Daily FX Bites 30th November 2023
Welcome to our daily morning FX Bites email. A 30 second snap shot of the key economic releases and risk events that lie ahead from across the global. We have kept it concise and clear; however containing all the information you need to ensure you are up –to-date with the latest market moving events in the world of foreign exchange – from economic data releases to the latest central bank speakers.
Seeing Increased Volatility in the FX markets
The dominant theme in the FX markets is Dollar weakness, with the majority of the FX mayors rallying against the greenback. The perceived wisdom here is that the US Federal Reserve is done hiking interest rates and will not hike at their December meeting – US interest rates are currently at 5.50%. US yields have sold off considerable over the month of November – 10 year US interest rates are at 4.27% having traded above 5.0% in October. This loss of yield and softening US economic data has seen the Dollar sell off on average 4.5% versus G10 currencies.
This morning we have seen a slight reversal in this lower Dollar trend, particularly versus the Euro, as the Dollar has rallied on the back of weaker than expected inflation report out of France and Germany and then the Eurozone wide release. We have also seen the Euro selloff against Sterling on the back of these economic figures – with EUR/GBP breaking through very decent support at 0.8650 and trading to a low of 0.8617 so far.
Eurozone core inflation came in at 3.6% year on year versus market expectations of 3.9% – an impressive decrease from 5.7% in March of this year.
Day’s Highlights –
At ‘’ High’’ on the importance scale this afternoon we have – Chicago PMI – this is a very good activity indicator for the US economy and it will be monitored closely – 46.00 is expected by the markets.
Major levels to keep an eye on this week –
EUR/USD – All eyes on the physiological level at 1.1000 which we have broken briefly this week already – Euro has sold off this morning on the back of weaker than expected inflation figures – the first downside level of note is 1.0900- 1.0890 support.
GBP/USD – GBP/USD is outperforming the single currency and although it has sold off from the initial break of 1.27 earlier this week, it is holding onto its gains versus the Dollar and remains above decent support at 1.2600
EUR/GBP – As mentioned above – GBP/USD is outperforming EUR/USD and this has led to an interesting subplot in EUR/GBP. For the past number of weeks EUR/GBP threatened to break out above 0.88, as we trade on a high 0.87 handle. Better than expected UK data, has seen this trend reverse, as we trade back below 0.87 and on the back of weaker than expected Eurozone inflation figures this morning we have finally broken through the 0.8650 support trading to a low of 0.8617 so far.
Chart of the Day – EUR/USD
EUR/GBP– see below a 6 month chart of EUR/GBP – we have sold off some 1.7% in EUR/GBP over the past 10 days, trading below significant support and pivot zone at 0.8650 – see green line on chart. The low so far on this move this morning has been 0.8617, matching the lows seen towards the end of Sept –see circles on chart – a break and daily close below 0.8600 would be very significant.