November 03, 2021
NZD/USD: Kiwi pair seems to ignore strong New Zealand jobs data for the third quarter, trying to recover near a two-week low around 0.7100 level. NZD/USD showed the biggest drop for the last five weeks before the bears took a breather during the early morning session in Asia. Earlier in the day, the Reserve Bank of New Zealand reported that they expect banks to be more cautious about high debt-to-income loans given the risks of rising interest rates and the economic outlook. Looking forward, the pre-Fed calm session could challenge kiwi traders, but monthly releases of the US ADP Employment Change and ISM Services PMI may lead to intraday volatility.
GBP/USD: GBP/USD is under pressure, having shown a sharp decline for the third day in a row, while bears are trying to push the market, staying close to a three-week low. Central banks are the focus for the week. It’s not yet clear whether the Bank of England will be raising interest rates and whether the US Federal Reserve will start tapering this month. US data is also in the spotlight this week. Judging by last month’s employment report, which was better than expected, the upcoming Nonfarm Payrolls data scheduled to be released on Friday is also expected to be positive. Extreme market volatility can be observed depending on the outcome.
S&P500: Yesterday was another day of growth for US equity markets, with all three major US indices refreshing their closing levels; the key S&P 500 index gained 0.4%. Strong earnings have supported US equity markets in recent weeks despite expectations for interest rate hikes by most of the major central banks in 2022. Those are driven by significant inflationary risks due to higher energy prices and further evidence that it might take some time to handle the issue of supply chain disruptions and shortages. This week, equity investors will be tested by the ongoing hawkish shift in global central bank policies as the Fed and the BoE announce their monetary policy decisions on Wednesday and Thursday, respectively.