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Without a major fresh catalyst this week, price action was mixed between the major asset classes and between the major currencies.

Overall, the Swiss franc took the top spot, likely thanks to a slight risk-off lean, while the Loonie fell to last place as oil prices tanked.

Notable News & Economic Updates:

The International Monetary Fund stated on Sunday that the global economic outlook is even more dire than expected last month, noting a sustained deterioration in purchasing manager sentiment in recent months.

OPEC lowered its outlook for global oil demand once again on Monday, also saying it will cut production by 520K bbl/day this quarter

U.S. President Joe Biden said it was unlikely that the missile that struck a village in Poland close to the Ukraine border was shot from Russia.

Energy Information Administration (EIA) reported on Wednesday that crude oil inventories fell by -5.4M barrels in the week ending Nov. 18, more than expected

The People’s Bank of China (PBOC) warned on Thursday that inflation may accelerate, leaving little room for more easing

Several Federal Reserve members warned this week that policy tightening has not yet put a cap on high inflation rates; possibly another 75 bps hike ahead.

Intermarket Weekly Recap

Dollar, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay 1-Hour

Dollar, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay 1-Hour

Price correlations between the major asset classes were a bit looser and mixed this week, but in general, it looks like a risk-off lean with only the Greenback coming out green by the Friday close.

That risk-off lean was likely fueled by an arguably net negative round of economic and sentiment updates from around the globe, starting with Japan and China at the beginning of the week.

On Monday, the preliminary GDP read from Japan that came in negative vs. a positive forecast, and on Tuesday Chinese retail sales and industrial production reads were weaker-than-expected.  Also adding to the risk aversion vibes was headlines of another covid-lockdown in China, this time in the major city of Guangzhou (a major manufacturing hub) due to high covid numbers.

The headlines and data from China likely support the coming global recession narrative, and likely why we saw early week weakness in risk assets, most notably in oil prices. Oil weakness might have drawn in additional sellers from a statement from OPEC, saying they see oil demand falling in the coming year.

Bond yields noticeably moved lower as well this week, likely a continuation of the bearish move after last week’s weaker-than-expected CPI read from the U.S. This week, the “inflation peaking” narrative in the U.S. got additional support as the latest producer prices data came in below expectations as well on Wednesday. It was the lead into and reaction to the PPI read that we saw some of the bigger downside moves in oil and bond yields.

But we also got geopolitical headlines early in the Asia session that may have contributed to risk-off behavior after a Russian-made missile hit a village in Poland and killed two people.  This of course sparked fear that Poland (a member of NATO) would be drawn into a direct conflict with Russia, likely pulling in NATO into the war as well. It was later reported that the missile was unlikely fired from Russia.

On Thursday, we saw a bit more of the same vibes from Wednesday as the Dollar moved higher, while risk assets (especially oil and equities) further dipped to the downside. This was likely helped along with comments from the People’s Bank of China during the Asia session, hinting that inflation may accelerate, dampening the idea of easing tightening policy in the near-term.

No major catalysts on Friday, probably with exception to another ballistic missile launch from North Korea, although there didn’t seem to be a major reaction to the news. Instead, price action was a muted reflection of the past two days, with the most notable move coming once again from the oil markets as crude prices took another -5% dip before finding a bottom just under $78/bbl.

Given that we saw more arguments raising the probability of recession ahead, and when combined with the fall in oil prices, it’s not surprising to see the Loonie take the last spot while the Swiss franc topped the majors in this week’s session.

USD Pairs

Overlay of USD Pairs: 1-Hour Forex Chart

Overlay of USD Pairs: 1-Hour Forex Chart

Despite positive news this week about consumer pricing, Federal Reserve Governor Christopher Waller stated “we’ve still got a ways to go” before the US central bank stops raising interest rates.

NY Manufacturing Index for November: 4.5 vs. -9.1 previous and -6.1 forecast

U.S. PPI for October: 0.2% m/m vs. 0.4% m/m forecast; Core PPI was 0.0% m/m vs. 0.3% m/m forecast

As monetary policy gets closer to being suitably restrictive, Federal Reserve Bank of Philadelphia President Patrick Harker said he anticipates authorities to moderate the pace of their interest-rate hikes.

U.S. industrial production in October: -0.1% m/m vs. 0.1% m/m previous

U.S. Retail sales for October: +1.3% m/m vs. 0.0% m/m in September; core retail sales also came in at +1.3% m/m vs. +0.1% m/m previous

NAHB housing market index fell to 33 in November vs. 38 in October

The policy rate “is not yet in a zone that may be regarded adequately restrictive,” according to James Bullard, president of the St. Louis Fed; suggested that the proper range for fed funds may be in the 5% to 7% zone

Weekly U.S. initial jobless claims decreased to 222K in the week ending Nov. 12 vs. 226K claims the previous week

U.S. housing starts fell in October by -4.2% m/m to 1.43M annualized; existing  home sales in October: -5.9% m/m to 4.43M vs. a -1.5% m/m drop in September

Federal Reserve Bank of Boston President Collins stated on Friday that in order to bring inflation under control, the Fed may need to deliver another rate increase of 75 basis points

GBP Pairs

Overlay of GBP Pairs: 1-Hour Forex Chart

Overlay of GBP Pairs: 1-Hour Forex Chart

U.K. Rightmove HPI slipped by 1.1% m/m this month, following 0.9% uptick

U.K. unemployment rate for July to September 2022 was 3.6% vs. 3.5% forecast; average total wage growth was 6.0% in the same period; job vacancies fell to the lowest since 2021 at 1.23M during the Aug.-to-Oct. period

U.K. House price index for September: +9.5% y/y vs. 13.1% y/y in August

U.K. Consumer Price Index rose +11.1% y/y in October; core CPI rose +6.5% y/y

On Thursday, British finance minister Jeremy Hunt unveiled a strict budget plan that included a number of tax rises and more public expenditure restrictions.

