- UoM Consumer Sentiment came below 70 points, the lowest in a decade
- Dollar remains strong in a weekly basis, but EURUSD has a problem with breaking another important support zone
- Wall Street recovers after concerns over inflation
The greenback slightly erased some gains on Friday but from a wider perspective, it still remains very strong. EURUSD has some problems with breaking support at 1.1440. In fact, the pair rebounded significantly after a huge disappointment from the US data. UoM Consumer Sentiment index came at 66.8 points compared to 72.4 that was expected. It was the lowest print in a decade. About half of respondents anticipate that real income will be lower next year.
Oil will probably end this week with the third weekly decline in a row which may be the longest negative streak since March. The price is close to levels from the beginning of October. Oil reacted to recent forecasts from OPEC which said that demand in the last quarter of the year should be lower than earlier anticipated, mainly due to high prices. It suggests that the market has a problem with demand destruction.
Market session in Asia was relatively calm with Nikkei 225 that gained more than 1% after turbulences across the globe this week. Indices from China struggled to find a common direction. Session in Europe was rather positive, but money market futures continued to price in a possible aggressive ECB policy. The market sees around 20 bps hike at the end of 2022, more than in the UK. Despite mixed sentiment among investors, DE30 still hovers near its all-time high.
On the data front from the European session, wholesale prices in Germany jumped 15.2% year-on-year in October, accelerating from a 13.2% rise in the previous month. It was the highest wholesale inflation rate since March 1974 when prices rose by 15.8% in the wake of the first oil crisis. On a monthly basis, wholesale prices increased 1.6%, following a 0.8% gain in September. Above that, industrial production came considerably lower than estimated in September. High inflation and worse data may suggest a possible stagflation problem.
Precious metals, especially gold struggled after a few days of strong gains. It is probably related to a still strong dollar and high yields, although concerns over high and persistent inflation should benefit gold as well as cryptocurrencies. Cryptocurrencies experienced downbeat sentiment today but declines were not so significant. Close to the end of the US session, the gold erased some decreases, and Bitcoin fell further.
Daily summary: Weak US data drags markets down, precious metals under pressure again!
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