Central-bank decisions were the key events during the week of 2–6 November. The Reserve Bank of Australia raised its interest rate from 4.60% to 4.85%, while the Bank of England increased its rate from 3.75% to 4.00%. Both decisions were in line with consensus forecasts. Meanwhile, New Zealand macroeconomic data came in weaker than expected: employment fell by 0.1% quarter on quarter, while the unemployment rate rose to 5.7%. This could strengthen expectations that the Reserve Bank of New Zealand will ease monetary policy.
The US technology sector remains under pressure in the equity market. Following a sharp decline, the Nasdaq 100 is trading at around 27,160 points. In the foreign-exchange market, the euro and pound retreated from recent highs, with EUR/USD falling towards 1.1171 and GBP/USD towards 1.3389.
Gold rebounded from around $3,870 per troy ounce, but its advance stalled near $4,150 before prices retreated to $4,078. US inflation data will be the key driver for precious metals, currency pairs and equity indices next week.
US: Consumer Price Index (CPI)
Analysts expect monthly consumer-price growth to slow from 0.6% to 0.3%. Core CPI, which excludes food and energy prices, is expected to rise by 0.2%, following a 0.3% increase a month earlier. Such a reading would point to easing inflationary pressures, although it would not in itself guarantee a change in the Federal Reserve’s monetary policy. Weaker-than-expected data could strengthen expectations of rate cuts, putting pressure on the dollar and US Treasury yields, potentially creating conditions for a recovery in gold prices. In this scenario, XAU/USD could retest 4,150.00. Lower interest-rate expectations could also support technology stocks, with the 27,650-point area serving as a potential target for a corrective recovery in the Nasdaq 100.
United Kingdom: gross domestic product
Following the Bank of England’s rate increase, the resilience of the UK economy has become particularly important. The previous monthly GDP growth reading was 0.1%. The new report will help assess whether economic growth is holding up amid high borrowing costs. Weak data, particularly a contraction in GDP, could deepen doubts over the scope for further monetary-policy tightening. Sterling has already retreated from the 1.3500 area, and its short-term trend remains bearish. Disappointing data could see GBP/USD extend its decline towards 1.3300, where a support zone lies on the four-hour chart.
US: Producer Price Index (PPI)
Analysts expect monthly producer-price growth to slow from 1.3% to 0.4%. The core measure could rise by 0.2–0.3%, following a 0.7% increase. The release will complement the consumer-inflation data and help assess the persistence of price pressures in the US economy. If the figures come in below forecasts, pressure on the US dollar could intensify.
This could create scope for a corrective recovery in EUR/USD towards 1.1250, close to the area of recent highs. However, the pair’s daily trend remains bearish. If producer inflation exceeds expectations and supports the US dollar, 1.1120 could become a potential downside target for the euro.
