Commodity prices across the board have made an explosive start to the month – registering their biggest back-to-back weekly gains on record since 1960. So far this quarter, a total 27 Commodities ranging from the metals, energies to agriculture have tallied up astronomical double-digit single day gains – not once, not twice, but on multiple occasions – outperforming every other asset class out there. Just take last week for example – every possible commodity imaginable from Aluminium, Copper, Palladium, Platinum, Gold, Silver, Lumber, Zinc, Crude Oil to Natural Gas prices surged following Thursday's U.S Consumer Price Inflation data – with a long-list chalking up spectacular gains of 10% or higher – literally in a single day! The exact same thing happened in the previous week, following the U.S employment report. And yes, you guessed it – the week before that too following the Bank of Japan's currency intervention. As a result, there's really nothing historical you can point to for what's going on in markets today. We are routinely seeing Commodities across the sector whip up spectacular back to back gains of 10% or higher, almost on a weekly basis – fuelling an era of enormous wealth creation like we have never seen before. Looking ahead, more big moves could be on the horizon as traders shift their attention to U.S Producer Price Inflation data and the UK Autumn Statement. Last week's cooler-than-expected Consumer Price Inflation data offered some relief to the Fed, potentially indicating that October could be the start of a disinflationary trend that lasts through next year. The headline Consumer Price Index rose less than expected – boosting expectations that supersize rate hikes are likely now in the rear view mirror. This week's hotly anticipated U.S Producer Price Inflation reading will either boost or dampen expectations of a possible Fed "pivot" away from an aggressive interest rate hikes. Elsewhere, this week all eyes will be on the UK Autumn Statement. After the disastrous "mini-budget" in September, which subsequently forced The Bank of England to revert back to unprecedented "Quantitative Easing" measures – this week's Autumn Statement is already gearing up to be a major market-moving event, that traders will not want to miss. Despite short-term UK borrowing costs stabilising since the market meltdown seen in late September, the Chancellor will need to present plans to address the 55 billion pound "black hole" in Government finances. Should the Chancellor's fiscal plan fail to instil confidence, then we could be on for a repeat of September announcement, which sent a long-list of commodities surging to multi-month highs – registering their biggest one-day move this year. Extraordinary times create extraordinary opportunities and right now, as traders we are amidst "one of the greatest eras of wealth creation the world has seen". My advice to you is, do not waste this opportunity! Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

This week, Cable traders will have a lot to look at. Of course the big event later in the week is the long anticipated Autumn Budget that is expected to be released on Thursday. It's not expected to be such a controversial affair this time around, but there are still some pending issues that could shake up the markets. And pending nervousness after what happened last time a new Chancellor announced a spending plan. The main issue is how will Chancellor Hunt balance the books over an expected shortfall of £60B due to slower economic outlook and increasing costs. What has been leaked so far suggests that it will be a combination of higher taxes and spending cuts. While these measures are generally understood to weigh on economic growth, they are also expected to help with the inflation situation. It's stagflation now What happens with the budget is particularly relevant for the BOE, since it is facing something of a crossroads. After UK GDP came in negative for the third quarter, it's expected to show the beginning of the prolonged recession the BOE anticipated. The BOE is also forecasting that inflation will remain in the double digits for a couple of months, and won't start trending lower definitively until the middle of next year. In other words, stagflation. The question is how will the BOE choose to deal with this situation. One way is to raise rates aggressively to kill off inflation, provoking a hard landing for the economy. Another is to try to rescue the economy and let inflation run hot until productivity can increase and stabilize the currency. Both are politically difficult solutions. Since the BOE and the new Chancellor are on the same wavelength, that could work with the Autumn Budget. An "austerity" budget would work with crushing inflation sooner, and shoring up the government's finances for an expected growth strategy later. Though, all of that is in theory; practice might be an entirely different matter. But it's useful to have some insight into how officials are thinking. The data that could shake things up The first bit of important information comes out tomorrow, which are labor figures. Here the market's focus is likely to be on the claimant count numbers, since the employment change and unemployment rates are from previous months. October claimant count is expected to continue its rise and reach 27K, up from 25.5K previously. That would be the largest number of people going on unemployment since March of last year. Wednesday has what could be the market mover in cable this week, which is the release of October inflation, which is expected to move up to 10.6%, and another multi-decade high. That's above the previous 10.1%. The BOE doesn't expect inflation to peak until next year. To tighten or not to tighten Where the BOE could see some relief is in the core inflation rate, which is expected to tick lower to 6.4% from 6.5% prior, the first drop in months. This is likely to have more of an impact on monetary policy, since the BOE appears to be worried about tightening too much, which could impact liquidity in the financial sector. With the government looking to cut spending, liquidity could be even tighter. So, if core inflation starts to move lower (or moves down faster than the market anticipates, like it did in the US), then that opens the very real possibility the BOE could let up on the tightening. That would weaken the pound, and push cable lower.

