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FINLAND PRODUCER PRICE INFLATION ACCELERATES IN SEPTEMBER

Finland's producer price inflation increased in September, data from Statistics Finland showed on Monday. Producer prices increased 19.1 percent year-on-year in September, after a 15.5 percent rise in August.

The increase in the producer prices for manufactured products was particularly attributable to risen prices of oil products, basic metals and timber from September last year.

Import prices grew 18.6 percent annually in September and export prices rose by 20.9 percent. On a month-on-month basis, producer prices rose 2.3 percent in September, following a 1.4 percent increase in the prior month.

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FINLAND JOBLESS RATE FALLS IN SEPTEMBER

Finland's jobless rate decreased in September, figures from Statistics Finland showed on Tuesday.

The unemployment rate for the 15 to 74 age group fell to 7.0 percent in September from 7.5 percent in the same month last year. In August, jobless rate was 6.5 percent.

The number of unemployed persons decreased to 191,000 in September from 203,000 in the last year.

The employment rate rose to 71.7 percent in September from 71.3 percent in the same month last year. The number of employed persons grew by 17,000 from a year ago to 2.52 million.

On a seasonally adjusted basis, unemployment rate fell to 7.6 percent in September from 7.7 percent in August.

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AUSTRALIA INFLATION DATA DUE ON WEDNESDAY

Australia will on Wednesday release Q3 numbers for consumer prices, highlighting a modest day for Asia-Pacific economic activity. Inflation is tipped to rise 0.8 percent on quarter and 3.1 percent on year after gaining 0.8 percent on quarter and 3.8 percent on year in the three months prior.

Australia also will see October results for the business confidence index from ANZ; in September, the index score was -7.2.

New Zealand will provide September figures for imports, exports and trade balance. In August, imports were worth NZ$6.49 billion and exports were at NZ$4.35 billion for a trade deficit of NZ$2.144 billion.

China will see September numbers for industrial profits; in August, profits surged 49.5 percent on year.

Thailand will release September data for industrial production; in August, production was down 4.15 percent on year.

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AUSTRALIA EXPORT PRICES CLIMB 6.2% ON QUARTER IN Q2

Export prices in Australia were up 6.2 percent on quarter in the third quarter of 2021, the Australian Bureau of Statistics said on Thursday - slowing from the 13.2 percent jump in Q2.

Import prices rose 5.4 percent on quarter, accelerating from 1.9 percent in the three months prior.

On a yearly basis, export prices skyrocketed 41.0 percent and import prices jumped 6.4 percent.

The main contributors to the jump in export prices included coal, coke and briquettes; gas, natural and manufactured goods; non-ferrous metals; meat and meat preparations; and petroleum, petroleum products and related materials.

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AUSTRALIA PRIVATE SECTOR CREDIT GAINS 0.6% IN SEPTEMBER

Private sector credit in Australia was up 0.6 percent on month in September, the Reserve Bank of Australia said on Friday - matching expectations and unchanged from the August reading.

On a yearly basis, credit jumped 5.3 percent - accelerating from 4.7 percent in the previous month.

Housing credit rose 0.6 percent on month and 6.5 percent on year, while personal credit fell 0.6 percent on month and 5.3 percent on year and business credit gained 0.7 percent on month and 4.6 percent on year.

Broad money gained 1.3 percent on month and 7.9 percent on year.

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AUSTRALIA NEW HOME LOANS SINK 2.7% IN SEPTEMBER

The total value of owner-occupied home loans in Australia was down a seasonally adjusted 2.7 percent on month in September, the Australian Bureau of Statistics said on Monday - coming in at A$20.69 billion.

That missed expectations for a decline of 2.0 percent following the 6.6 percent plunge in August.

Investment lending was up 1.4 percent on month at A$9.62 billion and overall home loans fell 1.4 percent on month to A$30.31 billion.

On a yearly basis, owner-occupied home loans gained 20.8 percent, while investment lending skyrocketed 83.2 percent and overall home loans jumped 35.5 percent.

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SOUTH KOREA INFLATION RISES IN OCTOBER

South Korea's consumer prices increased in October, figures from Statistics Korea showed on Tuesday.

The consumer price index rose 3.2 percent year-on-year in October, after a 2.5 percent increase in September. This was in line with economists' expectation.

