- Equity markets remain in rally mode.
- The dollar continues downhill, in search of a new equilibrium level.
- Treasury bonds confirm recent gains.
The US inflation data on Thursday was added to the measures of less restrictions in China due to COVID, which gave continuity to the rally in the equity markets. The dollar is still downhill and oil picks up pace.
US data and Chinese measures wake up the bears
On the day after the best day for stocks since 2020, in a rally fueled by lower inflation, Wall Street futures trade in the green. The S&P 500 points to a positive open of 0.50%. In Europe, the DAX climbs 0.63% and the CAC 40 0.57%, while the FTSE 100 loses 0.28%.
The Consumer Price Index rose 7.7% in October from a year ago, less than the 8.2% in September and lower than the 8% expected. This generated expectations that the Federal Reserve will soften interest rate hikes and triggered the rally in stocks and bonds and the decline in the dollar.
To the above was added that China announced an easing of restrictions on its policy due to COVID. The Chinese yuan also takes advantage of the dollar’s weakness and the USDCNH hit the lowest since October 7 below 7.10.
The final results are not yet known. usa elections The Democrats aim to get 50 seats in the Senate, the Republicans 49 and one seat to be defined in the second round. In the House of Representatives, the Republicans have already won 211 and the Democrats 194. There are still races to be defined, but it is estimated that the Republicans would reach the majority.
On Friday, record inflation in Germany of 10.4% in October was confirmed and the European Commission’s forecasts point to a contraction in activity in the fourth quarter and in the first quarter of 2023. In the UK GDP contracted 0.2% in the third quarter, better than the expected drop of 0.5%.
Of the economic calendar for the rest of the day, the report from the University of Michigan with the data on consumer confidence and inflation expectations stands out from the US. Among the companies that will present results are Softbank and Olympus.
The pound rises against the dollar but falls against the euro. Both EURUSD and GBPUSD are at weekly highs around 1.0300 and 1.1780 respectively. USDJPY continues downhill and broke 140.00.
Oil prices were helped by announcements from China. The barrel of WTI is up more than 3% and is paring weekly losses, trading above $89.00. Gold does not stop the rally and posted new highs above $1760, while silver fails to assert itself and falls on Friday trading below $21.50.
The recovery of cryptocurrencies stopped and they are down again. Bitcoin falls 3% and operates in the area of $17,300 and ethereum yields 3.70% at $1,270. Volatility remains at extreme levels.
Technical levels
Source: Fx Street
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