time for the Fed to slow rate hikes is coming. On a more fundamental level, we note that US midterm elections results are still not completed with Republicans being poised to get control of the House of Representatives, but results for the Senate are still considered to be indecisive and we may have to wait until the last vote is counted for the actual result. Overall, the results of the midterm elections may actually provide the Republicans the chance to bring the US Government to a political gridlock thus curbing the expansionary fiscal policy of US President Biden and allowing the Fed to remain alone in navigating the US economy. Yet the failure of the Republicans to produce a cataclysmic red wave may be a slap on the face for the efforts of former US President Trump for a re-run in the 2024 elections.<\/p>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2022\/11\/image-60.png\")
<\/figure>\n\n\n\nGBP \u2013 Autumn statement in the epicenter of attention<\/h2>\n\n\n\n
The pound is about to end the week stronger against the USD and the EUR and seems to edge lower against the JPY. The market\u2019s attention may still be on the prospect of a deep recession for the UK economy. It should be noted that next Thursday UK finance minister Jeremy Hunt, is expected to make the autumn statement and possibly announce spending cuts and substantial tax hikes. The Chancellor of the Exchequers is expected to cover a hole of \u00a350 billion and regardless of the proportion of tax increases and spending cuts which are to be included in the mix, the overall restrictive fiscal policy is expected to weigh on the UK economic outlook further. It was characteristic that BoE\u2019s chief economist Hugh Pill stated that a tight fiscal budget could weigh on the UK economy even more than what the central bank expects and may alter BoE\u2019s policy intentions. Furthermore, we would note that UK house prices contracted for a second month in a row and at the fastest rate since June 2021 in another possible sign of lack of demand for the UK housing market which intensifies worries for the outlook of the UK economy. Yet we would also like to note that financial releases could be of interest for pound traders as they may increase the volatility for the sterling, especially the CPI rates for October on Wednesday and should the rate accelerate further that may add additional pressure on BoE to continue tightening its monetary policy at a fast pace.<\/p>\n\n\n\n JPY is about to end the week stronger against the USD and gains slightly against the GBP and the EUR in a sign of broader strength. On a monetary level we note the release of BoJ\u2019s summary of opinions for the October meeting last Tuesday. In the document the bank stated that \u201cContinued monetary easing is necessary in order to raise productivity and wage levels through supply-side reforms, EUR is about to end the week higher against the USD, yet is losing ground against the GBP, the CHF and JPY. On the monetary front the ECB seems to remain on the hawkish side. It was characteristic that one of the hawks of the bank, Germany\u2019s BuBa President Nagel was reported stating that the ECB would \u201cpress ahead with monetary policy normalisation with determination \u2014 even if our measures dampen economic growth\u201d. The statement underscored the decisiveness of the bank to proceed with further rate hikes and QT at a future stage even if the bank\u2019s monetary policy tightening could hurt growth in the area. On a fundamental level market worries for the economic outlook for the Eurozone remain extensive, given the ECB\u2019s intentions the energy crunch in Europe and the war in Ukraine. It should be noted that the final PMI figures for October tended to be slightly better than expected for the services sector, yet still noted the contraction of economic activity in the Eurozone. Also the contraction of Eurozone\u2019s retail sales growth rate for September was narrower than in August, while investors and analysts are less pessimistic about the outlook of the Eurozone for the next six months according to the Sentix index for November.<\/p>\n\n\n\n AUD is about to end the week stronger against the USD for a fourth consecutive week. On a monetary level RBA Deputy Governor Bullock, stated before a hearing at the Australian Senate that the rates may be at a level where the bank may pause its rate hiking path. Ms. Bullock stated, \u201cinterest rates will probably have to go up a little bit further, but we’re not set on our timing and we’re not set on the amount,”. It should be noted that RBA had allready slowed its rate hiking path to only 25 basis points rate hikes per meeting with the market pricing in another 25 basis points rate hike in the December meeting, while a pause is expected early next year. Hence we note the release of the bank\u2019s November meeting minutes on Tuesday which could shed more light on the bank\u2019s intentions. On a more fundamental level, we expect the Aussie to remain sensitive to the market sentiment as a commodity currency and a more positive, risk oriented market may Also the CAD is about to end the week stronger against the USD. On a monetary front BoC\u2019s Governor Tiff Macklem stated that more rate hikes are to come, yet also noted that the Employment market may suffer some mild