Excluding food and energy, core consumer prices increased 2.4 percent in October, following a 1.5 percent rise in the preceding month.

On a monthly basis, consumer prices rose 0.1 percent in October, after a 0.5 percent increase in the previous month.

The core CPI grew 0.3 percent monthly in October, after a 0.1 percent fall in the prior month.

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Is the Bank of England ready for a rate hike? What will happen to the pound

The central event of the week, which will determine the further movement of the dollar in pairs with other major currencies, not only in the short term, but also in the long term, is the Federal Reserve meeting. If we talk about GBP/USD, then another important catalyst for the movement is the Bank of England meeting. The central bank will announce its verdict on further monetary policy on Thursday.

If the Fed initially said that the rate hike is still far away, then the British central bank is more determined here. There are suggestions that the BoE will become the first central bank from developed countries to tighten policy. Such forecasts are not taken out of thin air, but dictated by representatives of the central bank. So, how big are the chances of a rate hike by the BoE?

The main reason for the abrupt change in the tone of the head of the Bank of England and the signals for tightening policy that have appeared is, of course, accelerating inflation. The indicator exceeded the target almost twice. The goal is 2%, the actual value is 3.1%. At the same time, all economists' forecasts agree that this is far from the final result, the indicator will exceed 4%, and by the end of the year it will reach 4.4%.

Customs regulations due to Brexit, an energy crisis, a shortage of truck drivers are just some of the reasons that are causing inflation to accelerate in the country. Local authorities are adding fuel to the fire. The country's chief treasurer, Rishi Sunak, last week announced tax cuts for pubs and restaurants and an additional £75bn for infrastructure, skills development and support for the poor. Meanwhile, previous statements were about tax increases. This step had to be taken due to the correction of the assessment of economic growth and damage from the pandemic.

Pro-inflationary forces are looming over England and the government is increasing spending. This means that the likelihood of a rate hike by the end of this year increases significantly. Investors estimate this step at 85%. As soon as the BoE begins the process of tightening policy, the pound will receive an impetus for growth. It is possible that this will happen on November 4. If the tone of the minutes is soft, the pound will drop.

Since BoE Governor Andrew Bailey has already signaled to the markets about a possible tightening of policy, this will not come as a surprise and a big surprise. For a more tangible growth of the pound, it is necessary for the central bank to act more harshly than market players now assume.

Three high-ranking representatives of the central bank, apparently, are ready to vote for a rate hike. However, the volume of the quantitative easing program is likely to remain at the same level - 875 billion pounds. This means that there are no strong drivers for the growth of the British currency at the moment.

Technical picture

The growth of the GBP/USD pair has slowed down. As confirmation that bullish sentiment for the pound will prevail in Forex again, it will be possible to consider a breakdown of the mirror level of 1.3641. Further, the road to the levels of 1.3686, 1.3723 and 1.3758 will open for bulls.

Otherwise, the bears will have the initiative and the level of severity, pulling the pound to 1.3594, 1.3568 and 1.3546.

Scotiabank believes that the central bank at its November meeting will nevertheless leave its policy unchanged. A rate hike this year may still occur, but the BoE, analysts say, will want to limit expectations for next year's rate. It is rather difficult to do this at the same time as the rate hike.

A downward test of the GBP/USD pair at 1.3600 is possible, but it can act as a strong support, and the next one is located at 1.3585. The breakthrough will make it possible to retest the level of the end of September - 1.3450.

The pound will be completely under the influence of the dollar until the BoE meeting.

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Forex Analysis & Reviews: Gold sharply surged and recovered all its losses yesterday

Gold made a sharp reversal following the disappointing decline on Wednesday to a 3-week low on Thursday. It rapidly rose in price and approached the key level of $ 1,800.

After the Fed's monetary policy meeting ended on November 3, the market was getting ready for a hawkish statement from the regulator.

In view of this, gold prices sharply declined quickly, received an additional boost from strong US employment data. On Wednesday, quotes sank by 1.4%, falling to their lowest level since October 12.

The situation changed after the final speech of the Fed Chairman. Jerome Powell made it clear that there is absolutely no connection between the upcoming reduction in asset purchases and a potential increase in interest rates. Moreover, he stressed that the central bank is not considering raising them in the near future.

