US dollar rebounds to start week as risk rally fades

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Here’s what you need to know on Monday, November 14:

After the sharp rally in risk seen in the second half of the previous week, markets appear to have turned cautious to start the new week as investors assess the latest developments. The US dollar index is rebounding after losing nearly 4% last week and US stock index futures are trading in negative territory. Eurostat will release industrial production data for September and the US economic file will not feature any release of high-impact macro data. Still, investors will pay close attention to comments from US Federal Reserve officials, including Vice Chairman Lael Brainard and New York Fed Chairman John Williams.

Commenting on the reaction to October’s weak Consumer Price Index (CPI) data, Federal Reserve Governor Christopher Waller argued that markets were “ahead” and added rates won’t drop. not until there is “clear and strong” evidence that inflation is down. Meanwhile, San Francisco Fed President Mary Daly advised markets to stop thinking about the pace of rate hikes and start thinking about the level.

On November 12, China’s daily coronavirus count rose to nearly 15,000 from 11,950 on November 11. Explaining the changes they have made to coronavirus restrictions, senior Chinese health officials noted that they were not “loosening the rules”, but rather tightening them. “It is necessary to maintain strategic direction and scientifically and accurately do the work of epidemic prevention and control,” China’s National Health Commission (NHC) said in a statement on Sunday.

EUR/USD gained over 100 pips on Friday and posted its highest weekly close since the last week of June above 1.0300. The pair appears to have entered a consolidation phase and was last seen in negative territory slightly above 1.0300.

GBPUSD hit its highest level since August 26 at 1.1855 on Friday night and posted impressive weekly gains. The pair is staging a downward correction and was last down 0.7% around 1.1750.

USDJPY closed the fourth consecutive week in negative territory and fell below 140.00 for the first time in 10 weeks on Friday. “The yen’s abnormally one-sided and sharp weakening appears to have come to a halt, in part due to government intervention in the foreign exchange market,” Bank of Japan (BoJ) Governor Haruhiko Kuroda said Monday, noting that he did not expect the “solitary strength” of the US dollar. last indefinitely. USDJPY is currently trading in a tight range near 139.50.

Gold capitalized on risk flows and broad-based US dollar weakness last week and gained more than 5%. XAUUSD remains down early on Monday and is trading at around $1,760.

Bitcoin extended its slide over the weekend and ended the week with a 22% loss to $16,300 as investors reacted to the latest developments surrounding the FTX collapse. In the same way, Ethereum lost over 20% in the past week but appears to have stabilized near $1,200, at least for now.

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