Xe Morning Update - Your daily market wrap

Developments in markets for Friday 14 November......

• Snapshot: S&P500/Nasdaq?? yields??, crude oil??, gold??US dollar??
• AUD/USD:??oscillates either side of 100d MA, ends the week near 0.6540
• AUD WoW?: JPY: +1.40%, USD: +0.66%, GBP: +0.59%, EUR: +0.20%, NZD -0.31%
• Choppy trade through Friday's U.S. session, equities recover from deep losses
• Hawkish Fedspeak: odds of December cut drop below 50%
• Week ahead: confirmation of resumption of U.S. data; Nvidia 3Q earnings

Each morning we bring you up to speed with the latest market news, including the events and themes that are impacting currencies and other related asset classes......

A turbulent U.S. session saw equity markets stage a notable recovery having been deep in the red shortly after the open, the Nasdaq rebounding from near 2% intraday losses to end the session marginally higher. The S&P500 closed marginally lower having been down close to one-and-a-half percent. Net intraday moves for major currencies were mostly contained within a +/- 0.20% intraday change. The Australian dollar was a solid performer, oscillating either side of the 100-day moving average, ending the week a few pips south of 0.6540.
 
The market has become increasingly jumpy over the past couple of weeks as investors fret over the sustainability of richly valued tech stocks and a Fed, at aggregate, appears reluctant to deliver another 25-bps cut at the final FOMC meeting for the year. Multiple Fed officials were speaking through Friday's session, the hawks again pushing the case for an on-hold decision on 10 December given upside inflation risks prevail.
 
Earlier in the week, rates markets assigned a circa two-thirds probability to a quarter-point cut…..by the week's close this had dropped below 50%.
 
The dollar index (DXY) located support around the 99.00 mark over the final two trading days of the week, seeking to halt its pullback from the 05 November swing high logged a few pips shy of 100.40. The modest retracement may be due to positioning ahead of the recommending of U.S. government issued data following the end of the longest government shutdown in history. It's expected that some components of the September BLS jobs report are to be released this week, including the widely monitored nonfarm payrolls data point.

US equity markets as at time of morning update release and may not represent session closing prices  

Should the data record a sustained cooling of the labour market, expectations of a December rate cut will once again rise, placing downward pressure on U.S. treasury yields and the dollar. Conversely, signs of moderating softness would likely result in a more hawkish FOMC opting to remain on-hold.
 
Advancing around two-thirds-of-a-percent for the week, the Australian dollar was a middling performer amongst the G10, having handed back gains after marking the week's high at 0.6580, Thursday.  Catching a bid in the Asian afternoon, AUD/USD added over 40-pips to mark intraday highs a pip or so beyond 0.65500. Gains were consolidated through European and U.S. trade, the Aussie tracking sideways within proximity to 0.6540.
 
Near-term resistance therefore presents at 0.6550, then 0.6580. Beyond here a 0.6610/30 resistance zone must be overcome for AUD bulls to retain control.
 
To the week ahead, the market awaits confirmation of the revised schedule for the past two month's government issued data. A relatively quiet calendar presents GDP for Japan, RBA minutes, UK CPI and retail sales and S&P Global PIMs for the UK, eurozone and U.S.
 
The week's pivotal event may be the release of Nvidia' earnings report which may determine if the relentless march higher for U.S. equity markets continues or cracks start to appear in the AI trade. Nvidia has a staggering 8% weighting within the S&P500. Should the numbers and/or forward guidance fail to live up to expectations, U.S. equities could drop precipitously. Nvidia's results are released after Wednesday's closing bell - Thursday morning, local time.
 
Have a great week!
Stuart Talman (stuart.talman@xe.com)
Xe Corporate

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