This dovish remark of the Fed Chairman, who took a less rigid than expected position, literally inspired gold. The metal left the red zone after the close of trading on Wednesday and moved to a steady rise, which continued on Thursday.

On November 4, the noble asset showed the strongest intraday growth in 3 weeks. The bullion rose by 1.7%, or $29.60 yesterday, closing the session at $1,793.50.

Meanwhile, silver's value has also noticeably increased. Quotes rose 2.9%, or 68 cents, ending trading at $23.911.

In addition to the comments of the Fed's head, the precious metals market was also helped by the Bank of England's statement yesterday to recover. The regulator announced that it will not rush to increase interest rates and keeps them at the same level of 0.1% for the time being.

The announcement surprised investors, as many were betting that the British regulator could become the first major central bank to raise rates after the pandemic.

The unexpected decision of the Bank of England provoked a decline in British bond yields. Along with the fall of US bonds, this provided strong support for gold, analyst Fawad Razaqzada commented on the situation.

The expert also added that for a more significant strengthening of the precious metal, it is now important for the US currency to weaken its position. However, it is still moving along an ascending route. Yesterday, the dollar index rose by 0.4% against its main competitors. Due to the less aggressive than expected tightening of the Federal Reserve policy, as well as the emerging increase in interest in risky assets such as stocks, Razaqzada predicted that the US dollar may begin to decline, and this should contribute to the positive dynamics of gold and silver.

Market strategist George Milling-Stanley also draws investors' attention to the records that American stock indexes continue to set. In his opinion, the market is overheated and is far ahead of economic indicators, and stock prices are significantly higher than their real value.

At the same time, the expert does not expect a serious correction in the stock markets. He believes that even a small downward trend will be enough to bring gold back to the forefront in portfolios.

J. Milling-Stanley emphasized that the precious metal is now more attractive as a protective instrument against risks than as a hedge against inflation. And although the growing inflationary pressure has a positive effect on gold quotes, the prospects for the metal in the current context are still uncertain.

In order for gold to return to an annual yield of 16% as a result of high inflation, which, for example, was observed during the period of increased price growth in the 1970s, the analyst concluded that inflation should be currently above the current level for at least 4 months.

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US dollar is worried about the current inflation

The US dollar is worried about the unexpected turn in inflation after rising on the Fed's decision last week to start curtailing stimulus. In such a situation, analysts believe that the indicated currency runs the risk of seriously collapsing.

Currently, the US dollar is frozen in anticipation of inflationary surprises, which the American economy is rich in. Last Wednesday, the Fed kept the rate in the range of 0-0.25% and announced a reduction in the volume of asset purchases ($ 15 billion in November and December 2021). This is in line with market expectations, although many feared a tightening of the regulator's rhetoric. At the same time, the Fed still considers high inflation to be a temporary phenomenon.

According to Fed Chairman, Jerome Powell, the existing inflation rate does not correspond to price stability. He explains this phenomenon not by the US labor market's overheating, which contributes to the transition of high inflation into a stable form, but with the uneven recovery of the national economy and with disruptions of global supply chains. In view of this, the timing of the normalization of the US economy remains uncertain.

Experts believe that the current situation slows down the dynamics of the US dollar. At the beginning of the new week, the USD shows stability but remains below the highs of last Friday. According to analysts, the prolonged presence of the US dollar near two-year peaks hinders its further growth. It should be noted that after a weekly reduction, market participants increased their long positions on the greenback.

Last Friday, the US dollar managed to reach a 15-month high of 1.1513 after the publication of strong data on the US labor market. However, the triumph turned out to be temporary. The US dollar stabilized at the level of 1.1566. On Monday morning, the EUR/USD pair was trading near the level of 1.1562, trying to catch up, but without much success.

If American companies increase their prices, high inflation in the United States will last much longer than the Fed expects. Most organizations have to raise prices to protect their profits amid constant labor costs. If negative trends intensify, the central bank will have to raise federal funds rates, which will support the US dollar.

