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• Errante’s The Week Ahead: 11th – 15th November 2024

Errante’s The Week Ahead: 11th – 15th November 2024

Errante’s The Week Ahead: 11th – 15th November 2024 

Highlights of the Week: 

• US CPI Release: The US inflation report on Wednesday will be a key market mover, shaping Fed policy expectations, and directly impacting USD volatility. 

• Australian Employment Figures: Key labor data from Australia on Thursday will provide fresh insights into the health of the Australian economy and influence AUD sentiment. 

• Fed Chair Powell’s Speech: Friday’s speech by Fed Chair Powell could provide further clues regarding the Fed’s stance on interest rates, potentially affecting market expectations and risk sentiment. 

What Now?  

Global financial markets are on edge amid multiple cross-currents this week. Investors are grappling with Chinese economic measures, Trump’s re-election impact, and the Federal Reserve’s policy adjustments, which are all reshaping the narrative for currencies and commodities alike. Chinese stimulus announcements, while significant in headline terms, underwhelmed market expectations, leaving commodity prices including oil, copper, and iron ore under pressure as investors reeled from smaller-than-expected fiscal interventions. Brent Crude and WTI are witnessing muted price action despite the substantial geopolitical developments. Both are trading within narrow ranges, which signals traders’ hesitation to commit until there is more clarity regarding OPEC+ moves and Trump’s potential policy changes. 

Adding to the complex mix, the Federal Reserve’s rate cut last week left investors interpreting Chair Powell’s cautious commentary. Powell’s assertion that the US economic outlook remains strong, coupled with a reluctance to tip his hand regarding a December cut, has kept USD relatively stable. Inflation data this week will serve as a critical pivot point for Fed rate expectations, with markets looking to recalibrate risk based on inflationary pressures amid Trump’s expansive fiscal policies, including tax cuts and tariffs. 

Meanwhile, Australian economic sentiment hinges on employment figures due Thursday. As the RBA looks for clearer signals on economic strength, the labor market data will be key in shaping future rate policy. With economic uncertainty extending from US tariffs, China’s additional debt and credit measures add another layer of complexity for AUD and broader risk sentiment. 

Market Events and Announcements: 

Monday, November 11, 2024: 

• 4:00 AM – NZD: Inflation Expectations q/q: A key measure of consumer inflation expectations, influencing RBNZ policy. 

• 11th-15th Nov – CNY: New Loans: This monthly report will give insights into Chinese credit growth. 

Tuesday, November 12, 2024: 

• 9:00 AM – GBP: Claimant Count Change & Average Earnings Index: Labor market indicators that can provide hints on BoE’s next moves. 

• 12:00 PM – EUR: German ZEW Economic Sentiment: A sentiment indicator, crucial for gauging investor confidence. 

• 5:00 PM – USD: FOMC Member Waller Speaks: Watch for any comments on inflation and monetary policy. 

Wednesday, November 13, 2024: 

• 12:00 AM – USD: FOMC Member Harker Speaks: Key insights into the Fed’s perspective on monetary policy. 

• 2:30 AM – AUD: Wage Price Index q/q: A major component affecting consumer inflation and RBA policy considerations. 

• 3:30 PM – USD: Core CPI m/m, CPI m/m, CPI y/y: The inflation data release will be pivotal for Fed’s policy decisions. 

Thursday, November 14, 2024: 

• 1:00 AM – AUD: RBA Governor Bullock Speaks 

• 2:30 AM – AUD: Employment Change & Unemployment Rate: Labor data will significantly influence AUD sentiment. 

• 9:00 AM – GBP: GDP m/m, Preliminary GDP q/q: Key data to assess UK economic performance. 

• 3:30 PM – USD: Core PPI m/m, PPI m/m, Unemployment Claims: Indicators of inflation and labor market health. 

• 6:00 PM – USD: Crude Oil Inventories: Important data for assessing supply-demand dynamics in the oil market. 

• 10:00 PM – USD: Fed Chair Powell Speaks: Potential for market volatility depending on Powell’s tone regarding monetary policy. 

Friday, November 15, 2024: 

• 4:00 AM – CNY: Industrial Production y/y, Retail Sales y/y: Key metrics to assess China’s economic momentum. 

• 3:30 PM – USD: Core Retail Sales m/m, Retail Sales m/m, Empire State Manufacturing Index: Important indicators for gauging consumer spending and manufacturing activity. 

Market Insights: Key Charts to Watch 

Chart 1: EUR/GBP – Weekly Chart 

EUR/GBP is positioned midway within a descending channel, currently trading at 0.83168. The pair’s momentum remains bearish, reflecting broader market expectations around the UK and the Eurozone’s diverging economic outlooks. 

Main Scenario: 

If EUR/GBP breaks below the 0.83168 level, it will pave the way for further declines toward the 161.8% Fibonacci extension at 0.82332, with a potential move extending to 0.81408 (200% extension of the last upswing). The 0.81408 level coincides with the lower boundary of the descending channel, adding further weight to this target. This bearish scenario is aligned with the current market sentiment, which is impacted by lower expectations for Eurozone economic activity relative to the UK. 

Alternative Scenario: 

A recovery above the key resistance at 0.83826 would invalidate the bearish momentum, prompting a move higher to test the upper boundary of the channel at 0.84750. A sustained break above this boundary could propel EUR/GBP toward the previous top at 0.86244, especially if UK economic data underwhelms or if sentiment regarding the BoE’s monetary policy outlook shifts toward the dovish side. 

Impactful Events: 

The upcoming UK GDP figures and the ongoing Monetary Policy Hearings will have a major influence on EUR/GBP dynamics this week, with any surprises having the potential to either reinforce the prevailing bearish trend or spark a bullish reversal. 

Key Levels: 

• Support: 0.83168, 0.82332, 0.81408 

• Resistance: 0.83826, 0.84750, 0.86244 

Chart 2: Gold (XAU/USD) – Daily Chart 

Gold prices are currently undergoing a corrective phase, with bearish divergence visible between the price action and the RSI. This divergence has contributed to the recent pullback, and prices are trading at $2,688.97, positioned within the lower half of the Bollinger Bands. 

Main Scenario: 

If bearish pressure persists, Gold could correct towards the 10-month ascending trendline, with $2,658.49 serving as the immediate support level (161.80% Fibonacci extension). A break below this level would likely accelerate losses, targeting $2,627.44 and potentially extending towards $2,577.20, which represents the 261.80% Fibonacci extension and a key support zone where the trendline converges. 

Alternative Scenario: 

However, should buyers regain control at these key support levels, a rebound may ensue, potentially driving gold back towards the $2,739.78 level (61.80% Fibonacci retracement). The metal could rally further, particularly if the inflation data on Wednesday disappoints, reducing expectations for further Fed tightening, thus enhancing Gold’s appeal as a safe-haven asset. 

Impactful Events: US CPI data on Wednesday, followed by Fed Chair Powell’s comments on Friday, will likely be pivotal in determining Gold’s short-term direction. Any dovish hints or weaker inflation numbers could provide a strong case for Gold’s recovery. 

Key Levels: 

• Support: $2,658.49, $2,627.44, $2,577.20 

• Resistance: $2,739.78, $2,790.02 

Errante’s Weekly Newsletter brings you critical market insights to keep you ahead in the financial world. Stay informed and make strategic decisions with Errante. 

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