November 12, 2021
GBP/USD: The Great Britain pound fell against the US dollar on Thursday, reaching its lowest level this year as the UK economy lost momentum and a surge in US inflation boosted the greenback amid bets that the Federal Reserve would hike interest rates faster than expected. Data released by the Office for National Statistics showed Britain’s economy grew in September but estimates for previous months were revised lower, leaving the economy still smaller than it was last year in February. The Bank of England at the November policy meeting surprised markets by leaving its key interest rate unchanged at 0.1% while most members of The Monetary Policy Committee had been advocating for the rate hike. Nevertheless, markets are now pricing in a high probability of a December rate increase.
USD/JPY: The US dollar rose against the Japanese Yen yesterday due to the general greenback strength. Previously, the wholesale inflation in Japan hit a four-decade high in October due to rising commodity prices and supply issues, according to government data. Bank of Japan policymakers admitted inflationary pressure was rising due to higher energy prices. However, they said the pressure was moderate and saw the need to maintain ultra-easy policy. The pair may keep it momentum from a US rate hike hints and developing news from China’s property sector. The local resistance level can be seen at 114.40. A breakout to the upside can trigger growth to 114.90.
XAU/USD: Gold prices rose on Thursday and neared a five-month high touched in the previous session. Investors have sought inflation hedges that traditionally support prices on precious metals. Generally, US dollar strength has not been an excuse for the rising yellow metal. Furthermore, the US 10-year Treasury yield rose above 1.50%, which could usually cause pressure on gold prices. However, real yields are the main driver for gold. It’s worth recalling that the real yield is the difference between the US 10-year Treasury yield and the country’s inflation. And as of November 10, the real yield sits at a negative value of 1.85%. As long as real yields keep falling, gold will be maintaining its uptrend.