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The U.S. dollar took the top spot this week, riding higher off of fresh inflation data from the U.S., raising speculation that rate hikes may come sooner than expected.

This also fueled ideas that economic activity may slow due to high prices, bringing an element of risk aversion to the major currencies and risk assets as well this week.

Notable News & Economic Updates:

China posts record trade surplus as exports surged well above forecasts by 27.1% in October

Bitcoin hit a new all-time high of $69,000, Ether also makes new all-time high, nearly reaching $4,900.

API data shows U.S. crude stocks down by 2.5M barrels last week

Bank of Mexico raised its benchmark rate by 25 bps to 5.00%

OPEC says high prices to dampen pace of oil demand recovery; Cuts fourth-quarter 2021 demand forecast by 330,000 barrels per day

U.S. Consumer prices rise by 6.2% y/y, a 31-year high; Fed rate hikes may come as early as 2022

Evergrande narrowly dodges default again on Thursday after paying overdue interest payments at the last minute

Australia’s unemployment rate unexpectedly rises from 4.6% to 5.2% in October as economy sheds 46,000 jobs

Europe becomes COVID-19’s epicenter again, some countries look at fresh curbs

Intermarket Weekly Recap

Dollar, Gold, S&P 500, Oil, T-Bond Futures, Bitcoin Overlay 1-Hour
Dollar, Gold, S&P 500, Oil, T-Bond Futures, Bitcoin Overlay 1-Hour

Global inflation conditions continued to be the top macro focus this week, and the latest data showed us that prices are still rising at record high rates around the world.

This continues to keep traders on their toes as they have to balance speculation that central banks may need to push up monetary policy tightening moves earlier than expected to slow prices down, versus the idea that monetary policy needs to remain easy to combat the possibly that inflation rates may dampen economic activity, as well as support economies still recovering from the global pandemic.

Price action generally reflected these themes as the U.S. dollar, gold and bond yields rallied after the extremely hot U.S. inflation read on Wednesday, while risk assets like equities, oil, and crypto took a tumble as risk aversion grew on the idea of slowing growth. Oil bulls were extra dinged this week as U.S. oil companies added more rigs (a sign of future rising output), as well as a lower demand forecast from OPEC.

In the currency space, we saw the U.S. dollar take off after the U.S. CPI data, recovering from early weakness to take the top spot this week among the major currencies. The Japanese yen took second place despite weak economic updates from Japan and calls from the Bank of Japan to keep easy monetary policy.

This price action along with weakness among the comdolls signaled that risk sentiment was a big driver for currencies this week, with exception to the movement in the euro and Swiss franc. Both currencies were unusually weak given the broad risk-off lean, likely due to the resurgence of covid-19 in Europe that’s sparking calls for lockdowns in the region once again.

USD Pairs

Overlay of USD Pairs: 1-Hour Forex Chart
Overlay of USD Pairs: 1-Hour Forex Chart

U.S. House of Representatives passed $1 trillion infrastructure bill last week and heading to President Biden’s desk where it will likely be signed

Fed Vice Chair Clarida says another year of inflation like this one would not be ‘a policy success’; Fed’s Evans says inflation rise is ‘temporary,’ but sees upside risk

U.S. consumers’ income and spending expectations rose to 5.7% from 5.3% in September

Fed’s Kashkari: Keeping an ‘open mind’ on timing of rate hikes; Federal Reserve’s Bullard expects two rate hikes in 2022

U.S. consumer prices jump 6.2% in October, the biggest inflation surge in more than 30 years; U.S. Producer Price Index rose +0.6% m/m in October; +8.6% y/y

U.S. credit card use returning to pre-pandemic patterns, NY Fed report finds

Mortgage applications jumped 5.5% from last week – MBA

U.S. weekly jobless claims fall 4,000 to 267,000 but a record 4.4M Americans quit their jobs in September

U.S wholesale inventories rise +1.4% in September

U.S. consumer sentiment drops to 66.8, a 10-year low, on inflation worries

GBP Pairs

Overlay of GBP Pairs: 1-Hour Forex Chart
Overlay of GBP Pairs: 1-Hour Forex Chart

