No Americans means lower volatility

Yesterday, Americans had a day off for Thanksgiving and today the session on Wall Street will be shortened. From the US macro data, we will only know preliminary PMI data. The dollar is stable, which is illustrated by the consolidation of the EUR/USD rate around 1,09. PMI indicators from Europe slightly surprised to the upside but still indicate that the economy is facing a difficult period.

The empty calendar in the USA caused the market's attention to be redirected to the development of the situation on the crude oil market, ceasefire in the Israel-Hamas conflict and news from the Chinese real estate market and PMI data from Europe. In the first case, the decision OPEC + the postponement of the meeting scheduled for this weekend due to the lack of agreement on production cuts resulted in oil losing rapidly on Wednesday. Some of the inheritance has been made up. WTI is at USD 76,5. Volatility should be higher until the meeting scheduled for November 30.

Crisis on the real estate market

In China, we witnessed an unprecedented political discussion by the central government on the topic support for the real estate sector, as he reportedly plans to allow banks to provide unsecured short-term loans to developers. On paper, this is a positive change, but at the same time it signals that Beijing is concerned about the crisis in the real estate market.

There are increasing signs of recession in the euro zone. The services PMI, the most reliable economic barometer for the euro area, improved slightly to 48,2 but remained in recession territory in November. Despite an increase of 0,7 points to 43,8, the index for the manufacturing sector did as well it does not give any hope for an improvement in the situation in the industrial sector. Today's data may therefore fuel speculation about an interest rate cut by the ECB. However, such a move is unlikely in the near future, given the still high inflation pressure. The ECB has raised its key interest rates by as much as 2022 basis points since mid-450, which is now putting the full brake on the economy. At the same time, little stimulus comes from the external economy, as not only the ECB but all other Western central banks have massively raised interest rates.

The British economy is in good shape

The British pound gained against the euro, dollar and other major currencies after Britain's PMI survey for November showed the economy was performing better than expected. GBP / USD exchange rate rose above 1,2550 and set new local maximums. The services PMI rose from 49,5 to 50,5, while economists had expected it to remain flat, ensuring the UK's largest sector returned to growth in November. The manufacturing PMI rose to 46,7 from 44,8 and exceeded the consensus estimate of 45.

This positive surprise caused GBP to gain in value. After today's data, the narrative that the BoE will keep interest rates at an elevated level for a long time. Last week, the market assumed that in 2024 the cost of money would be reduced by a total of approximately 80 basis points, and we can expect the first downward move in May. Now the valuation will probably be slightly modified.

Source: OANDA TMS Brokers