drops by 0.21% at 105.875, extending its losses to three days. US Treasury yields, mainly the 10-year benchmark, followed suit, falling three bps at 3.663%.
Silver Price Forecast (XAG/USD): Technical outlook
Albeit Silver price retreated from weekly highs, it remains above the trendsetter 200-day Exponential Moving Average (EMA) at $21.37, sought as support by the white metal buyers. The XAG/USD bias remains upwards, and it could resume its uptrend if buyers reclaim $22.00. if that scenario plays out, the XAG/USD following resistance would be November 15 high at $22.24, followed by the June 6 high at $22.51. Otherwise, the XAG/USD first support would be the 200-day EMA at $21.37, followed by the psychological $21.00 mark.
Gold reaches new week high on soft US Dollar, post-Fed minutes
- US Dollar weakened due to the dovish tone of the Federal Reserve’s last meeting minutes.
- US S&P Global PMIs dropped to contractionary territory, a headwind for the USD.
- According to the University of Michigan Consumer Sentiment poll, inflation expectations in the United States remained unchanged.
- Gold Price Analysis: Upward biased, needing to clear $1800 to extend the uptrend.
Gold Price advanced steadily on Thursday amidst thin liquidity conditions courtesy due to the observance of the Thanksgiving holiday in the United States (US), with Wall Street and the bond market closed. Factors like Federal Reserve (Fed) policymakers agreeing to moderate interest-rate increases and a risk-on mood keep the US Dollar (USD) on the defensive. Therefore, XAU/USD is trading at $1756 a troy ounce at the time of writing.
Federal Reserve minutes a headwind for the US Dollar
On Wednesday, the Federal Reserve revealed its latest minutes, which showed that officials are ready to begin hiking rates on smaller sizes after lifting the Federal Funds rate (FFR) by 75 bps four times in 2022. Even though the minutes are slightly dovish, investors should know that Federal Reserve officials are uncertain how high rates will end, with most policymakers expressing that 5% could be the peak for some participants.
US S&P Global PMI tumbled to recessionary territory, triggering USD weakness
On Wednesday, S&P Global PMIs revealed for the United States showed that the economy is slowing faster than expected, with Manufacturing, Services, and Composite Indices lying in contractionary territory. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said that “business conditions across the US worsened in November” and added that “according to the preliminary PMI survey findings, with output and demand falling at increased rates, consistent with the economy contracting at an annualized rate of 1%.”
US consumer sentiment remained positive
At the same time, the University of Michigan (UOM) Consumer Sentiment for November, on its final reading, came at 56.9, above expectations but below the 59.9 preliminary reading. The same report updated American expectations for inflation, with one-year estimated to rise hit 4.9%, while the 5-10 year estimates remained unchanged at 3%.
Mixed US economic data pressured the US Dollar
Earlier, the US economic docket featured Initial Jobless Claims for the last week, which jumped above expectations, flashing that the labor market is easing. At the same time, US Durable Good Orders for October rose sharply by 1% MoM, against 0.4% estimates, as consumers’ resilience kept manufacturing activity from slowing down.
Aside from this, US Treasury yields extended their losses, with the 10-year T-bond yield dropping six bps, down to 3.70%, a tailwind for the Gold price, undermining the USD. Meanwhile, the US Dollar Index (DXY), a gauge of the buck’s value against a basket of rivals, stumbles 0.36%, at 105.705.
Gold Price Analysis (XAU/USD): Technical outlook
From a daily chart perspective, XAU/USD is neutral-upward biased. However, Gold stays below the “trendsetter” 200-day Exponential Moving Average (EMA), used as confirmation for bullish/bearish bias in the long term. So if XAU buyers want to regain control, they need to clear $1800, so they can pose a threat to send XAU/USD rallying towards the June 17 swing high at $1857 ahead of the psychological $1900 figure. Otherwise, the XAU/USD will be exposed to selling pressure, opening the door for a fall to the 100-day EMA at $1711.51, ahead of the $1700 mark.
EU News
Major European indices close higher led by the German Dax
- UK FTSE 100 lags
European stock traders are leaving for the day with decent gains in most of the major indices. The UK FTSE 100 is the laggard with a small gain.
The final numbers are showing:
- German Dax, +0.70%
- Frances CAC, +0.42%
- UK’s FTSE 100 +0.02%
- Spain’s Ibex was a 0.68%
- Italy’s FTSE MIB .0 .63%
Other News
German finance minister Lindner: We need to fight inflation
- German finance minister Lindner speaking
- we can’t afford to provide extraordinary help indefinitely,
- so we need to fight the source of inflation
- Progress on a Capital Market union could be part of the European answer to the US inflation reduction act
- there is no choice between stability and growth, you need both for sustainable public finances
Meanwhile Frances finance minister LeMaire is saying:
- We have total determination to strengthen German – French relationship
- Both countries have no other choice but to move on the key challenges
Cryptocurrency News
Will there be a Christmas miracle for Ethereum price as FTX unravels?
- Ethereum price rallied over 10% in just three trading days.
- ETH sees bulls breaking down a bearish element.
- Expect a continuation of the fresh uptick that could spiral into an uptrend.
Ethereum (ETH) price jumped for a third consecutive day this morning as the hearings about FTX made several headlines overnight. As more pieces of the puzzle fit into one another, it becomes clearer that FTX might be involved in fraud and that quite a lot of assets have “vanished”. Further questions and inquiries will need to be made, while Binance is once again saying it is more than happy to buy the pieces and elements of FTX worth salvaging.
As cryptocurrencies settle down after these events, global markets are gearing up for Christmas. Not only are equities and indices shooting higher, the almighty US Dollar, which has been the omen for most of 2022, is finally backing off a bit. With several central bankers signaling the terminal rate for interest rates is almost in reach, markets are already popping the champagne with the idea that the worst might be over. Any recession, the thinking goes, will be short-lived with not that much pain, which should provide a massive tailwind for cryptocurrencies now able to at least pair quite big chunks of losses from 2022.
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