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26/11/2024 - 08:08 UTCThe U.S. dollar fell slightly against most major currencies on Monday, with the dollar index (USDX) fluctuating between gains and losses only to end the session 0.04% lower. The US dollar has recently been on a winning streak for eight consecutive weeks, reaching two-year highs amid increased demand as a safe-haven and expectations of a slower pace of interest rate cuts than initially anticipated. Trump's announcement of Bessent as the U.S. Treasury secretary late on Friday, pushed yields on 10-year Treasuries down about 14 basis points, the most since early August.
Meanwhile according to the CME FedWatch Tool, market participants are currently assigning a 59.6% probability to a 25 basis point interest rate cut by the Federal Reserve. However, there is a significant 40.4% probability that the Fed will maintain interest rates at their current level.
On Monday, Wall Street experienced a positive sentiment, buoyed by the nomination of seasoned investor Scott Bessent as Treasury Secretary, which drove the US 30 index to record highs this week. Nevertheless, market sentiment took a significant downturn after the President-elect hinted at the potential imposition of additional tariffs on China, Canada, and Mexico. Market participants are now focused on the upcoming release of the PCE price index data on Wednesday, a crucial inflation metric closely monitored by the Federal Reserve.
On the cryptos front, Bitcoin retraced from levels close to $99K and is currently trading close to the $94K as of 07:30 AM GMT on Tuesday. Reports suggest that Bitcoin's recent price decline was fuelled by comments from President-elect Donald Trump indicating more trade tariffs on China and other countries are possible, triggering a risk-off sentiment for investors.
Market participants are gearing up for a busy week, with a slew of economic indicators and central bank insights set to influence market direction. Tuesday's trading session will likely be shaped by the release of U.S. Consumer Confidence data, New Home Sales figures, and the Richmond Fed Manufacturing Index. Investors will also be closely watching the Federal Open Market Committee (FOMC) Meeting Minutes for clues about the Fed's future monetary policy path. As the week progresses, attention will shift to the preliminary reading of U.S. Gross Domestic Product (GDP) and the Core Personal Consumption Expenditure (PCE) Price Index, the Fed's preferred inflation gauge.
The EUR/USD pair sought higher ground on Monday, reclaiming the 1.0500 level as broader markets eased off from aggressive US Dollar buying.
Investors have tentatively shifted toward a risk-on sentiment, though the impact on markets remains constrained.
European markets face a relatively quiet week in terms of economic data, with limited releases until Friday’s publication of the Harmonized Index of Consumer Prices (HICP) inflation figures.
Across the Atlantic, later today, the Federal Open Market Committee (FOMC) will release its latest Meeting Minutes, offering insights into the Federal Reserve’s discussions on the future path of interest rates.
Gold prices took a significant hit on Monday, ending the session 4% lower. The decline came as reports of a potential ceasefire between Lebanon and Israel fueled a shift toward riskier assets.
Adding to the pressure, the announcement of Scott Bessent as the nominee for Treasury Secretary in former President Trump’s administration weighed further on the precious metal.
Looking ahead, bullion traders are closely monitoring key economic indicators, including Consumer Confidence data, the Federal Open Market Committee (FOMC) Meeting Minutes, Initial Jobless Claims, and the Personal Consumption Expenditures (PCE) Price Index—the Fed’s preferred inflation measure.
Oil prices dropped sharply on Monday following multiple reports suggesting that Israel and Lebanon had agreed to terms for a potential ceasefire to end the Israel-Hezbollah conflict.
The reports, citing unnamed senior U.S. officials, sparked a sell-off in oil markets despite the absence of direct supply disruptions from the conflict.
While Israel announced progress toward a ceasefire, officials noted unresolved issues remain. Lebanese leaders expressed cautious optimism but warned against fully trusting Israeli Prime Minister Benjamin Netanyahu.
Looking ahead, OPEC+ will hold its next meeting on Sunday, where the group may decide to maintain current oil output cuts into 2024.
U.S. stock indexes declined on Monday evening after President-elect Donald Trump vowed to impose higher import tariffs on China, Canada, and Mexico.
The proposed measures, tied to concerns over illegal drugs and immigration, heightened fears of a renewed global trade war.
The drop in futures reversed earlier gains, cutting short the momentum from a strong Wall Street session. On Monday, U.S. stock benchmarks hit record highs as investors reacted positively to the nomination of Scott Bessent as Treasury Secretary and continued rotations into cyclical sectors.
With the Thanksgiving holiday later this week, trading volumes are anticipated to remain subdued. However, investors will keep a close watch on critical economic releases, including the Personal Consumption Expenditures (PCE) Price Index on Wednesday, which serves as the Federal Reserve’s preferred inflation gauge.
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