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19/11/2024 - 08:38 UTCThe U.S. dollar fell against most major currencies on Monday, with the dollar index (USDX) retreating further from its one-year high reached last week as markets held on to bets that rates will fall in the short-term.
The CME FedWatch tool suggests that market participants are anticipating a rate cut of 25 basis points in December, with a 58.4% probability, while odds for rates to remain unchanged are at 41.6%.
This week, the PBOC's loan prime rate decision takes center stage. The central bank is likely to maintain the rate, following a more aggressive cut in October. This comes amidst concerns about China's economic growth, despite recent stimulus measures and weak economic data.
Wall Street painted a mixed picture on Monday as all three major stock indices appear to be moving sideways ahead of a key earnings report from Nvidia on Wednesday, which is widely seen as an indicator on whether the AI boom will continue. Despite recent optimism from Wall Street analysts, Nvidia faces potential short-term volatility due to heightened market expectations. While the company has consistently exceeded revenue expectations, slower growth and supply chain challenges for its AI chips could impact its stock price.
In other news, tensions escalate in Ukraine as the U.S. authorizes long-range missile strikes on Russian targets. Russia warns of severe consequences, and Ukraine's potential use of these missiles could significantly intensify the conflict. With these developments unfolding, energy prices surged rise as oil supply disruptions tend to boost prices.
For Tuesday, markets will most likely be focusing on core annual inflation numbers from the eurozone and Canada while later in the day, some price action could be seen upon the release of US building permits and housing starts. Other key reports expected this week include US jobless claims, the Philly Fed Manufacturing index and a consumer sentiment survey from the University of Michigan
The EUR/USD currency pair trimmed earlier losses on Monday, climbing nearly 0.56% as markets reduced their bullish stance on the US Dollar, giving the Euro room to recover.
Aside from European Central Bank (ECB) President Christine Lagarde's midweek speech, the economic calendar remains subdued until Friday, when Purchasing Managers Index (PMI) figures will be released across major economies.
Until Wednesday, Euro-focused markets are likely to follow broader trends, with Lagarde scheduled to deliver opening remarks at the ECB’s Conference on Financial Stability and Macroprudential Policy. The ECB faces mounting challenges as inflation in the Eurozone remains persistently high, surpassing policymakers' earlier expectations, while the regional economy struggles with imbalances.
Gold prices rallied over 1.60% on Monday, surging above $2,600 as escalating geopolitical tensions from the Russia-Ukraine conflict, coupled with a weakening US Dollar, fueled the precious metal’s rise.
Geopolitical developments continue to dominate bullion’s price movements. A large-scale Russian offensive in Ukraine spurred a strong response from the White House, heightening market volatility. Reports revealed that US President Joe Biden has approved Ukraine’s use of long-range missiles within Russia, a decision linked to the deployment of thousands of North Korean troops supporting Moscow.
Looking ahead, the US economic calendar includes key housing market data, initial jobless claims, S&P Global Flash PMIs, and the University of Michigan’s final Consumer Sentiment reading for November, all of which could further influence gold prices.
Oil prices climbed sharply on Monday, supported by production halts at Norway's Johan Sverdrup oilfield and intensified hostilities in the Russia-Ukraine conflict.
Production at Johan Sverdrup, Europe's largest oilfield responsible for approximately 25% of North Sea crude output, was halted due to an onshore power outage, Norway's state-owned Equinor reported. This supply disruption has bolstered prices despite market concerns about a potential surplus in 2024, as OPEC and non-OPEC producers plan to raise output.
The geopolitical landscape continues to influence oil prices. Reports indicate that the Biden administration has authorized Ukraine to use U.S.-made long-range missiles to target deep within Russia. This decision follows Russia’s deployment of North Korean troops to bolster its forces in Ukraine.
The US Tech 100 and US 500 closed higher on Monday, recovering from last week’s losses as investors geared up for Nvidia’s third-quarter earnings and Tesla surged on potential regulatory changes from the incoming Trump administration.
Nvidia is set to report earnings on Wednesday, with markets focused on the sustainability of the AI-driven growth that has fueled much of the market’s rally in 2023.
Retail earnings will take center stage this week as Walmart, Lowe's Companies, and Target are set to release their results. These reports will provide key insights into the strength of U.S. consumer spending ahead of the critical holiday shopping season.
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