BoE will act on rates if inflation risks grow, Bailey says

Early Christmas shopping boosted UK consumer spending in October by 1.3% y/y, 0.6% m/m

UK CPI expected to peak around 5% in Q2 2022, then slow to fall

UK GDP rose 0.6% in September but still lags pre-pandemic levels

UK house prices jump on as supply of properties declines. 70% of respondents to the Royal Institution of Chartered Surveyors (RICS) UK residential market survey expect prices to move higher over the next quarter

EU sees better tone in Brexit talks as U.K. warns time is short

EUR Pairs

Overlay of EUR Pairs: 1-Hour Forex Chart
Overlay of EUR Pairs: 1-Hour Forex Chart

ECB Chief Economist Lane: Current period of inflation unusual and transitory

Eurozone Sentix investor confidence hits 18.3 in November vs. 16.9 previous

German exports fall for second consecutive month in September

France trade balance in third quarter of 2021: -€1.3B

ZEW Indicator of Economic Sentiment for Germany increased 9.4 to 31.7

ECB Economic Bulletin: Global economic activity expands at a moderate pace; price pressures remain unexpectedly elevated but likely temporary

German Wholesale prices +15.2% y/y in October

Industrial production down by 0.2% in euro area and by 0.5% in the EU

Spain CPI in October rose by 5.4% y/y, the highest rate in 29 years

Austria to impose lockdown on millions of unvaccinated people as Covid cases surge

CHF Pairs

Overlay of CHF Pairs: 1-Hour Forex Chart
Overlay of CHF Pairs: 1-Hour Forex Chart

Swiss jobless rate down from 2.8% to 2.7% as expected

Market uncertainties remain elevated, supporting the Swiss franc’s safe haven status in the markets – SNB Andrea Maechler

Swiss Producer price index rose 0.6% in October to 104.7

CAD Pairs

Overlay of CAD Pairs: 1-Hour Forex Chart
Overlay of CAD Pairs: 1-Hour Forex Chart

Bank of Canada governor says inflation ‘transitory but not short-lived’; assures Canadians that inflation will be kept under control despite a 4.4% read in September, and expectations of 5% m/m by the end of the year

NZD Pairs

Overlay of NZD Pairs: 1-Hour Forex Chart
Overlay of NZD Pairs: 1-Hour Forex Chart

New Zealand preliminary ANZ business confidence index down from -13.4 to -18.1

New Zealand food prices fall for 1st time since February: -0.9% m/m in October

Business NZ manufacturing index up from 51.6 to 54.3

AUD Pairs

Overlay of AUD Pairs: 1-Hour Forex Chart
Overlay of AUD Pairs: 1-Hour Forex Chart

Australia’s new home sales climbed 11.1% in October amid a lift in consumer confidence following end of COVID-19 lockdowns in some states

Australia NAB business confidence jumps from 10 to 21 in Oct, conditions rose from 5 to 11 on rebound expectations

Australia weekly consumer confidence : 109.0 vs. 108.4

Australia’s unemployment rate unexpectedly rises from 4.6% to 5.2% in October as economy sheds 46,000 jobs

JPY Pairs

Overlay of Inverted JPY Pairs: 1-Hour Forex Chart
Overlay of Inverted JPY Pairs: 1-Hour Forex Chart

BOJ expecting rebound in first half of next year but wary of supply chain risks and offshore recession; plans to maintain easy policy to improve output gap and household spending

Japanese leading indicators dip from 101.3% to 99.7% in Oct

Japan’s inflation-adjusted wages slips by 0.2% for the first time in three months as inflation outpaces wage growth

Japan’s current account surplus falls 31% amid slow car exports

Japan’s Economy Watchers Sentiment hits 55.5, an 8-year high

Japanese preliminary machine tool orders rose from 71.9% to 81.5%

Japan’s wholesale inflation hits 40-year high as fuel costs spike; Japan PPI surged to 8.00% y/y in Oct, highest since 1981