Daily Market Update

Buck climbs, U.S. and China renew relations

November 14, 2022

The U.S. Dollar is trading in higher ranges for now as participants navigate through mixed messages across the markets. 

Overview

At the time of writing, President Joe Biden was speaking live from Indonesia, where he was able to have a face-to-face meeting with China’s President Xi Jinping. Per reports, there was plenty of preparation prior to the talks, which were intended to be warm and collaborative.After a year marked by “technological warfare,” it seems there are still areas of common support that they look to enhance. We believe this could turn into a Dollar-negative. However, Fed officials sticking to the hikes is keeping equities with fear that there is inflation to fight with higher borrowing costs.This week has data to chew on Tuesday from both the U.S. and China gauging manufacturing, Industrial Production, as well as Retail Sales. On Wednesday, we will hear from European Central Bank President Christine Lagarde and look into inflationary figures in the form of the Consumer Price Index on Thursday. Expect Fed officials throughout the week to give their insight into how the Fed may or may not message markets any further.

 

What to Watch Today…

  • No major economic events are scheduled for today

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EUR ⇓

The Euro improved last week, but it is slightly down to start the week. Potentially, the shared currency could have a rebound mid-week based on inflationary numbers that could put more pressure on the ECB to be hawkish. Meanwhile, on Wednesday, Christine Lagarde will speak, and her commentary may give some guidance as to how much worse price increases they see ahead. Any slowdown or perceived dovishness could easily erase recent Euro gains, but we are putting doubts about it. Furthermore, developments in Ukraine, such as the Russian retreat from Kherson, may add to the prospects of Euro increased value down the line.

 

GBP ⇓

Sterling fell this morning by almost 1.0% following some comments from Chancellor of the Exchequer Philip Hunt regarding taxation. Following a traumatic time during Liz Truss’s reign, U.K. business leaders are worried that a universal tax hike will hurt consumption, and demand and overall lead to a deeper recession than already outlined by the Bank of England. We shall see how much this will impact Sterling which has stabilized itself and had one of its strongest weekly runs in a year by rising 1.7%.

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