Appetite in Asian equities improved on hints that China could ease the excessive Covid curbs as a response to angry anti-Covid protests, but appetite for rest of the market was limited before a deluge of US economic data and Federal Reserve (Fed) President Jerome Powell’s speech due between today and the end of the week.

Investors will be watching the latest US GDP update, the JOLTS job openings, ADP report today, the US PCE, personal income and spending on Thursday, and US NFP and unemployment rate on Friday.

Soft inflation and not too strong data is what the market needs to keep positive.

But in all cases, it’s possible that we won’t see US equities extend gains by much, and we can see the S&P500 headed lower from the 200-DMA, which also coincides with the year-to-date descending channel top.

Good news is that both a softer Fed due to a potentially softening inflation, or soft economic data in the US, should be negative for the US dollar, and could finally help the dollar ease against major currencies, hence ease the strong-dollar-led-high-inflation in the rest of the world.
Due today, investors will have their eyes set on the Eurozone’s preliminary inflation data for November. Who knows, maybe we will see a figure below 10%, in which case, the EURUSD could make another attempt above the 200-DMA which stands near 1.0370.

But as I always say, the US data, and Jerome Powell will say the last word on the overall direction in currency markets. Strong US data, and hawkish Fed comments could immediately turn the winds in favour of a stronger dollar yet again.

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The week started with a selloff across global equities. Unrest in China due to protests against the Covid zero policy combined with the Federal Reserve (Fed) members’ hawkish comments led to an early week selloff in both Asian, European and US equities.

In cryptocurrencies, it was another day of bankruptcy news. This time, the crypto lender BlockFi, which had strong ties with FTX announced to file for bankruptcy. Bitcoin eased but didn’t damage important support on the news, while Coinbase dived another 4%.

Elsewhere, the S&P500 lost 1.54% on Monday, as Nasdaq slid 1.43%. The US dollar traded up and down as US crude fell to $73pb then rebounded to flirt with the $80pb this morning, despite the Chinese slowdown worries. Expectation that OPEC would use the Chinese unrest as excuse to restrict outlook boosted bulls’ appetite.

There is still hope that Fed President Jerome Powell talks about slower rate hikes at his speech this week, but again, his words shouldn’t be heard halfway through. The Fed is willing to slow the pace of rate hikes to avoid going too far. But if they slow down, it’s also because they want to go higher than 5%.

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Massive anti-Covid protests in the biggest Chinese cities marked the weekend. So, the week kicked off on a bad mood in the Asian markets. Australian and Chinese stock markets were painted in red. The Hang Seng index dived more than 2% in Hong Kong, and crude oil has already lost more than 3% at the time of shooting.

In the US, the record Black Day sales could hammer the joy around a potential Federal Reserve (Fed) pivot on softening US economy. The US shoppers spent more than $9 billion in online sales on Friday, and Cyber Monday is also expected to be a record-breaking one, with more than $11 billion to be spent.

This is not exactly what you expect to hear when you think that the US will enter a consumer-led recession in couple of weeks from now…

The US dollar kicked off the week on a bullish note. The EURUSD slipped below the 200-DMA, near 1.0380. The S&P500 index closed last week at the highest levels since mid-September, and stands a couple of points from the year-to-date descending channel top, which could bring topsellers in, especially if strong data revives the idea that the Fed has no reason to stop hiking its interest rates.

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Markets were quiet yesterday, as the US was closed for Thanksgiving.
European markets mostly surfed on the positive reaction from the US equities to the Federal Reserve (Fed) minutes released a day earlier.

The German DAX advanced to a fresh 5-month high, as the French CAC40 hit a fresh 7-month high, thanks to the euro’s appreciation against the greenback, which somehow eases the inflationary pressures for the European companies, along with the falling energy prices.

Elsewhere, the latest minutes from the European Central Bank (ECB) released yesterday revealed that ‘a few’ officials favored a smaller rate increase, than the 75bp that the bank delivered last month, citing the other monetary tightening measures that would help restricting the monetary conditions. The Swedish Riksbank raised its interest rates by 75bp yesterday and said that the monetary tightening will continue to tame inflation in Sweden. The Korean Central Bank raised its interest rates by another 25bp to the highest levels since 2012 and the won gained, whereas the Turkish Central Bank CUT its policy rate by another 150bp points, but said that the easing is perhaps enough at 9%, and that risks on inflation – which stands around 85% officially, and 185% unofficially – increase from here.

In China, the central bank signals lower reserve ratios for banks, and conducts reverse repo operations to boost liquidity in the system, as news of fresh Covid restriction measures creep in. The Chinese news certainly prevent oil bulls from jumping in the market right now, and the American crude consolidates below $80pb this morning, with solid offers seen at $82/85 range.

In Switzerland, Credit Suisse continues making the headlines. The stock price flirts with all-time-lows, as UBS sees its share price extend gains as outflows from CS reportedly benefit UBS.

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US stocks spent most of yesterday’s session hesitating between slight gains and slight losses, then the release of the latest Federal Reserve (Fed) minutes helped the bulls take the upper hand, as the minutes confirmed that a ‘substantial majority’ of Fed members thought it was a good idea to slow down the pace of the rate hikes.

The S&P500 gained around 0.60% while Nasdaq jumped around 1%.
The US 10-year yield eased, as the US dollar sold off quite aggressively across the board.

We saw a decent price action yesterday was oil, and that was well before the Fed minutes. The barrel of American crude dropped up to 5% yesterday on news that the Europeans would set the price cap for Russian oil to around $65 to $70 per barrel, levels at which Russian oil is already exchanged.

On individual stocks, Tesla was one of the biggest gainers of yesterday’s session as Citi and Morgan Stanley revised their views higher, but that rally was maybe… exaggerated.

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