Weekly market analysis from 18th November

This week has significant economic data releases and central bank insights likely to shape currency movements across various markets. Monday begins on a quiet note, offering a brief pause before a packed schedule of releases.

On Tuesday, attention will shift to Canada with the release of key inflation data, including the monthly CPI, which is expected to rise by 0.3% following last month’s decline of 0.4%. This forecast suggests a potential rebound in inflationary pressures. The median and trimmed CPI rates, projected at 2.3% and 2.4% respectively, are likely to indicate steady inflation levels that align with the Bank of Canada’s target. These numbers could be pivotal for the Canadian dollar as they may impact expectations surrounding the Bank of Canada’s rate policy.

Midweek, on Wednesday, the UK will take the spotlight with the release of annual CPI data, forecast at 1.7%. If inflation remains below the Bank of England’s 2% target, it could signal moderation in price pressures, potentially dampening demand for the British pound as it may cool expectations for further rate hikes.

Thursday brings a global focus as Reserve Bank of Australia Governor Bullock is scheduled to speak, with markets watching closely for any hints on Australia’s economic outlook or potential policy adjustments. The United States will also release unemployment claims, projected at 217,000. A higher-than-expected figure could signal slight softening in the labor market, which may weigh on the USD by heightening concerns over the pace of economic growth.

Friday rounds off the week with a data-heavy day across Europe, the UK, and North America. The UK’s retail sales data, expected to rise by 0.3%, could strengthen the British pound if it reflects resilient consumer spending. In the Eurozone, French and German PMI figures are anticipated to reveal mixed economic health; French manufacturing PMI is projected to remain in contraction at 44.5, with the services sector showing slight contraction near stabilization at 49.2. Germany’s manufacturing PMI, also expected in contraction territory at 43, contrasts with its services PMI forecast of 51.6, suggesting some resilience in the service sector despite broader industrial challenges.

As the day progresses, markets will watch for Swiss National Bank Chairman Schlegel’s speech, looking for any indications on future monetary policy, which could influence the Swiss franc. In Canada, a divergence is expected in spending data, with core retail sales forecast to drop by 0.7% while overall retail sales may rise by 0.4%, potentially affecting the Canadian dollar’s direction. The week concludes with US flash PMI data; the manufacturing sector is expected to contract with a forecast PMI of 48.5, while the services sector is likely to show robust growth at 55.0, providing a positive outlook for the services-driven areas of the economy and setting a mixed tone for the dollar heading into the weekend.

As these economic releases and central bank statements unfold, traders will closely monitor global economic indicators and policy cues. The data from the UK, Eurozone, and US will likely be instrumental in shaping risk sentiment and determining the direction of various currencies this week.

Here are 3 markets to watch this week

All technical analysis is provided by Trading Central.

AUD/USD

AUD/USD is trading below a critical pivot level at 0.6640, suggesting a bearish outlook if the pair remains under this threshold. The daily chart reflects potential for downside momentum, with initial targets set at 0.6360 and a further extension down to 0.6290. However, if AUD/USD breaks above 0.6640, it may signal renewed bullish interest, leading the pair higher toward 0.6710 and potentially 0.6800. The RSI currently lacks upward momentum, which reinforces the downside bias as long as the price stays below 0.6640. Key support and resistance levels at 0.6800, 0.6710, 0.6640, 0.6360, and 0.6290 could play significant roles in shaping future price movements.

Gold

Gold is showing potential for a decline toward the 2450.00 - 2525.00 range, with a key pivot level set at 2710.00. If the price remains below this pivot, a bearish outlook is favored, targeting 2525.00 initially and then extending down to 2450.00. Alternatively, a break above 2710.00 could open the door for further upside, with targets at 2790.00 and potentially 2870.00. A move below 2525.00 would likely accelerate downside momentum toward 2450.00. Important support and resistance levels include 2870.00, 2790.00, 2710.00, 2525.00, and 2450.00, with the strength of each level indicated by the number of asterisks.

EUR/USD

EUR/USD may experience a decline toward the 1.0450 - 1.0500 range, with a key pivot level at 1.0940. A bearish outlook is preferred if the pair remains below this pivot, with initial targets at 1.0500, extending further to 1.0450. However, if EUR/USD breaks above 1.0940, it could signal upside potential, targeting 1.1000 and possibly reaching 1.1200. The RSI indicator is bearish, indicating further downside pressure while the pair trades below 1.0940. Key support and resistance levels include 1.1200, 1.1000, 1.0940, 1.0500, and 1.0450, with the strength of each level indicated by the number of asterisks.

This weeks high impact market events

The following economic events and data releases have the potential to cause considerable price movements, thereby offering you both opportunities and risks. Stay informed and leverage our economic calendar to access real-time data and analysis as these key events unfold.

Time (GMT +3)

Tuesday 19th November

Wednesday 20th November

Thursday 21st November

Friday 22nd November

How will you trade the markets this week?

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TIO Staff

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