Bond market returns for 2022 have been horrific, right along the credit curve. For 2023, returns will be helped by a higher starting running yield, and subsequent falls in market rates. Bonds will be a good place to be, especially higher on the credit spectrum. Brace for a reduction in liquidity and more available collateral as key themes, too. The energy crisis this year saw us drawing parallels to the 1970s and 80s. Dollar strength was a net outcome as the Volcker years generated high real rates to kill inflation. The collapse in tech stocks, meanwhile, has struck a similar chord to the dot com boom and bust of 1999/2000. That period also saw the dollar in vogue. And as we pick through the bones of the 2019/20 pandemic fallout, we're reminded of the great financial crisis in 2007/08, as housing markets suffer intense pressure. So many parallels, but none are perfect. Our story for 2023 draws on these, with a modern twist. As we know, history doesn't repeat itself but it often rhymes. Inflation and the Fed funds rate back to the 1970s (%) Source:  Refinitiv, ING So what do we see? The Federal Reserve, the European Central Bank and the Bank of England will all undershoot the current market discount for terminal rates, but we should get quite close to the tops that the market expects. For market rates, we need to see those peaks before we can conclusively declare the top. That implies that market rates should remain under upward pressure at least through the turn of the year, and likely into the early part of the first quarter of 2023. After that, it's all about market rates concluding that if indeed we have peaked, the next move must be down. Actual Fed rate cuts in the second half will solidify this move, even if the ECB decides to stand still. Overall, market rates in the 10yr are projected to fall by some 100bp in 2023 (US by a bit more and eurozone by half that), and the US 2yr should fall by more still if we are right and the Fed does cut in the second half. The US curve should steepen by more than the eurozone curve, as the ECB steers clear from actually cutting rates in 2023. The peak in the Fed funds rate should act to ease the US dollar premium, and we'll see that in an easing in the US dollar cross-currency basis. The second half of 2023 should see some meaningful convergence of eurozone to US market rates. All-in spreads, especially those comprising the Japanese yen basis, should narrow significantly. All-in spreads to dollars, especially those comprising the Japanese yen basis, should narrow significantly The energy crisis in Europe adds to bond supply pressure as economies struggle to deal with recessions while at the same time buffering their economies from higher energy costs. This increase in supply is a driver for a widening in swap spreads, as government bonds at the same time unwind some of the quantitative easing-induced price premiums. Quantitative tightening is also humming in the background but is a much bigger deal in the US relative to the eurozone or the UK. Tighter conditions also contribute to vulnerabilities in the system, a system that is already being stressed by gaps in prices, wider bid/offer spreads and higher bank funding costs. In the US, repo should be pressured higher. While a repeat of the great financial crisis is not anticipated, housing market pressure, resulting in system pressure and decent falls in inflation will ultimately allow the Fed to cut in a dot com bust style, by enough to avert a significant US recession. But recession there will be, with a bigger one in Europe, likely in play before we get to 2023. This all gels with room for decent falls in market rates through 2023. We're not coming off 1970s-style starting points in terms of the level of rates, but we are coming off peaks in market rates that have not been seen since the noughties. The lows won't be as extreme either; we're not heading back down to zero this time. We should stop to the downside with handles of 2% and 3% rather than 0% (or close to) for market rates in the US and eurozone, and with steeper curves to boot. More supply (especially in Europe) and balance sheet roll-off (especially in the US) should allow curves to steepen out Even if inflation gets tamed in 2023, as we expect it will, we now know that an inflation vulnerability is back. That, plus more supply (especially in Europe) and balance sheet roll-off (especially in the US), should allow curves to steepen out, and actual US rate cuts will push in the same direction. While the act...

