Monday trading may start cautiously, with investors focusing on retail earnings, housing market signals, and global economic updates.
Energy and interest-sensitive sectors may experience early-week volatility as traders await critical midweek data and Federal Reserve signals. Expect a steady buildup in market activity as the week progresses.
KEY INDICATORS
European market open
European markets will likely react to upcoming Eurozone economic reports and any developments over the weekend.
Investors may position themselves ahead of key manufacturing and consumer data later in the week.
Oil prices and energy markets
Volatility in oil prices remains a theme as geopolitical factors and OPEC production signals continue to influence energy markets.
Crude price movements on Monday could impact inflation-sensitive sectors and broader market sentiment.
US housing market in spotlight
Investors will prepare for housing market data scheduled later in the week, such as housing starts and existing home sales.
Sentiment on Monday may reflect early positioning in sectors like real estate and home construction, given the continued impact of elevated interest rates.
MARKET MOVERS
EUR/GBP
Possible long preference The upside prevails as long as 0.83416 is support. Alternative scenario Below 0.83416, expect 0.83350 and 0.83150. The RSI is above 70. It could mean either that the pair is in a lasting uptrend or just overbought and therefore bound to correct (look for bearish divergence in this case).
Pound to euro rate week ahead forecast: Inflation, PMIs to dominate
Pound Sterling could lose further value against the euro in the coming week if UK inflation and PMI data undershoot expectations.
The pound to euro exchange rate (GBP/EUR) fell 0.65% last week despite initially rallying to its highest level in two years at 1.21 on Monday.
Near-term, GBP/EUR is in the process of consolidating its recent gains, which means strength will be capped at the 1.21 2024 highs.
UK inflation is expected to have risen to 2.2% year-on-year in October from 1.7% in September, indicating an acceleration in inflation.
EUR/JPY
Possible long indication The upside prevails as long as 163.019 is support. Alternative scenario Below 163.019, expect 162.728 and 162.353. The RSI is above 50. The MACD is positive and above its signal line. The configuration is positive.
GBP/CHF
Possible short preference The downside prevails as long as 1.12164 is resistance. Alternative scenario The upside breakout of 1.12164, would call for 1.12316 and 1.12485. The RSI is below 30. It could either mean that the pair is in a lasting downtrend or just oversold and therefore bound to retrace (look for bullish divergence in this case).
TODAY’S NEWS HEADLINES
Dollar sitting pretty, yen bears wary of Bank of Japan hawks
The dollar was looking to extend its bull run on Monday as lofty Treasury yields and a more restrained outlook for US rate cuts burnished its attractiveness, though the risk of intervention had caused a pullback against the yen.
Markets imply around a 55% chance of a quarter-point rate hike to 0.5% when the BOJ meets on 19 December.
Japanese Finance Minister Katsunobu Kato on Friday put the market on warning of possible intervention if the yen fell too far and fast, sending the dollar down 1.3% to 154.30 yen.
Oil prices tick higher as Russia-Ukraine tensions escalate
Oil prices edged up on Monday after fighting between Russia and Ukraine intensified over the weekend, although concerns about fuel demand in China and forecasts of a global oil surplus weighed on markets.
Brent crude futures were up 55 cents, or 0.8%, to USD 71.59 a barrel at 9:54 AM GMT.
US West Texas Intermediate crude futures were at USD 67.45 a barrel, up 43 cents, or 0.6%.
Russia unleashed its largest air strike on Ukraine in almost three months on Sunday, causing severe damage to the country’s power system.
China’s refinery throughput fell 4.6% in October from last year and the country’s factory output growth slowed last month, government data showed on Friday.
Gold gains 1% as dollar rally stalls
Gold prices rose on Monday after last week’s sharp declines, as a rally in the dollar paused, while market participants awaited comments from Federal Reserve officials this week for more clues on the US interest rate path.
Spot gold firmed 1% to USD 2,587.49 per ounce by 1:50 AM GMT, after falling to its worst week in more than three years on Friday.
US gold futures inched 0.9% higher to USD 2,592.00.
