Pre-FOMC Market Scrappiness Continues – US PPI On Watch Today

Recent market action has been a little tricky to pin down and can likely be attributed to some nervousness amongst traders ahead of next week’s central bank meetings. The Fed, BOE and ECB each meet and are each expected to hike rates further, adding to a growing concern over a global slowdown into next year. However, USD was seen lower across the day again yesterday, allowing for US stocks to bounce back on the day. Today, market attention shifts to the November US PPI release which will be seen as a key gauge ahead of next week’s CPI number and, therefore, has the potential to create plenty of volatility if we see any surprises.

Key Factors for Today

- USD slide deepens ahead of PPI and consumer sentiment data
- Stocks mixed but US equities bounce back on USD weakness – recession fears vx China optimism the key drivers
- EUR leads in FX – CAD weak following BOC
- Metals continue higher, poised to break
- Oil prices hit fresh 2022 lows

Coming Up

- GBP – Consumer Inflation expectations
- USD – Core PPI
- USD – UoM Consumer Sentiment

Equities

Equities markets saw choppy and fairly mixed action yesterday. US and Asian stocks were broadly higher with US markets benefiting from a weaker Dollar and Asian markets continuing to build on China reopening optimism. Along with US PPI today we’ll also get the latest US consumer sentiment reading which will be closely watched as we head into what is typically the biggest retail season of the year. In Europe, the focus remains on energy prices as European leaders continue to try and eek out an agreement on new Russian energy price caps.

EUR Stays Strong in FX

In FX, the continued weakness in USD into the end of the week has allowed for recent strength elsewhere in the G10 FX bloc to continue. EUR remains at the forefront while GBP and CHF have been strong also. Hawkish central bank expectations are keeping those currencies underpinned against the Dollar heading into next week’s key central bank meetings.

CAD Weak Following Dovish BOC

CAD has been the weakest performer over the European open on Friday, weighed on by the continued slide in oil prices. The BOC meeting earlier in the week confirmed that the bank is looking to pause on rates, adding bearish pressure for CAD near-term.

Metals Higher Again But Crude Continues Lower

In the metals and commodities space, both gold and silver are both stronger again today as weakness in the US Dollar continues to underpin. If today’s US data sends USD lower still, both metals look poised to break out. Crude prices have not been so lucky this week. Crude futures continue to push to new 2022 lows as budding global recession fears and concerns over a potential new price cap on Russian oil weigh on sentiment.