Investors await the German ZEW survey and US PPI
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Investors await the German ZEW survey and US PPI

The S&P 500 reached a two-month high at one point. As momentum failed to build over 4,000, while the US dollar retreated from its highs, which could cause markets in Europe to open mixed today as investors gauge the economic outlook in the region and globally. Currently, gold is moving up and down around $1,770 in a narrow range. As long as the yield on the benchmark 10-year US Treasury bond remains below 4%, gold can move sideways for the time being.


Following Monday's choppy action, the EUR/USD trades in a tight range above 1.0300 in the early Tuesday trading session. Investors are waiting for the third quarter GDP data for the Eurozone as well as the ZEW sentiment survey to be released. On the US economic docket, there will be data on the Producer Price Index for October.

Eurozone GDP will likely confirm the initial forecast of 0.2% QoQ, which may not enhance the prospects of EUR/USD buyers returning. In contrast, a downward reading would be welcomed by sellers of the pair. Nevertheless, it is important to view the US Producer Price Index (PPI) for October, which is expected to rise by 8.3% YoY from 8.5% last month, along with US Retail Sales for October with caution until clear indications emerge.

There is a mixed sentiment out there after a rather bumpy session on Monday in the United States as a result of comments made by Federal Reserve leaders Lael Brainard and Chris Waller about the possibility of a further interest rate hike in the near future.

Waller argues that the market is overly optimistic, and should prepare itself for higher interest rates in the coming months, whereas Brainard believes the central bank can ease interest rate increases.


Even though sterling has slipped back from the 1.1855 area, it is still in a strong uptrend on the daily chart from its September lows. While above the 50-day EMA the trend remains for a move towards the 1.1952 area after breaking above the September highs. Intensifying bullish momentum can send the pair towards 1.19518 and 1.21421, respectively. On the other hand, A break below 1.16440 retargets the 1.14537 area.

As inflation in the UK is expected to hit 10.5% tomorrow, another record high, if there is one bright spot in the bleak economic outlook, it would have to be a low unemployment rate. It is estimated that the unemployment rate for the three months to August fell to a 48-year low of 3.5%, and the rate for the three months to September is expected to remain at that level in the data due out later this morning.

It is expected that the rate of wage growth, which includes bonuses, will remain the same over the last month. However, we will pay close attention to the economic activity rate, which has reached a record high of 21.7%.

China's latest data

Considering last week's poor trade numbers, which showed that imports and exports fell into negative territory in October, there were low expectations surrounding this morning's latest retail sales and industrial production numbers from China.

It seems that Chinese consumers have been subjected to rolling lockdowns and various restrictions for most of this year, and while we were able to see a decent increase in August of 5.4%, it appears that this was mainly due to pent-up demand being released. Despite the improvement in the original August numbers, sales were lower in September, with a decline of 2.5%, and today's October numbers were even more disappointing, with a decline of -0.5%. On the other hand, industrial production was up by 5% over the last month.