Fundamental Analysis

Month-to-month Market Outlook – November

CLICK HERE FOR THE .PDF VERSION OF THE OUTLOOK

CURRENCIES 

Greenback: The Greenback has been gaining power during the last month, because the US economic system nonetheless boasts of excessive development and a possible for larger rates of interest. A stabilization of the USD is anticipated within the following month, though optimistic surprises within the home entrance may materialize, with NFP outcomes developing early within the month (November 2). The November 6 midterm elections are certain to trigger some volatility within the markets, whereas Fed is anticipated to verify its intention of a charge hike in December on November eight. Different vital releases embody the PCE Index on November 29 and the preliminary Q3 actual GDP estimates on November 28.

Euro: Developments within the Euro have been largely damaging, because the widespread foreign money depreciated with respect to most of its counterparts on account of upper uncertainty and threat aversion because of the Brexit and Italian finances points. In November, the European Fee is anticipated to put up its development forecasts on the eighth, with preliminary Q3 GDP outcomes anticipated to return out on the 14th. The official October CPI will probably be launched on the 16th, whereas the November preliminary CPI will come out on November 30.

Sterling: One of many few currencies which misplaced to the Euro in October, Sterling nonetheless falls prey to Brexit uncertainty and home politics. Selecting up from the October stalemate, EU leaders will maintain one other Brexit summit on November 17-18, with hopes of finalizing the deal. Different vital dates embody the rate of interest determination on November 1, and preliminary GDP outcomes on November 9.

Yen:In October, the foreign money traded stronger in opposition to the Greenback, on account of higher than anticipated Japanese financial efficiency. This efficiency is anticipated to proceed over the subsequent months, with BoJ financial coverage minutes on November 5 anticipated to shed gentle as to the policymakers view. Different vital releases embody GDP on November 13 and the Tokyo CPI on November 30.

Aussie: The Aussie has gained in opposition to the Euro and the Loonie, albeit shedding floor in opposition to the Greenback. Macro developments have been higher than anticipated, particularly on the housing/actual property sector, and helped ease off some worries. November begins with vital knowledge releases reminiscent of Commerce Steadiness (November 1) and Retail Gross sales (November 2), with an rate of interest determination on the sixth.

Loonie: BoC raised rates of interest to 1.75% in October, setting the tone for extra charge hikes, albeit at a extra gradual charge than the Fed. Macroeconomic developments have been useful for the nation, with CPI and Retail Gross sales popping out on November 23.

Rising: The Russian economic system and the Ruble are anticipated to stabilize over the month, with no main developments anticipated. The identical holds for the ZAR, albeit with the South African economic system showing far more fragile. The Turkish Lira seems to have overcome the problems it confronted over the summer season, in a development which is anticipated to proceed conditional on no damaging developments for the Turkish economic system. The Peso declined on account of a choice to scrap a brand new airport, albeit with no fundamentals suggesting that it will proceed.

COMMODITIES

Gold: As anticipated, when threat aversion rises, the value of Gold jumps. October confirmed this, as the value jumped over USD1200 mark in a single day, as uncertainty elevated. It has since continued to commerce above the USD1200 mark, as uncertainty continued. The inventory market pains additionally performed a task within the worth enhance, though this isn’t anticipated to proceed for lengthy. As rates of interest all over the world rise, the value of Gold is anticipated to say no additional, probably under the USD1200 mark within the close to future.

Silver: The worth of Silver seems to have roughly stabilized across the USD14-14.70 channel since September, regardless of a small upwards development noticed within the knowledge. Silver does register a powerful optimistic correlation with Gold, nonetheless, its reactions are a lot smaller. The longer-term development seems to counsel a damaging transfer, maybe in the direction of the USD14 mark by the tip of the 12 months if rate of interest hikes persist throughout the globe.

Oil: Oil peaked at USD76 and returned to USD66 in October, following two vital occasions: the potential sanctions on the manufacturing of Iranian Oil by the US which pushed the value up, and the estimated enhance in Saudi and Russian manufacturing which introduced the value again to its September ranges. As well as, weaker than anticipated US macro knowledge additionally put downwards strain to the value. The Saudi manufacturing is anticipated to extend by extra in November and may put extra downwards strain, regardless of a rising world economic system. The OPEC assembly on December 6 can be probably to supply insights to the way forward for Oil provide.

