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29/11/2024 - 08:22 UTCThe U.S. dollar extended its decline against most of its major peers, with the dollar index (USDX) down by another 0.39% early on Friday. This move could be reflecting the market's growing belief that the Federal Reserve would implement a less steep reduction in interest rates. This sentiment was further solidified by comments from Fed officials and recent economic data that indicated a resilient U.S. economy. Consequently, traders appear to be adjusting their positions to anticipate smaller or no rate cuts in the upcoming meetings.
The December FOMC interest rate decision is expected to be published on December 18th where based on the CME Fedwatch tool, the probability of a 25-basis-point interest rate reduction is currently at 66.3%, while odds for rates to remain unchanged are at 33.7%.
In Asia, stock markets fell on Friday as risk appetite was dented by rising tensions between Russia and Ukraine, while the Japan 225 index dropped as the yen surged on strong inflation data.Russia launched a second major attack on Ukraine's energy infrastructure this month. This move is seen as a direct response to Ukraine's use of Western-supplied weapons. In a significant escalation, President Vladimir Putin has threatened to use new ballistic missiles to strike 'decision-making centers' in Kyiv.
Gold prices experienced an uptick on Thursday, capitalizing on a weakening U.S. dollar and increased geopolitical tensions. As the U.S. stock market was closed for Thanksgiving, investors turned their attention to safe-haven assets like gold.
Bitcoin continued its upward trend on Friday, staying within striking distance of its recent record high. This positive sentiment was driven by market expectations of a pro-crypto stance from the incoming Trump administration. While Bitcoin experienced some profit-taking in the past week after falling short of the $100,000 milestone, losses were limited by optimism surrounding Trump's choices for key regulatory roles, which are seen as indicative of a more lenient regulatory approach towards the cryptocurrency industry.
Some key events due later today include annual inflation data from the Eurozone, monthly Gross Domestic Product from Canada and a speech by BOE's governor Bailey about the Financial Stability Report, in London
EUR/USD hovered just below the 1.0600 level on Thursday, unable to build on its recent bullish momentum while maintaining a steady range. Trading volumes were subdued as US markets were closed for the Thanksgiving holiday, and Friday’s session is also expected to see limited liquidity, capping activity for the week.
Attention now turns to Friday’s release of Eurozone inflation data, which could provide a catalyst for the Euro as the weekend approaches. Looking ahead, the US dollar’s trajectory may hinge on next Friday’s Nonfarm Payrolls (NFP) report, set for release on December 6.
Gold prices ended the session on Thursday with minor gains, with trading activity subdued due to the Thanksgiving holiday closure of US markets.
The market mood improved slightly on Thursday, aided by news of a 60-day ceasefire between Israel and Lebanon. However, the ongoing escalation of the Russia-Ukraine conflict is expected to keep gold prices firmly anchored above the $2,600 mark.
US President-elect Donald Trump's renewed tariff threats against China, Canada, and Mexico initially weighed on gold prices as investors sought refuge in the US dollar. Following a brief tumble, gold rebounded as Trump softened his rhetoric toward Canada and Mexico.
Oil prices ticked upward on Thursday, buoyed by geopolitical tensions in the Middle East and OPEC+ developments, despite thin trading due to the U.S. Thanksgiving holiday.
Prices moved higher after Israel and Lebanon’s Hezbollah exchanged accusations of ceasefire violations. Israeli tanks reportedly fired into southern Lebanon, adding uncertainty to the fragile agreement intended to allow civilians to return to border areas impacted by over a year of conflict.
Adding to the bullish tone, OPEC+—a coalition of the Organization of the Petroleum Exporting Countries and allies like Russia—rescheduled its next policy meeting to December 5 from December 1 to avoid overlapping with another event.
U.S. stock index futures climbed slightly in thin trading Thursday evening, as Wall Street remained near record highs driven by optimism about the strength of the U.S. economy and the prospect of lower interest rates.
Investor sentiment improved further on reports suggesting that U.S. trade tariffs on China might be less severe than previously anticipated, fueling hopes for a more measured approach in the trade dispute between the world’s two largest economies.
Markets also maintained bets on an additional Federal Reserve interest rate cut in December, which would mark the fourth rate reduction in 2024. However, the longer-term outlook remains uncertain amid persistent inflation concerns and potential expansionary policies under President-elect Donald Trump.
Investors are turning their attention to Federal Reserve commentary in the coming week, including remarks from Fed Chair Jerome Powell on Wednesday, for further insight into the central bank's rate policy.
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