Experts think that the negative impact of inflation on the USD in the near future is unlikely. Market participants are confident that the Fed controls its level and is ready to maintain a soft monetary policy. Investors are wary of the regulator's uncertainty about the temporary nature of inflation and the timing of its return to the target 2%. Against this background, the risk of an error in MP increases. This will lead to a chain of incorrect economic calculations that can bring down the US dollar. However, the Fed may reconsider its attitude to inflation as a temporary factor in 2022. Previously, J. Powell emphasized that the existing monetary policy will be adjusted depending on current economic data.

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US dollar is trying to consolidate its position, leaving EUR/USD pair in a narrow range

The US employment data, released at the end of the previous week, allowed the greenback to renew its annual highs at 94.60 points

The data published on Friday showed the highest US job growth by 531,000 in three months in October and a decline of the unemployment rate to its lowest level by 4.6% since March 2020.

This data contributed to the USD strengthening, pushing EUR/USD to a 15-month low at 1.1514.

However, the pair was able to recoup its losses rather quickly and recovered to 1.1570 amid a wide dollar rebound.

The major Wall Street indices stimulated bulls in EUR/USD, which gained 0.2-0.6% on average and closed the past five days at new record highs.

The decline of the dollar was intensified by a 10-year Treasuries yield dropping to a 5-week low by 1.4360%.

Moreover, the greenback had been strengthening since the beginning of the week and investors decided to take profits before the weekend.

The dollar started the week positively, taking advantage of some weakening risk and a rebound in 10-year Treasury yields to 1.50%. However, this momentum did not continue. After updating to local highs around 94.30 the US currency resumed its decrease.

Meanwhile, the EUR/USD is struggling to extend its recovery from its lowest levels since July 2020, trading in a narrow range on Monday.

The publication of significant EU and US macro statistics is not scheduled for today. Therefore the main currency pair is influenced by the greenback dynamics.

Besides, the fundamental picture is still favorable for the dollar compared to the single currency. It means that EUR/USD recovery attempts may be held back by technical levels.

Experts at Westpac believe that strong data on the US labor market, the Fed's decision to begin winding down the asset buyback program, as well as the approval of the US House of Representatives the infrastructure investment plan will support the dollar.

According to experts, the divergence in rates of the US and European Central Banks will also favor the greenback.

At last week's FOMC meeting Federal Reserve Chairman Jerome Powell said that it was not the suitable time to raise interest rates as the national labor market had not fully recovered. He added that according to forecasts, it would happen no earlier than mid-2022. Until then, the Fed will display patience.

The data expected on Wednesday will likely point to a 5.8% year-over-year rise in US consumer prices in October. This will be a new major test for the US Central Bank. Its management insists on not rushing to raise rates.

Goldman Sachs, which recently changed its expectation of the Fed rate hike from the third quarter of 2023 to July 2022, believes an earlier hike could provide support to the dollar.

So far, the US Central Bank has promised to keep borrowing costs low despite the acceleration of inflation in the country.

As for the ECB, last Wednesday its head Christine Lagarde said that the regulator had previously set out clear conditions for raising interest rates and they would not be fulfilled in 2022.

According to strategists at Scotiabank, the EUR/USD pair has probably entered the consolidation phase. However, the break of 1.1500 is ahead and the test of 1.1400 will follow quickly.

The strategists said that a sharp fall of the pair for the last two weeks had strengthened the probability of testing 1.1500 amid the downward pressure since the end of May. They noted that the next support was only at 1.1422, and then at 1.1400, and its break would target EUR/USD at 1.1100. The strategists added that resistance was at 1.1600 and 1.1650.

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Forex Analysis & Reviews: US stock indices finished trading lower

The Dow Jones Industrial Average on the basis of trading on Tuesday fell by 112.24 points (0.31%) and amounted to 36319.98 points.

Standard & Poor's 500 fell by 16.45 points (0.35%) - to 4685.25 points.

The Nasdaq Composite lost 95.81 points (0.6%) to 15886.54 points.

Some investors saw the market pullback as a little respite after several days of continuous gains. Strong company reports for the third quarter support the stock market, despite continued investor concerns about rising inflation and supply chain problems.

Statistics released on Tuesday showed a slight increase in the rate of rise in producer prices in October compared to the previous month - to 0.6% from 0.5% in September. The acceleration in growth was largely due to the rise in gasoline prices (6.7%). On an annualized basis, US producer prices jumped at a record 8.6%, as in the previous month.