AUDUSD Current Price: 0.6719 Chinese news keep investors on their toes at the beginning of the week. US Dollar on the back foot amid speculation the US Federal Reserve will pivot. AUDUSD´s bullish potential intact, with near-term support in the 0.6660 price zone. The AUDUSD pair is ending Monday with modest gains in the 0.6710 price zone, pressuring a fresh November monthly high. The pair slid throughout the first half of the day amid US Dollar near-term oversold conditions. Nevertheless, speculative interest saw it as a chance to short further the greenback, which somehow anticipates how things will go, at least until the next US Federal Reserve (Fed) meeting in a month. Hawkish comments from Fed officials may be ignored by market players unless Chief Jerome Powell explicitly says that December will bring a 75 bps rate hike. The focus at the beginning of the day was on China, as the country keeps reporting record coronavirus contagions in Bejing and other big cities. The country has a zero-covid policy, which may lead to stricter lockdowns and the interruption of global shipments. The country reported the October Producer Price Index, which printed at 4.9% YoY, easing from the previous 5.4%. The Australian macroeconomic calendar had nothing to offer, although the Reserve Bank of Australia (RBA) will publish the Minutes of its latest meeting on Tuesday. China will release October Industrial Production and Retail Sales. AUDUSD short-term technical outlook The daily chart for the AUDUSD pair shows that it is battling to extend its rally beyond a mildly bearish 100 SMA while the 20 SMA gains upward traction well below the current level. Technical indicators have lost their bullish strength but hold near overbought readings, in line with another leg higher. The near-term picture shows some divergences, but nothing that could confirm the bullish potential has come to an end. The 4-hour chart shows that the pair is developing well above bullish moving averages,  with the 20 SMA currently at around 0.6600. The Momentum indicator retreats sharply but holds within positive levels, while the RSI indicator remains flat at around 71. Buyers defend the downside at around 0.6660, with more chances of a corrective decline if the pair breaks below it. Support levels: 0.6705 0.6660 0.6615 Resistance levels: 0.6745 0.6780 0.6825 View Live Chart for the AUDUSD  

All eyes on Westminster as we wait to see if Hunt will quell market concerns on the UK's fiscal outlook  As FX trading gets underway in Asia late on Sunday, the dollar has slipped yet again, which is a continuation of the move from last week, when the dollar fell 3.5% on a broad-basis and US stocks surged 6%. The market mood appears upbeat as we start another week, as expectations of a Fed pivot, China dropping its zero covid policy and the Russian withdrawal from the strategically important Ukranian city of Kherson all helping to boost sentiment. The key driver for risk sentiment remains weaker US inflation data, which focussed minds on the longed-for pivot from the Fed to smaller rate increases. This narrative was given a boost on Friday when the University of Michigan consumer confidence indicator for the US came in lower than expected across all measures for November. Right now, weaker data is good news for the market as a slowing economy also builds the case for a Fed pivot. As we start a new week, the UK Chancellor’s Autumn Statement (and UK Budget version 2) is scheduled for Thursday, UK inflation is released, along with a raft of Chinese data, US retail sales and US producer prices. To add a political twist to the mix, the Democrats have won the Senate race in the Midterms after they won Senate seats in Arizona and Nevada, and a Republican victory in House of Representatives has not yet been called.    Democrats hold onto power: the market impact  Looking ahead, the market had been expecting a Republican win in the Midterms, yet that has failed to materialise. For outsiders, this highlights how the Trump brand is now toxic for the Republican party, and with heavy losses dealt to his favoured candidates this has reduced the likelihood that he will run in the 2024 Presidential race. While a divided Washington is usually good news for financial markets, right now the Democrats continue to hold the sway of power, controlling both the White House and the Senate. On the surface, this could be bad news for stocks, however, there are three reasons why this is not such a bad result for US asset prices:  1.   If this causes Trump to step aside from the 2024 Presidential race, then it could signal a return to a more convential and centrist political style in the US. This is good news for financial markets as it makes the future of US politics and policy-making more certain and less wayward, which is surely a good development after the turmoil thrown at financial markets in 2022.  