INDICES

US: In one of the iconic drops within the final decade, the three indices (US30, US100, and US500) declined by greater than 10% throughout the month, in an array of developments together with elevated threat aversion, worse than anticipated macroeconomic developments, and a lower in company income on account of the hurricane season and the China tariffs which have elevated manufacturing prices, particularly amongst car producers. Pressures are anticipated to ease within the coming month, though the anticipated charge hike can even put exert downwards strain on the indices.

Europe: Inventory markets in Europe chimed within the general damaging efficiency in October. Regardless of the Italian finances concern and the continued Brexit uncertainty, the UK100 declined by 9% (peak to trough). The GER30 additionally misplaced important floor, following the worldwide developments in addition to Angela Merkel’s determination to step down from the CDU occasion. EUR50 moved alongside the identical strains, shedding roughly 10% of its worth. The notable distinction between European and US Indices is that the latter have been recording extra consecutive will increase in final days of October, supporting the argument that the China commerce tariffs are the principle reason for the decline.

CRYPTOS

Bitcoin: September was a low volatility month for Bitcoin, as its worth fluctuated across the 6180-6700 channel, regardless of a one-off bounce to the 7300 degree. The longer-term development exhibits indicators of worth stabilization for Bitcoin, leaving merchants questioning what’s going to come subsequent. Whereas there have been indicators of a downwards transfer within the final buying and selling days of October, its future potential continues to be a thriller, though there have additionally been indicators that it may act like a secure haven asset when threat aversion will increase, on condition that there’ll at all times be a requirement for personal transactions.

Ripple’s worth was boosted by an settlement in mid-September for the Ripple Firm to supply a transaction platform to the ninth largest financial institution within the US. The deal pushed Ripple’s worth to USD0.49, nonetheless, it has adopted the general downwards development of Bitcoin after the spike, however has been typically buying and selling above USD0.40. In distinction, Ethereum and Litecoin have been following the Bitcoin path, registering solely a small enhance when Ripple’s worth spiked. Nonetheless, the three Cryptos can not keep away from following the Bitcoin path sooner or later, evident in Ripple’s conduct because the one-off occasion.

BONDS

US10Yr: The rise in threat aversion noticed in October decelerated the rise within the bond yield, and the next drop in its worth. This improvement, attributed to various components such because the Kashoggi incident, elevated commerce tensions particularly on account of the China tariffs, in addition to the inventory market drop in late October. Nonetheless, the chance aversion regime is anticipated to subside sooner or later which, in affiliation with expectations of a Fed charge hike in December, ought to put upward strain on the yield.

UK Gilt: Within the general spirit of elevated threat aversion, UK’s yields have additionally skilled a rise in October. Elevated uncertainty in regards to the remaining final result of the Brexit settlement – as Theresa Might faces opposition inside her personal occasion and European leaders don’t seem to have reached concession for a remaining deal – pushed traders away from the bond. Nonetheless, the UK Gilt has been buying and selling stronger within the final days of October, though a possible enhance in Brexit uncertainty may push it again down once more. An extra uncertainty issue pertains to the BoE conduct concerning its rate of interest setting, as the chance for an additional charge hike in 2018 nonetheless exists.

EUBund: The Bund yield elevated considerably within the first days of October as US uncertainty rose, however the mixture of the Brexit non-agreement and the Italian finances points pushed the yield down. The anticipated finish of a budget cash period in December ought to put some upwards strain on the yield, particularly in anticipation of charge hikes in late 2019. Nonetheless, the yield rise will not be anticipated to be fast.

*All knowledge and references for the above have been obtained from the next sources (until in any other case specified): HotForex Evaluation (numerous articles), HotForex Financial Calendar, and the MT4 platform.

Click on right here to entry the HotForex Financial calendar.

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Dr Nektarios Michail

Market Analyst

HotForex

Disclaimer: This materials is supplied as a normal advertising and marketing communication for info functions solely and doesn’t represent an impartial funding analysis. Nothing on this communication incorporates, or must be thought of as containing, an funding recommendation or an funding advice or a solicitation for the aim of shopping for or promoting of any monetary instrument. All info supplied is gathered from respected sources and any info containing a sign of previous efficiency will not be a assure or dependable indicator of future efficiency. Customers acknowledge that any funding in FX and CFDs merchandise is characterised by a sure diploma of uncertainty and that any funding of this nature entails a excessive degree of threat for which the customers are solely accountable and liable. We assume no legal responsibility for any loss arising from any funding made based mostly on the knowledge supplied on this communication. This communication should not be reproduced or additional distributed with out our prior written permission.


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