In addition, the National Federation of Independent Business reported that the small business optimism indicator dropped 0.8 percentage points in October, to 98.2 points, the lowest since March.

General Electric Co. rose 2.7% by the end of trading on Tuesday. The American concern announced that it will split operations into three independent public companies.

Tesla Inc. lost almost 12% in price.

The price of securities of the developer of the online video game platform Roblox Corp. soared by 42%.

Car rental Hertz Global Holdings Inc. plunged 9.8% on its Nasdaq debut.

Boeing shares fell 0.9%.

Cruise operator Royal Caribbean's share price fell 2.5% on news of the imminent resignation of the company's chief executive Richard Fane, who has held the post since 1988.

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Forex Analysis & Reviews: Inflation release provoked a sharp growth in the US dollar

The long-awaited report on consumer inflation in the United States provoked a rapid growth in the US dollar. The impressive macro data turned out to be great support of the US dollar, which took advantage of the situation.

On Wednesday evening, it became known that US inflation accelerated to a maximum in 31 years. According to preliminary forecasts, the growth of annual inflation in the country was expected by 5.8%, and in October, by 0.6%. However, US consumer prices came as a surprise: they soared up to 6.2% in annual terms, and by 0.9% in October. As a result, the consumer price index (CPI) in the United States showed a record growth compared to the same period in 2020.

Analysts drew attention to a significant increase in the base CPI (by 4.6%), which does not include the cost of food and energy. In September, this indicator was 4%. Experts expected the overall CPI to grow by 5.9%, and the base CPI by 4.3%. However, both indicators showed a sharp increase. Economists emphasize that this is the most significant annual rise in inflation for 31 years.

It can be recalled that the target inflation rate set by the Fed does not exceed 2%. however, the current inflation is far from it. This raises the concerns of investors, who are concerned not only about the rate hike in 2022, but also about the specific timing and scale of this increase.

The US currency has benefited from the current situation. It has risen rapidly on the inflationary wave and is now trying to maintain its position. Experts believe that the main reason for the strengthening of the USD is the increase in market rates. The chain of events here is as follows: shocking inflation reports provoked an increase in the yield of treasuries and contributed to the further expansion of spreads between US and German government bonds. An additional factor in this issue was the recent statements by the ECB about the inexpediency of raising rates. The divergence of the rhetoric of the ECB and the Fed led to the expansion of government bond spreads, providing significant support to the US dollar.

Meanwhile, the Euro currency has lost ground unlike the American one. And although it is trying to catch up, it will be difficult for it to surpass its rival. On Thursday morning, the EUR/USD pair traded at the level of 1.1477, leaving the previous range of 1.1500-1.1550.

According to analysts, the problems associated with the acceleration of inflation in the United States are shaking the national economy and the US dollar. The situation is heating up, as the economic difficulties provoked by the COVID-19 wave, especially the delta variant, remain in force. Experts pay attention to long-term problems with the supply of goods. The pandemic has turned global labor markets upside down, causing a total shortage of workers. This had a negative impact on production processes and the slowdown in global transportation. Supporting payments in the form of trillions of dollars received from the government stimulated demand for goods. This has led to an overload of supply chains and provoked additional problems in the global economy.

Despite the Fed's assurances about the "temporary nature of inflation," the situation is getting worse, and the market is less and less believing what has been said. At the same time, the prerequisites for further growth of the US dollar remain. The specified currency is supported by the reduction of the asset purchase program launched by the Federal Reserve. Experts said that this is the first step towards raising rates.

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US stock indices finished trading with multidirectional dynamics

The Dow Jones Industrial Average fell 158.71 points (0.44%) to 35921.23 points. Standard & Poor's 500 rose by 2.56 points (0.06%), that is, to 4649.27 points. The Nasdaq Composite gained 81.58 points (0.52%) and amounted to 15704.28 points. Tesla Inc. Stock Quote decreased by 0.4%.

Tesla CEO Elon Musk this week sold shares in the company for a total of about $ 5 billion. On Monday, he exercised options to buy more than 2 million Tesla shares, which he received as compensation, for a total of $ 2.5 billion. options amounted to about $ 13.4 million.