2.   Nancy Pelosi, the Democratic speaker of the House of Representatives, is calling for a vote this year on the US debt ceiling before the new Congress is sworn in. US Treasury Secretary, Janet Yellen, has also said that it would be “great” to get this done this year. No wonder these two key Democratic figures are calling for the vote on the debt ceiling to take place ASAP, the Midterm results mean that the Republicans are not as emboldened as some expect, thus raising the debt ceiling without a standoff or potential tough spending cuts is possible. This eradicates the prospect of a debt ceiling wrangle and a potential US default, which is a good thing for global financial markets.  3.   The prospect of a Fed pivot is still the key driver of markets right now, and that supersedes politics at this stage of the financial cycle. Could weak US retail sales also push the Fed to slow down plans to shrink its balance sheet? We think yes, thus the ‘bad data is good for financial markets’ theme may have some way to go this month.  Overall, political developments in the US also support a continuation of the stock market rally that we saw last week, although we may not get such large moves to the upside as issues remain: weak Q3 earnings  and a weak Q4 outlook, a dreadful outlook for key lead economic indicators such as the semi-conductor industry and the prospect of a weak economic outlook in 2023, which could temper market exuberance in the coming days and weeks.    The Autumn statement: what to expect  The UK is also in focus this week, with the Chancellor’s Autumn Statement due on Thursday. As we mention above, this is the UK’s second attempt at a Budget in just shy of two months after the disastrous mini budget back in September. The mood music is very different this time around, with the Chancellor expected to cut spending and raise taxes for nearly every tax-paying cohort. Accompanying this statement will be the Office for Budget Responsibility’s forecasts for the UK economy, with all eyes on the OBR’s projections for UK debt to GDP...

GBPUSD awaits budget catalyst The pound edges higher as Britain may look to restore markets' confidence with a new budget. Sterling has recouped losses from the September budget firesale. Traders are awaiting a new announcement while riding on the dollar's softness. Heightened volatility could be expected this week as British finance minister Jeremy Hunt presents his plan to fill a £50 billion fiscal hole. After the market sanctioned Mr Kwarteng's unfunded tax cuts, fiscal discipline with a mix of public spending cuts and tax rises would alleviate worries about Britain's finances. 1.2300 is the next hurdle as the recovery goes on. 1.1150 is the closest support. USDJPY tumbles on lower inflation The Japanese yen soared over the prospect of a narrowing interest differential with the US counterpart. Following months of parabolic ride, a weaker US CPI finally gave traders an excuse to exit an overcrowded trade. The market has been watching Japan's falling foreign reserves and pondering whether Tokyo would commit more of its war chest to prop up its currency. But now a greater fall than the one from Japanese authorities' intervention indicates that prolonged weakness has released the reversal tension, making the yen the main beneficiary of the dollar's retreat. 137.00 is the first support and 144.00 a fresh resistance. UK Oil struggles as China's demand worries Oil markets cheered after China announced an easing of some of its COVID curbs. Brent crude has been going sideways over demand concerns. China's zero-COVID policy and a resurgence in infections in major cities remain a thorny problem. Now that the manufacturing centre of Guangzhou has become ground zero, expectations of a slowdown in China's activities and its appetite for the commodity put the buy side on the defensive. Meanwhile, global supply has kept up with US crude stocks surprisingly rising to a 16-month high. The supply demand imbalance may cap the price under 105.00. 84.00 is a key support to monitor. Nasdaq 100 recovers on renewed Fed pivot hopes The Nasdaq 100 bounced back as hopes of peaking inflation took a foothold. With US CPI coming in below 8% for the first time in eight months, investors have regained faith in a policy U-turn by the Fed sooner than later. Plunging Treasury yields suggests that the central bank could live with a 50bp rate hike in December, rather than a 75bp one. However, the bounce could be opportunistic as it might take multiple sets of data over the next few months to make the Fed change its mind. The pivot may only happen when there is a consistent deceleration in inflation. The index is heading towards 12800 with 10500 as a fresh support.