The USD gained after finding a bottom on Tuesday yesterday due to a yield turnaround after earlier falls. Consumer sentiment in Michigan continued to support the economy, as consumer forecasts for inflation one and five years away continued to be higher, with the rate at 4.5% one year and 3.2% five years from now. The yield spiked and then went modestly lower as a consequence.
After OPEC postponed the meeting for this week to November 30, oil prices fell around $4 lower. Stocks opened higher and stayed favorable throughout the day. Saudi Arabia has suggested lowering prices to maintain high prices, but members disagree. Oil stocks (from the EIA) increased by 8.701 million today, following a 3.59 million rise last week. The United States produces more oil than ever, but the global economy is slowing. Crude oil has recently rebounded to trade around $77.00 after falling as low as $73.85.
As a result of this weakness, durable goods fell -5.4% more than projected today, but weekly jobless claims have risen after a significant increase last week. In this week’s report, initial claims declined from 233K to 209K, while continuing claims dropped to 1.840 million from 1.862 million the previous week.
The Thanksgiving holiday in the United States has led to a low level of liquidity today. Still, the Eurozone and UK manufacturing and services PMIs are expected to set the tone for the day. Towards the end of the day, we will see the Retail Sales report from New Zealand, which remains negative.
As for the Eurozone’s manufacturing sector, the PMI reading is expected to remain in contraction, up from 43.1 points previously and up from 47.8 in October to 48.0 points, while the Composite reading is expected to reach 46.7. Although forward-looking indicators for November offer some hope that the economic situation will begin to improve soon, it is unlikely that a solid rebound will occur until the faltering German economy gets back on track.
A headline number of 49.7 points is expected for November Flash Services in the United Kingdom, up from 49.5 points. In contrast, the Manufacturing headline number is anticipated to be 45.0 (previously 44.8), while the Composite is expected to be 48.7 points. As of September, the latter has gone below the neutral line of 50 for the first time since January. The decline was blamed on the services sector, and the manufacturing PMI was in recession for over a year, falling below 50 points in August 2022.
Our short-term signals were short on the USD yesterday, while our long-term signals were long, as the USD gained some territory during the day. As a result of the two long-term commodity signals, we booked profit. However, we were caught off guard by the short-term forex signals, so we had some good profit anyway.
Last month, gold prices surged dramatically due to the Gaza conflict, surpassing the crucial $2,000 mark. Today, gold prices remain strong due to economic uncertainty. After geopolitical tensions in the Middle East eased earlier this month, gold prices dropped. Still, following last week’s poor US inflation numbers, gold purchasers have regained control, and sentiment has changed. After another retreat yesterday following a break of this level, there appears to be a cautious buyer near the $2,000 level. However, the 20 SMA is still holding at support, so we opened a buy signal at this level yesterday.