HUBFX Market Report – End of November, 2024

Insights on US Mortgage Data, GBP/USD Trends, and Key Economic Updates

US MBA Mortgage Applications: Surging Activity Amidst Mixed Trends

Date: November 22, 2024
Reported: +6.3% (prior +1.7%)

The US MBA Mortgage Applications index saw a significant surge of 6.3%, driven by a sharp rise in purchase activity. This uptick underscores stronger homebuyer interest, despite a challenging rate environment where the 30-year mortgage rate eased slightly to 6.86% from 6.90% the previous week.

• Market Index: Climbed to 208.0 from 195.6, signaling broad-based demand growth.
• Purchase Index: Increased robustly to 152.9 from 136.0, reflecting heightened homebuyer engagement.
• Refinance Index: Dropped to 501.7 from 514.9, suggesting refinancing is less appealing under high-rate conditions.

The data highlights that while refinancing struggles due to elevated rates, home purchases remain a growth driver, potentially buoyed by easing home prices in some regions and seasonal factors.

GBP/USD Technical Analysis: Potential for a Pullback

Fundamental Overview:
The US Dollar has maintained its strength, supported by robust economic data. However, markets anticipate three Fed rate cuts by the end of 2025, which could cap further dollar gains. Meanwhile, in the UK, a higher-than-expected CPI and marginally hawkish commentary from the Bank of England have steadied the British pound.

Daily Timeframe:

• The pair is consolidating near a major trendline after failing to sustain a break below it.
• Buyers appear to be building positions for a pullback, targeting a move back into the downward trendline.

Key Levels to Watch:

• Resistance at 1.27: Confluence with the 38.2% Fibonacci retracement level.
• Support below 1.2615: This zone has acted as a rejection area recently.

4-Hour and 1-Hour View:

• Shorter timeframes show signs of bottoming, suggesting potential bullish momentum.
• Immediate resistance lies at 1.2615, where sellers are likely to re-enter for downside opportunities.

Upcoming Catalysts:
Today’s US PCE report and jobless claims data will play a pivotal role in shaping near-term dollar trends.

Global Highlights: Key Developments to Watch

China LNG Imports Expected to Rebound to Record Highs

• Goldman Sachs projects China’s 2024 LNG imports to hit over 80 million tonnes, a record level.
• The Russia-China gas pipeline will likely operate at full capacity, fueling substantial growth in gas imports for the next decade.
• Asia LNG prices could climb above $20/MMBTU if European gas supply tightens.

This reflects China’s increasing reliance on natural gas for its growing power needs, reshaping the global LNG trade dynamics.

New Zealand GDP Revision: Brighter Economic Picture

• Revisions indicate stronger-than-estimated growth:
  • 3.5% y/y for March 2023 (production-based).
  • 3.9% y/y for March 2023 (expenditure-based).
• Labour productivity growth has been revised upward, reducing implied growth in unit labor costs.

While these revisions are encouraging, their impact on monetary policy remains limited as the Reserve Bank of New Zealand prepares for a 50 bps rate cut, signaling a dovish stance to counter persistent economic headwinds.

Australian Data: Mixed Inflation and Construction Trends

• October CPI: Slowed to 2.1% y/y, below the expected 2.3%. The trimmed mean rose to 3.5%, highlighting sticky core inflation.
• Q3 Construction Work Done: Surprised positively at +1.6% q/q vs. 0.3% expected, suggesting resilience in construction activity despite sectoral constraints.

These data points reinforce a mixed economic picture for Australia, with slowing inflation potentially influencing the Reserve Bank of Australia’s rate trajectory.

Light European Session Ahead of Thanksgiving

Today’s European session features a limited set of data, including:

• Germany GfK Consumer Confidence (December)
• France Consumer Confidence (November)

The main focus shifts to the US session, packed with high-impact releases:

• Q3 GDP (2nd estimate)
• PCE price index
• Durable goods orders
• Trade balance

With the Thanksgiving holiday looming, these releases could trigger volatility, setting the stage for the end of the trading week.

Conclusion: Market Dynamics to Watch

This week’s highlights underscore a nuanced global economic environment:

1. US Mortgage Activity: Strong purchase demand amidst refinancing decline.
2. GBP/USD Trends: Short-term potential for pullback, driven by technical and fundamental cues.
3. China’s LNG Demand: A rising force in global energy markets.
4. Anticipated Data Releases: US economic indicators will likely drive near-term market sentiment.

As markets brace for Thanksgiving, traders should remain cautious, balancing opportunities with risk management strategies.