U.K. Nov GfK consumer confidence index up from -47 to -44 vs. -46 estimate

U.K. Oct retail sales rebounded 0.6% m/m after previous 1.5% slump

EUR Pairs

Overlay of EUR Pairs: 1-Hour Forex Chart

Overlay of EUR Pairs: 1-Hour Forex Chart

Germany ZEW Economic Sentiment improved to -36.7 in November vs. -59.2

Germany Wholesale Prices Index in October: 17.4% y/y vs. 19.9% y/y in September

In Q3 2022, Euro area GDP was up by 0.2% q/q and employment was up by 0.2% q/q; In the EU, GDP was up by 0.2% q/q and employment was up by 0.2% q/q

In September 2022, the Euro area international trade in goods deficit was €34.4B; in the EU the deficit was €45.8B

Risks are rising as economic and financial conditions deteriorate, according to the ECB Financial Stability Review released on Wednesday

Three of the top ECB policymakers (including ECB President Lagarde) said on Friday that the European Central Bank must hike interest rates to a level that will slow growth while combating sky-high inflation, and that they may soon begin paying down its $5.2T (EUR 5T) of debt.

CHF Pairs

Overlay of CHF Pairs: 1-Hour Forex Chart

Overlay of CHF Pairs: 1-Hour Forex Chart

Swiss Producer price index for October: 0.1% m/m at 106.5; Import price index fell -0.2% m/m to 116.8

Swiss Trade Balance for October: rose to a CHF 3B surplus vs. a CHF 2.9B surplus in September

Swiss National Bank governing board member Andrea Maechler said on Thursday that interest rtes will move higher if needed based on inflation projections

CAD Pairs

Overlay of CAD Pairs: 1-Hour Forex Chart

Overlay of CAD Pairs: 1-Hour Forex Chart

Canada manufacturing sales for September: 0.0% m/m at $70.4B

Canada Wholesale sales for September: +0.1% m/m to $81.8B

Canada consumer prices index rose by +6.9% y/y in October; ex food and energy, prices rose +5.3% y/y vs. +5.4% y/y in September

Canada housing starts declined by -11% in October to 267K units vs. the surge to 299K units in September

Canada consumer prices index rose by +6.9% y/y in October; ex food and energy, prices rose +5.3% y/y vs. +5.4% y/y in September

NZD Pairs

Overlay of NZD Pairs: 1-Hour Forex Chart

Overlay of NZD Pairs: 1-Hour Forex Chart

New Zealand Services PMI for October: 57.4 vs. 55.9 in September

New Zealand’s tourism up by another 16.6% m/m in September

New Zealand dairy prices rebounded 2.4% in latest GDT auction

NZ producer inflation slows down from 3.1% to 0.8% q/q in Q3 2022

NZ producer inflation slows down from 3.1% to 0.8% q/q in Q3 2022

AUD Pairs

Overlay of AUD Pairs: 1-Hour Forex Chart

Overlay of AUD Pairs: 1-Hour Forex Chart

RBA Minutes: Board doesn’t rule out return to 50bps, or pause

ANZ-Roy Morgan Weekly Consumer Confidence was up 2.1 to 80.8; the first rise in 6 weeks

Australia’s MI leading index down by another -0.1% m/m in Oct

Australian wage price index was up +1.0% q/q in Q3 2022, following an +0.8% q/q increase in Q2

Australian jobless rate unexpectedly edged down from 3.5% to 3.4% in October

Australia added a net 32.2K jobs in October vs. 15K addition expected

JPY Pairs

Overlay of Inverted JPY Pairs: 1-Hour Forex Chart

Overlay of Inverted JPY Pairs: 1-Hour Forex Chart

In order to achieve sustained and steady inflation accompanied with wage growth, Bank of Japan Governor Haruhiko Kuroda stated on Monday that the central bank would keep to monetary easing to assist the economy for the time being.

Japan’s economy unexpectedly contracts by 0.3% q/q (1.2% y/y) in Q3 on weak yen and rising inflation

Japanese core machinery orders slumped -4.6% m/m in Sept.

Japanese tertiary industry activity dipped 0.4% m/m in September vs. a projected +0.6% uptick

Haruhiko Kuroda, governor of the Bank of Japan, reaffirmed on Thursday that the central bank must maintain its monetary easing program to sustain a shaky economy.

Japanese National core CPI was up from 3.0% to 3.6% y/y in October vs. 3.5% forecast

BOJ Governor Kuroda admits inflation could still keep rising in coming months