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Movement on multiple fronts – Market Overview

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Miguel A. Rodriguez
Miguel A. Rodriguez
05 November 2022
The USD gained territory driven by the rebound in treasury bond yields and a modest shift in market risk sentiment towards higher risk aversion.

Elsewhere, the global stock markets slowed their upward movement experiencing slight drops for North American indices and a more pronounced fall for Japan225 index that corrected after almost two weeks of a bullish rally.

The causes of these falls can be attributed purely to technical reasons. Still, it is also worth mentioning that the increases in interest rates of long-term references anticipate investors' fear of inflationary spikes that could force central banks, especially the Federal Reserve, to anticipate the moment when reference rates could rise again.

Higher interest rates would hurt the markets by influencing stocks' valuation criteria, which would make their financing needs more expensive.

The main factor to take into account at this time would be the level of growth of the economy and, to a greater extent, inflation expectations.

This afternoon, Fed’s Meeting Minutes will be published. Although no variation is expected in regards to the assessment of the economic situation, any comment they make concerning a potential inflationary rebound could potentially influence the markets.

The energy market keeps steady.

One of the elements that are beginning to worry about the market, which could influence the Federal Reserve's valuation is the continuous rise in oil prices.

Although energy prices are not taken into account when assessing sustained inflationary pressures, they are still a factor that could influence the rest of the commodities.

Oil has already reached maximum levels (higher than those pre-COVID), and with expectations of production cuts by OPEC, prices could continue to increase.

Technically, oil it is in an uptrend and only finds resistance in the zone of January 2020 highs at 65.60.

The EUR/USD pair might be on the downhill.

EUR/USD is back in the pivot zone of 1.2065 below which, from a technical analysis point of view, it could work its way towards the previous lows of 1.1960 where the next support for the pair is located.

Sources:  Bloomberg, WSJ.

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.