UK GDP and US Retail Sales Data Shape Markets (11.15.2024)

The market's focus today will be on the UK GDP data, while in the US, attention will be on retail sales.

After Donald Trump's victory in the US presidential election, the EUR/USD pair is hovering near its lowest levels of 2024, while the DXY is trading at its 52-week high. Gold, on the other hand, has tested the 2530 levels again after about 3 months.

EUR/USD at 1.0540: Dollar Set for Strong Weekly Gain

The Euro fell below $1.06, its lowest point since October 2023, as a strong dollar and concerns about trade tariffs following Trump's election victory weighed heavily on the currency. Political instability in Germany and expectations of a 25 bps ECB rate cut in December added to the pressure. Meanwhile, Germany’s ZEW Economic Sentiment Indicator fell to 7.4 in November, well below expectations. The dollar index stayed near 106.8 on Friday, on track for its strongest week in over a month, as investors scaled back expectations for Federal Reserve rate cuts.

Fed Chair Powell indicated no rush to cut rates, highlighting the strong economy, a strong job market, and ongoing inflation. As a result, market odds for a 0.25% rate cut at the Fed's December meeting dropped to around 59%, down from 82.5% the previous day.

EUR/USD resistance levels are 1.0560, 1.0615, and 1.0650; support is at 1.0500, with further levels at 1.0450 and 1.0400.

Yen Weakens on Q3 Low Growth

The Japanese yen weakened past 156 per dollar on Friday, its lowest in nearly four months, after Japan's Q3 GDP grew just 0.2%, down from 0.5% in Q2. Annual growth slowed to 0.9% from 2.2%. Uncertainty about the Bank of Japan's policy direction, combined with a stronger US dollar, kept pressure on the yen. The BoJ still expects to raise rates to 1% by mid-2025, despite mixed economic data and political instability.

For USD/JPY, support levels are at 154.50 (200-day moving average), 153.40, and 152.30, while resistance is at 156.50, 157.30, and 158.50.

Gold Heads for Worst Week Since 2021

Gold traded around $2,570 per ounce on Friday, on track for its worst week since June 2021, weighed down by a strong US dollar and lower expectations for Federal Reserve rate cuts, which reduced the appeal of non-yielding gold. Market expectations for a December rate cut dropped after Powell's statement, with traders now assigning a 58% chance, down from the prior 80%.

Gold's support levels are $2,540, $2,485, and $2,460; resistance levels are $2,585, $2,605, and $2,630.

Markets Await Q3 Growth Data in the UK

The British pound dropped to $1.26, a four-month low, as a stronger dollar fueled concerns that Donald Trump's policies could boost inflation and limit the Federal Reserve’s ability to cut rates. In the UK, labor market data reinforced the Bank of England’s cautious approach to rate cuts. While regular pay growth slowed slightly to 4.8%, total pay, including bonuses, increased. However, the unemployment rate rose to 4.3%, and job vacancies fell to their lowest since May 2021. Last week, the BoE cut rates by 25bps for the second time this year and signaled caution on further cuts. Key UK economic data, including Q3 GDP, is due this week.

GBP/USD support levels are 1.2620, 1.2580, and 1.2520; resistance levels are 1.2745, 1.2815, and 1.2840.

Silver Rebounds to $30 on Friday

Silver prices held around $30 per ounce on Friday, close to two-month lows, as a stronger dollar and risk-on sentiment shifted investor focus away from precious metals. In China, investors were underwhelmed by Beijing's latest economic support measures, despite the finance ministry's announcement of tax incentives for property and land transactions. As a vital metal in solar panel production, silver has been pressured by concerns over the lack of strong stimulus in China, which has dampened the sector's outlook.

Resistance levels are at 31.00, 31.65, and 32.00, while support is at 30.40, with further levels at 29.85 and 28.80.