Global stocks and precious metals ended last week on a positive note. The investors were in a buying mood after the most awaited US inflation number unexpectedly dropped to 7.7% in October, below the 8% priced in, and its lowest level since January and the market participants expect the Federal Reserve to revert back to a 50bp rate hike at the bank’s December FED meeting.
This week is inactive in terms of monetary policy, with no significant central banks due to meet. The main attraction for this week is the retail sales figures from the US, China and UK. On the other hand, Investors should continue to monitor the series of inflation data from the UK, Canada, and Japan scheduled across the week.
On the earnings front, the companies scheduled to release their last quarter financial results this week will be Walmart, Nvidia, Target and GAP.
The precious metal registered strong gains for the week after the US Treasury yields fell sharply in response to the lower-than-expected CPI readings, which also spurred an intense rally in precious metals. The metal started the new week flat but trades steady above $1760, supported by a continued decline in USD. A few of the key factors the gold traders should monitor this week is the US housing data and the trend of the dollar index.
The technical scenario is absolutely bullish after the last two weeks bullish sentiment. While considering the recently bullish momentum the metal may find strong resistance this week above 1790. On the downside, any meaningful pullback now seems to find some support near the 1755 zones, below which the slide could further get extended towards the 1746/40 regions.
The U.S. dollar index which measures the greenback against major peers collapsed more than 2% last week against its major peers after October's US inflation data falls well short of market expectations. However, the greenback slightly recovered on Monday morning from the previous week's sell-off while the overall momentum remains bearish. The main attraction for the Dollar this week is the US retail sales, Housing data and PPI numbers.
Technically the overall trend looks bearish after last week's heavy selling pressure and the medium-term support is still around 106. If the index pair breaks and closes below this level the next important support is at 105.60. However, if the pair find some support above 106.80 again we may see a short-term retracement to 107.30/40.
EURUSD hit a fresh 3-month high of 1.0350 as the Euro traders took advantage of the weaker US dollar. This week, Euro traders will now look to the Eurozone inflation data due on Thursday for more clues on the future path of European central bank monetary policy. During the last week, Germany released the latest inflation data. The data showed, in October German inflation climbed to 10.4%, its highest in about seven decades.
EURO ended on Friday near the short-term resistance zone of 1.0370/80. In case the pair manages to settle above this area, it will gain upside momentum and head towards the next resistance level at 1.0400 and 1.0450. On the downside, in the short-term the first immediate support at 1.0300 followed by 1.0260.
Dow Jones and other US indices ended last week firmly in positive territory following the US inflation report offered hope that the Federal Reserve will ease the pace of its interest-rate increases. The indices received additional buying pressure after China eased some Covid restrictions sparking gains for US-listed Chinese stocks. This week, the Dow traders will now turn their attention to the Q3 big retail earnings results from Walmart, Target, Macy’s, and Kohl’s.
This week, the first resistance is located around 34,000, a break above this level will confirm a possible move to 34,300/500. On the downside, any meaningful pullback now seems to find some support near the 33,300 zones, below which the slide could further get extended towards the 33,000 and 32,600 regions.
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