Lordstown Motors Corp. rose 23.2% after rising more than 20% in additional trading on Wednesday. The electric car maker has struck a deal to sell its plant to Foxconn for $ 230 million.

Twitter Inc. Papers decreased by 0.7%. The company is creating a team that will develop a strategy for the future use of cryptocurrencies and blockchain technology in general within the social network.

Walt Disney Co. decreased by 7.1%. The world's largest entertainment and media company posted weaker-than-expected earnings and revenues in its fiscal fourth quarter and saw a significant slowdown in subscriber growth for its Disney + streaming service.

Beyond Meat shares fell 13.3%. The American manufacturer of plant-based meat substitutes increased its net loss 2.8 times, while its revenue was worse than forecast.

Yesterday, traders' attention was focused on the statistics published the day before, which indicated a significant acceleration of inflation in the US last month.

According to the Department of Labor, consumer prices in the United States in October rose by 6.2% compared with the same month last year - the highest rate in almost 31 years (since November 1990). A month earlier, inflation in the US was 5.4%, and experts expected it to accelerate in October to 5.8%.

The jump in energy prices in the United States last month amounted to 30% in annual terms, gasoline rose in price by 49.6%. The rate of growth in the cost of food, which amounted to 5.3%, was the highest since January 2009.

According to Ryan Detrick, senior market strategist at LPL Financial, inflation remains steadily high, surprising many who expected prices to return to normal more quickly. He also added that it is impossible to close the $ 20 trillion economy and not feel obstacles in the process of opening it, but we hope that supply chain problems will be resolved in the coming months, and inflation will stabilize.

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Swiss Inflation Rises In October

Swiss Inflation Rises In October Switzerland's consumer price inflation increased in October, data from the Federal Statistical Office showed on Tuesday.

The consumer price index grew 1.2 percent year-on-year in October, following a 0.9 percent rise in September and August.

Economists had expected a 1.1 percent rise. On a monthly basis, consumer prices gained 0.3 percent in October, after remained unchanged in the previous month.

Economists had forecast a rise of 0.1 percent. Prices for heating oil, gas and fuel increased in October.

The core CPI rose 0.6 percent yearly in October and grew 0.2 percent from the previous month.

The EU measure of harmonized index for consumer prices, or HICP rose 0.4 percent monthly in October and increased 1.3 percent from a year ago.

Separate data from the statistical office showed that the retail sales increased a real working-day adjusted 2.5 percent yearly in September.

On a seasonally adjusted basis, retail sales gained 0.1 percent monthly in September. On a nominal basis, retail sales rose 1.9 percent annually in September and remained unchanged from a month ago.
 
US stock indices finished trading with multidirectional dynamics

The European currency, finding itself behind the American one, seeks to increase its potential. However, these attempts have been so far unsuccessful. Nevertheless, experts believe that the situation.

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EUR/USD: US dollar is rising, but the euro is not

It is increasingly difficult for the Euro currency to keep its position, pretending that its decline is an annoying misunderstanding. In the EUR/USD pair, the euro has to act at the limit of its capabilities in order not to collapse.

Analysts believe that the catalyst for the euro's collapse was the "dovish" statements of ECB President Christine Lagarde. Representatives of the European regulator still consider it inappropriate to raise the rate and tighten the monetary policy. At the same time, the ECB, along with the Fed, significantly reduced the volume of the asset repurchase program. However, the similarity with the strategies of the leading central banks ended there. With regard to the rate hike, the European regulator disagrees with the Fed, the Bank of England, and the Bank of Canada. The ECB hed is confident that the tightening of the monetary policy will harm the European economy.

The response to Lagarde's stubbornness was a sharp plunge of the euro, which has lost its position, trying to consolidate at current levels. Meanwhile, the US currency continues to test the highs. According to experts, the US dollar received a new impetus after another statement by C. Lagarde regarding the "temporary" nature of inflation. The ECB believes that it will return to the target 2% in the near future.

It is possible that the European regulator repeats the mistake of the American one. Earlier, the Fed claimed that high inflation in the US is a temporary phenomenon, and now the ECB is "persuading" itself and the markets in a similar way. Experts consider this a dangerous misconception, for which they will have to pay with holes in the economy. Inflation is considered the main way to normalize the MP, and statements by central banks about its temporary nature increase price pressure.

