Volatility could be the name of the game over the next few days due to the protests in China, speeches from Fed officials including Jerome Powell, and top-tier economic data. 

Gold kicked off the week on a positive note as unrest in China over Covid restrictions strained global sentiment. A growing sense of anticipation ahead of the US jobs report along with other top-tier data this week added to the overall caution, leaving investors on edge. With a softer dollar adding to the mix, bulls were injected with enough confidence to challenge levels not seen since November 18.

As the Thanksgiving festivities fade away, including the Black Friday/Cyber Monday sales as well as the excessive turkey consumption, it’s then time to digest some serious economic data and events over the coming week:

Monday, November 28

This year has been a tumultuous one for global financial markets, to say the least.

The New Zealand dollar has been flying high in this tail-end of 2022.

And it could be further boosted by a hawkish Reserve Bank of New Zealand (RBNZ) this week.

NZD in Q4: by the numbers

Nobody, it seems loves the dollar which has weakened against every single G10 currency this month.

It was already suffering from markets scaling back bets for further aggressive Fed rate increases, but the most recent soft US inflation report dealt the knockout blow. With signs of cooling inflation significantly reducing the pressure for the Fed to keep raising rates aggressively, the dollar could be yanked from its throne sooner than expected.

GBPJPY on the D1 time frame was in a brief uptrend where the bulls prevailed over the bears before a last higher top formed at 172.122 on 21 October. Supply then started to overcome demand with the resulting change in market structure.

A closer look at the Momentum Oscillator reveals a negative divergence between points “a” and “b” when comparing the tops at 170.076 and 172.122.

A sense of unease gripped financial markets on Wednesday as a rocket blast in Poland overnight left investors on edge.

Renewed fears of further escalation in geopolitical tensions dragged European markets lower with the risk-off sentiment hitting US equity futures. In the currency space, the dollar got no love which offered an opportunity for G10 currencies to fight back. While gold found comfort above $1780 as market players rushed to safe-haven destinations.  

Last week we questioned whether the mighty dollar would continue dominating the FX space after its shaky performance this quarter.

First, let’s recap the volatile week that was for global financial markets!

Here’s the stunning price action that ensued after the lower-than-expected US inflation print that was released yesterday (Thursday, Nov 10th):