Financial Markets in Red as Disappointing Data Sparks Risk-Off Mood

Global financial markets faced a sea of red as disappointing economic data and increased corporate debt issuance shook investor confidence. The US dollar surged to its highest level since March, while crude oil prices saw a boost following production cut extensions.

Key Factors for Today

• Debt Issuance Pressures Gold Prices
• Eurozone Services PMI Declines, EURUSD Hits $1.07
• Australian Dollar Slumps After RBA Holds Rates
• Yen Hits Fresh Lows Amidst Japan's Intervention Consideration
• Saudi Arabia and Russia Extend Production Cuts

Market Movers

• Approximately 40 US businesses collectively issued around $36 billion in debt, leading to increased yields on treasuries and bolstering the US dollar. Consequently, gold recorded its second consecutive decline this week, reaching a low of $1925 per ounce.
• The final Eurozone Services PMI saw a downward revision to 47.9 from the preliminary 48.3, confirming the first contraction in eight months. The composite PMI also dipped to its weakest level since November 2020, causing the EURUSD pair to dip to $1.07 after a 0.67% loss on Tuesday. If bulls fail to reclaim $1.0767, the next level of short-term rejection could be at $1.0667.
• The Reserve Bank of Australia (RBA) maintained rates for the third consecutive time, suggesting the possibility of future rate hikes while acknowledging uncertainty in the effects of monetary policy lag.
• : The Japanese yen initially experienced a boost but later declined following remarks by Masato Kanda, the top currency official in the Japanese government, who did not rule out any options to address the weakening currency.
• Both Saudi Arabia and Russia confirmed the extension of their current production curbs until the end of the year. Saudi Arabia will maintain its reduction of 1 million barrels per day, while Russia will keep its 500,000 barrels per day cut in place.

Economic Calendar

• DE Factory Orders
• S&P Global/CIPS Construction PMI
• US Trade Balance
• Fed Collins Speech
• BOE MPC Treasury Committee Hearings

The Big News

US Dollar Surges as Debt Issuance Spikes

The US dollar saw a notable uptick, reaching its highest level since March, driven by approximately 40 US businesses issuing approximately $36 billion in debt. This surge in debt issuance pushed treasury yields higher and exerted downward pressure on gold prices. As a result, gold experienced a second consecutive session of declines, dropping to $1925 per ounce. The precious metal faces critical resistance at $1935 and now confronts support at $1915.

Eurozone Services PMI Contracts, EURUSD at $1.07

In the Eurozone, the Services PMI saw a downward revision, confirming the first contraction in eight months. The composite PMI also hit its weakest level since November 2020, pushing the EURUSD pair down to $1.07 after a 0.67% loss earlier in the week. Failure to recapture $1.0767 may see further declines towards $1.0667. ECB official Joachim Nagel highlighted the Euro Area's failure to reach its inflation target and underscored a data-dependent rate approach.

Australian Dollar Faces Setback Amidst RBA Decision

The Australian Dollar (AUD) faced a significant setback as the Reserve Bank of Australia (RBA) held rates steady for the third consecutive time. While the RBA hinted at the possibility of future rate hikes, it also acknowledged uncertainty regarding the lag in the effects of monetary policy. Consequently, the AUD slumped to $0.6378, marking a November low, with the next key support level at $0.63.

Japanese Yen's Initial Strength Fades Amidst Yen Depreciation Concerns

The Japanese yen initially saw some strength but ultimately weakened after remarks by Masato Kanda, the top currency official in the Japanese government. Kanda did not rule out any options to address the yen's depreciation, and USD/JPY reached a fresh November high. Bulls may target ¥149 unless ¥146.43 succumbs to increasing pressure.