- US stocks close higher on the day. Close out a stellar week for the major indices.
- Crude oil settles the week at $88.96
- S&P index trades at 4000
- Feds Collins: See further Fed rate hikes
- ECB's de Cos: The 75 basis point hike does not imply a similar move at the next meeting
- Major European indices end the day with mixed results
- BOEs Haskel : Important for monetary policy to stand firm against risk of inflation
- Univ. of Michigan preliminary sentiment index for November 54.7 vs 59.5 last
- FTX commences voluntary Chapter 11 proceedings in US
- G20 leaders to say: Russia's war in Ukraine has adversely impacted the global economy
- Binance Chao: Full impact of meltdown at FTX had yet to be felt
- ECB de Guindos: It could be the market may be underestimating inflation's persistence
- SNBs Jordan:Current monetary policy is not sufficient least restrictive to lower inflation
- BOE Tenreyro: Extremely challenging times for the UK and the global economy
- The JPY is the strongest and the USD is the weakest as the NA session begins
- ForexLive European FX news wrap: Dollar poised for worst two-day drop since 2009
The USD moved lower for the 2nd consecutive day and the 5th day in the last 6 trading days.
The dollar index (DXY) is down nearly 4% this week with all the major currencies gaining vs the greenback. The decline is the largest % fall since March 2009. The better-than-expected CPI on Thursday was a catalyst for the sharp move lower especially over the last 2 trading days.
The USD this week fell:
- -5.46% vs the JPY
- -5.37% vs the CHF
- -4.07% vs the GBP
- -3.97% vs the EUR
- -3.65% vs the AUD
- -3.19% vs the NZD
- -1.67% vs the CAD
From the most recent high 7 trading days ago, the DXY is down -5.96%.
For 2022, the USD is still up 11.22% but well off the gain of 19.97% at the index high on September 28.
The higher dollar has been a headwind for US earnings in 2022. That has led to expectations of slower growth in earnings going forward. However the sharp decline this week as reverse the fortunes and the expectations a bit (more on that later in the post).
Technically, this week, the DXY fell below its 100 day MA at 109.056 and below the 38.2% of the 2022 trading range, but remains above the 50% midpoint and the 200 day MA which are both at 104.86 area. A test of that area would represent an additional -1.46% decline, and would give buyers and sellers a key bias defining level going forward. Stay above and the the correction lower is within normal corrective targets. Move below, and the bias starts to tilt more in favor of the sellers (if price can stay below).
Be aware of the dual technical level near 104.86 going forward.
The move lower in the USD this week led to a sharp rise in US stocks as investor suddenly see a tailwind as result of the lower dollar.
The Nasdaq index benefited the most with a gain of 8% for the week. The S&P rose 5.9% and tested the natural resistance at 4000 before rotating lower marginally into the close. The Dow which had been leading the run to the upside advanced by 4.15% this week (see post here).
The better CPI was also a catalyst for lower rates this week. The bond market was closed today in observance of Veterans Day. For the trading week:
- 2 year yield closed at 4.349%, -31.4 basis points
- 5 year yield closed at 3.96%, -37.4 basis points
- 10 year yield closed at 325%, -31.3 basis points
- 30 year yield closed at 4.04%, -21 basis points
Bitcoin, and other digital currency's, had a rough go this week as a result of the bankruptcy of the currency exchange FTX. More distrust entered the digital currency space which may not be solved without increased regulation
For the trading week:
- Bitcoin is trading down -20%
- Ethereum is down -23.8%
- Dogecoin is down -28.2%
- The digital token FTT for FTX is trading down -89.8%
Thank you for your support this week. Hope you have a safe and fun filled weekend.