In view of the euro's weakening, the US dollar felt a surge of strength and became the leader once again. The US currency was helped by inspiring data on US retail sales. According to reports, this indicator increased in October much faster than experts expected. In the medium term, this will force the Fed to accelerate the reduction of the asset purchase program due to persistently high inflation.

Analysts are concerned about the long-term downward trend of the EUR/USD pair, recorded since the summer of 2021. Currently, the pair has broken through the 200-week moving average and is headed lower. This is extremely negative for the European currency, which is now more vulnerable to inflation than the American one. On Wednesday morning, the EUR/USD pair was trading near the level of 1.1301, hoping to win back a series of falls, but without much success.

Experts consider geopolitics to be another reason for the weakness of the euro, in particular the problems of the UK related to Brexit and Northern Ireland. Moreover, the expectation of the final estimate of annual inflation in the eurozone also exerts additional pressure on the euro. According to preliminary forecasts, consumer price growth increased to 4.1% in October. This is the maximum price turn in the last 13 years.

Analysts believe that the euro has currently no growth impulse. If the ECB does not change the current monetary strategy, the indicated currency will remain in the outsiders and test the bottom. At the same time, inflation fears contribute to the growth of the yield of treasuries, providing significant support for the US currency. In such a situation, the euro has a very low chance of recovery. However, possible changes in the ECB's policy will give a head start to the EUR. If the regulator considers the possibility of raising rates in 2022, the situation will change in favor of the euro.

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Demand for all types of metals dramatically exceeds supply

The world's six most significant industrial metals are demonstrating supply shortages for the first time in more than a decade as logistical shocks and high demand cause anxiety among buyers.

Spot prices for base metals (from aluminum to zinc) on the London Metal Exchange are rapidly exceeding futures, a condition known as backwardation that has occurred for the first time since 2007. Buyers are paying a premium for access to metal amid a slump in inventory exchanges, delays in the supply chain, production disruptions and rising demand for industrial goods from construction to consumer electronics.

As for copper and tin, the magnitude of the reversal development reached record highs in recent months, provoking panic among industrial consumers, who have faced escalating supply problems since the COVID-19 pandemic began.

Signs of tight physical supply in the metals market also act as a counterbalance to growing nervousness about the broader macroeconomic outlook for major industrialized countries and especially China, the largest consumer of commodities. Spreads have reduced considerably over the past month, regarding aluminum, despite prices having fallen from multi-year highs.

Oliver Nugent, a base metals analyst at Citigroup Inc. said that taking into account diverse use and supply dynamics of individual metals, the unusual synchronized tightness of the six major LME contracts was a sign of the logistical shocks and demand growth widely distribution since the early stages of the coronavirus pandemic.

Nugent noted that this aspect was obvious. He said that consumers mostly faced logistic problems. Nugent highlighted that this fact indicated very robust demand.

Evidently, complete tightness may not last long. Backwardation in copper and lead markets is disappearing, even as aluminum and nickel spreads reduce. Nugent stated that one of the consequences of supply chain disorder was that price spreads on other global exchanges could reduce further, even as the LME market softened.

As for copper, for example, there is a growing backwardation of contracts on the Shanghai Futures Exchange, despite LME spreads retreating from the record highs observed during last month's unprecedented supply contraction.

Copper futures fell 0.9% to $9,472 a tonne at 11:57 a.m. in London, with metal shipments to LME warehouses in the United States helping to partially dispel supply fears after the cuts.

Aluminum prices on the London Metal Exchange rose 0.8% to $2,594.50 a tonne on Wednesday, compared to a high above $3,200 last month.

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JAPAN OVERALL INFLATION RISES 0.1% ON YEAR IN OCTOBER

Overall consumer prices in Japan were up 0.1 percent on year in October, the Ministry of Internal Affairs and Communications said on Friday.

That was in line with expectations and down from 0.2 percent in September.

Core consumer prices, which exclude volatile food prices, also rose an annual 0.1 percent - unchanged and matching forecasts.

Individually, prices were up for food, housing, fuel, furniture, education and recreation; prices were down for clothing, medical care and communications.

On a seasonally adjusted monthly basis, overall inflation slipped 0.3 percent and core CPI dipped 0.1 percent.

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