consequences. It should be noted that the release of Canada\u2019s employment data for October last Friday tended to indicate a red hot employment market with a sky rocketing employment change figure of 108.3k and a low unemployment rate of 5.2%. On a fundamental level, we note that the Canadian government\u2019s fiscal spending plans of additional C$6.1 billion, may despite BoC\u2019s efforts, revitalise inflationary pressures in the Canadian economy. As for financial releases, we highlight Canada\u2019s CPI rates for October on Wednesday and should rates show an acceleration we may see the pressure once again increasing for BoC to intensify the pace of its rate hikes. Also we note that the CAD may also have gotten some support from the improved market sentiment, given that as a commodity currency it\u2019s considered to be a riskier asset. On the other hand, the drop of oil prices after three weeks of gains could weaken the CAD as well, as Canada is a major oil producing economy. The recent substantial increase in US oil reserves as reported by EIA and API tended to underscore the slack in the US oil market for the past week, while In the coming week we note the higher degree of dispersion of financial releases from different economies, maybe with the main characteristic being that the number of high impact financial releases stemming from the US are lessening. Hence we would expect the USD to relent part of the initiative to other currencies, and thus allow for the blend of trading opportunities in the FX market to lighten on the greenback\u2019s side. Yet the release of the US CPI rates for October on Thursday unleashed forces in the FX market that may continue to affect it in the coming week as well. The market\u2019s expectations for a possible easing of the Fed\u2019s rate hiking path, seem to solidify sinking the USD for now, while at the same time providing support for US stockmarkets as a more risk oriented market seems to be building up. Nevertheless we would like to note the release of the earnings reports for Q3 of Home Depot and Walmart on Tuesday, Cisco on Wednesday and Ali Baba on Thursday and JD.com on Friday. As for gold we note that the weakening of the greenback tended to polish the shiny metal as did also the drop of US yields. We have to highlight that the negative corelation with the USD was on display once again in the past few days and we expect that tendency to be maintained in the coming week as well.<\/p>\n\n\n\n![\"\"](\"\/wp-content\/uploads\/2022\/11\/image-61.png\")
<\/figure>\n\n\n\nJPY \u2013 GDP and CPI rates eyed<\/h2>\n\n\n\n
such as with “investment in people” and business portfolio transformation, and thereby lead to a virtuous cycle from income to spending\u201d. Hence the meeting practically reaffirmed the bank\u2019s dovish stance without any substantial objection being noted for now. On the other hand the document also showed that BoJ policymakers debated the need to have a look at possible side effects of an exit strategy, something that tended to imply that the bank may be more open to such a scenario. Yet, BoJ Governor Kuroda on Thursday, practically dismissed any idea of a monetary policy tightening in the short term, dismissing as premature any details of an exit strategy from the current ultra-loose monetary policy settings in place. In the coming week we note the release of the CPI rates for October on Friday yet before that we would highlight the release of the preliminary GDP rate for Q3 on Tuesday. A possible slowing of the GDP rate is expected and if actually so, may provide more leeway for BoJ, while an acceleration of the CPI rates could intensify the pressure the bank is allready facing.<\/p>\n\n\n\n![\"\"](\"\/wp-content\/uploads\/2022\/11\/image-62.png\")
<\/figure>\n\n\n\nEUR \u2013 Market worries remain<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2022\/11\/image-63.png\")
<\/figure>\n\n\n\nAUD \u2013 Australia\u2019s employment data in focus<\/h2>\n\n\n\n
provide some support for AUD. On second note we would also highlight the close ties of Australia with China, given that Australia exports a high amount of raw materials to the Chinese mainland. It should be noted that China\u2019s trade data for October showed that the China\u2019s import growth rate for October contracted, that is definitely not good news for the Aussie. In the coming week we would note the release of China\u2019s industrial output growth rate for October on Monday and a possible slow-down of the growth rate could weaken AUD. Yet the main market focus is expected to be on Australia\u2019s employment data, with the earnings growth rate for Q3 being due out on Wednesday and the rest on Thursday. Should the data show that the Australian employment market remains tight, with the unemployment rate remaining at low levels, we may see the Aussie getting some support.<\/p>\n\n\n\n![\"\"](\"\/wp-content\/uploads\/2022\/11\/image-64.png\")
<\/figure>\n\n\n\nCAD- CPI rates to move the Loonie<\/h2>\n\n\n\n
increased worries for a possible weakening of the demand side of the commodity tended to contribute to the drop of WTI\u2019s price. Should oil prices drop further, we may see CAD bulls having second thoughts.<\/p>\n\n\n\n![\"\"](\"\/wp-content\/uploads\/2022\/11\/image-65.png\")
<\/figure>\n\n\n\nGeneral Comment<\/h2>\n\n\n\n