Forex Market Recap (07-12 November 2021)

The USD took the top spot this week, riding higher off of fresh inflation data from the US, raising speculation that rate hikes will be coming sooner than expected. The JPY took the second spot despite weak economic updates from Japan and calls from the BoJ to keep an easy monetary policy.

USD:

• House of Representatives passed $1 trillion infrastructure bill last week and heading to President Biden’s desk where it will likely be signed
• Fed Vice Chair Clarida says another year of inflation like this one would not be ‘a policy success’;
• Fed’s Evans says inflation rise is "temporary", but sees upside risk
• Consumer's income and spending expectations rose from 5.3% to 5.7%
• Fed’s Kashkari is keeping an "open mind" on timing of rate hikes
• Fed's Bullard expects two rate hikes in 2022
• Consumer prices jump 6.2% in October, the biggest inflation surge in more than 30 years
• Producer Price Index rose +0.6% m/m in October; +8.6% y/y
• Credit card use returning to pre-pandemic patterns, NY Fed report finds
• Weekly jobless claims fall 4,000 to 267,000 but a record 4.4M Americans quit their jobs in September
• Consumer sentiment drops to 66.8, a 10-year low, on inflation worries

EUR:

• ECB Chief Economist Lane: Current period of inflation unusual and transitory
• Eurozone Sentix investor confidence hits 18.3 in November vs. 16.9 previous
• German exports fall for second consecutive month in September
• France trade balance in third quarter of 2021: -€1.3B
• ECB Economic Bulletin: Global economic activity expands at a moderate pace; price pressures remain unexpectedly elevated but likely temporary
• Industrial production down by 0.2% in euro area and by 0.5% in the EU
• Spain CPI in October rose by 5.4% y/y, the highest rate in 29 years
• Austria to impose lockdown on millions of unvaccinated people as Covid cases surge

GBP:

• BoE Bailey says they will act on rates if inflation risks grow
• Early Christmas shopping boosted UK consumer spending in October by 1.3% y/y, 0.6% m/m
• CPI expected to peak around 5% in Q2 2022, then slow to fall
• GDP rose 0.6% in September but still lags pre-pandemic levels
• EU sees better tone in Brexit talks as UK warns time is short

CAD:

• BoC governor says inflation is ‘transitory but not short-lived’; assures Canadians that inflation will be kept under control despite a 4.4% read in September, and expectations of 5% m/m by the end of the year

JPY:

• BOJ expecting rebound in first half of next year but wary of supply chain risks and offshore recession
• Leading indicators dip from 101.3% to 99.7% in Oct
• Inflation-adjusted wages slips by 0.2% for the first time in three months as inflation outpaces wage growth
• Japan’s Economy Watchers Sentiment hits 55.5, an 8-year high
• Japan’s wholesale inflation hits 40-year high as fuel costs spike
• Japan PPI surged to 8.00% y/y in Oct, highest since 1981

AUD:

• New home sales climbed 11.1% in October amid a lift in consumer confidence following end of covid lockdowns in some states
• Australia weekly consumer confidence : 109.0 vs. 108.4
• Unemployment rate unexpectedly rises from 4.6% to 5.2% in October as economy sheds 46,000 jobs

NZD:

• Preliminary ANZ business confidence index down from -13.4 to -18.1
• Food prices fall for 1st time since February: -0.9% m/m in October
• Business NZ manufacturing index up from 51.6 to 54.3